Exhibit 10.3

EXECUTION COPY

 

 

 

CREDIT AGREEMENT

Dated as of August 30, 2016,

among

ESH HOSPITALITY, INC.,

as the Borrower,

THE OTHER GUARANTORS PARTY HERETO FROM TIME TO TIME,

and

EXTENDED STAY AMERICA, INC.,

as the Lender

 

 

 

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TABLE OF CONTENTS

 

         Page   ARTICLE I    DEFINITIONS AND ACCOUNTING TERMS   

Section 1.01

 

Defined Terms

     1   

Section 1.02

 

Other Interpretive Provisions

     42   

Section 1.03

 

Accounting Terms

     42   

Section 1.04

 

Rounding

     42   

Section 1.05

 

References to Agreements, Laws, Etc.

     43   

Section 1.06

 

Times of Day

     43   

Section 1.07

 

Timing of Payment or Performance

     43   

Section 1.08

 

FFO Builder Basket Transactions

     43   

Section 1.09

 

Cashless Rollovers

     43   

Section 1.10

 

Certain Calculations and Tests

     43    ARTICLE II    THE COMMITMENTS AND CREDIT EXTENSIONS   

Section 2.01

 

The Initial Loans

     45   

Section 2.02

 

Borrowings of Loans

     45   

Section 2.03

 

[Reserved]

     46   

Section 2.04

 

[Reserved]

     46   

Section 2.05

 

Prepayments

     46   

Section 2.06

 

Termination or Reduction of Commitments

     48   

Section 2.07

 

Repayment of Loans

     48   

Section 2.08

 

Interest

     48   

Section 2.09

 

Fees

     49   

Section 2.10

 

Computation of Interest and Fees

     49   

Section 2.11

 

Evidence of Indebtedness

     49   

Section 2.12

 

Payments Generally

     49   

Section 2.13

 

[Reserved]

     50   

Section 2.14

 

Incremental Credit Extensions

     50   

Section 2.15

 

Refinancing Amendments

     53   

Section 2.16

 

Extension of Loans

     53    ARTICLE III    TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY   

Section 3.01

 

Taxes

     55   

Section 3.02

 

[Reserved]

     57   

Section 3.03

 

[Reserved]

     57   

 

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Section 3.04

 

Increased Cost and Reduced Return; Capital Adequacy

     57   

Section 3.05

 

[Reserved]

     58   

Section 3.06

 

Matters Applicable to All Requests for Compensation

     58   

Section 3.07

 

[Reserved]

     58   

Section 3.08

 

Survival

     58    ARTICLE IV    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS   

Section 4.01

 

Conditions to Initial Credit Extension

     58   

Section 4.02

 

Conditions to All Credit Extensions

     60    ARTICLE V    REPRESENTATIONS AND WARRANTIES   

Section 5.01

 

Existence, Qualification and Power; Compliance with Laws

     60   

Section 5.02

 

Authorization; No Contravention

     61   

Section 5.03

 

Governmental Authorization; Other Consents

     61   

Section 5.04

 

Binding Effect

     61   

Section 5.05

 

Financial Statements; No Material Adverse Effect

     62   

Section 5.06

 

Litigation

     62   

Section 5.07

 

No Default

     62   

Section 5.08

 

Ownership of Property; Liens; Real Property; Leases and Management Agreements

     62   

Section 5.09

 

Environmental Matters

     63   

Section 5.10

 

Taxes

     64   

Section 5.11

 

ERISA Compliance

     64   

Section 5.12

 

Subsidiaries; Equity Interests

     65   

Section 5.13

 

Margin Regulations; Investment Company Act

     65   

Section 5.14

 

Disclosure

     65   

Section 5.15

 

Labor Matters

     66   

Section 5.16

 

Use of Proceeds

     66   

Section 5.17

 

Intellectual Property; Licenses, Etc.

     66   

Section 5.18

 

Solvency

     67   

Section 5.19

 

[Reserved]

     67   

Section 5.20

 

OFAC; USA PATRIOT Act; FCPA; Anti-Corruption Laws; Sanctions

     67    ARTICLE VI    AFFIRMATIVE COVENANTS   

Section 6.01

 

Financial Statements

     67   

Section 6.02

 

Certificates; Other Information

     69   

Section 6.03

 

Notices

     70   

Section 6.04

 

Payment of Obligations

     71   

 

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Section 6.05

 

Preservation of Existence, Etc.

     71   

Section 6.06

 

Maintenance of Properties

     71   

Section 6.07

 

Maintenance of Insurance

     72   

Section 6.08

 

Compliance with Laws

     72   

Section 6.09

 

Books and Records

     72   

Section 6.10

 

Inspection Rights

     72   

Section 6.11

 

Additional Guarantors

     73   

Section 6.12

 

Compliance with Environmental Laws

     74   

Section 6.13

 

[Reserved]

     74   

Section 6.14

 

Designation of Subsidiaries

     74   

Section 6.15

 

Maintenance of Ratings

     74   

Section 6.16

 

Post-Closing Covenants

     75   

Section 6.17

 

Taxes

     75   

Section 6.18

 

Use of Proceeds

     75   

Section 6.19

 

Know Your Customer

     75   

Section 6.20

 

[Reserved]

     75   

Section 6.21

 

Leases

     75   

Section 6.22

 

Management Agreements

     76   

Section 6.23

 

Property

     76    ARTICLE VII    NEGATIVE COVENANTS   

Section 7.01

 

Liens

     76   

Section 7.02

 

Investments

     80   

Section 7.03

 

Indebtedness

     83   

Section 7.04

 

Fundamental Changes

     88   

Section 7.05

 

Dispositions

     89   

Section 7.06

 

Restricted Payments

     91   

Section 7.07

 

Change in Nature of Business

     93   

Section 7.08

 

Transactions with Affiliates

     93   

Section 7.09

 

Burdensome Agreements

     94   

Section 7.10

 

Use of Proceeds

     95   

Section 7.11

 

[Reserved]

     95   

Section 7.12

 

Fiscal Year

     95   

Section 7.13

 

Prepayments, Etc. of Indebtedness

     96   

Section 7.14

 

Certain Amendments

     96   

Section 7.15

 

Anti-Money Laundering

     97   

Section 7.16

 

Permitted Activities of Specified Property Owning Entities

     97    ARTICLE VIII    EVENTS OF DEFAULT AND REMEDIES   

Section 8.01

 

Events of Default

     98   

Section 8.02

 

Remedies Upon Event of Default

     100   

 

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Section 8.03

 

Exclusion of Immaterial Subsidiaries

     101   

Section 8.04

 

Application of Funds

     101    ARTICLE IX    [RESERVED]    ARTICLE X    MISCELLANEOUS   

Section 10.01

 

Amendments, Etc.

     102   

Section 10.02

 

Notices and Other Communications; Facsimile Copies

     102   

Section 10.03

 

No Waiver; Cumulative Remedies

     103   

Section 10.04

 

Attorney Costs and Expenses

     103   

Section 10.05

 

Indemnification by the Borrower

     104   

Section 10.06

 

Payments Set Aside

     105   

Section 10.07

 

Successors and Assigns

     105   

Section 10.08

 

Confidentiality

     107   

Section 10.09

 

Setoff

     108   

Section 10.10

 

Interest Rate Limitation

     109   

Section 10.11

 

Counterparts

     109   

Section 10.12

 

Integration; Termination

     109   

Section 10.13

 

Survival of Representations and Warranties

     110   

Section 10.14

 

Severability

     110   

Section 10.15

 

GOVERNING LAW

     110   

Section 10.16

 

WAIVER OF RIGHT TO TRIAL BY JURY

     111   

Section 10.17

 

Binding Effect

     111   

Section 10.18

 

USA PATRIOT Act

     111   

Section 10.19

 

No Advisory or Fiduciary Responsibility

     112   

Section 10.20

 

[Reserved]

     113   

Section 10.21

 

[Reserved]

     113   

Section 10.22

 

Judgment Currency

     113    ARTICLE XI    GUARANTY   

Section 11.01

 

The Guaranty

     113   

Section 11.02

 

Obligations Unconditional

     114   

Section 11.03

 

Reinstatement

     115   

Section 11.04

 

Subrogation; Subordination

     115   

Section 11.05

 

Remedies

     115   

Section 11.06

 

Instrument for the Payment of Money

     116   

Section 11.07

 

Continuing Guaranty

     116   

Section 11.08

 

General Limitation on Guarantee Obligations

     116   

Section 11.09

 

Information

     116   

 

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Section 11.10

 

Release of Guarantors

     116   

Section 11.11

 

Right of Contribution

     117   

SCHEDULES

 

1.01A

  

Commitments

1.01B

  

[Reserved]

1.01C

  

[Reserved]

1.01D

  

Excluded Subsidiaries

1.01E

  

Operating Leases

1.01F

  

Unrestricted Subsidiaries

1.01G

  

Management Agreements

5.05

  

Certain Liabilities

5.06

  

Litigation

5.08

  

Ownership of Property

5.09(a)

  

Environmental Matters

5.11(a)

  

ERISA Compliance

5.12

  

Subsidiaries and Other Equity Investments

6.16

  

Post-Closing Covenants

7.01(b)

  

Existing Liens

7.02(f)

  

Existing Investments

7.03(b)

  

Existing Indebtedness

7.08

  

Transactions with Affiliates

7.09

  

Certain Contractual Obligations

10.02

  

Certain Addresses for Notices

 

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EXHIBITS

Form of

 

A   

Committed Loan Notice

B   

Note

C-1   

Compliance Certificate

C-2   

Solvency Certificate

 

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CREDIT AGREEMENT

This CREDIT AGREEMENT is entered into as of August 30, 2016, among ESH
HOSPITALITY INC., a Delaware corporation (the “Borrower”), the Guarantors party
hereto from time to time and EXTENDED STAY AMERICA, INC., a Delaware
corporation, as the lender (the “Lender”).

PRELIMINARY STATEMENTS

The Borrower has requested that the Lender extend credit to the Borrower in the
form of the Initial Loans on the Closing Date in an initial aggregate principal
amount of $75,000,000.

The proceeds of the Initial Loans will be used by the Borrower to directly or
indirectly consummate the Refinancing, pay the Transaction Expenses and for
general corporate purposes.

The Lender has indicated its willingness to lend on the terms and subject to the
conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.01 Defined Terms.

As used in this Agreement, the following terms shall have the meanings set forth
below:

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.

“Agreement” means this Credit Agreement, as the same may be amended, restated,
amended and restated, supplemented or otherwise modified from time to time.

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the Borrower or its Subsidiaries from time to time
concerning or relating to bribery or corruption.

“Applicable Period” has the meaning set forth in Section 10.21.

“Applicable Rate” means a percentage per annum equal to 5.00%.

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“Asset Acquisition” means:

(1) an investment by the Borrower or any of the Restricted Subsidiaries in any
other Person pursuant to which such Person shall become a Restricted Subsidiary
or shall be merged, amalgamated or consolidated with and into the Borrower or
any of the Restricted Subsidiaries; provided, however, that such Person’s
primary business is related, ancillary, incidental or complementary to the
businesses of the Borrower or any of the Restricted Subsidiaries on the date of
such investment; or

(2) an acquisition by the Borrower or any of the Restricted Subsidiaries from
any other Person of assets or one or more properties of such Person; provided,
however, that the assets and properties acquired are related, ancillary,
incidental or complementary to the businesses of the Borrower or any of the
Restricted Subsidiaries on the date of such acquisition and otherwise permitted
under this Agreement.

“Asset Disposition” means the sale or other disposition by the Borrower or any
of the Restricted Subsidiaries, other than to the Borrower or a Restricted
Subsidiary, of:

(1) all or substantially all of the Equity Interests of such Restricted
Subsidiary, whether in a single transaction or a series of transactions; or

(2) all or substantially all of the assets that constitute a division or line of
business, or one or more properties, of the Borrower or any of the Restricted
Subsidiaries, whether in a single transaction or a series of transactions.

“Assignment Taxes” has the meaning set forth in Section 3.01(b).

“Attorney Costs” means and includes all reasonable and documented fees, expenses
and disbursements of any law firm or other external legal counsel.

“Attributable Indebtedness” means, on any date, in respect of any Capitalized
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP.

“Audited Financial Statements” means the audited consolidated balance sheets of
the Borrower and its Subsidiaries and Parent and its Subsidiaries as of each of
December 31, 2015, 2014 and 2013 and related consolidated statements of income,
stockholders’ equity and cash flows of the Borrower and its Subsidiaries and
Parent and its Subsidiaries for the fiscal years ended December 31, 2015, 2014
and 2013.

“Award” means any compensation paid by any Governmental Authority in connection
with a Casualty Event or condemnation in respect of all or any part of any
Property.

“Bankruptcy Code” means the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.

“Borrower” has the meaning set forth in the introductory paragraph to this
Agreement.

“Borrower Attributable Proceeds” means the Net Cash Proceeds received by the
Borrower from the public or private offering of its Equity Interests, which may
include the Net Cash

 

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Proceeds from offerings of Equity Interests of the Borrower paired with Equity
Interests of Parent, provided that the Net Cash Proceeds to the Borrower in the
offering of paired shares shall be determined by the Borrower in good faith and
shall include the Net Cash Proceeds from the sale of Class A common stock by the
Borrower to Parent if such shares are purchased with the proceeds attributable
to Parent from the sale of the paired shares.

“Borrowing” means a borrowing consisting of simultaneous Loans of the same Class
made by the Lender pursuant to Section 2.01.

“BREP” means, collectively, Blackstone Real Estate Partners VI L.P., Blackstone
Real Estate Partners (AIV) VI L.P., Blackstone Real Estate Partners VI.TE.1
L.P., Blackstone Real Estate Partners VI.TE.2 L.P., Blackstone Real Estate
Partners VI.F L.P. and Blackstone Real Estate Holdings VI L.P., each a Delaware
limited partnership, and their respective Controlled Investment Affiliates.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Lender is located.

“Capital Expenditures” means, for any period, the aggregate of all expenditures
(whether paid in cash or accrued as liabilities and including in all events all
amounts expended or capitalized under Capitalized Leases) by the Borrower and
its Restricted Subsidiaries during such period that, in conformity with GAAP,
are or are required to be included as capital expenditures on the consolidated
statement of cash flows of the Borrower and its Restricted Subsidiaries.

“Capitalized Lease Obligation” means, at the time any determination thereof is
to be made, the amount of the liability in respect of a Capitalized Lease;
provided that any obligations of the Borrower or its Restricted Subsidiaries
either existing on the Closing Date or created prior to any recharacterization
described below (i) that were not included on the consolidated balance sheet of
the Borrower as capital lease obligations and (ii) that are subsequently
recharacterized as capital lease obligations or indebtedness due to a change in
accounting treatment or otherwise, shall for all purposes under this Agreement
(including, without limitation, the calculation of Net Operating Income and
Consolidated EBITDA) not be treated as capital lease obligations, Capitalized
Lease Obligations or Indebtedness.

“Capitalized Leases” means all leases that have been or are required to be, in
accordance with GAAP, recorded as capitalized leases; provided that for all
purposes hereunder the amount of obligations under any Capitalized Lease shall
be the amount thereof accounted for as a liability on a balance sheet in
accordance with GAAP; provided, further, that for purposes of calculations made
pursuant to the terms of this Agreement, GAAP will be deemed to treat leases in
a manner consistent with its current treatment under generally accepted
accounting principles as of the Closing Date, notwithstanding any modifications
or interpretive changes thereto that may occur thereafter.

“Capitalized Software Expenditures” means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities) by the Borrower
and its Restricted Subsidiaries during such period in respect of licensed or
purchased software or internally developed software

 

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and software enhancements that, in conformity with GAAP, are or are required to
be reflected as capitalized costs on the consolidated balance sheet of the
Borrower and its Restricted Subsidiaries.

“Cash Equivalents” means any of the following types of Investments, to the
extent owned by the Borrower or any Restricted Subsidiary:

(1) Dollars;

(2) such local currencies held by the Borrower or any Restricted Subsidiary from
time to time in the ordinary course of business;

(3) securities issued or directly and fully and unconditionally guaranteed or
insured by the U.S. government or any agency or instrumentality thereof the
securities of which are unconditionally guaranteed as a full faith and credit
obligation of such government with maturities of 24 months or less from the date
of acquisition;

(4) certificates of deposit, time deposits and eurodollar time deposits with
maturities of 24 months or less from the date of acquisition, demand deposits,
bankers’ acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any domestic or foreign commercial bank having
capital and surplus of not less than $250,000,000 in the case of U.S. banks and
$100,000,000 (or the Dollar equivalent as of the date of determination) in the
case of non-U.S. banks;

(5) repurchase obligations for underlying securities of the types described in
clauses (3), (4), (7) and (8) hereof entered into with any financial institution
or recognized securities dealer meeting the qualifications specified in clause
(4) above;

(6) commercial paper and variable or fixed rate notes rated at least P-2 by
Moody’s or at least A-2 by S&P (or, if at any time neither Moody’s nor S&P shall
be rating such obligations, an equivalent rating from another nationally
recognized statistical rating agency) and in each case maturing within 24 months
after the date of creation thereof;

(7) marketable short-term money market and similar funds having a rating of at
least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time
neither Moody’s nor S&P shall be rating such obligations, an equivalent rating
from another nationally recognized statistical rating agency);

(8) readily marketable direct obligations issued by any state, commonwealth or
territory of the United States or any political subdivision or taxing authority
thereof having an investment grade rating from either Moody’s or S&P (or, if at
any time neither Moody’s nor S&P shall be rating such obligations, an equivalent
rating from another nationally recognized statistical rating agency) with
maturities of 24 months or less from the date of acquisition;

(9) readily marketable direct obligations issued by any foreign government or
any political subdivision or public instrumentality thereof, in each case having
an

 

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investment grade rating from either Moody’s or S&P (or, if at any time neither
Moody’s nor S&P shall be rating such obligations, an equivalent rating from
another nationally recognized statistical rating agency) with maturities of 24
months or less from the date of acquisition;

(10) Investments with average maturities of 12 months or less from the date of
acquisition in money market funds rated AAA- (or the equivalent thereof) or
better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or, if
at any time neither Moody’s nor S&P shall be rating such obligations, an
equivalent rating from another nationally recognized statistical rating agency);

(11) securities with maturities of 12 months or less from the date of
acquisition backed by standby letters of credit issued by any financial
institution or recognized securities dealer meeting the qualifications specified
in clause (4) above;

(12) Indebtedness or preferred stock issued by Persons with a rating of “A” or
higher from S&P or “A2” or higher from Moody’s with maturities of 24 months or
less from the date of acquisition; and

(13) investment funds investing at least 90% of their assets in securities of
the types described in clauses (1) through (12) above.

In the case of Investments by any Foreign Subsidiary that is a Restricted
Subsidiary or Investments made in a country outside the United States of
America, Cash Equivalents shall also include (a) investments of the type and
maturity described in clauses (1) through (8) and clauses (10), (11), (12) and
(13) above of foreign obligors, which Investments or obligors (or the parents of
such obligors) have ratings described in such clauses or equivalent ratings from
comparable foreign rating agencies and (b) other short-term investments utilized
by Foreign Subsidiaries that are Restricted Subsidiaries in accordance with
normal investment practices for cash management in investments analogous to the
foregoing investments in clauses (1) through (13) and in this paragraph.

Notwithstanding the foregoing, Cash Equivalents shall include amounts
denominated in currencies other than that set forth in clause (1) above;
provided that such amounts are converted into the currency listed in clause (1)
as promptly as practicable and in any event within 10 Business Days following
the receipt of such amounts.

For the avoidance of doubt, any items identified as Cash Equivalents under this
definition will be deemed to be Cash Equivalents for all purposes regardless of
the treatment of such items under GAAP.

“Casualty Event” means any event that gives rise to the receipt by the Borrower
or any Restricted Subsidiary of any insurance proceeds or condemnation awards in
respect of any equipment, fixed assets or real property (including any
improvements thereon) to replace or repair such equipment, fixed assets or real
property.

“Centerbridge” means Centerbridge Capital Partners, L.P., a Delaware limited
partnership, and its Controlled Investment Affiliates.

 

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“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as subsequently amended, and the regulations promulgated
thereunder.

“Change of Control” shall be deemed to occur if:

(a) any person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act as in effect on the Closing Date), other than any combination of
the Parent, the Investors or any “group” including any Permitted Holders, shall
have acquired beneficial ownership of 35% or more on a fully diluted basis of
the voting interest in Borrower’s Equity Interests and the Permitted Holders
shall own, directly or indirectly, less than such person or “group” on a fully
diluted basis of the voting interest in Borrower’s Equity Interests;

(b) a “change of control” (or similar event) shall occur under any Indebtedness
for borrowed money permitted under Section 7.03 with an aggregate outstanding
principal amount in excess of the Threshold Amount or any Permitted Refinancing
Indebtedness in respect of any of the foregoing with an aggregate outstanding
principal amount in excess of the Threshold Amount; or

(c) during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of Borrower cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body.

“Class” (a) when used with respect to the Lender, refers to whether the Lender
has a Loan or Commitment with respect to a particular Class of Loans or
Commitments, (b) when used with respect to Commitments, refers to whether such
Commitments Initial Commitments, Incremental Commitments or Refinancing
Commitments of a given Refinancing Series and (c) when used with respect to
Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such
Borrowing, are Initial Loans, Incremental Loans, Refinancing Loans of a given
Refinancing Series or Extended Loans of a given Extension Series, Initial
Commitments, Incremental Commitments or Refinancing Commitments (and in each
case, the Loans made pursuant to such Commitments) that have different terms or
conditions shall be construed to be in different Classes. Commitments (and, in
each case, the Loans made pursuant to such Commitments) that have the same terms
and conditions shall be construed to be in the same Class. There shall be no
more than an aggregate of five Classes of term loan facilities under this
Agreement.

“Closing Date” means August 30, 2016, the first date on which all conditions
precedent in Section 4.01 are satisfied or waived in accordance with Section
4.01.

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time.

 

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“Commitment” means, as to the Lender, its obligation to make a Loan to the
Borrower hereunder, expressed as an amount representing the maximum principal
amount of the Loan to be made by the Lender under this Agreement, as such
commitment may be (a) reduced from time to time pursuant to Section 2.06 and (b)
reduced or increased from time to time pursuant to (i) an Incremental Amendment,
(ii) a Refinancing Amendment or (iii) an Extension.

“Committed Loan Notice” means a notice of a Borrowing, which, if in writing,
shall be substantially in the form of Exhibit A.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.).

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1.

“Consolidated EBITDA” means, for any period, the aggregate net income (or loss)
attributable to the Borrower and its Restricted Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP, increased by, to the
extent such amount was deducted in calculating such net income (without
duplication):

(1) net income from discontinued operations;

(2) provision for income taxes, including, without limitation, state, provincial
or territorial, franchise and similar taxes and foreign withholding taxes;

(3) the income or expense attributable to transactions involving derivative
instruments that do not qualify for hedge accounting in accordance with GAAP;

(4) net amount of extraordinary items or non-recurring items, as may be
determined by the Borrower in good faith;

(5) loss from unconsolidated entities;

(6) interest expense, net;

(7) depreciation and amortization;

(8) equity-based compensation expense;

(9) Transaction Expenses in connection with the Transactions;

(10) impairment charges;

(11) all other non-cash items reducing net income (other than accruals or
reserves for items that will require cash payments in future periods), including
asset write-offs and write-down related to intangible assets (including
goodwill) and long lives assets pursuant to GAAP; and

(12) any (gain) or loss, together with any related provision for taxes on such
(gain) or loss, realized in connection with: (a) any disposition of assets by
the Borrower or any Restricted Subsidiary outside the ordinary course of
business; or (b) the disposition of any securities by the Borrower or any
Restricted Subsidiary or the extinguishment of any Indebtedness of the Borrower
or a Restricted Subsidiary.

 

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In addition, Consolidated EBITDA shall exclude the impact of all currency
translation gains or losses related to non-operating currency transactions.

“Consolidated Interest Expense” means, for any period, the aggregate amount of
interest expense, less the aggregate amount of interest income for such period,
in respect of Indebtedness of the Borrower and its Restricted Subsidiaries
during such period, all as determined on a consolidated basis in conformity with
GAAP including (without duplication):

(1) the interest portion of any deferred payment obligations;

(2) all commissions, discounts and other fees and expenses owed with respect to
letters of credit and bankers’ acceptance financing;

(3) the net cash costs associated with Swap Contracts and Indebtedness that is
Guaranteed or secured by assets of the Borrower or any Restricted Subsidiary;
and

(4) all but the principal component of rentals in respect of Capitalized Lease
Obligations paid, accrued or scheduled to be paid or to be accrued by the
Borrower and its Restricted Subsidiaries;

excluding, to the extent included in interest expense above, (i) accretion of
accrual of discounted liabilities not constituting Indebtedness, (ii) any
expense resulting from the discounting of any Indebtedness in connection with
the application of purchase accounting in connection with any acquisition, (iii)
amortization of debt discount, amortization of deferred financing charges and
debt issuance costs, commissions, fees and expenses and any amortization
thereof, (iv) any expensing of bridge, commitment or other financing fees or (v)
non-cash costs associated with Swap Contracts or attributable to mark-to-market
valuation of derivative instruments pursuant to GAAP.

“Consolidated Senior Debt” means as of any date, Consolidated Total Debt that
(x) is Secured Indebtedness or (y) was incurred by any Subsidiary of the
Borrower.

“Consolidated Total Debt” means, at any date, the aggregate principal amount of
all Indebtedness (other than (x) all obligations of such Person, contingent or
otherwise, as an account party or applicant under or in respect of acceptances,
letters of credit, surety bonds or similar arrangements or (y) the liquidation
value of all redeemable preferred Equity Interests of such Person) of the
Borrower and its Subsidiaries at such date, determined on a consolidated basis
in accordance with GAAP; provided that Consolidated Total Debt shall not include
(i) Indebtedness in respect of letters of credit, except to the extent of
unreimbursed amounts thereunder; provided that any unreimbursed amount under
commercial letters of credit shall not be counted as Consolidated Total Debt
until three Business Days after such amount is drawn and (ii) Indebtedness of
Unrestricted Subsidiaries; it being understood, for the avoidance of doubt, that
obligations under Swap Contracts do not constitute Consolidated Total Debt.

 

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“Consolidated Total Net Debt” means, as of any date of determination,
Consolidated Total Debt, minus the aggregate amount of all cash and Cash
Equivalents on the balance sheet of the Borrower and its Restricted Subsidiaries
as of such date.

“Consolidated Total Net Leverage Ratio” means, with respect to any Test Period,
the ratio of (a) Consolidated Total Net Debt as of the last day of such Test
Period to (b) Consolidated EBITDA for such Test Period.

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

“Control” has the meaning set forth in the definition of “Affiliate.”

“Controlled Investment Affiliate” means, as to any Person, any other Person
which directly or indirectly is in Control of, is Controlled by, or is under
common Control with, such Person and is organized by such Person (or any Person
Controlling such Person) primarily for making, or otherwise having as its
primary activity holding or exercising Control over, equity or debt investments
in one or more companies.

“Credit Agreement Refinancing Indebtedness” means Permitted Unsecured
Refinancing Debt or other unsecured Indebtedness incurred pursuant to a
Refinancing Amendment, in each case, issued, incurred or otherwise obtained
(including by means of the extension or renewal of existing Indebtedness) in
exchange for, or to extend, renew, replace, repurchase, retire or refinance, in
whole or part, existing Loans, or any then-existing Credit Agreement Refinancing
Indebtedness (“Refinanced Debt”); provided that in each case (i) such
Indebtedness has a maturity no earlier than, and a Weighted Average Life to
Maturity equal to or greater than, the Refinanced Debt, (ii) such Indebtedness
shall not have a greater principal amount than the principal amount of the
Refinanced Debt plus accrued interest, fees, premiums (if any) and penalties
thereon and reasonable fees and expenses associated therewith, (iii) the terms
and conditions of such Indebtedness (except as otherwise provided in clause (i)
above and with respect to pricing, premiums, fees, rate floors and optional
prepayment or redemption terms) are substantially identical to, or (taken as a
whole) are no more favorable to the lenders or holders providing such
Indebtedness, than those applicable to the Refinanced Debt being refinanced
(except for (x) covenants or other provisions applicable only to periods after
the Latest Maturity Date at the time of incurrence of such Indebtedness and (y)
any Previously Absent Financial Maintenance Covenant, in which case the Lender
shall be given prompt written notice of such Previously Absent Financial
Maintenance Covenant and the Loan Documents shall be automatically and without
further action deemed modified on or prior to the date of incurrence of the
Credit Agreement Refinancing Indebtedness to include such Previously Absent
Financial Maintenance Covenant for the benefit of the Loans, it being understood
that upon the amendment of the Loan Documents to include any such Previously
Absent Financial Maintenance Covenant, any subsequent amendment, modification or
waiver to the Loan Documents as it pertains to such Previously Absent Financial
Maintenance Covenant shall only be made pursuant to Section 10.1); provided that
a certificate of a Responsible Officer delivered to the Lender at least five
Business Days prior to the incurrence of such Indebtedness, together with a
reasonably detailed description of the material terms and conditions of such
Indebtedness

 

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or drafts of the documentation relating thereto, stating that the Borrower has
determined in good faith that such terms and conditions satisfy the requirement
of this clause (iii) shall be conclusive evidence that such terms and conditions
satisfy such requirement unless the Lender notifies the Borrower within such
five Business Day period that it disagrees with such determination (including a
description of the basis upon which it disagrees) and (iv) such Refinanced Debt
shall be repaid, repurchased, retired, defeased or satisfied and discharged, all
accrued interest, fees, premiums (if any) and penalties in connection therewith
shall be paid, and all commitments thereunder terminated, on the date such
Credit Agreement Refinancing Indebtedness is issued, incurred or obtained.

“Credit Extension” means a Borrowing.

“Debtor Relief Laws” means the Bankruptcy Code of the United States and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

“Default Rate” means an interest rate equal to the rate that would otherwise be
applicable to the principal amount of the Loans or other amounts pursuant to
Section 2.08 plus 2.0%.

“Discharge of Obligations” means termination of the Commitments and payment in
full in cash in immediately available funds of all Obligations (other than
contingent indemnification obligations not yet accrued and payable).

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction and any sale or
issuance of Equity Interests in a Restricted Subsidiary) of any property by any
Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith: provided that “Disposition” and “Dispose” shall not be
deemed to include any issuance by the Borrower of any of its Equity Interests to
another person.

“Disqualified Equity Interests” means any Equity Interest that, by its terms (or
by the terms of any security or other Equity Interests into which it is
convertible or for which it is exchangeable), or upon the happening of any event
or condition (a) matures or is mandatorily redeemable (other than solely for
Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise
(except as a result of a change of control or asset sale so long as any rights
of the holders thereof upon the occurrence of a change of control or asset sale
event shall be subject to the prior repayment in full of the Loans and all other
Obligations that are accrued and payable and the termination of the
Commitments), (b) is redeemable at the option of the holder thereof (other than
solely for Qualified Equity Interests and other than as a result of a change of
control or asset sale so long as any rights of the holders thereof upon the
occurrence of a change of control or asset sale event shall be subject to the
prior repayment in full of the Loans and all other Obligations that are accrued
and payable and the termination of the Commitments), in whole or

 

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in part, (c) provides for the scheduled payments of dividends in cash or (d) is
or becomes convertible into or exchangeable for Indebtedness or any other Equity
Interests that would constitute Disqualified Equity Interests, in each case,
prior to the date that is 91 days after the Latest Maturity Date at the time of
issuance of such Equity Interests; provided that, if such Equity Interests are
issued pursuant to a plan for the benefit of employees of Parent (or any direct
or indirect parent thereof), the Borrower or the Restricted Subsidiaries or by
any such plan to such employees, such Equity Interests shall not constitute
Disqualified Equity Interests solely because it may be required to be
repurchased by the Borrower or its Restricted Subsidiaries in order to satisfy
applicable statutory or regulatory obligations.

“Dollar” and “$” mean lawful money of the United States.

“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of
the United States, any state thereof or the District of Columbia.

“Effective Yield” means, as to any Loans of any Class, the effective yield on
such Loans, taking into account the applicable interest rate margins, any
interest rate floors or similar devices and all fees, including upfront or
similar fees and OID (amortized over the shorter of (x) the original stated life
of such Loans and (y) the four years following the date of incurrence thereof)
payable generally to the lenders making such Loans, but excluding arrangement
fees, structuring fees, commitment fees, underwriting fees or other similar fees
(regardless of whether paid in whole or in part to any or all lenders) in
connection with the commitment or syndication of such Indebtedness.

“Eligible Assignee” means an any Person (other than a natural person).

“Environment” means indoor air, ambient air, surface water, groundwater,
drinking water, land surface, subsurface strata and natural resources such as
wetlands, flora and fauna.

“Environmental Laws” means any applicable Law relating to pollution, protection
of the Environment and natural resources, pollutants, contaminants, or chemicals
or any toxic or otherwise hazardous substances, wastes or materials, or the
protection of human health and safety as it relates to any of the foregoing,
including any applicable provisions of CERCLA.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of investigation and remediation,
fines, penalties or indemnities), of or relating to the Loan Parties or any of
their respective Subsidiaries directly or indirectly resulting from or based
upon (a) violation of, or liability under or relating to any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the actual or alleged presence, Release or threatened Release of any
Hazardous Materials or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

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“Equity Interests” means, with respect to any Person, all of the shares,
interests, rights, participations or other equivalents (however designated) of
capital stock of (or other ownership or profit interests or units in) such
Person and all of the warrants, options or other rights for the purchase,
acquisition or exchange from such Person of any of the foregoing (including
through convertible securities).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with a Loan Party or any Restricted Subsidiary, is treated as a
single employer under Section 414(b) or (c) of the Code, or solely for purposes
of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by a Loan Party, any Restricted Subsidiary or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party, any
Restricted Subsidiary or any ERISA Affiliate from a Multiemployer Plan or a
notification or determination that a Multiemployer Plan is insolvent; (d) the
filing by the PBGC of a notice of intent to terminate any Pension Plan, the
treatment of a Pension Plan or Multiemployer Plan amendment as a termination
under Sections 4041 or 4041A of ERISA, respectively, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
appointment of a trustee to administer any Pension Plan or Multiemployer Plan;
(f) with respect to a Pension Plan, the failure to satisfy the minimum funding
standard of Section 412 of the Code or Section 302, 303 or 304 of ERISA, whether
or not waived; (g) any Foreign Benefit Event; (h) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon a Loan Party, any Restricted
Subsidiary or any ERISA Affiliate; (i) a determination that any Pension Plan is
in “at-risk” status (within the meaning of Section 430 of the Code or Section
303 of ERISA); (j) a determination that any Multiemployer Plan is in endangered
or critical status (within the meaning of Section 432 of the Code or Section 305
of ERISA) or (k) the occurrence of a non-exempt “prohibited transaction” (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code) in
connection with a Plan, which could reasonably be expected to result in the
incurrence of any liability by a Loan Party or any Restricted Subsidiary under
Title I of ERISA, or the imposition on a Loan Party or any Restricted Subsidiary
Subsidiaries of any excise tax under Section 4975 of the Code.

“Event of Default” has the meaning set forth in Section 8.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Contribution” means net cash proceeds, marketable securities or
Qualified Proceeds received by the Borrower from:

(1) contributions to its common equity capital;

 

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(2) dividends, distributions, fees and other payments (A) from Unrestricted
Subsidiaries and any of their Subsidiaries, (B) received in respect of any
minority investments and (C) from any joint ventures that are not Restricted
Subsidiaries; and

(3) the sale (other than to the Borrower or a Subsidiary of the Borrower or to
any management equity plan or stock option plan or any other management or
employee benefit plan or agreement of the Borrower) of Equity Interests (other
than Disqualified Equity Interests and preferred stock) of Parent (or any direct
or indirect parent of the Borrower);

in each case, to the extent designated as Excluded Contributions by the Borrower
within 180 days of the date such capital contributions are made, such dividends,
distributions, fees or other payments are paid, or the date such Equity
Interests are sold, as the case may be.

“Excluded Subsidiary” means (a) any Subsidiary that is not a wholly owned
Subsidiary of the Borrower or a Guarantor, (b) any Immaterial Subsidiary, (c)
any Subsidiary that is prohibited by applicable Law or Contractual Obligations
(including, in the case of Contractual Obligations constituting Indebtedness
existing on the Closing Date, pursuant to any documentation with respect to any
Permitted Refinancing thereof) existing on the Closing Date (or, in the case of
any newly acquired Subsidiary, in existence at the time of acquisition but not
entered into in contemplation thereof) from guaranteeing the Obligations or if
guaranteeing the Obligations would require governmental (including regulatory)
consent, approval, license or authorization (unless such consent, approval,
license or authorization has been obtained), (d) any other Subsidiary with
respect to which, in the reasonable judgment of the Lender, in consultation with
the Borrower, the burden or cost or other consequences (including any material
adverse tax consequences) of providing a Guarantee shall be excessive in view of
the benefits to be obtained by the Lender therefrom, (e) any direct or indirect
Foreign Subsidiary of the Borrower, (f) any not-for-profit Subsidiaries, (g) any
Unrestricted Subsidiaries, (h) any direct or indirect Domestic Subsidiary
substantially all of the assets of which consist, directly or indirectly, of the
Equity Interests and/or Indebtedness of one or more Foreign Subsidiaries that
are “controlled foreign corporations” within the meaning of Section 957 of the
Code, (i) any Domestic Subsidiary that is a direct or indirect Subsidiary of a
Foreign Subsidiary or of a Domestic Subsidiary described in clause (h) above and
(j) any captive insurance subsidiaries and (k) any Specified Property Owning
Entities. The Excluded Subsidiaries as of the Closing Date are listed on
Schedule 1.01D.

“Existing Corp Credit Facility” means the Credit Agreement dated as of November
18, 2013, as amended, among Parent, the lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent.

“Existing Loan Tranche” has the meaning set forth in Section 2.16(a).

“Existing REIT Revolving Credit Facility” means the Credit Agreement dated as of
November 18, 2013, as amended, among the Borrower, the lenders party thereto and
JPMorgan Chase Bank, N.A., as administrative agent.

“Extended Loans” has the meaning set forth in Section 2.16(a).

 

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“Extension” means the establishment of an Extension Series by amending a Loan
pursuant to Section 2.16 and the applicable Extension Amendment.

“Extension Amendment” has the meaning set forth in Section 2.16(d).

“Extension Request” means any Loan Extension Request.

“Extension Series” means any Loan Extension Series.

“Facility” means the Initial Loans, a given Class of Incremental Loans, a given
Refinancing Series of Refinancing Loans or a given Extension Series of Extended
Loans, as the context may require.

“FATCA” means Sections 1471 through 1474 of the Code (including, for the
avoidance of doubt, any agreements entered into pursuant to Section 1471(b)(1)
of the Code), as of the Closing Date (and any amended or successor version
thereof that is substantively comparable and not materially more onerous to
comply with), any current or future United States Department of the Treasury
regulations or other official administrative guidance promulgated thereunder and
any intergovernmental agreements entered into in connection with the
implementation thereof.

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers on such
day, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York; provided that to the extent that the interest rate determined
by the foregoing provision of this definition is negative, such interest rate
shall be deemed to be 0.00%; provided further that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published for any day
that is a Business Day, the average of the quotations for the day for such
transactions received by the Lender from three federal funds brokers of
recognized standing selected by it.

“FFO Builder Basket” means the sum of (without duplication):

(1) 95% of the aggregate amount of the Funds From Operations (or, if the Funds
From Operations is a loss, minus 100% of the amount of such loss) accrued on a
cumulative basis during the period (taken as one accounting period) beginning on
January 1, 2015 and ending on the last day of the last fiscal quarter preceding
the Transaction Date for which reports have been filed with the SEC or provided
to the Lender pursuant to Section 6.01, plus

(2) 100% of the sum of (A) the aggregate of the Borrower Attributable Proceeds
after the Senior Notes Issue Date from the issuance and sale of the Borrower’s
Equity Interests or any options, warrants or other rights to acquire Equity
Interests of the Borrower and (B) the aggregate Net Cash Proceeds or the fair
market value of other property received from the issuance or sale of convertible
or exchangeable indebtedness of the Borrower upon conversion or exchange of such
Indebtedness into Equity Interests and (C) contributions to the equity capital
of the Borrower by any Person other than a Restricted Subsidiary, exclusive of
(i) any Disqualified Equity Interests, (ii) any options,

 

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warrants or other rights that are redeemable at the option of the holder for
cash or Indebtedness, or are required to be redeemed, prior to the stated
maturity of the Senior Notes or (iii) issuances and sales to Parent, other than
the Borrower Attributable Proceeds from the sale of paired shares in an offering
of Equity Interests, plus

(3) an amount equal to the net reduction in Investments made pursuant to Section
7.02(u) in any Person after the Senior Notes Issue Date resulting from payments
of interest on Indebtedness, dividends, repayments of loans or advances, or
other transfers of assets, in each case to the Borrower or any of the Restricted
Subsidiaries or from the Net Cash Proceeds from the sale of any such Investment
(except, in each case, to the extent any such payment or proceeds are included
in the calculation of Funds From Operations) or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of “Investments”, set forth in the New Senior Notes
Indenture as of the date hereof) not to exceed, in each case, the amount of
Investments previously made by the Borrower and the Restricted Subsidiaries in
such Person or Unrestricted Subsidiary pursuant to Section 7.02(u), plus

(4) the fair market value of non-cash tangible assets or Equity Interests
acquired in exchange for an issuance of Equity Interests (other than
Disqualified Equity Interests) of the Borrower, in each case, on or subsequent
to January 1, 2015, plus

(5) without duplication, in the event the Borrower or any Restricted Subsidiary
makes any Investment in a Person that, as a result of or in connection with such
Investment, becomes a Restricted Subsidiary, an amount not to exceed the amount
of Investments previously made by the Borrower and the Restricted Subsidiaries
in such Person pursuant to Section 7.02(u), minus

(6) any amount of the FFO Builder Basket used to make Investments pursuant to
Section 7.02(u) after the Closing Date and prior to such time, minus

(7) any amount of the FFO Builder Basket used to pay dividends or make
distributions or other Restricted Payments pursuant to Section 7.06(h) after the
Closing Date and prior to such time, minus

(8) any amount of the FFO Builder Basket used to make payments or distributions
in respect of Junior Financings pursuant to Section 7.13(a)(iv) after the
Closing Date and prior to such time.

“Foreign Benefit Event” means, with respect to any Foreign Pension Plan, (a) the
existence of unfunded liabilities in excess of the amount permitted under any
applicable Law or in excess of the amount that would be permitted absent a
waiver from applicable Governmental Authority, (b) the failure to make the
required contributions or payments, under any applicable Law, on or before the
due date for such contributions or payments, (c) the receipt of a notice by a
Governmental Authority relating to the intention to terminate any such Foreign
Pension Plan or to appoint a trustee or similar official to administer any such
Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension
Plan, (d) the incurrence of any liability by a Loan Party or any Restricted
Subsidiary under applicable Law on account of the complete or partial

 

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termination of such Foreign Pension Plan or the complete or partial withdrawal
of any participating employer therein, or (e) the occurrence of any transaction
that is prohibited under any applicable Law and that could reasonably be
expected to result in the incurrence of any liability by a Loan Party or any
Restricted Subsidiary, or the imposition on a Loan Party or any Restricted
Subsidiary of any fine, excise tax or penalty resulting from any noncompliance
with any applicable Law.

“Foreign Pension Plan” means any benefit plan that under applicable Law is
required to be funded through a trust or other funding vehicle other than a
trust or funding vehicle maintained exclusively by a Governmental Authority.

“Foreign Subsidiary” means any direct or indirect Restricted Subsidiary of the
Borrower that is not a Domestic Subsidiary.

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

“Fund” means any Person (other than a natural person) that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course.

“Funds From Operations” for any period means the consolidated net income
attributable to the Borrower and the Restricted Subsidiaries for such period
determined in conformity with GAAP, plus depreciation and amortization
(excluding amortization of deferred financing costs and debt discounts) and
impairment losses.

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time; provided, however, that (i) if the
Borrower notifies the Lender that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the
Closing Date in GAAP or in the application thereof on the operation of such
provision, regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith, (ii) GAAP shall be
construed, and all computations of amounts and ratios referred to herein shall
be made, without giving effect to any election under FASB ASC Topic 825 (or any
other Financial Accounting Standard having a similar result or effect) to value
any Indebtedness or other liabilities of the Borrower or any of its Subsidiaries
at “fair value,” as defined therein, and Indebtedness shall be measured at the
aggregate principal amount thereof, and (iii) the accounting for operating
leases and capital leases under GAAP as in effect on the date hereof (including,
without limitation, Accounting Standards Codification 840) shall apply for the
purposes of determining compliance with the provisions of this Agreement,
including the definition of Capitalized Leases and obligations in respect
thereof.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

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“Gross Income from Operations” means the sum of (i) rent payments made under the
Operating Leases received by or on behalf of Borrower or any Restricted
Subsidiary of Borrower and (ii) that portion of the Gross Income from Property
Operations received by or on behalf of Borrower or any Restricted Subsidiary of
Borrower.

“Gross Income from Property Operations” means, without duplication, all income
and proceeds (whether in cash or on credit, and computed on an accrual basis)
received by the Borrower, any of the Restricted Subsidiaries or by the Manager
on behalf of the Borrower and the Restricted Subsidiaries, for the use,
occupancy or enjoyment, or license to use, occupy or enjoy the Properties, or
any part thereof, or received by the Borrower, any of the Restricted
Subsidiaries or by Manager on behalf of the Borrower or any of the Restricted
Subsidiaries for the sale of any goods, services or other items sold on or
provided from the Properties in the ordinary course of the operation of the
Properties, including, without limitation: (a) all income and proceeds received
from rental of rooms, Leases and commercial space, meeting, conference and/or
banquet space within the Properties, if any, including parking revenue; (b) all
income and proceeds received from food and beverage operations and from catering
services conducted from the Properties, if any, even though rendered outside of
the Properties; (c) all income and proceeds from business interruption, rental
interruption and use and occupancy insurance with respect to the operation of
the Properties (after deducting therefrom all necessary costs and expenses
incurred in the adjustment or collection thereof); (d) all Awards for temporary
use (after deducting therefrom all costs incurred in the adjustment or
collection thereof and in Restoration of the Properties); (e) all income and
proceeds from judgments, settlements and other resolutions of disputes with
respect to matters which would be includable in this definition of “Gross Income
from Property Operations” if received in the ordinary course of the operation of
the Properties (after deducting therefrom all necessary costs and expenses
incurred in the adjustment or collection thereof); (f) interest on credit
accounts, rent concessions or credits, and other required pass-throughs; and (g)
all other income from operation of the Properties, including, without
limitation, laundry and vending income; but excluding, (1) gross receipts
received by lessees (other than Operating Lessee), licensees or concessionaires
of the Properties; (2) consideration received at the Properties for hotel
accommodations, goods and services to be provided at other hotels not
constituting directly or indirectly, a portion of the Properties, although
arranged by, for or on behalf of the Borrower or any of the Restricted
Subsidiaries or the Manager; (3) income and proceeds from the sale or other
disposition of goods, capital assets and other items not in the ordinary course
of operation of the Properties; (4) Hotel Taxes; (5) Awards (except to the
extent provided in clause (d) above); (6) refunds of amounts not included in
Property Operating Expenses at any time and uncollectible accounts; (7)
gratuities collected by the employees at the Properties; (8) the proceeds of any
permitted financing; (9) other income or proceeds resulting other than from the
use or occupancy of the Properties, or any part thereof, or other than from the
sale of goods, services or other items sold on or provided from the Properties
in the ordinary course of business; (10) any credits or refunds made to
customers, guests or patrons in the form of allowances or adjustments to
previously recorded revenues; (11) rent payments made and received under the
Operating Leases; and (12) proceeds from the sale of any of the Properties,
including Net Proceeds from Dispositions.

 

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“Ground Leases” means each of

(1) with respect to the Property located at 8 East Swedesford Road in Malvern,
Pennsylvania, that certain Ground Lease by and between Morelli Enterprises, LP
and Boulevard Motel Corp. as ground lessee, dated May 14, 1997, as amended by
the Amendment to Ground Lease dated May 14, 1997, the Second Amendment to Ground
Lease dated September 29, 1997, the Third Amendment to Purchase Agreement dated
November 10, 1997 and the Fourth Amendment of Ground Lease dated as of
August 29, 2003, of which a certain Short Form Memorandum, dated January 10,
2001, was recorded in the Recorder’s Office of Chester County, Pennsylvania on
February 12, 2001, in Book 4895 Page 1908, and that certain Amended Short Form
of Memorandum of Lease dated as of June 16, 2003, recorded in the Recorder’s
Office of Chester County, Pennsylvania, as assigned from Boulevard Motel Corp.
to BRE/Homestead Portfolio L.L.C. (n/k/a ESH/Homestead Portfolio L.L.C.)
pursuant to that certain Assignment and Assumption of Lease, dated as of June
17, 2003, and as modified by that certain Estoppel Certificate given by Ground
Lessor to BRE/Homestead Portfolio L.L.C. dated as of July 20, 2005;

(2) with respect to the Property located at One Plaza Drive in Secaucus, New
Jersey, that certain Ground Lease by and between Meadow Park Associates and
Boulevard Motel Corp. dated March 9, 1998, as amended by that certain First
Amendment of Lease dated as of May 8, 1998, of which a certain Memorandum of
Lease was recorded in the Recorder’s Office of Hudson County, New Jersey on
November 9, 2000, in Deed Book 5711 Page 295, as assigned from Boulevard Motel
Corp. to BRE/Homestead Portfolio L.L.C. (n/k/a ESH/Homestead Portfolio L.L.C.)
pursuant to that certain Assignment and Assumption of Lease, dated as of June
16, 2003, as consented to by Meadow Park Associates;

(3) with respect to the Property located at 3045 South Maryland Parkway in Las
Vegas, Nevada, that certain Ground Lease Agreement by and between Homestead
Village Incorporated and PH Homestead LLC, as successor in interest to Paradise
Homes, dated June 23, 1997, of which a certain Memorandum of Lease, dated June
23, 1997, was recorded in the Official Records of Clark County, Nevada on June
23, 1997, in Book 970623, Instrument Number 01580, as assigned by Homestead
Village Incorporated to ESH/HV Properties L.L.C. pursuant to that certain
Assignment and Assumption of Lease dated November 20, 2001, recorded in the
Official Records of Clark County, Nevada on December 4, 2001, in Book 20011204,
Instrument Number 01940;

(4) with respect to the Property located at 45 Glimcher Realty Way in Elizabeth,
New Jersey, that certain Master Lease dated December 5, 1997, by and between
Elizabeth Metromall Urban Renewal, Inc. and Elizabeth Metromall LLC, a Delaware
limited liability company (“Master Tenant”), as ground lessee, recorded in the
Office of the County Clerk of Union County, New Jersey, in Book 4604 page 148,
as amended and restated by that certain Amended and Restated Master Lease by and
between Elizabeth Metromall Urban Renewal, Inc. and Master Tenant, dated June 4,
1998, recorded in the Office of the County Clerk of Union County, New Jersey, in
Book 4674 page 183, as amended by First Amendment to the Amended and Restated
Master Lease dated December 8, 2000, as partially assigned by that certain
Partial Assignment of

 

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Amended and Restated Lease dated June 4, 1998, from Master Tenant to Jersey
Gardens Center LLC, a Delaware limited liability company (“Jersey Gardens”),
recorded in the Office of the County Clerk of Union County, New Jersey, in Book
4674 page 212 and rerecorded in the same Office in Book 4679 page 137, a portion
of such partial assignment further assigned by that certain Assignment of
Partial Leasehold under Amended and Restated Master Lease dated December 8,
2000, from Jersey Gardens to ESA 2653, Inc., a New Jersey corporation, recorded
in the Office of the County Clerk of Union County, New Jersey, in Book 5076 page
285 and as assigned to BRE/ESA Properties L.L.C. pursuant to that certain
Assignment of Ground Lease dated as of May 11, 2004, as further assigned to
BRE/ESA P Portfolio L.L.C. pursuant to that certain Ground Lease Assignment
dated as of July 11, 2005;

(5) with respect to the Property located at 2504 North Carolina Highway 54 in
Durham, North Carolina, that certain Ground Lease by and between Claude A. Adams
III and Studio Plus Properties, Inc., as ground lessee, dated August 28, 1995,
as assigned to BRE/ESA TX Properties L.P. pursuant to that certain Ground Lease
Assignment dated as of May 11, 2004; and

(6) such other ground leases entered into by the Borrower or any Restricted
Subsidiary from time to time.

“Guarantee” means, as to any Person, without duplication, (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other monetary obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other monetary obligation, (ii) to purchase or
lease property, securities or services for the purpose of assuring the obligee
in respect of such Indebtedness or other monetary obligation of the payment or
performance of such Indebtedness or other monetary obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to enable
the primary obligor to pay such Indebtedness or other monetary obligation, or
(iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other monetary obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other monetary obligation of any other Person, whether or not
such Indebtedness or other monetary obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain any
such Lien); provided that the term “Guarantee” shall not include endorsements
for collection or deposit, in either case in the ordinary course of business, or
customary and reasonable indemnity obligations in effect on the Closing Date or
entered into in connection with any acquisition or disposition of assets
permitted under this Agreement (other than such obligations with respect to
Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal
to the stated or determinable amount of the related primary obligation, or
portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term “Guarantee” as a
verb has a corresponding meaning.

 

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“Guarantee Requirement” means, at any time, the requirement that, after the
Closing Date, each Restricted Subsidiary of the Borrower that is not then a
Guarantor and not an Excluded Subsidiary shall become a Guarantor and party to
this Agreement pursuant to a joinder agreement in accordance with Sections 6.11;
provided that, notwithstanding the foregoing provisions, any Restricted
Subsidiary of the Borrower that Guarantees (other than Guarantees by a Foreign
Subsidiary of Indebtedness of another Foreign Subsidiary) any Indebtedness for
borrowed money permitted under Section 7.03 with an aggregate outstanding
principal amount in excess of $100,000,000 or any Junior Financing or any
Permitted Refinancing of any of the foregoing shall be a Guarantor hereunder for
so long as it Guarantees such Indebtedness.

“Guaranteed Obligations” has the meaning set forth in Section 11.01.

“Guarantors” means, collectively, (i) the wholly owned Domestic Subsidiaries of
the Borrower (other than any Excluded Subsidiary) and (ii) those wholly owned
Domestic Subsidiaries that issue a Guaranty of the Obligations after the Closing
Date pursuant to Section 6.11 or otherwise, at the option of the Borrower,
issues a Guaranty of the Obligations after the Closing Date; provided that,
notwithstanding the foregoing clause (i), the Borrower may in its sole
discretion designate any Excluded Subsidiary as a Guarantor and comply with the
provisions of Section 6.11 with respect to such Excluded Subsidiary.

“Guaranty” means, collectively, the guaranty of the Obligations by the
Guarantors pursuant to this Agreement.

“Hazardous Materials” means all materials, pollutants, contaminants, chemicals,
compounds, constituents, substances or wastes, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls, lead, radon gas, pesticides, fungicides, fertilizers, or toxic mold
that are regulated pursuant to, or which could give rise to liability under,
applicable Environmental Law.

“Hotel Taxes” means federal, provincial, state and municipal excise, occupancy
sales and use taxes collected by or on behalf of the Borrower or any of the
Restricted Subsidiaries directly from patrons or guests of the Properties as
part of or based on the sales price of any goods, services or other items, such
as gross receipts, room, admission, cabaret or equivalent taxes and required to
be paid to a Governmental Authority.

“Immaterial Subsidiary” has the meaning set forth in Section 8.03.

“Incremental Amendment” has the meaning set forth in Section 2.14(f).

“Incremental Commitments” has the meaning set forth in Section 2.14(a).

“Incremental Facility Closing Date” has the meaning set forth in Section
2.14(d).

“Incremental Loan” has the meaning set forth in Section 2.14(b).

“Incremental Loan Request” has the meaning set forth in Section 2.14(a).

 

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“Incremental Loan-to-Value Ratio” means, with respect to any Test Period and any
specific Measurement, the percentage determined by the ratio of (a) such
Measurement as of the last day of such Test Period to (b) the quotient of (i)
the Net Operating Income for such Test Period divided by (ii) 0.0925. In making
the foregoing calculations, the adjustments set forth in clauses (1) through (6)
of the second paragraph of the definition of the Interest Coverage Ratio shall
also apply.

“Incur” means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including the incurrence or assumption of acquired Indebtedness; provided,
however, that neither the accrual of interest, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) the maximum amount (after giving effect to any prior drawings or reductions
which may have been reimbursed) of all outstanding letters of credit (including
standby and commercial), bankers’ acceptances, bank guarantees, surety bonds,
performance bonds and similar instruments issued or created by or for the
account of such Person;

(c) net obligations of such Person under any Swap Contract;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than (i) trade accounts and accrued expenses payable
in the ordinary course of business, (ii) any earn-out obligation until such
obligation becomes a liability on the balance sheet of such Person in accordance
with GAAP and (iii) accruals for payroll and other liabilities accrued in the
ordinary course);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements and mortgage,
industrial revenue bond, industrial development bond and similar financings),
whether or not such indebtedness shall have been assumed by such Person or is
limited in recourse;

(f) all Attributable Indebtedness;

(g) all obligations of such Person in respect of Disqualified Equity Interests
if and to the extent that the foregoing would constitute indebtedness or a
liability in accordance with GAAP; provided that Indebtedness of any direct or
indirect parent of the Borrower appearing upon the balance sheet of the Borrower
solely by reason of push-down accounting under GAAP shall be excluded; and

(h) to the extent not otherwise included above, all Guarantees of such Person in
respect of any of the foregoing.

 

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For all purposes hereof, the Indebtedness of any Person shall (A) include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent such Person’s
liability for such Indebtedness is otherwise expressly limited and only to the
extent such Indebtedness would be included in the calculation of Consolidated
Total Net Debt, (B) in the case of the Borrower and its Restricted Subsidiaries,
exclude all intercompany Indebtedness having a term not exceeding 364 days
(inclusive of any roll-over or extensions of terms) and made in the ordinary
course of business, and (C) exclude obligations under or in respect of operating
leases or sale-lease back transactions (except any resulting Capitalized Lease
Obligations). The amount of any net obligation under any Swap Contract on any
date shall be deemed to be the Swap Termination Value thereof as of such date.
The amount of Indebtedness of any Person for purposes of clause (e) shall be
deemed to be equal to the lesser of (i) the aggregate unpaid amount of such
Indebtedness and (ii) the fair market value of the property encumbered thereby
as determined by such Person in good faith. Notwithstanding anything in this
definition to the contrary, Indebtedness shall be calculated without giving
effect to the effects of Financial Accounting Standards Board Accounting
Standards Codification 815 and related interpretations to the extent such
effects would otherwise increase or decrease an amount of Indebtedness for any
purpose hereunder as a result of accounting for any embedded derivatives created
by the terms of such Indebtedness.

“Indemnified Taxes” means, with respect to the Lender, all Taxes other than (i)
Taxes imposed on or measured by its net income, however denominated, and
franchise (and similar) Taxes imposed in lieu of net income Taxes by a
jurisdiction (A) as a result of such recipient being organized in or having its
principal office (or, in the case of the Lender, its applicable Lending Office)
in such jurisdiction (or any political subdivision thereof), or (B) as a result
of any other connection between the Lender and such jurisdiction other than any
connections arising from executing, delivering, being a party to, engaging in
any transactions pursuant to, performing its obligations under, receiving
payments under, or enforcing, any Loan Document, (ii) Taxes attributable to the
failure by the Lender to deliver the documentation required to be delivered
pursuant to Section 3.01(d), (iii) any branch profits Taxes imposed by the
United States or any similar Tax, imposed by any jurisdiction described in
clause (i) above, (iv) in the case of the Lender, any U.S. federal withholding
Tax that is in effect on the date the Lender becomes a party to this Agreement,
or designates a new Lending Office, except to the extent the Lender (or its
assignor, if any) was entitled immediately prior to the time of designation of a
new Lending Office (or assignment) to receive additional amounts with respect to
such withholding Tax pursuant to Section 3.01, (v) any withholding Taxes imposed
under FATCA, and (vi) any U.S. federal backup withholding imposed as a result of
a failure by the Lender to deliver the form described in Section 3.01(d)(i).

“Indemnitees” has the meaning set forth in Section 10.05.

“Information” has the meaning set forth in Section 10.08.

 

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“Initial Commitment” means, as to the Lender, its obligation to make an Initial
Loan to the Borrower pursuant to Section 2.01(a) in an aggregate amount not to
exceed the amount set forth opposite the Lender’s name in Schedule 1.01A under
the caption “Initial Commitment”, as such amount may be adjusted from time to
time in accordance with this Agreement (including Section 2.14). The initial
aggregate amount of the Initial Commitments is $75,000,000.

“Initial Loans” means the term loans made by the Lender on the Closing Date to
the Borrower pursuant to Section 2.01(a).

“Intercompany Note” means a promissory note substantially in the form of Exhibit
I to the Senior REIT Credit Agreement.

“Interest Coverage Ratio” means, on any Transaction Date, the ratio of:

(a) the aggregate amount of Consolidated EBITDA for the then applicable Test
Period to

(b) the aggregate Consolidated Interest Expense during such Test Period.

In making the foregoing calculation (and without duplication),

(1) pro forma effect shall be given to any Indebtedness Incurred or repaid
during the period (“Reference Period”) commencing on the first day of the Test
Period and ending on the Transaction Date (other than Indebtedness Incurred or
repaid under a revolving credit or similar arrangement), in each case as if such
Indebtedness had been Incurred or repaid on the first day of such Reference
Period;

(2) Consolidated Interest Expense attributable to interest on any Indebtedness
(whether existing or being Incurred) computed on a pro forma basis and bearing a
floating interest rate shall be computed as if the rate in effect on the
Transaction Date (taking into account any Swap Contract applicable to such
Indebtedness if such Swap Contract has a remaining term in excess of 12 months
or, if shorter, at least equal to the remaining term of such Indebtedness) had
been the applicable rate for the entire period;

(3) pro forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to (i) the application of proceeds of any
Asset Disposition and any Indebtedness Incurred or repaid in connection with any
such Asset Acquisitions or Asset Dispositions and (ii) the Consolidated EBITDA
and Net Operating Income of any such assets acquired or disposed of) that occur
during such Reference Period or subsequent to the end of the related Test Period
as if they had occurred and such proceeds had been applied on the first day of
such Reference Period and after giving effect to Pro Forma Cost Savings;

(4) pro forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to (i) the application of proceeds of any
asset disposition and any Indebtedness Incurred or repaid in connection with any
such asset acquisitions or asset dispositions, (ii) expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Securities
Exchange Act of 1934, as

 

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amended, or any successor statute or statutes thereto, (iii) Pro Forma Cost
Savings and (iv) the Consolidated EBITDA and Net Operating Income of any such
assets acquired or disposed of) that have been made by any Person that is or has
become a Restricted Subsidiary or has been merged with or into the Borrower or
any of its Restricted Subsidiaries during such Reference Period or subsequent to
the end of the related Test Period and that would have constituted asset
dispositions or asset acquisitions during such Reference Period or subsequent to
the end of the related Test Period had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions and had occurred on
the first day of such Reference Period;

(5) the Consolidated Interest Expense attributable to discontinued operations,
as determined in accordance with GAAP, shall be excluded, but only to the extent
that the obligations giving rise to such Consolidated Interest Expense will not
be obligations of the specified Person or any of its Restricted Subsidiaries
following the Transaction Date; and

(6) interest on Indebtedness that may optionally be determined at an interest
rate based on a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rate, shall be deemed to have been based upon the rate
actually chosen, or, if not, then based upon such operational rate chosen as the
Borrower may designate. Interest on any Indebtedness under a revolving credit
facility computed on a pro forma basis shall be computed based on the average
daily balance of such Indebtedness during the applicable period except as set
forth in clause (1) of this definition. Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a Responsible Officer to be the rate of interest implicit in such Capitalized
Lease Obligation in accordance with GAAP;

provided, however, that to the extent that clause (3) or (4) of this paragraph
requires that pro forma effect be given to an Asset Acquisition or Asset
Disposition, as the case may be, such pro forma calculation shall be based upon
the four full fiscal quarters immediately preceding the Transaction Date of the
Person, or division or line of business, or one or more properties, of the
Person that is acquired or disposed of to the extent that such financial
information is available or otherwise a reasonable estimate thereof is
available.

“Interest Payment Date” means the last Business Day of each March, June,
September and December and the Maturity Date of the Facility under which such
Loan was made.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests or debt or other securities of another Person,
(b) a loan, advance or capital contribution to, Guarantee or assumption of
Indebtedness of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person excluding, in the case of the Borrower and
its Restricted Subsidiaries, Intercompany loans, advances, or Indebtedness,
having a term not exceeding 364 days (inclusive of any roll-over or extensions
of terms) and made in the ordinary course of business consistent with past
practice, or (c) the purchase or other acquisition (in one transaction or a
series of

 

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transactions) of all or substantially all of the property and assets or business
of another Person or assets constituting a business unit, line of business or
division of such Person. For purposes of covenant compliance, the amount of any
Investment at any time shall be the amount actually invested (measured at the
time made), without adjustment for subsequent increases or decreases in the
value of such Investment.

“Investors” means, individually or collectively, as the context may require,
Centerbridge, Paulson and BREP.

“IP Rights” has the meaning set forth in Section 5.17.

“Junior Financing” has the meaning set forth in Section 7.13(a).

“Junior Financing Documentation” means any documentation governing any Junior
Financing.

“Latest Maturity Date” means, at any date of determination, the latest Maturity
Date applicable to any Loan or Commitment hereunder at such time, including the
latest maturity date of any Refinancing Loan, any Refinancing Commitment, any
Extended Loan, in each case as extended in accordance with this Agreement from
time to time.

“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents, orders, decrees, injunctions or
authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority.

“Lease” means with the exception of (a) any occupancy agreement with hotel
guests at any Property, or (b) gas, oil or mineral rights leases with respect to
any Property provided such lease does not have a material adverse effect on the
business operations or value of the applicable Property, any lease, sublease or
subsublease, letting, license, concession or other agreement (whether written or
oral and whether now or hereafter in effect), including, without limitation, the
Operating Leases, pursuant to which any Person is granted a possessory interest
in, or right to use or occupy all or any portion of any space in any Property,
and every modification, amendment or other agreement relating to such lease,
sublease, subsublease, or other agreement entered into in connection with such
lease, sublease, subsublease, or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.

“Lender” has the meaning set forth in the introductory paragraph to this
Agreement and, as the context requires, includes the Lender’s successors and
assigns as permitted hereunder, each of which is referred to herein as a
“Lender.”

“Lender-Related Persons” means the Lender, together with its Affiliates, and the
officers, directors, employees, partners, agents, advisors, attorneys-in-fact
and other representatives of such Persons and Affiliates.

 

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“Lending Office” means the office or offices of the Lender as identified to the
Borrower from time to time.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to Real
Property, and any Capitalized Lease having substantially the same economic
effect as any of the foregoing).

“Loan” means an extension of credit in Dollars by a Lender to the Borrower under
Article II in the form of a Loan (including any Incremental Loan). “Loans” means
any Initial Loan or any Incremental Loan, Refinancing Loan or Extended Loan
designated as a “Loan”, as the context may require.

“Loan Documents” means, collectively, (i) this Agreement, (ii) the Notes and
(iii) any Refinancing Amendment, Incremental Amendment or Extension Amendment.

“Loan Extension Request” has the meaning set forth in Section 2.16(a).

“Loan Extension Series” has the meaning set forth in Section 2.16(a).

“Loan Increase” has the meaning set forth in Section 2.14(a).

“Loan Parties” means, collectively, the Borrower and each other Guarantor.

“Loan-to-Value Ratio” means with respect to any Test Period, the percentage
determined by the ratio of (a) Consolidated Total Debt as of the last day of
such Test Period to (b) the quotient of (i) the Net Operating Income for such
Test Period divided by (ii) 0.0925. In making the foregoing calculations, the
adjustments set forth in clauses (1) through (6) of the second paragraph of the
definition of the Interest Coverage Ratio shall also apply.

“Management Agreements” means those management agreements listed on Schedule
1.01G and those certain management agreements entered into from time to time
between a Manager, Affiliates of the Loan Parties party thereto and those other
parties thereto from time to time pursuant to which the Manager is to provide
management and other services with respect to the Properties.

“Manager” means those certain managers engaged to manage the Properties from
time to time pursuant to a Management Agreement.

“Margin Stock” has the meaning set forth in Regulation U issued by the FRB.

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

“Material Adverse Effect” means a (a) material adverse effect on the business,
operations, assets, liabilities (actual or contingent) or financial condition of
the Borrower and its Restricted Subsidiaries, taken as a whole; (b) material
adverse effect on the ability of the Loan Parties

 

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(taken as a whole) to fully and timely perform any of their payment obligations
under any Loan Document to which the Borrower or any of the Loan Parties is a
party; or (c) material adverse effect on the rights and remedies available to
the Lender under any Loan Document.

“Material Operating Leases” means (i) that certain Amended and Restated Lease
Agreement dated as of the date hereof (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time) among ESA P
Portfolio L.L.C., ESA P Portfolio MD Trust and ESH/TN Properties L.L.C.,
collectively, as Landlord, and ESA P Portfolio Operating Lessee Inc., as tenant,
and (ii) any other Operating Lease from time to time representing more than 20%
of the Properties in aggregate.

“Maturity Date” means (i) with respect to the Initial Loans, the date that is
seven years after the Closing Date, (ii) with respect to any tranche of Extended
Loans, the final maturity date applicable thereto as specified in the applicable
Extension Request accepted by the Lender, (iv) with respect to any Refinancing
Loans, the final maturity date applicable thereto as specified in the applicable
Refinancing Amendment and (v) with respect to any Incremental Loans, the final
maturity date applicable thereto as specified in the applicable Incremental
Amendment; provided, in each case, that if such date is not a Business Day, then
the applicable Maturity Date shall be the next succeeding Business Day.

“Maximum Rate” has the meaning set forth in Section 10.10.

“Measurement” means an amount of Indebtedness, Restricted Payment, Investment,
non-cash consideration received in connection with Dispositions of property or
obligations with respect to a Lien, as applicable.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Mortgage Loan Agreement” means the Loan Agreement, dated as of November 30,
2012, as amended, among the borrowers named therein, ESA P Portfolio MD Trust,
ESA Canada Administrator L.L.C., ESA Canada Properties Trust, ESA P Portfolio
Operating Lessee Inc., ESA Canada Operating Lessee Inc. and the lenders named
therein.

“Multiemployer Plan” means any employee benefit plan of the type described in
Sections 3(37) or 4001(a)(3) of ERISA, to which the Borrower, any Restricted
Subsidiary or any ERISA Affiliate makes or is obligated to make contributions,
or during the preceding six years, has made or been obligated to make
contributions.

“Net Cash Proceeds” means, with respect to any issuance or sale of Equity
Interests that is not an Asset Disposition or the sale of any Investment, the
proceeds of such issuance or sale in the form of cash or Cash Equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal but not interest, component thereof) when
received in the form of cash or Cash Equivalents (except to the extent such
obligations are financed or sold with recourse to the Borrower or any of its
Restricted Subsidiaries) and proceeds from the conversion of other property
received when converted to cash or Cash Equivalents, net of attorneys’ fees,
accountants’ fees, underwriters’ or placement agents’ fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of tax paid or payable as a result
thereof.

 

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“Net Operating Income” means for any period the amount obtained by subtracting
Operating Expenses for such period from Gross Income from Operations for such
period.

“Net Proceeds” means:

(a) 100% of the cash proceeds actually received by the Borrower or any of its
Restricted Subsidiaries (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise and including casualty insurance
settlements and condemnation awards, but in each case only as and when received)
from any Disposition or Casualty Event, net of (i) attorneys’ fees, accountants’
fees, investment banking fees, survey costs, title insurance premiums, and
related search and recording charges, transfer taxes, deed or mortgage recording
taxes, other customary expenses and brokerage, consultant and other customary
fees actually incurred in connection therewith, (ii) the principal amount,
premium or penalty, if any, interest and other amounts on any Indebtedness that
is secured by a Lien (other than a Lien that ranks pari passu with or
subordinated to the Liens securing the Obligations) on the asset subject to such
Disposition or Casualty Event and that is required to be repaid (and is timely
repaid) in connection with such Disposition or Casualty Event (other than
Indebtedness under the Loan Documents), (iii) in the case of any Disposition or
Casualty Event by a non-wholly owned Restricted Subsidiary, the pro rata portion
of the Net Proceeds thereof (calculated without regard to this clause (iii))
attributable to minority interests and not available for distribution to or for
the account of the Borrower or a wholly owned Restricted Subsidiary as a result
thereof, (iv) taxes paid or reasonably estimated to be payable as a result
thereof, and (v) the amount of any reasonable reserve established in accordance
with GAAP against any adjustment to the sale price or any liabilities (other
than any taxes deducted pursuant to clause (i) above) (x) related to any of the
applicable assets and (y) retained by the Borrower or any of the Restricted
Subsidiaries including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental matters or against
any indemnification obligations (however, the amount of any subsequent reduction
of such reserve (other than in connection with a payment in respect of any such
liability) shall be deemed to be Net Proceeds of such Disposition or Casualty
Event occurring on the date of such reduction); provided that, if no Default
exists, the Borrower may reinvest any portion of such proceeds in assets useful
for its business (which shall include any Investment permitted by this
Agreement) within 12 months of such receipt and such portion of such proceeds
shall not constitute Net Proceeds except to the extent not, within 12 months of
such receipt, so reinvested or contractually committed to be so reinvested (it
being understood that if any portion of such proceeds are not so used within
such 12-month period but within such 12-month period are contractually committed
to be used, then upon the termination of such contract or if such Net Proceeds
are not so used within 18 months of initial receipt, such remaining portion
shall constitute Net Proceeds as of the date of such termination or expiry
without giving effect to this proviso; it being further understood that such
proceeds shall constitute Net Proceeds notwithstanding any investment notice if
there is a Specified Default at the time of a proposed reinvestment unless such
proposed reinvestment is made pursuant to a binding commitment entered into at a
time when no Specified Default was continuing); provided, further, that no
proceeds realized in a single

 

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transaction or series of related transactions shall constitute Net Proceeds
unless (x) such proceeds shall exceed $35,000,000 and (y) the aggregate net
proceeds excluded under clause (x) exceeds $150,000,000 in any fiscal year (and
thereafter only net cash proceeds in excess of such amount shall constitute Net
Proceeds under this clause (a)), and

(b) 100% of the cash proceeds from the incurrence, issuance or sale by the
Borrower or any of the Restricted Subsidiaries of any Indebtedness, net of all
taxes paid or reasonably estimated to be payable as a result thereof and fees
(including investment banking fees and discounts), commissions, costs and other
expenses, in each case incurred in connection with such incurrence, issuance or
sale.

For purposes of calculating the amount of Net Proceeds, fees, commissions and
other costs and expenses payable to the Borrower or any Restricted Subsidiary
shall be disregarded.

“New Senior Notes Indenture” means the supplemental indenture, dated as March
18, 2016, among ESH Hospitality, Inc., as the issuer, the guarantors named
therein and Deutsche Bank Trust Company Americas, as the trustee.

“Note” means a promissory note of the Borrower payable to the Lender or its
registered assigns, in substantially the form of Exhibit B hereto, evidencing
the aggregate Indebtedness of the Borrower to the Lender resulting from the
Loans of each Class made by the Lender.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party and its Restricted Subsidiaries arising
under any Loan Document or otherwise with respect to any Loan, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or
Restricted Subsidiary of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding. Without limiting the generality of
the foregoing, the Obligations of the Loan Parties under the Loan Documents (and
of their Restricted Subsidiaries to the extent they have obligations under the
Loan Documents) include (a) the obligation (including Guaranteed Obligations) to
pay principal, interest, reimbursement obligations, charges, expenses, fees,
Attorney Costs, indemnities and other amounts payable by any Loan Party under
any Loan Document and (b) the obligation of any Loan Party to reimburse any
amount in respect of any of the foregoing that the Lender, in its sole
discretion, may elect to pay or advance on behalf of such Loan Party.

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

“OID” means original issue discount.

“Operating Expenses” means that portion of the Property Operating Expenses paid
by or on behalf of Borrower or any Restricted Subsidiary of Borrower.

“Operating Leases” means those operating leases listed in Schedule 1.01E and
those certain Leases entered into from time to time between the Borrower or any
Restricted Subsidiary thereof, as the lessor, and an Operating Lessee
thereunder, as lessee, with respect to the Properties.

 

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“Operating Lessee” means collectively those lessees party to the Operating
Leases or other Leases from time to time.

“Organization Documents” means (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other Charges” means all maintenance charges, impositions other than Taxes, and
any other charges, including, without limitation, vault charges and license fees
for the use of vaults, chutes and similar areas adjoining any Property, now or
hereafter levied or assessed or imposed against such Property or any part
thereof.

“Other Taxes” has the meaning set forth in Section 3.01(b).

“Parent” means Extended Stay America, Inc., a Delaware corporation.

“Participant” has the meaning set forth in Section 10.07(f).

“Participant Register” has the meaning set forth in Section 10.07(f).

“Paulson” means Paulson Advantage Plus Master Ltd., an exempted company
incorporated in the Cayman Islands with limited liability, and its Controlled
Investment Affiliates.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or
any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding six years.

“Permitted Acquisition” has the meaning set forth in Section 7.02(i).

“Permitted Holders” means each of the Investors.

“Permitted Other Debt Conditions” means that such applicable Indebtedness (i)
does not mature or have scheduled amortization payments of principal or payments
of principal and is not

 

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subject to mandatory redemption, repurchase, prepayment or sinking fund
obligations (except customary asset sale or change of control provisions that
provide for the prior repayment in full of the Loans and all other Obligations),
in each case on or prior to the Latest Maturity Date at the time such
Indebtedness is incurred and (ii) is not at any time guaranteed by any
Subsidiaries other than Subsidiaries that are Guarantors.

“Permitted Ratio Debt” means Indebtedness of the Borrower or any Restricted
Subsidiary so long as immediately after giving Pro Forma Effect thereto and to
the use of the proceeds thereof (but without netting the proceeds thereof) (i)
no Event of Default shall be continuing or result therefrom, (ii) (x) the
Loan-to-Value Ratio as of the last day of the most recently ended Test Period on
or prior to the date of determination is equal to or less than 65.0%, and (y) if
such Indebtedness is secured, the Senior Loan to Value Ratio as of the last day
of the most-recently ended Test Period on or prior to the date of determination
is equal to or less than 45.0% and (z) the Interest Coverage Ratio as of the
last day of the most recently ended Test Period on or prior to the date of
determination is equal to or greater than 2.00 to 1.00, provided that, in each
case, such Indebtedness shall (A) [reserved], (B) not have scheduled
amortization payments of principal and not be subject to mandatory redemption,
repurchase, prepayment or sinking fund obligations (except customary asset sale
or change of control provisions that provide for the prior repayment in full of
the Loans and all other Obligations), in each case on or prior to the Latest
Maturity Date at the time such Indebtedness is incurred, (C) [reserved], (D) not
be Guaranteed by any Person that is not a Loan Party and (E) have other terms
and conditions (other than maturity, pricing, rate floors, discounts, fees,
premiums and optional prepayment or redemption provisions) that in the good
faith determination of the Borrower are not materially less favorable (when
taken as a whole) to the Borrower than the terms and conditions of the Loan
Documents (when taken as a whole) (provided that a certificate of the Borrower
as to the satisfaction of the conditions described in this clause (E) delivered
at least five Business Days prior to the incurrence of such Indebtedness,
together with a reasonably detailed description of the material terms and
conditions of such Indebtedness or drafts of documentation relating thereto,
stating that the Borrower has determined in good faith that such terms and
conditions satisfy the foregoing requirements of this clause (E), shall be
conclusive unless the Lender notifies the Borrower within such five Business Day
period that it disagrees with such determination (including a description of the
basis upon which it disagrees)); provided, further, that any such Indebtedness
incurred pursuant to Section 7.03(s) of the type described in this definition by
a Restricted Subsidiary that is not a Loan Party does not exceed in the
aggregate an Incremental Loan-to-Value Ratio of the Borrower and the Restricted
Subsidiaries as of the last day of the most recently ended Test Period on or
prior to the date of determination equal to 2.0% at any time outstanding
determined at the time of incurrence.

“Permitted Refinancing” means, with respect to any Person, any modification,
refinancing, refunding, renewal, replacement or extension of any Indebtedness of
such Person; provided that (a) the principal amount (or accreted value, if
applicable) thereof does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so modified, refinanced, refunded, renewed,
replaced or extended except by an amount equal to unpaid accrued interest and
premium thereon plus other reasonable amounts paid, and fees and expenses
reasonably incurred, in connection with such modification, refinancing,
refunding, renewal, replacement or extension and by an amount equal to any
existing commitments unutilized thereunder, (b) other than with respect to a
Permitted Refinancing in respect of Indebtedness permitted pursuant to

 

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Section 7.03(e), such modification, Refinancing, refunding, renewal, replacement
or extension has a final maturity date equal to or later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being modified,
refinanced, refunded, renewed, replaced or extended, (c) other than with respect
to a Permitted Refinancing in respect of Indebtedness permitted pursuant to
Section 7.03(e), at the time thereof, no Event of Default shall have occurred
and be continuing, (d) (i) to the extent such Indebtedness being modified,
refinanced, refunded, renewed, replaced or extended is subordinated in right of
payment to the Obligations, such modification, Refinancing, refunding, renewal,
replacement or extension is subordinated in right of payment to the Obligations
on terms at least as favorable to the Lender as those contained in the
documentation governing the Indebtedness being modified, refinanced, refunded,
renewed, replaced or extended, and (ii) such modification, refinancing,
refunding, renewal, replacement or extension shall not have obligors or
contingent obligors that were not obligors or contingent obligors (or that would
not have been required to become obligors or contingent obligors) in respect of
the Indebtedness being modified, refinanced, refunded, renewed, replaced or
extended and (e) the terms of any such Indebtedness with an original principal
amount in excess of the Threshold Amount (excluding pricing, fees, premiums or
rate floors (and, if applicable, subordination terms)), are not, taken as a
whole, more favorable to the lenders providing such Indebtedness than those
applicable to the Indebtedness being so modified, refinanced, refunded, renewed,
replaced or extended (other than any covenants or any other provisions
applicable only to periods after the Latest Maturity Date as of such date).

“Permitted Unsecured Refinancing Debt” means Credit Agreement Refinancing
Indebtedness in the form of unsecured Indebtedness (including any Registered
Equivalent Notes) incurred by the Borrower in the form of one or more series of
senior unsecured notes or loans; provided that such Indebtedness (i) constitutes
Credit Agreement Refinancing Indebtedness and (ii) meets the Permitted Other
Debt Conditions.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) sponsored, maintained or contributed to by any Loan Party or,
with respect to any such plan that is subject to Section 412 of the Code or
Title IV of ERISA, any ERISA Affiliate.

“Previously Absent Financial Maintenance Covenant” means, at any time, any
financial maintenance covenant that is not included in the Loan Documents at
such time.

“Principal Amount” means the stated or principal amount of each Loan.

“Pro Forma Basis”, “Pro Forma Compliance” and “Pro Forma Effect” mean, with
respect to compliance with any test hereunder, that (A) to the extent
applicable, the adjustments set forth in clauses (1) through (6) of the second
paragraph of the definition of the Interest Coverage Ratio shall have been made
and (B) all Specified Transactions and the following transactions in connection
therewith shall be deemed to have occurred as of the first day of the applicable
period of measurement in such test: (a) income statement items (whether positive
or negative) attributable to the property or Person subject to such Specified
Transaction, (i) in the case of an

 

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Asset Disposition, shall be excluded, and (ii) in the case of an Asset
Acquisition or other Investments described in the definition of “Specified
Transaction” (to the extent permitted under this Agreement), shall be included
and (b) any retirement of Indebtedness; provided that, without limiting the
application of (A) above, the foregoing pro forma adjustments may be applied to
any such test solely to the extent that such adjustments are consistent with the
definition of Consolidated EBITDA or Net Operating Income, as applicable, and
give effect to events (including operating expense reductions) that are (as
determined by the Borrower in good faith) (i)(x) directly attributable to such
transaction, (y) expected to have a continuing impact on the Borrower and the
Restricted Subsidiaries and (z) factually supportable or (ii) otherwise
consistent with Section 1.10.

“Pro Forma Cost Savings” means, with respect to any period, the reductions in
costs (including such reductions resulting from employee terminations,
facilities consolidations and closings, standardization of employee benefits and
compensation policies, consolidation of property, casualty and other insurance
coverage and policies, standardization of sales and distribution methods,
reductions in taxes other than income taxes) that occurred during such period
that are (1) directly attributable to an acquisition or (2) implemented and that
are factually supportable and reasonably quantifiable, as if, in the case of
each of clauses (1) and (2), all such reductions in costs had been effected as
of the beginning of such period, decreased by any incremental expenses incurred
or to be incurred during such period in order to achieve such reduction in
costs, all such costs to be determined in good faith by the chief financial
officer of the Borrower.

“Projections” has the meaning set forth in Section 6.01(c).

“Properties” means each parcel of Real Property, the improvements thereon and
all personal property owned, in each case, by the Borrower or any of the
Restricted Subsidiaries or leased pursuant to a Ground Lease together with all
rights pertaining to such property and improvements.

“Property Operating Expenses” means without duplication, the sum of all costs
and expenses of operating, maintaining, directing, managing and supervising the
Properties (excluding, (i) depreciation and amortization, (ii) any Capital
Expenditures in connection with the Properties and (iii) rent paid by Operating
Lessee under the Operating Leases) incurred by the Borrower or any Restricted
Subsidiary (or by the Manager on behalf of Operating Lessee pursuant to a
Management Agreement, for the account of the Borrower or any Restricted
Subsidiary), or as otherwise specifically provided therein, which are properly
attributable to the period under consideration under the Borrower or any
Restricted Subsidiary’s and/or Manager’s system of accounting, including,
without limitation: (a) the cost of all food and beverages sold or consumed, if
any, and of all necessary chinaware, glassware, linens, flatware, uniforms,
utensils and other items of a similar nature, if any, including such items
bearing the name or identifying characteristics of the hotels as the Borrower or
any Restricted Subsidiary, Operating Lessee and/or Manager shall reasonably
consider appropriate (“Operating Equipment”) and paper supplies, cleaning
materials and similar consumable items (“Operating Supplies”) placed in use
(other than reserve stocks thereof in storerooms) (Operating Equipment and
Operating Supplies shall be considered to have been placed in use when they are
transferred from the storerooms of the Properties to the appropriate operating
departments); (b) salaries and wages of personnel of the Properties (regardless
of whether such personnel are employees of the Borrower or any

 

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Restricted Subsidiary or Manager), including costs of payroll taxes and employee
benefits (which benefits may include, without limitation, a pension plan,
medical insurance, life insurance, travel accident insurance and an executive
bonus program) and the costs of moving (i) employees of the Properties whose
primary duties consist of the management of the Properties or of a recognized
department or division thereof or (ii) personnel (A) who customarily and
regularly direct the work of five (5) or more other employees of the Properties;
(B) who have authority with reference to the hiring, firing and advancement of
the employees of the Properties; (C) who customarily and regularly exercise
discretionary powers; (D) who devote at least ninety five percent (95%) of their
work time to activities which are directly and closely related to the
performance of the work described in clauses (A) through (C) of clause (ii) of
this sentence; and (E) who are not compensated on an hourly basis (the
“Executive Hotel Personnel”), their families and their belongings to the area in
which the Properties are located at the commencement of their employment at the
Properties and all other expenses not otherwise specifically referred to in this
definition which are referred to as “Administrative and General Expenses” in the
Uniform System of Accounts; (c) the cost of all other goods and services
obtained by the Borrower or any Restricted Subsidiary or Manager in connection
with its operation of the Properties including, without limitation, heat and
utilities, office supplies and all services performed by third parties,
including leasing expenses in connection with telephone and data processing
equipment, and all existing and any future installations necessary for the
operation of the improvements for hotel purposes (including, without limitation,
heating, lighting, sanitary equipment, air conditioning, laundry, refrigeration,
built-in kitchen equipment, telephone equipment, communications systems,
computer equipment and elevators, if any), Operating Equipment and existing and
any future furniture, furnishings, wall coverings, fixtures and hotel equipment
necessary for the operation of the building for hotel purposes which shall
include all equipment required for the operation of kitchens, bars, laundries,
(if any) and dry cleaning facilities (if any), office equipment, cleaning and
engineering equipment and vehicles; (d) the cost of repairs to and maintenance
of the Properties; (e) insurance premiums for general liability insurance,
workers’ compensation insurance or insurance required by similar employee
benefits acts and such business interruption or other insurance as may be
provided for protection against claims, liabilities and losses arising from the
operation of the Properties (as distinguished from any property damage insurance
on the Properties building or its contents) and losses incurred on any
self-insured risks of the foregoing types; provided that the Borrower and its
Restricted Subsidiaries and Manager have specifically approved in advance such
self-insurance or insurance is unavailable to cover such risks (premiums on
policies for more than one year will be prorated over the period of insurance
and premiums under blanket policies will be allocated among properties covered);
(f) all Taxes and Other Charges (other than federal, state or local income taxes
and franchise taxes or the equivalent) payable by or assessed against the
Borrower or any of its Restricted Subsidiaries or Manager with respect to the
operation of the Properties; (g) without duplication of any amount paid or
reimbursed under a Management Agreement, legal fees and fees of any firm of
independent certified public accounts designated from time to time by the
Borrower and the Restricted Subsidiaries (the “Independent CPA”) for services
directly related to the operation of the Properties; (h) without duplication of
any amount paid or reimbursed under a Management Agreement, the costs and
expenses of technical consultants and specialized operational experts for
specialized services in connection with non-recurring work on operational,
legal, functional, decorating, design or construction problems and activities,
including the reasonable fees of an Investors or any subsidiary of such
Investors or division in

 

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connection therewith, provided that such employment of an Investors or of any
such subsidiary or division of an Investor is approved in advance by the
Borrower and the Restricted Subsidiaries; (i) without duplication of any amount
paid or reimbursed under a Management Agreement all expenses for advertising for
the Properties and all expenses of sales promotion and public relations
activities; (j) without duplication of any amount paid or reimbursed under a
Management Agreement, all out-of-pocket expenses and disbursements determined by
the Independent CPA to have been reasonably, properly and specifically incurred
by the Borrower or any of the Restricted Subsidiaries, Manager, Investor or any
of their Affiliates pursuant to, in the course of and directly related to, the
management and operation of the Properties under a Management Agreement (without
limiting the generality of the foregoing, such charges may include all
reasonable travel, telephone, telegram, radiogram, cablegram, air express and
other incidental expenses, but, shall exclude costs relating to the offices
maintained by the Borrower or any of the Restricted Subsidiaries, Manager,
Investor or any of their Affiliates other than the offices maintained at the
Property for the management of such Property and excluding transportation costs
of the Borrower or any of the Restricted Subsidiaries, Operating Lessee, or
Manager related to meetings between the Borrower and or the Restricted
Subsidiaries and Manager with respect to administration of a Management
Agreement or of the Properties involving travel away from such party’s principal
executive offices); (k) without duplication of any amount paid or reimbursed
under a Management Agreement, the cost of any reservations system, any
accounting services or other group benefits, programs or services from time to
time made available to properties in the Borrower and the Restricted
Subsidiaries’ system; (l) the cost associated with any retail Leases and all
costs and expenses of owning, maintaining, conducting and supervising the
operation of the Properties to the extent such costs and expenses are not
included above; and (m) any management fees, basic and incentive fees or other
fees and reimbursables paid or payable to a Manager under a Management
Agreement. If the Executive Hotel Personnel are on the payroll of an Investors
or any Affiliate of an Investors, the cost of their salaries, payroll taxes and
employee benefits (which benefits, in the case of employees who are not United
States citizens or in the case of employees of hotels located outside the
continental United States may include, without limitation, in addition to the
foregoing benefits, reasonable home leave transportation expenses approved by
the Borrower and the Restricted Subsidiaries) shall be billed by said Affiliate
to and be reimbursed by the Borrower, the Restricted Subsidiaries and/or Manager
monthly, and such reimbursement shall be an Operating Expense. Except as
otherwise expressly provided under a Management Agreement with respect to
employees regularly employed at the Properties, the salaries or wages of other
employees or executives of the Investors or any of their Affiliates shall in no
event be Operating Expenses, but they shall be entitled to free room and board
and the free use of all facilities at such times as they visit any Property
exclusively in connection with the management of such Property.

“Qualified Equity Interests” means any Equity Interests that are not
Disqualified Equity Interests.

“Qualified Proceeds” means the fair market value of assets that are used or
useful in, or Equity Interests of any Person engaged in, a Similar Business.

“Real Property” means, collectively, all right, title and interest (including
any leasehold, mineral or other estate) in and to any and all parcels of or
interests in real property owned or leased by any Person, whether by lease,
license or other means, together with, in each case, all

 

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easements, hereditaments and appurtenances relating thereto, all improvements
and appurtenant fixtures and equipment, all general intangibles and contract
rights and other property and rights incidental to the ownership, lease or
operation thereof.

“Refinanced Debt” has the meaning set forth in the definition of Credit
Agreement Refinancing Indebtedness.

“Refinancing” means the repayment in full of all Indebtedness of the Borrower
and its Subsidiaries under the Existing REIT Revolving Credit Facility and the
Mortgage Loan Agreement, with the proceeds of the Senior REIT Facilities, the
Initial Loans and cash on hand and the termination and release of all
commitments, security interests and guarantees in connection therewith.

“Refinancing Amendment” means an amendment to this Agreement executed by each of
(a) the Borrower and (b) the Lender.

“Refinancing Commitments” means one or more Classes of Commitments hereunder
that are established to fund Refinancing Loans of the applicable Refinancing
Series hereunder pursuant to a Refinancing Amendment.

“Refinancing Loans” means one or more Classes of Loans hereunder that result
from a Refinancing Amendment.

“Refinancing Series” means all Refinancing Loans or Refinancing Commitments that
are established pursuant to the same Refinancing Amendment (or any subsequent
Refinancing Amendment to the extent such Refinancing Amendment expressly
provides that the Refinancing Loans or Refinancing Commitments provided for
therein are intended to be a part of any previously established Refinancing
Series) and that provide for the same Effective Yield and, in the case of
Refinancing Loans or Refinancing Commitments, amortization schedule.

“Registered Equivalent Notes” means, with respect to any notes originally issued
in an offering pursuant to Rule 144A under the Securities Act or other private
placement transaction under the Securities Act of 1933, substantially identical
notes (having the same guarantees) issued in a dollar-for-dollar exchange
therefor pursuant to an exchange offer registered with the SEC.

“REIT Distribution” has the meaning set forth in Section 7.06(d).

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, disposing or migrating in,
into, onto or through the Environment.

“Released Guarantor” has the meaning set forth in Section 11.10.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA
or the regulations issued thereunder, other than events for which the 30-day
notice period has been waived.

 

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“Request for Credit Extension” means with respect to a Borrowing a Committed
Loan Notice.

“Responsible Officer” means the chief executive officer, president, vice
president, chief financial officer, treasurer or assistant treasurer or other
similar officer of a Loan Party and, as to any document delivered on the Closing
Date, any secretary or assistant secretary of such Loan Party. Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party
shall be conclusively presumed to have been authorized by all necessary
corporate, limited liability company, partnership and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

“Restoration” means the repair and restoration of a Property after a Casualty
Event as nearly as possible to the condition the Property was in immediately
prior to such Casualty Event, with such alterations as may be made in Borrower’s
reasonable discretion.

“Restricted Debt Payment” has the meaning set forth in Section 7.13.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interest of the
Borrower or any Restricted Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, defeasance, acquisition,
cancellation or termination of any such Equity Interest, or on account of any
return of capital to the Borrower’s or a Restricted Subsidiary’s stockholders,
partners or members (or the equivalent Persons thereof).

“Restricted Subsidiary” means any Subsidiary of the Borrower other than an
Unrestricted Subsidiary.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.

“Same Day Funds” means immediately available funds.

“Sanctioned Country” means, at any time, a country or territory which is itself
the subject or target of any Sanctions (at the time of this Agreement, Crimea,
Cuba, Iran, North Korea, Sudan and Syria).

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or the U.S. Department of
State, or by the United Nations Security Council, or the European Union, (b) any
Person located, organized or resident in a Sanctioned Country or (c) any Person
owned 50% or more or controlled by any such Person or Persons described in (a)
and (b) hereof.

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by OFAC or the U.S. Department of State or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.

 

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“SEC” means the U.S. Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Secured Indebtedness” means any Indebtedness secured by a Lien on any asset or
property of the Borrower or any Restricted Subsidiary.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Loan-to-Value Ratio” means, with respect to any Test Period, the
percentage determined by the ratio of (a) Consolidated Senior Debt as of the
last day of such Test Period to (b) the quotient of (i) the Net Operating Income
for such Test Period divided by (ii) 0.0925. In making the foregoing
calculations, the adjustments set forth in clauses (1) through (6) of the second
paragraph of the definition of Interest Coverage Ratio shall also apply.

“Senior Notes” means the 5.25% senior unsecured notes due 2025 issued pursuant
to the Senior Notes Indenture.

“Senior Notes Indenture” means the indenture, dated as of May 25, 2015, among
ESH Hospitality, Inc., as the issuer, the guarantors named therein and Deutsche
Bank Trust Company Americas, as the trustee.

“Senior Notes Issue Date” means May 15, 2015.

“Senior REIT Credit Agreement” means the Credit Agreement dated as of August 30,
2016 by and among the Borrower, the other guarantors from time to time party
thereto, Deutsche Bank AG, New York Branch, as administrative agent, collateral
agent and L/C issuer, and the other lenders from time to time party thereto (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time).

“Senior REIT Facilities” means the loans and credit facilities available to the
Borrower under the Senior REIT Loan Documents.

“Senior REIT Loan Documents” means the “Loan Documents”, as defined in the
Senior REIT Credit Agreement.

“Senior REIT Revolving Credit Loans” means the “Revolving Credit Loans”, as
defined in the Senior REIT Credit Agreement.

“Similar Business” means (1) any business conducted or proposed to be conducted
by the Borrower or any of its Restricted Subsidiaries on the Closing Date, and
any reasonable extension thereof, or (2) any business or other activities that
are reasonably similar, ancillary, incidental, complementary or related to, or a
reasonable extension, development or expansion of, the businesses in which the
Borrower and its Restricted Subsidiaries are engaged or propose to be engaged on
the Closing Date.

“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the assets of such Person
and its Subsidiaries, on a consolidated basis, exceeds, on a consolidated basis,
their debts and liabilities, subordinated, contingent or

 

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otherwise, (b) the present fair saleable value of the property of such Person
and its Subsidiaries, on a consolidated basis, is greater than the amount that
will be required to pay the probable liability, on a consolidated basis, of
their debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured, (c) such Person
and its Subsidiaries, on a consolidated basis, are able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such liabilities become
absolute and matured and (d) such Person and its Subsidiaries, on a consolidated
basis, are not engaged in, and are not about to engage in, business for which
they have unreasonably small capital. The amount of any contingent liability at
any time shall be computed as the amount that would reasonably be expected to
become an actual and matured liability.

“Specified Default” means a Default under Section 8.01(a), (f) or (g).

“Specified Guarantor” means any Guarantor that is not an “eligible contract
participant” under the Commodity Exchange Act (determined prior to giving effect
to Section 11.12).

“Specified Property Owning Entities” means (i) ESA P Portfolio L.L.C., ESH/TN
Properties L.L.C., ESA LVP Portfolio LLC, ESA UD Properties L.L.C., ESA Canada
Properties Trust, ESA P Portfolio MD Trust, ESA P Portfolio MD Borrower L.L.C.
and ESA Canada Properties Borrower L.L.C. and (ii) any other wholly owned direct
Domestic Subsidiaries of the Borrower or a Guarantor, as designated by the
Borrower in a notice delivered to the Lender, who is itself the beneficial owner
of one or more of the Properties.

“Specified Transaction” means any Investment, Disposition, incurrence or
repayment of Indebtedness, Restricted Payment, Subsidiary designation or
Incremental Commitments in respect of which the terms of this Agreement require
any test to be calculated on a “Pro Forma Basis” or after giving “Pro Forma
Effect”; provided that Incremental Commitments, for purposes of this “Specified
Transaction” definition, shall be deemed to be fully drawn.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which (i) a majority of
the shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, (ii) more than half of the issued share
capital is at the time beneficially owned or (iii) the management of which is
otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower. For the avoidance of doubt, any
entity that is owned at a 50.0% or less level (as described above) shall not be
a “Subsidiary” for any purpose under this Agreement, regardless of whether such
entity is consolidated on the Borrower’s or any Restricted Subsidiary’s
financial statements.

“Subsidiary Guarantor” means any Guarantor.

“Successor Company” has the meaning set forth in Section 7.04(d).

“Swap” means, any agreement, contract, or transaction that constitutes a “swap”
within the meaning of Section 1a (47) of the Commodity Exchange Act.

 

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“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

“Swap Obligation” means, with respect to any Person, any obligation to pay or
perform under any Swap.

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

“Taxes” has the meaning set forth in Section 3.01(a).

“Test Period” means, for any date of determination under this Agreement, the
latest four consecutive fiscal quarters of the Borrower for which financial
statements have been delivered to the Lender on or prior to the Closing Date
and/or for which financial statements are required to be delivered pursuant to
Section 6.01, as applicable.

“Threshold Amount” means $50,000,000.

“Total Assets” means the total assets of the Borrower and the Restricted
Subsidiaries on a consolidated basis in accordance with GAAP, as shown on the
most recent balance sheet of the Borrower delivered pursuant to Sections 6.01(a)
or 6.01(b).

“Transaction Date” means, with respect to the Incurrence of any Indebtedness by
the Borrower or any of the Restricted Subsidiaries, the date such Indebtedness
is to be incurred and, with respect to any Restricted Payment, the date such
Restricted Payment is to be made.

“Transaction Expenses” means any fees or expenses incurred or paid by the
Borrower or any of its Subsidiaries in connection with the Transactions
(including expenses in connection with hedging transactions related to the
Facilities and any OID or upfront fees), this Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby.

 

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“Transactions” means, collectively, (a) the funding of the Initial Loans and the
execution and delivery of Loan Documents entered into on the Closing Date, (b)
the Refinancing, (c) the repayment of in full of all Indebtedness of the
Borrower and its Subsidiaries under the Existing REIT Revolving Credit Facility
with the proceeds of the Senior REIT Revolving Credit Loans made on the Closing
Date and the termination and release of all commitments, security interest and
guarantees in connection therewith, (d) the refinancing of the Existing Corp
Credit Facility and (e) the payment of Transaction Expenses.

“Transformative Transaction” means any acquisition or investment by Borrower or
any Restricted Subsidiary that is either (a) not permitted by the terms hereof
immediately prior to the consummation of such acquisition or investment or (b)
if permitted by the terms hereof immediately prior to the consummation of such
acquisition or investment, would not provide adequate flexibility to Borrower
and its Restricted Subsidiaries under this Agreement for the continuation and/or
expansion of their combined operations following such consummation, as
determined by Borrower acting in good faith.

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as the same
may from time to time be in effect in the State of New York or the Uniform
Commercial Code (or similar code or statute) of another jurisdiction, to the
extent it may be required to apply.

“Uniform System of Accounts” means the Uniform System of Accounts for Hotels
(10th edition), as adopted by the American Hotel and Motel Association.

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

“Unrestricted Subsidiary” means (i) as of the Closing Date, each Subsidiary of
the Borrower listed on Schedule 1.01F, (ii) any Subsidiary of the Borrower
designated by the board of managers of the Borrower as an Unrestricted
Subsidiary pursuant to Section 6.14 subsequent to the Closing Date and (iii) any
Subsidiary of an Unrestricted Subsidiary.

“USA PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. 107-56, Oct. 26, 2001), as amended or modified from time
to time.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing: (i) the sum of the products
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by (ii) the then outstanding principal amount of
such Indebtedness.

“wholly owned” means, with respect to a Subsidiary of a Person, a Subsidiary of
such Person all of the outstanding Equity Interests of which (other than (x)
director’s qualifying shares and (y) shares issued to foreign nationals to the
extent required by applicable Law) are owned by such Person and/or by one or
more wholly owned Subsidiaries of such Person.

 

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Section 1.02 Other Interpretive Provisions.

With reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

(b) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar
import when used in any Loan Document shall refer to such Loan Document as a
whole and not to any particular provision thereof.

(c) Article, Section, Exhibit and Schedule references are to the Loan Document
in which such reference appears.

(d) The term “including” is by way of example and not limitation.

(e) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

(f) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including”; the words “to” and
“until” each mean “to but excluding”; and the word “through” means “to and
including.”

(g) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

Section 1.03 Accounting Terms.

All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.

Section 1.04 Rounding.

Any financial ratios required to be maintained by the Borrower pursuant to this
Agreement (or required to be satisfied in order for a specific action to be
permitted under this Agreement) shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding up if there is no nearest
number).

 

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Section 1.05 References to Agreements, Laws, Etc.

Unless otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are permitted by the Loan Documents; and (b) references to any Law
shall include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such Law.

Section 1.06 Times of Day.

Unless otherwise specified, all references herein to times of day shall be
references to Eastern time (daylight or standard, as applicable).

Section 1.07 Timing of Payment or Performance.

Except as otherwise provided herein, when the payment of any obligation or the
performance of any covenant, duty or obligation is stated to be due or
performance required on a day which is not a Business Day, the date of such
payment or performance shall extend to the immediately succeeding Business Day.

Section 1.08 FFO Builder Basket Transactions.

If more than one action occurs on any given date the permissibility of the
taking of which is determined hereunder by reference to the amount of the FFO
Builder Basket immediately prior to the taking of such action, the
permissibility of the taking of each such action shall be determined
independently and in no event may any two or more such actions be treated as
occurring simultaneously.

Section 1.09 Cashless Rollovers

Notwithstanding anything to the contrary contained in this Agreement or in any
other Loan Document, to the extent that the Lender extends the maturity date of,
or replaces, renews or refinances, any of its then-existing Loans with
Incremental Loans, Refinancing Loans, Extended Loans or loans incurred under a
new credit facility, in each case, to the extent such extension, replacement,
renewal or refinancing is effected by means of a “cashless roll” by the Lender,
such extension, replacement, renewal or refinancing shall be deemed to comply
with any requirement hereunder or any other Loan Document that such payment be
made “in immediately available funds”, “in cash” or any other similar
requirement.

Section 1.10 Certain Calculations and Tests

(a) Notwithstanding anything to the contrary herein, to the extent that the
terms of this Agreement require (x) compliance with any financial ratio or test
(including any Loan-to-Value Ratio test, any Senior Loan-to-Value Ratio test,
any Interest Coverage Ratio test, any Consolidated Total Net Leverage Ratio test
or any cap expressed as a percentage of Consolidated EBITDA) or (y) the absence
of a Default or Event of Default (or any type of Default or Event of Default but
excluding any Event of Default under Sections 8.01(a), 8.01(f) or 8.01(g)) as a
condition to:

(i) (A) the making of any Investment or Disposition or (B) the consummation of
any transaction in connection with any Investment or Disposition (including the
assumption or incurrence of Indebtedness or Liens in connection therewith), the
determination of whether the relevant condition is satisfied may be made, at the
election of the Borrower, at the time of (or on the basis of the financial
statements for the most recently ended Test Period at the time of) either (I)
the execution of the definitive agreement with respect to such Investment or
Disposition or (II) the consummation of such Investment or Disposition, in each
case, after giving effect to the relevant Investment, Disposition or other
transaction and any related Indebtedness or Liens on a Pro Forma Basis;

 

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(ii) the making of any Restricted Payment, the determination of whether the
relevant condition is satisfied may be made, at the election of the Borrower, at
the time of (or on the basis of the financial statements for the most recently
ended Test Period at the time of) either (I) the declaration of such Restricted
Payment (provided that such Restricted Payment shall be made within 60 days of
such declaration) or (II) the making of such Restricted Payment, in each case,
after giving effect to the relevant Restricted Payment on a Pro Forma Basis; and

(iii) the making of any Restricted Debt Payment, the determination of whether
the relevant condition is satisfied may be made, at the election of the
Borrower, at the time of (or on the basis of the financial statements for the
most recently ended Test Period at the time of) either (I) the delivery of an
irrevocable notice of redemption or repayment or (II) the making of such
Restricted Debt Payment, in each case, after giving effect to the relevant
Restricted Debt Payment on a Pro Forma Basis.

(b) Notwithstanding the foregoing, if the Borrower has made an election to test
at the time of:

(i) the execution of the definitive agreement with respect to an Investment or
Disposition or the consummation of any transaction in connection with any
Investment or Disposition, then, in connection with any subsequent calculation
of any ratio or test on or following the relevant determination date, and prior
to the earlier of (x) the date on which such Investment or Disposition is
consummated or (y) the date that the definitive agreement for such Investment or
Disposition is terminated or expires without consummation of such Investment or
Disposition, any such ratio or test shall be calculated on (A) a Pro Forma Basis
assuming such Investment, Disposition or any transactions in connection
therewith (including any incurrence of Indebtedness, Liens and the use of
proceeds thereof) has been consummated, and (B) a standalone basis without
giving effect to such Investment or Disposition and any such transactions in
connection therewith;

(ii) the declaration of a Restricted Payment, then, in connection with any
subsequent calculation of any ratio or test on or following the relevant
determination date, and prior to the earlier of (x) the making of such
Restricted Payment and (y) the date that is 60 days after the declaration of
such Restricted Payment, any such ratio or test shall be calculated on a Pro
Forma Basis assuming such Restricted Payment has been consummated; and/or

(iii) the delivery of an irrevocable notice of redemption or repayment (which
may be conditional) in respect of a Restricted Debt Payment, then, in connection
with any subsequent calculation of any ratio or test on or following the
relevant determination date and prior to the date on which such Restricted Debt
Payment is made, any such ratio or test shall be calculated on (A) a Pro Forma
Basis assuming such Restricted Debt Payment has been consummated and (B) a
standalone basis without giving effect to such Restricted Debt Payment.

 

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(c) For purposes of determining the permissibility of any action, change,
transaction or event that requires a calculation of any financial ratio or test
(including any Loan-to-Value Ratio test, any Senior Loan-to-Value Ratio test,
any Interest Coverage Ratio test, any Consolidated Total Net Leverage Ratio test
or the amount of the FFO Builder Basket), such financial ratio or test shall be
calculated (x) as set forth in clause (a) above (if applicable), or (y) at the
time such action is taken, such change is made, such transaction is consummated
or such event occurs, as the case may be, and no Default or Event of Default
shall be deemed to have occurred solely as a result of a change in such
financial ratio or test occurring after the relevant time set forth in clause
(a) above (if applicable) or the time such action is taken, such change is made,
such transaction is consummated or such event occurs, as the case may be.

(d) Notwithstanding anything to the contrary herein, with respect to any amounts
incurred or transactions entered into (or consummated) in reliance on a
provision of this Agreement that requires compliance with a financial ratio or
test, at all times prior to the first delivery of financial statements pursuant
to Section 6.01(a) or (b), compliance shall be determined based on the pro forma
consolidated financial statements of the Borrower delivered pursuant to Section
4.01(d) hereof.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

Section 2.01 The Initial Loans. Subject to the terms and conditions set forth
herein, the Lender agrees to make to the Borrower on the Closing Date loans
denominated in Dollars in an aggregate amount not to exceed the amount of the
Lender’s Initial Commitment. Amounts borrowed under this Section 2.01(a) and
repaid or prepaid may not be reborrowed.

Section 2.02 Borrowings of Loans.

Each Borrowing shall be made upon the Borrower’s irrevocable notice to the
Lender, which may be given by telephone. Each such notice must be received by
the Lender not later than 11:00 a.m. (local time in New York City) one Business
Day prior to the requested date of any Borrowing. Each telephonic notice by the
Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery
to the Lender of a written Committed Loan Notice, appropriately completed and
signed by a Responsible Officer of the Borrower. Except as provided in Section
2.14(a), each Borrowing shall be in a minimum principal amount of

 

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$1,000,000 or a whole multiple of $500,000 in excess thereof. Each Committed
Loan Notice (whether telephonic or written) shall specify (i) the requested date
of the Borrowing (which shall be a Business Day), and (ii) the principal amount
of Loans to be borrowed.

Section 2.03 [Reserved]

Section 2.04 [Reserved].

Section 2.05 Prepayments.

(a) Optional. (i) The Borrower may, subject to Section 2.05(a)(iii) below, upon
written notice to the Lender by the Borrower, at any time or from time to time
voluntarily prepay Loans of any Class in whole or in part without premium or
penalty; provided that (1) such notice must be received by the Lender not later
than 11:00 a.m. (local time in New York City) one Business Day prior to such
prepayment; and (2) any prepayment shall be in a minimum Principal Amount of
$500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if
less, the entire Principal Amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment and the Class(es) of Loans
to be prepaid. If such notice is given by the Borrower, subject to Section
2.05(a)(iii), the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
In the case of each prepayment of the Loans pursuant to this Section 2.05(a),
the Borrower may in its sole discretion select the Borrowing or Borrowings (and
the order of maturity of principal payments) to be repaid, and such payment
shall be paid to the Lender as provided for under this Agreement.

(ii) [Reserved].

(iii) Notwithstanding anything to the contrary contained in this Agreement,
subject to the payment of any amounts owing pursuant to Section 3.05, the
Borrower may rescind any notice of prepayment under Section 2.05(a)(i) if such
prepayment would have resulted from a refinancing of all or a portion of the
applicable Facility or occurrence of another event, which refinancing or event
shall not be consummated or shall otherwise be delayed. Each prepayment of any
Class of Loans pursuant to this Section 2.05(a) shall be applied in an order of
priority to repayments thereof required pursuant to Section 2.07(a) as directed
by the Borrower and, absent such direction, shall be applied in direct order of
maturity to repayments thereof required pursuant to Section 2.07(a).

(iv) [reserved].

(v) [reserved]

(b) Mandatory. (i) [reserved]

(ii) [reserved]

(iii) [Reserved].

 

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(iv) If the Borrower or any Restricted Subsidiary incurs or issues any
Indebtedness after the Closing Date (other than Indebtedness not prohibited
under Section 7.03 (excluding Section 7.03(t))), the Borrower shall cause to be
offered to be prepaid in accordance with clause (b)(vii) below an aggregate
principal amount of Loans in an amount equal to 100% of all Net Proceeds
received therefrom on or prior to the date which is five Business Days after the
receipt by the Borrower or such Restricted Subsidiary of such Net Proceeds.

(v) [reserved].

(vi) Except with respect to Loans incurred in connection with any Refinancing
Amendment, Loan Extension Request or any Incremental Amendment (which may be
prepaid on a less than pro rata basis in accordance with their terms), each
prepayment of Loans pursuant to clause (iv) of this Section 2.05(b) shall be
applied, first, ratably to each Class of Loans then outstanding (provided that
(i) any prepayment of Loans with the Net Proceeds of Credit Agreement
Refinancing Indebtedness shall be applied solely to each applicable Class of
Refinanced Debt, and (ii) any Class of Incremental Loans, Extended Loans, or
Refinancing Loans may specify that one or more other Classes of Loans and
Incremental Loans may be prepaid prior to such Class of Incremental Loans,
Extended Loans or Refinancing Loans; provided further, with respect to each
Class of Loans, each prepayment pursuant to clause (iv) of this Section 2.05(b)
shall be applied to the scheduled installments of principal thereof following
the date of prepayment pursuant to Section 2.07(a) as directed by the Borrower,
or, absent such direction, in direct order of maturity of such installment).

(vii) The Borrower shall notify the Lender in writing of any mandatory
prepayment required to be made pursuant to this Section 2.05(b) at least four
Business Days prior to the date of such prepayment. Each such notice shall
specify the date of such prepayment and provide a reasonably detailed
calculation of the amount of such prepayment.

(viii) [reserved]

(ix) With respect to each prepayment of Loans required pursuant to Section
2.05(b), the Lender will have the right to refuse such offer of prepayment. Any
prepayment refused by the Lender may be retained by the Borrower.

(x) In connection with any mandatory prepayments by the Borrower of the Loans
pursuant to this Section 2.05(b), such prepayments shall be applied on a pro
rata basis to the then outstanding Loans of the applicable Class or Classes
being prepaid.

Notwithstanding anything to the contrary in this Section 2.05(b), (i) mandatory
prepayments in an aggregate amount not to exceed $100,000 in any one fiscal year
shall not be required to the extent that, if following such repayment, the Loan
Party would have insufficient funds to make a REIT Distribution and (ii) the
amount of any mandatory prepayment shall furthermore be reduced if the Borrower
determines in good faith that the payment of any distribution is necessary
either to maintain the Borrower’s status as a real estate investment trust under
the

 

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Code or to enable the Borrower to avoid payment of any Tax that could be avoided
by reason of a distribution by the Borrower; provided that such reduction shall
not exceed the amount needed to make such distribution or maintain such status.

Section 2.06 Termination or Reduction of Commitments.

(a) Optional. The Borrower may, upon written notice to the Lender, terminate the
unused Commitments of any Class, or from time to time permanently reduce the
unused Commitments of any Class, in each case without premium or penalty;
provided that any such notice shall be received by the Lender on the date of
termination or reduction for such Loans and (ii) any such partial reduction
shall be in a minimum aggregate amount of $5,000,000, or any whole multiple of
$1,000,000, in excess thereof or, if less, the entire amount of outstanding
Commitments of such Class. Notwithstanding the foregoing, the Borrower may
rescind or postpone any notice of termination of the Commitments if such
termination would have resulted from a refinancing of all of the applicable
Facility or occurrence of other event, which refinancing or other event shall
not be consummated or otherwise shall be delayed.

(b) Mandatory. The Initial Commitment of the Lender of each Class shall be
automatically and permanently reduced to $0 upon the funding of Initial Loans of
such Class to be made by it on the Closing Date.

Section 2.07 Repayment of Loans. The Borrower shall repay to the Lender on the
Maturity Date for the Initial Loans, the aggregate principal amount of all
Initial Loans outstanding on such date. In the event any other Incremental
Loans, Refinancing Loans or Extended Loans are made, such other Incremental
Loans, Refinancing Loans or Extended Loans, as applicable, shall be repaid by
the Borrower in the amounts and on the dates set forth in the Incremental
Amendment, Refinancing Amendment or Extension Amendment with respect thereto and
on the applicable Maturity Date thereof.

Section 2.08 Interest.

(a) Subject to the provisions of Section 2.08(b), each Loan shall bear interest
on the outstanding principal amount thereof from the applicable borrowing date
at a rate per annum equal to the Applicable Rate.

(b) During the continuance of a Default under Section 8.01(a), the Borrower
shall pay interest on past due amounts owing by it hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws. Accrued and unpaid interest on such amounts
(including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

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Section 2.09 Fees. The Borrower shall pay to the Lender such fees as shall have
been separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever (except as expressly agreed between the Borrower and
the Lender).

Section 2.10 Computation of Interest and Fees. All computations of fees and
interest shall be made on the basis of a 360-day year and actual days
elapsed. Interest shall accrue on each Loan for the day on which the Loan is
made and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid; provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.12(a), bear
interest for one day. Each determination by the Lender of an interest rate or
fee hereunder shall be conclusive and binding for all purposes, absent manifest
error.

Section 2.11 Evidence of Indebtedness.

(a) The Loans made by the Lender shall be evidenced by one or more accounts or
records maintained by the Lender in the ordinary course of business. The
accounts or records maintained by the Lender shall be prima facie evidence
absent manifest error of the amount of the Loans made by the Lender to the
Borrower and the interest and payments thereon. Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the
Obligations. Upon the request of the Lender, the Borrower shall execute and
deliver to the Lender a Note payable to the Lender, which shall evidence the
Lender’s Loans in addition to such accounts or records. The Lender may attach
schedules to its Note and endorse thereon the date, amount, currency and
maturity of its Loans and payments with respect thereto.

(b) [reserved].

(c) Entries made in good faith by the Lender in its account or accounts pursuant
to Section 2.11(a) shall be prima facie evidence of the amount of principal and
interest due and payable or to become due and payable from the Borrower to the
Lender, under this Agreement and the other Loan Documents, absent manifest
error; provided that the failure of the Lender to make an entry, or any finding
that an entry is incorrect in such account or accounts shall not limit or
otherwise affect the obligations of the Borrower under this Agreement and the
other Loan Documents.

Section 2.12 Payments Generally.

(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Lender in Dollars in Same Day Funds not later than 1:00
p.m. (local time in New York City) on the date specified herein. All payments
received by the Lender after the time specified above shall in each case be
deemed received on the next succeeding Business Day and any applicable interest
or fee shall continue to accrue.

(b) Except as otherwise provided herein, if any payment to be made by the
Borrower shall come due on a day other than a Business Day, payment shall be
made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.

 

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(c) [reserved]

(d) [reserved]

(e) [reserved]

(f) Nothing herein shall be deemed to obligate the Lender to obtain the funds
for any Loan in any particular place or manner or to constitute a representation
by the Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.

Section 2.13 [Reserved].

Section 2.14 Incremental Credit Extensions.

(a) Incremental Commitments. The Borrower may at any time or from time to time
after the Closing Date, by notice to the Lender (an “Incremental Loan Request”),
request one or more new commitments which may be in the same Facility as any
outstanding Loans of an existing Class of Loans (a “Loan Increase”) or a new
Class of term loans (collectively with any Loan Increase, the “Incremental
Commitments”).

(b) Incremental Loans. Any Incremental Commitments effected through the
establishment of new Loans made on an Incremental Facility Closing Date shall be
designated a separate Class of Incremental Commitments for all purposes of this
Agreement. On any Incremental Facility Closing Date on which any Incremental
Commitments of any Class are effected (including through any Loan Increase),
subject to the satisfaction of the terms and conditions in this Section 2.14,
the Lender shall make a Loan to the Borrower (an “Incremental Loan”) in an
amount equal to its Incremental Commitment of such Class. Notwithstanding the
foregoing, Incremental Loans may have identical terms to any of the Loans and be
treated as the same Class as any of such Loans.

(c) Incremental Loan Request. Each Incremental Loan Request from the Borrower
pursuant to this Section 2.14 shall set forth the requested amount and proposed
terms of the relevant Incremental Loans. Incremental Loans may be made by the
Lender (but the Lender will not have an obligation to make any Incremental
Commitment).

(d) Effectiveness of Incremental Amendment. The effectiveness of any Incremental
Amendment, and the Incremental Commitments thereunder, shall be subject to the
satisfaction on the date thereof (the “Incremental Facility Closing Date”) of
each of the following conditions:

(i) (x) if the proceeds of such Incremental Commitments are being used to
finance a Permitted Acquisition or other Investment permitted hereunder, no
Event of Default under Sections 8.01(a), 8.01(f) or 8.01(g) shall have occurred
and be continuing or would exist after giving effect to such Incremental
Commitments, or (y) if otherwise, no Event of Default shall have occurred and be
continuing or would exist after giving effect to such Incremental Commitments;

 

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(ii) after giving effect to such Incremental Commitments and except as set forth
in clause (i) above, the conditions of Sections 4.02(i) and 4.02(ii) shall be
satisfied (it being understood that all references to “the date of such Loan” or
similar language in such Section 4.02 shall be deemed to refer to the effective
date of such Incremental Amendment); provided that, if the proceeds of such
Incremental Commitments are being used to finance a Permitted Acquisition or
other Investment permitted hereunder, the reference in Section 4.02(i) to the
accuracy of the representations and warranties shall, to the extent agreed by
the Lender, refer to customary “specified representations” and “specified
acquisition representations”;

(iii) [reserved];

(iv) each Incremental Commitment shall be in an aggregate principal amount that
is not less than $5,000,000 and shall be in an increment of $1,000,000 (provided
that such amount may be less than $5,000,000 if such amount represents all
remaining availability under the limit set forth in Section 2.14(d)(v));

(v) the aggregate amount of the Incremental Loans (when aggregated with the
Initial Loans and with amounts incurred at or prior to such time pursuant to
Section 7.03(q)) shall not exceed the greater of (A) $300,000,000 and (B) an
unlimited amount so long as the Incremental Loan-to-Value Ratio, determined on a
Pro Forma Basis as of the last day of the most recently ended Test Period, as if
any Incremental Loans available under such Incremental Commitments had been
outstanding on the last day of such period, and, in each case, without netting
the cash proceeds of any such Incremental Loans, does not exceed 5.0%; and

(vi) to the extent reasonably requested by the Lender, the Lender shall have
received customary legal opinions, board resolutions and officers’ certificates
consistent with those delivered on the Closing Date other than changes to such
legal opinion resulting from a change in law, change in fact or change to
counsel’s form of opinion reasonably satisfactory to the Lender.

(e) Required Terms. The terms, provisions and documentation of the Incremental
Loans and Incremental Commitments of any Class shall be as agreed between the
Borrower and the Lender and, except as otherwise set forth herein, unless such
terms, provisions and documentation (other than any terms and provisions which
are applicable only after the Latest Maturity Date of the Loans existing on the
Incremental Facility Closing Date) shall be either (x) substantially identical
to the Loans existing on the Incremental Facility Closing Date or (y) no more
favorable (taken as a whole) to the Lender than under the Loans existing on the
Incremental Facility Closing Date and such terms, provisions and documentation
shall be reasonably satisfactory to the Lenders; provided that (i) to the extent
any Previously Absent Financial Maintenance Covenant and the Loan Documents
shall be automatically and without further action deemed modified on or prior to
the Incremental Facility Closing Date to include such Previously Absent
Financial Maintenance Covenant for the benefit of the Loans, it being

 

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understood that upon the amendment of the Loan Documents to include such
Previously Absent Financial Maintenance Covenant, any subsequent amendment,
modification or waiver to the Loan Documents as it pertains to such Previously
Absent Financial Maintenance Covenant shall only be permitted in the manner
detailed under Section 10.1 and (ii) Loan Increases of any Class shall be
identical to the then existing Loans of such Class. In any event:

(i) the Incremental Loans:

(A) shall rank pari passu in right of payment with the Loans,

(B) shall not mature earlier than the Latest Maturity Date of any Loans
outstanding at the time of incurrence of such Incremental Loans,

(C) shall have a Weighted Average Life to Maturity not shorter than the
remaining Weighted Average Life to Maturity of the Initial Loans,

(D) subject to clauses (e)(i)(B) and (e)(i)(C) above and clause (e)(iii) below
and Section 2.07(a), shall have an Applicable Rate determined by the Borrower
and the Lender, and

(E) may participate on a pro rata basis or less than pro rata basis (but not on
a greater than pro rata basis) in any voluntary or mandatory prepayments of
Loans hereunder, as specified in the applicable Incremental Amendment;

(ii) [reserved]; and

(iii) the Effective Yield applicable to the Incremental Loans of each Class
shall be determined by the Borrower and the Lender and shall be set forth in
each applicable Incremental Amendment; provided, however, that in the case of
any Incremental Loans obtained on or prior to the first anniversary of the
Closing Date, the Effective Yield applicable thereto (as determined on the date
of initial incurrence thereof) may not be more than 0.50% higher than the
Effective Yield applicable to the Initial Loans (as determined on such date)
unless the Applicable Rate with respect to the Initial Loans is adjusted to be
equal to such Effective Yield with respect to such Incremental Loans, minus,
0.50%.

(f) Incremental Amendment. Commitments in respect of Incremental Loans shall
become Commitments, under this Agreement pursuant to an amendment (an
“Incremental Amendment”) to this Agreement and, as appropriate, the other Loan
Documents, executed by the Borrower and the Lender.

(g) [Reserved]

(h) [Reserved].

(i) This Section 2.14 shall supersede any provisions in Section 10.01 to the
contrary.

 

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Section 2.15 Refinancing Amendments.

(a) On one or more occasions after the Closing Date, the Borrower may obtain,
from the Lender, any portion of Refinancing Loans pursuant to a Refinancing
Amendment in accordance with this Section 2.15.

(b) The effectiveness of any Refinancing Amendment shall be subject to the
satisfaction on the date thereof of each of the conditions set forth in Section
4.02 and, to the extent reasonably requested by the Lender, (i) receipt by the
Lender of customary legal opinions, board resolutions and officers’ certificates
consistent with those delivered on the Closing Date other than changes to such
legal opinions resulting from a change in law, change in fact or change to
counsel’s form of opinion reasonably satisfactory to the Lender and (ii)
reaffirmation agreements may be reasonably requested by the Lender in order to
ensure that such Credit Agreement Refinancing Indebtedness is provided with the
benefit of the applicable Loan Document.

(c) Each issuance of Credit Agreement Refinancing Indebtedness under Section
2.15(a) shall be in an aggregate principal amount that is (x) not less than
$20,000,000 and (y) an integral multiple of $1,000,000 in excess thereof.

(d) This Section 2.15 shall supersede any provisions in Section 10.01 to the
contrary.

Section 2.16 Extension of Loans.

(a) Extension of Loans. The Borrower may at any time and from time to time
request that all or a portion of the Loans of a given Class (each, an “Existing
Loan Tranche”) be amended to extend the scheduled maturity date(s) with respect
to all or a portion of any principal amount of such Loans (any such Loans which
have been so amended, “Extended Loans”) and to provide for other terms
consistent with this Section 2.16. In order to establish any Extended Loans, the
Borrower shall provide a notice to the Lender (each, a “Loan Extension Request”)
setting forth the proposed terms of the Extended Loans to be established, which
shall be identical to the Loans under the Existing Loan Tranche from which such
Extended Loans are to be amended, except that: (i) [reserved]; (ii) the
Effective Yield with respect to the Extended Loans may be different than the
Effective Yield for the Loans of such Existing Loan Tranche, in each case, to
the extent provided in the applicable Extension Amendment; (iii) the Extension
Amendment may provide for other covenants and terms that apply solely to any
period after the Latest Maturity Date that is in effect on the effective date of
the Extension Amendment (immediately prior to the establishment of such Extended
Loans); and (iv) Extended Loans may have call protection as may be agreed by the
Borrower and the Lender thereof; provided that no Extended Loans may be
optionally prepaid prior to the date on which the Loans under the Existing Loan
Tranche from which such Extended Loans were amended are repaid in full, unless
such optional prepayment is accompanied by at least a pro rata optional
prepayment of such Existing Loan Tranche; provided, however, that (A) no Default
shall have occurred and be continuing at the time a Loan Extension Request is
delivered to the Lender, (B) in no event shall the final maturity date of any
Extended Loans of a given Loan Extension Series at the time of establishment
thereof be earlier than the then Latest Maturity Date of any then existing Loans
hereunder, (C) the Weighted Average Life to Maturity of any Extended Loans of a
given Loan Extension Series at the time of establishment thereof shall be no
shorter (other than

 

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by virtue of amortization or prepayment of such Indebtedness prior to the time
of incurrence of such Extended Loans) than the remaining Weighted Average Life
to Maturity of any Existing Loan Tranche, (D) [reserved], (E) any Extended Loans
may participate on a pro rata basis or less than a pro rata basis (but not
greater than a pro rata basis) in any voluntary or mandatory repayments or
prepayments hereunder, in each case as specified in the respective Loan
Extension Request and (F) all documentation in respect of such Extension
Amendment shall be consistent with the foregoing. Any Extended Loans amended
pursuant to any Loan Extension Request shall be designated a series (each, a
“Loan Extension Series”) of Extended Loans for all purposes of this Agreement;
provided that any Extended Loans amended from an Existing Loan Tranche may, to
the extent provided in the applicable Extension Amendment, be designated as an
increase in any previously established Loan Extension Series with respect to
such Existing Loan Tranche. Each Loan Extension Series of Extended Loans
incurred under this Section 2.16 shall be in an aggregate principal amount that
is not less than $20,000,000.

(b) [Reserved].

(c) Extension Request. The Borrower shall provide the applicable Extension
Request at least three Business Days prior to the date on the Lender is required
to respond, and shall agree to such procedures, if any, as may be established
by, or acceptable to, the Lender, in each case acting reasonably to accomplish
the purposes of this Section 2.16. The Lender shall not have any obligation to
agree to have any of its Loans of any Existing Loan Tranche amended into
Extended Loans pursuant to any Extension Request. If the Lender wishes to have
all or a portion of its Loans under the Existing Loan Tranche subject to such
Extension Request amended into Extended Loans it shall notify the Borrower on or
prior to the date specified in such Extension Request of the amount of its Loans
under the Existing Loan Tranche, which it has elected to request be amended into
Extended Loans.

(d) Extension Amendment. Extended Loans shall be established pursuant to an
amendment (each, an “Extension Amendment”) to this Agreement between the
Borrower and the Lender, which shall be consistent with the provisions set forth
in Sections 2.16(a) or 2.16(b) above, respectively. The effectiveness of any
Extension Amendment shall be subject to the satisfaction on the date thereof of
each of the conditions set forth in Section 4.02 and, to the extent reasonably
requested by the Lender, receipt by the Lender of customary legal opinions,
board resolutions and officers’ certificates consistent with those delivered on
the Closing Date other than changes to such legal opinions resulting from a
change in law, change in fact or change to counsel’s form of opinion reasonably
satisfactory to the Lender.

(e) [reserved].

(f) This Section 2.16 shall supersede any provisions in Section 10.01 to the
contrary.

 

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ARTICLE III

TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

Section 3.01 Taxes.

(a) Except as provided in this Section 3.01, any and all payments made by or on
account of the Borrower or any Guarantor under any Loan Document shall be made
free and clear of and without deduction or withholding for any and all present
or future taxes, duties, levies, imposts, assessments, deductions, fees, charges
or withholdings (including backup withholding) or similar charges imposed by any
Governmental Authority including interest, penalties and additions to tax
(collectively “Taxes”), except as required by applicable Law. If the Borrower,
any Guarantor or other applicable withholding agent shall be required by any
Laws to deduct or withhold any Taxes from or in respect of any sum payable under
any Loan Document to the Lender, (A) to the extent the Tax in question is an
Indemnified Tax, the sum payable by the Borrower or such Guarantor shall be
increased as necessary so that after making all required deductions or
withholdings (including deductions or withholdings applicable to additional sums
payable under this Section 3.01), the Lender receives an amount equal to the sum
it would have received had no such deductions or withholdings been made, (B) the
applicable withholding agent shall make such deductions or withholdings, (C) the
applicable withholding agent shall pay the full amount deducted or withheld to
the relevant Governmental Authority in accordance with applicable Laws, and (D)
within 30 days after the date of such payment (or, if receipts or evidence are
not available within 30 days, as soon as possible thereafter), if the Borrower
or any Guarantor is the applicable withholding agent, shall furnish to the
Lender the original or a copy of a receipt evidencing payment thereof or other
evidence reasonably acceptable to the Lender.

(b) In addition, each Loan Party agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise, property, intangible or
mortgage recording taxes, or charges or levies of the same character, imposed by
any Governmental Authority, which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (including
additions to tax, penalties and interest related thereto) excluding, in each
case, such amounts that result from the Lender’s grant of a participation,
transfer or assignment to or designation of a new applicable Lending Office or
other office for receiving payments under any Loan Document (collectively,
“Assignment Taxes”) to the extent such Assignment Taxes result from a connection
that the Lender has with the taxing jurisdiction other than the connection
arising out of the Loan Documents or the transactions therein, except for such
Assignment Taxes resulting from assignment or participation that is requested or
required in writing by the Borrower (all such non-excluded Taxes described in
this Section 3.01(b) being hereinafter referred to as “Other Taxes”).

(c) Each Loan Party agrees to jointly and severally indemnify the Lender for (i)
the full amount of Indemnified Taxes and Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 3.01) payable by or paid by the Lender and (ii) any
reasonable expenses arising therefrom or with respect thereto, in each case
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability prepared in good faith by the Lender, accompanied by a written
statement thereof setting forth in reasonable detail the basis and calculation
of such amounts, shall be conclusive absent manifest error.

(d) The Lender shall, at such times as are reasonably requested by the Borrower,
provide the Borrower with any documentation prescribed by Law certifying as to
any

 

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entitlement of the Lender to an exemption from, or reduction in, withholding Tax
with respect to any payments to be made to the Lender under the Loan Documents.
The Lender shall, whenever a lapse in time or change in circumstances renders
such documentation obsolete or inaccurate in any respect, deliver promptly to
the Borrower updated or other appropriate documentation (including any new
documentation reasonably requested by the applicable withholding agent) or
promptly notify the Borrower in writing of its legal inability to do so. Unless
the applicable withholding agent has received forms or other documents
satisfactory to it indicating that payments under any Loan Document to or for
the Lender are not subject to withholding Tax or are subject to such Tax at a
rate reduced by an applicable tax treaty, the Borrower or other applicable
withholding agent shall withhold amounts required to be withheld by applicable
Law from such payments at the applicable statutory rate. Notwithstanding any
other provision of this Section 3.01(d), the Lender shall not be required to
deliver any form pursuant to this Section 3.01(d) that the Lender is not legally
able to deliver. Without limiting the foregoing:

(i) So long as the Lender is a United States person (as defined in Section
7701(a)(30) of the Code), it shall deliver to the Borrower on or before the date
on which it becomes a party to this Agreement two properly completed and duly
signed original copies of Internal Revenue Service Form W-9 (or any successor
form) certifying that the Lender is exempt from federal backup withholding.

(ii) If a payment made to the Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if the Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), the Lender
shall deliver to the Borrower, at the time or times prescribed by law and at
such time or times reasonably requested by the Borrower, such documentation
prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably
requested by the Borrower as may be necessary for the Borrower to comply with
its obligations under FATCA, to determine whether the Lender has or has not
complied with the Lender’s obligations under FATCA and, as necessary, to
determine the amount to deduct and withhold from such payment. Solely for
purposes of this Section 3.01(d)(iii), “FATCA” shall include any amendments made
to FATCA after the Closing Date.

(e) If the Lender claims any additional amounts payable pursuant to this Section
3.01 and Section 3.04(a), it shall, if requested by the Borrower, use its
reasonable efforts (subject to overall policy considerations of the Lender) to
change the jurisdiction of its Lending Office, if such a change would reduce any
such additional amounts (including any such additional amounts that may
thereafter accrue) and would not, in the sole determination of the Lender,
result in any unreimbursed cost or expense or be otherwise materially
disadvantageous to the Lender. The Borrower agrees to pay all reasonable costs
and expenses incurred by the Lender in connection with such change in
jurisdiction.

(f) If the Lender receives a refund in respect of any Indemnified Taxes or Other
Taxes as to which indemnification or additional amounts have been paid to it by
any Loan Party pursuant to this Section 3.01, it shall promptly remit such
refund to such Loan Party (but only to the extent of indemnification or
additional amounts paid by such Loan Party under this

 

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Section 3.01 with respect to Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses (including any Taxes) of the
Lender, and without interest (other than any interest paid by the relevant
taxing authority with respect to such refund); provided that such Loan Party,
upon the request of the Lender, agrees promptly to return such refund (plus any
penalties, interest or other charges imposed by the relevant taxing authority)
to such party in the event such party is required to repay such refund to the
relevant taxing authority. Notwithstanding anything to the contrary in this
Section 3.01(f), in no event will a Lender be required to pay any amount to a
Loan Party pursuant to this Section 3.01(f) the payment of which would place the
Lender in a less favorable net after-Tax position than the Lender would have
been if the Tax subject to indemnification and giving rise to such refund had
not been deducted, withheld or otherwise imposed and the indemnification
payments or additional amounts with respect to such Tax had never been
paid. This Section 3.01 shall not be construed to require the Lender to make
available its tax returns (or any other information relating to Taxes that it
deems confidential) to the Borrower or any other person.

Section 3.02 [Reserved].

Section 3.03 [Reserved].

Section 3.04 Increased Cost and Reduced Return; Capital Adequacy.

(a) Notwithstanding anything herein to the contrary, for all purposes under this
Agreement, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States
regulatory authorities, in each case pursuant to Basel III, shall in each case
be deemed to be a change in law, regardless of the date enacted, adopted or
issued.

(b) If the Lender determines that the introduction of any Law regarding capital
adequacy or liquidity requirements or any change therein or in the
interpretation thereof, in each case after the Closing Date, or compliance by
the Lender (or its Lending Office) therewith, has the effect of reducing the
rate of return on the capital of the Lender or any Person controlling the Lender
as a consequence of the Lender’s obligations hereunder (taking into
consideration its policies with respect to capital adequacy and liquidity and
the Lender’s desired return on capital), then from time to time upon demand of
the Lender setting forth in reasonable detail the charge and the calculation of
such reduced rate of return, the Borrower shall pay to the Lender such
additional amounts as will compensate the Lender for such reduction within 15
days after receipt of such demand.

(c) Failure or delay on the part of the Lender to demand compensation pursuant
to this Section 3.04 shall not constitute a waiver of the Lender’s right to
demand such compensation.

(d) If the Lender requests compensation under this Section 3.04, then the Lender
will, if requested by the Borrower, use commercially reasonable efforts to
designate another Lending Office for any Loan affected by such event; provided
that such efforts are made

 

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on terms that, in the reasonable judgment of the Lender, cause the Lender and
its Lending Office(s) to suffer no material economic, legal or regulatory
disadvantage; and provided, further, that nothing in this Section 3.04(e) shall
affect or postpone any of the Obligations of the Borrower or the rights of the
Lender pursuant to Sections 3.04(a) or 3.04(b).

Section 3.05 [Reserved].

Section 3.06 Matters Applicable to All Requests for Compensation.

(a) If the Lender claims compensation under this Article III it shall deliver a
certificate to the Borrower setting forth the additional amount or amounts to be
paid to it hereunder which shall be conclusive in the absence of manifest error.
In determining such amount, the Lender may use any reasonable averaging and
attribution methods.

(b) With respect to the Lender’s claim for compensation under Sections 3.01,
3.02, 3.03 or 3.04, the Borrower shall not be required to compensate the Lender
for any amount incurred more than 180 days prior to the date that the Lender
notifies the Borrower of the event that gives rise to such claim; provided that
if the circumstance giving rise to such claim is retroactive, then such 180-day
period referred to above shall be extended to include the period of retroactive
effect thereof.

Section 3.07 [Reserved].

Section 3.08 Survival.

All of the Borrower’s obligations under this Article III shall survive
termination of the Commitments and repayment of all other Obligations hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

Section 4.01 Conditions to Initial Credit Extension.

The obligation of the Lender to make a Credit Extension hereunder on the Closing
Date is subject to satisfaction of the following conditions precedent, except as
otherwise agreed between the Borrower and the Lender:

(a) The Lender’s receipt of the following, each of which shall be originals or
pdf copies or other facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party each in form and substance reasonably satisfactory to the Lender and its
legal counsel:

(i) a Committed Loan Notice in accordance with the requirements hereof;

(ii) executed counterparts of this Agreement;

 

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(iii) [reserved]

(iv) such certificates of good standing (to the extent such concept exists) from
the applicable secretary of state of the state of organization of each Loan
Party, certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party (including
a certificate attaching the Organization Documents of each Loan Party) as the
Lender may reasonably require evidencing the identity, authority and capacity of
each Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement and the other Loan Documents to which such Loan
Party is a party or is to be a party on the Closing Date;

(v) [reserved];

(vi) a solvency certificate from the chief financial officer, chief accounting
officer or other officer with equivalent duties of the Borrower (after giving
effect to the Transactions) substantially in the form attached hereto as Exhibit
C-2;

(vii) a certificate, dated the Closing Date and signed by a Responsible Officer
of the Borrower, confirming satisfaction of the conditions set forth in
Sections 4.02(i) and 4.02(ii);

(viii) [reserved]; and

(ix) copies of a recent Lien and judgment search in each jurisdiction reasonably
requested by the Lender with respect to the Loan Parties.

(b) all fees and expenses due to the Lender required to be paid on the Closing
Date and (in the case of expenses) invoiced at least three Business Days before
the Closing Date (except as otherwise reasonably agreed by the Borrower) shall
have been paid from the proceeds of the initial funding under the Facilities.

(c) The Lender shall have received reasonably satisfactory evidence that prior
to or substantially simultaneously with the initial Credit Extensions the
Refinancing has been consummated.

(d) The Lender shall have received (i) the Audited Financial Statements, (ii)
the unaudited quarterly consolidated balance sheets of the Borrower and its
Subsidiaries and Parent and its Subsidiaries as of each of March 31, 2016 and
June 30, 2016 and related consolidated statements of income, stockholders’
equity and cash flows of the Borrower and its Subsidiaries and Parent and its
Subsidiaries for the fiscal quarters ended March 31, 2016 and June 30, 2016 and
(iii) an unaudited consolidated income statement for the Borrower and its
Subsidiaries calculated on a pro forma basis after giving effect to the
Refinancing.

(e) The Lender shall have received at least three Business Days prior to the
Closing Date all documentation and other information about the Borrower and the
Guarantors required under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act that has been
requested by the Lender in writing at least 10 days prior to the Closing Date.

 

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(f) [reserved].

(g) [reserved].

(h) The Borrower and its Subsidiaries shall have delivered to the Lender
“pay-off” letters in form and substance reasonably satisfactory to the Lender in
connection with the repayment and termination of the Mortgage Loan Agreement.

Section 4.02 Conditions to All Credit Extensions.

The obligation of the Lender to honor any Request for Credit Extension other
than a Request for Credit Extension for an Incremental Loan which shall be
governed by Section 2.14(d)), including on the Closing Date, is subject to the
following conditions precedent:

(i) The representations and warranties of each Loan Party set forth in Article V
and in each other Loan Document shall be true and correct in all material
respects (except that any representation and warranty that is qualified as to
“materiality” or “Material Adverse Effect” shall be true and correct in all
respects as so qualified) on and as of the date of such Credit Extension with
the same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier
date.

(ii) No Default shall exist or would result from such proposed Credit Extension
or from the application of the proceeds therefrom.

(iii) The Lender shall have received a Request for Credit Extension in
accordance with the requirements hereof.

Each Request for Credit Extension submitted by the Borrower shall be deemed to
be a representation and warranty that the conditions specified in Sections
4.02(i) and 4.02(ii) (or, in the case of a Request for Credit Extension for an
Incremental Loan, the conditions specified in Section 2.14(d) have been
satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower and each of the Subsidiary Guarantors party hereto represent and
warrant to the Lender at the time of each Credit Extension that:

Section 5.01 Existence, Qualification and Power; Compliance with Laws.

Each Loan Party and each Restricted Subsidiary (a) is a Person duly organized or
formed, validly existing and in good standing (where relevant) under the Laws of
the jurisdiction of its

 

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incorporation or organization, (b) has all requisite power and authority to (i)
own or lease its assets and carry on its business as currently conducted and
(ii) in the case of the Loan Parties, execute, deliver and perform its
obligations under the Loan Documents to which it is a party, (c) is duly
qualified and in good standing (where relevant) under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, (d) is in compliance with
all Laws, orders, writs and injunctions and (e) has all requisite governmental
licenses, authorizations, consents and approvals to operate its business as
currently conducted; except in each case, referred to in clauses (a) (other than
with respect to the Borrower), (b)(i) (other than with respect to the Borrower),
(c), (d) and (e), to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.

Section 5.02 Authorization; No Contravention.

The execution, delivery and performance by each Loan Party of each Loan Document
to which such Person is a party, and the consummation of the Transactions, (a)
are within such Loan Party’s corporate or other powers, (b) have been duly
authorized by all necessary corporate or other organizational action, and (c) do
not (i) contravene the terms of any of such Person’s Organization Documents,
(ii) conflict with or result in any breach or contravention of, or the creation
of any Lien under, or require any payment to be made under (x) any Contractual
Obligation to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (y) any material order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject, or (iii) violate any applicable
Law; except with respect to any conflict, breach, contravention or payment (but
not creation of Liens) referred to in clause (c)(ii)(x), to the extent that such
violation, conflict, breach, contravention or payment could not reasonably be
expected to have a Material Adverse Effect.

Section 5.03 Governmental Authorization; Other Consents.

No approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other Person is necessary
or required in connection with (a) the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan
Document, or for the consummation of the Transactions, (b) [reserved], (c)
[reserved] or (d) the exercise by the Lender of its rights under the Loan
Documents except for (i) the approvals, consents, exemptions, authorizations,
actions, notices and filings which have been duly obtained, taken, given or made
and are in full force and effect (except to the extent not required to be
obtained, taken, given or made or be in full force and effect pursuant to the
Guarantee Requirements) and (ii) those approvals, consents, exemptions,
authorizations or other actions, notices or filings, the failure of which to
obtain or make could not reasonably be expected to have a Material Adverse
Effect.

Section 5.04 Binding Effect.

This Agreement and each other Loan Document has been duly executed and delivered
by each Loan Party that is a party thereto. This Agreement and each other Loan
Document constitutes a legal, valid and binding obligation of such Loan Party,
enforceable against each Loan Party that is a party thereto in accordance with
its terms, except as such enforceability may be limited by Debtor Relief Laws
and by general principles of equity.

 

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Section 5.05 Financial Statements; No Material Adverse Effect.

(a) The Audited Financial Statements fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries and Parent and its
Subsidiaries, as applicable, as of the dates thereof and their results of
operations for the periods covered thereby in accordance with GAAP consistently
applied throughout the periods covered thereby, except as otherwise expressly
noted therein.

(b) The forecasts of consolidated balance sheets and consolidated statements of
income and cash flow of the Borrower and its Subsidiaries which have been
furnished to the Lender prior to the Closing Date have been prepared in good
faith on the basis of the assumptions stated therein, which assumptions were
believed to be reasonable at the time of preparation of such forecasts, it being
understood that actual results may vary from such forecasts and that such
variations may be material.

(c) Since December 31, 2015, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

(d) As of the Closing Date, none of the Borrower or its Subsidiaries has any
material Indebtedness for borrowed money (other than (i) Indebtedness reflected
on Schedule 5.05, (ii) Indebtedness arising under the Senior REIT Facilities,
(iii) Indebtedness arising under the Senior Notes Indenture and the New Senior
Notes Indenture and (iii) Indebtedness arising under the Loan Documents).

Section 5.06 Litigation.

Except as set forth on Schedule 5.06, there are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of the Borrower or each of its
Restricted Subsidiaries, threatened in writing, at law, in equity, in
arbitration or before any Governmental Authority, by or against the Borrower or
any of its Restricted Subsidiaries or against any of their properties or
revenues that either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

Section 5.07 No Default.

No Default or Event of Default has occurred or is continuing.

Section 5.08 Ownership of Property; Liens; Real Property; Leases and Management
Agreements.

(a) The Borrower and/or each of its Restricted Subsidiaries, as applicable, has
good record title to, or valid leasehold interests in, or easements or other
limited property interests in, all Real Property necessary in the ordinary
conduct of its business, free and clear of all Liens except as set forth on
Schedule 5.08 hereto and except for Liens permitted by Section 7.01 and where
the failure to have such title or other interest could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

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(b) Except as would not have a Material Adverse Effect, (i) no Loan Party is a
party to any agreement which requires or will require such Loan Party to pay any
material property improvement plan fees or charges or requires or will require
any Loan Party to renovate, update, upgrade, repair, enhance, or improve such
Real Property as a result of the Transactions, and (ii) all Operating Leases and
Management Agreements to which any Loan Party is a party are in full force and
effect, are the legal, valid and binding obligations of each of the Loan Parties
party thereto, enforceable in accordance with their terms (subject to applicable
Debtor Relief Laws and by general principles of equity) and no consent is
required in connection with any such agreements for the consummation of the
Transactions, except as shall have been obtained prior to the Closing Date. In
addition, (A) no material rights in favor of the applicable Loan Party under any
Operating Lease or Management Agreement have been waived, canceled or
surrendered; (B) all material amounts due and payable by any Loan Party under
any Operating Lease or Management Agreement have been paid in full (except to
the extent such payment is not yet overdue); (C) no Loan Party or any of its
Subsidiaries is, to the knowledge of each Loan Party and its Subsidiaries, in
material default under any Operating Lease or Management Agreement and no Loan
Party or any of its Subsidiaries has received any notice of material default
with respect to any Operating Lease or Management Agreement; and (D) to the
knowledge of the Loan Parties, no counterparty to any Operating Lease or
Management Agreement is in material default thereunder.

Section 5.09 Environmental Matters.

Except as specifically disclosed in Schedule 5.09(a) or except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect:

(a) each Loan Party and its respective properties and operations are and, other
than any matters which have been finally resolved, have been in compliance with
all Environmental Laws, which includes obtaining, maintaining and complying with
all applicable Environmental Permits required under such Environmental Laws to
carry on the business of the Loan Parties;

(b) the Loan Parties have not received any written notice that alleges any of
them is in violation of or potentially liable under any Environmental Laws and
none of the Loan Parties nor any of the Real Property owned, leased, or operated
by any Loan Party, Subsidiary or a franchisee (subject to, in the case of such
franchised Real Property not managed by the Loan Parties or Subsidiaries or
their Affiliates, the knowledge of the Borrower) is the subject of any claims,
investigations, liens, demands, or judicial, administrative or arbitral
proceedings pending or, to the knowledge of the Borrower, threatened, under or
relating to any Environmental Law;

(c) there has been no Release of Hazardous Materials on, at, under or from any
Real Property, at any Real Property licensed to a franchisee (subject to, in the
case of such franchised Real Property not managed by the Loan Parties or
Subsidiaries or their Affiliates, the knowledge of the Borrower) or, to the
knowledge of the Borrower, any real property formerly owned, leased, or operated
by any Loan Party, Subsidiary or franchisee that could reasonably be

 

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expected to require investigation, remedial activity or corrective action or
cleanup by, or on behalf of, any Loan Party or Subsidiary or could reasonably be
expected to result in any Environmental Liability; and

(d) to the knowledge of the Borrower, there are no facts, circumstances or
conditions arising out of or relating to the Loan Parties or any of their
respective operations or any facilities currently or formerly owned, leased, or
operated by any of the Loan Parties, Subsidiaries or franchisees that could
reasonably be expected to require investigation, remedial activity or corrective
action or cleanup by, or on behalf of, any Loan Party or Subsidiary or could
reasonably be expected to result in any Environmental Liability.

Section 5.10 Taxes.

(a) Each of the Loan Parties and their respective Subsidiaries has filed or
caused to be filed all federal, state and other material tax returns and reports
that are required to have been filed and has paid all Taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property, and all other material Taxes, fees or other charges required to be
paid by it or imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the relevant Loan Party
or Subsidiary), and no Tax Lien has been filed, and, to the knowledge of the
Loan Parties, no claim is being asserted, with respect to any such Taxes, fees
or other charges.

(b) For its taxable year ended December 31, 2010, Borrower made a timely
election to be subject to tax as a real estate investment trust (a “REIT”)
pursuant to Sections 856 through 860 of the Code. Commencing with its short
taxable year ending December 31, 2010, Borrower has been organized and operated
in conformity with the requirements for qualification and taxation as a REIT,
and its proposed method of operation should enable it to continue to meet the
requirements for qualification and taxation as a REIT under the Code.

Section 5.11 ERISA Compliance.

(a) Except as set forth on Schedule 5.11(a) or as would not, either individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect, each Plan maintained by a Loan Party is in compliance with the
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder and other federal or state Laws.

(b) (i) No ERISA Event has occurred during the six year period prior to the date
on which this representation is made or deemed made or is reasonably expected to
occur; (ii) neither any Loan Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iii) neither any Loan Party nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (iv) neither

 

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any Loan Party nor any ERISA Affiliate has engaged in a transaction that could
be subject to Sections 4069 or 4212(c) of ERISA, except, with respect to each of
the foregoing clauses of this Section 5.11(b), as would not reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.

(c) With respect to each Pension Plan, the adjusted funding target attainment
percentage (as defined in Section 436 of the Code), as determined by the
applicable Pension Plan’s Enrolled Actuary under Sections 436(j) and 430(d)(2)
of the Code and all applicable regulatory guidance promulgated thereunder, would
not reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect. Neither any Loan Party nor any ERISA Affiliate
maintains or contributes to a Plan that is, or is expected to be, in at-risk
status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the
Code), in each case, except as would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.

Section 5.12 Subsidiaries; Equity Interests.

As of the Closing Date (after giving effect to the Transactions), no Loan Party
has any Subsidiaries other than those specifically disclosed in Schedule 5.12,
and all of the outstanding Equity Interests owned by the Loan Parties (or a
Subsidiary of any Loan Party) in such Subsidiaries (other than Immaterial
Subsidiaries) have been validly issued and are fully paid and all Equity
Interests owned by a Loan Party in such Subsidiaries (other than Immaterial
Subsidiaries) are owned free and clear of all Liens except any Lien that is
permitted under Section 7.01. As of the Closing Date (after giving effect to the
Transactions) there are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees or directors, directors’ qualifying shares and springing membership
interests held by independent managers) of any nature relating to any Equity
Interest of Borrower or any Subsidiary.

Section 5.13 Margin Regulations; Investment Company Act.

(a) The Borrower is not engaged nor will it engage, principally or as one of its
important activities, in the business of purchasing or carrying Margin Stock, or
extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Borrowings will be used for any purpose that violates Regulation
U of the Board of Governors of the United States Federal Reserve System.

(b) None of the Borrower, any Person Controlling the Borrower, or any of its
Restricted Subsidiaries is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.

Section 5.14 Disclosure.

To the best of the Borrower’s knowledge, no report, financial statement,
certificate or other written information furnished by or on behalf of any Loan
Party (other than projected financial information, pro forma financial
information and information of a general economic or industry nature) to the
Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan
Document (as

 

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modified or supplemented by other information so furnished), when taken as a
whole contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein (when taken as a whole),
in the light of the circumstances under which they were made, not materially
misleading. With respect to projected financial information and pro forma
financial information, the Borrower represents that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time of preparation; it being understood that such projections may vary from
actual results and that such variances may be material.

Section 5.15 Labor Matters.

Except as, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect as of the Closing Date (a) there are no strikes or other labor
disputes against the Borrower or any of its Restricted Subsidiaries pending or,
to the knowledge of the Borrower, threatened, (b) hours worked by and payment
made to employees of the Borrower or any of its Restricted Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable Laws,
(c) the Borrower and the other Loan Parties have complied with all applicable
labor laws including work authorization and immigration and (d) all payments due
from the Borrower or any of its Restricted Subsidiaries on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant party.

Section 5.16 Use of Proceeds. The proceeds of the Initial Loans shall be used
solely for (i) the repayment in full of a portion of the Indebtedness of the
Borrower and its Subsidiaries under the Mortgage Loan Agreement and to pay for
Transaction Expenses, and (ii) to the extent any portion of the proceeds of the
Initial Loans remain following application of the proceeds pursuant to the
precedent clause (i), for general corporate purposes.

Section 5.17 Intellectual Property; Licenses, Etc.

The Borrower and its Restricted Subsidiaries own, license or possess the right
to use all of the trademarks, service marks, trade names, domain names,
copyrights, patents, patent rights, trade secrets, licenses, technology,
software, know-how database rights, design rights and other intellectual
property rights (collectively, “IP Rights”) that are reasonably necessary for
the operation of their respective businesses as currently conducted, and, to the
knowledge of the Borrower, such IP Rights do not conflict with the rights of any
Person, except to the extent such failure to own, license or possess or such
conflicts, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. The business of any Loan Party or
any of their Subsidiaries as currently conducted does not infringe upon,
misappropriate or otherwise violate any IP Rights held by any Person except for
such infringements, misappropriations and violations, individually or in the
aggregate, which could not reasonably be expected to have a Material Adverse
Effect. No claim or litigation regarding any of the IP Rights is filed and
presently pending or, to the knowledge of the Borrower, presently threatened in
writing against any Loan Party or any of its Subsidiaries, which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

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Section 5.18 Solvency.

On the Closing Date, after giving effect to the Transactions, the Borrower and
its Restricted Subsidiaries, on a consolidated basis, are Solvent.

Section 5.19 [Reserved].

Section 5.20 OFAC; USA PATRIOT Act; FCPA; Anti-Corruption Laws; Sanctions.

(a) The Borrower has implemented and maintains in effect policies and procedures
reasonably designed to ensure compliance by the Borrower and its Subsidiaries
and their respective directors, officers, employees and agents with
Anti-Corruption Laws. The Borrower and its Subsidiaries and, to the knowledge of
the Borrower, their respective directors, officers, employees and agents, are in
compliance with Anti-Corruption Laws and applicable Sanctions in all material
respects.

(b) To the extent applicable, each of the Borrower and its Subsidiaries is in
compliance, in all material respects, with (i) the Trading with the Enemy Act,
as amended, the International Emergency Economic Powers Act, as amended, and
each of the foreign assets control regulations of the United States Department
of the Treasury (31 CFR Subtitle B, Chapter V, as amended) and any other
enabling legislation or executive order relating thereto and (ii) the USA
PATRIOT Act.

(c) Neither the Borrower nor any of its Subsidiaries nor, to the knowledge of
the Borrower, any director, officer, employee, agent or controlled affiliate of
the Borrower or any of its Subsidiaries that will act in any capacity in
connection with or benefit from the credit facility established hereby is a
Sanctioned Person, nor is the Borrower or any of its Subsidiaries located,
organized or resident in any country or territory that is the subject of
Sanctions.

(d) No part of the proceeds of the Loans will be used by the Borrower (i) in
violation of Anti-Corruption Laws or applicable Sanctions or (ii) for the
purpose of financing any activities or business of or with any Sanctioned
Person.

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as the Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, then from and after the Closing Date, the Borrower shall, and shall
(except in the case of the covenants set forth in Sections 6.01, 6.02 and 6.03)
cause each of its Restricted Subsidiaries to:

Section 6.01 Financial Statements.

(a) Deliver to the Lender, within 90 days after the end of each fiscal year, a
consolidated balance sheet of the Borrower and its Subsidiaries and Parent and
its consolidated Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, stockholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with GAAP, audited and accompanied by a report and opinion of
Deloitte &

 

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Touche LLP or any other independent registered public accounting firm of
nationally recognized standing, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be subject
to any “going concern” or like qualification or exception or any qualification
or exception as to the scope of such audit; provided that such report may
contain a “going concern” or like qualification or exception, or qualification
arising out of the scope of the audit, if such qualification or exception is
related to (i) an upcoming maturity date under any Indebtedness or (ii) any
potential inability to satisfy any financial covenant (whether or not such
failure has occurred);

(b) Deliver to the Lender, within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Borrower and Parent, a
consolidated balance sheet of the Borrower and its Subsidiaries and Parent and
its consolidated Subsidiaries as at the end of such fiscal quarter and the
related consolidated statements of income or operations for such fiscal quarter
and the portion of the fiscal year then ended, setting forth in comparative form
the figures for the corresponding fiscal quarter of the previous fiscal year and
the corresponding portion of the previous fiscal year, and statements of
stockholders’ equity for the current fiscal quarter and consolidated statement
of cash flows for the portion of the fiscal year then ended, setting forth in
each case in comparative form the figures for the corresponding portion of the
previous fiscal year, all in reasonable detail and certified by a Responsible
Officer of the Borrower as fairly presenting in all material respects the
financial condition, results of operations, stockholders’ equity and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes;

(c) Deliver to the Lender, no later than 90 days after the end of each fiscal
year, a detailed consolidated budget for the following fiscal year on a
quarterly basis (including a projected consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of the following fiscal year, the
related consolidated statements of projected cash flow and projected income and
a summary of the material underlying assumptions applicable thereto)
(collectively, the “Projections”), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections have been prepared in good faith on the basis of assumptions stated
therein, which assumptions were believed to be reasonable at the time of
preparation of such Projections, it being understood that actual results may
vary from such Projections and that such variations may be material; and

(d) Deliver to the Lender with each set of consolidated financial statements
referred to in Sections 6.01(a) and 6.01(b) above, supplemental financial
information necessary to eliminate the accounts of Unrestricted Subsidiaries (if
any) from such consolidated financial statements.

Notwithstanding the foregoing, the obligations in Sections 6.01(a) and 6.01(b)
may be satisfied with respect to such financial information by furnishing (A)
the applicable financial statements of the Borrower or Parent, as applicable, or
(B) the Borrower’s or Parent’s, as applicable, Form 10-K or 10-Q, as applicable,
filed with the SEC.

Documents required to be delivered pursuant to Sections 6.01 and 6.02 may be
delivered electronically and, if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower (or any direct or indirect
parent of the Borrower) posts such documents, or

 

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provides a link thereto on the website on the Internet at the Borrower’s website
address listed on Schedule 10.02; or (ii) on which such documents are posted on
the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if
any, to which the Lender has access (whether a commercial, third-party website
or whether sponsored by the Lender); provided that: (i) upon written request by
the Lender, the Borrower shall deliver paper copies of such documents to the
Lender until a written request to cease delivering paper copies is given by the
Lender; and (ii) the Borrower shall notify (which may be by facsimile or
electronic mail) the Lender of the posting of any such documents and provide to
the Lender by electronic mail electronic versions (i.e., soft copies) of such
documents. Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(a) to the Lender; provided, however, that
if such Compliance Certificate is first delivered by electronic means, the date
of such delivery by electronic means shall constitute the date of delivery for
purposes of compliance with Section 6.02(a).

Section 6.02 Certificates; Other Information.

Deliver to the Lender:

(a) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and 6.01(b), a duly completed Compliance Certificate signed by
a Responsible Officer of the Borrower accompanied, when applicable, by copies of
any amendments to the Operating Leases, Ground Leases or Management Agreements
entered into during such period;

(b) concurrently with the delivery of the financial statements referred to in
Section 6.01(a) and 6.01(b), a narrative discussion and analysis of the
financial condition and results of operations of the Borrower and its
Subsidiaries for the reporting period then ended and for the period from the
beginning of the then current fiscal year to the end of such period, as compared
to the portion of projections covering such periods and to the comparable
periods of the previous year, including occupancy figures and average daily rate
calculations, in each case, with respect to each of the properties of the
Borrower and its Subsidiaries; provided that the Borrower shall not be required
to deliver any documents or information to the Lender pursuant to this Section
6.02(b) for any financial quarter for which the Parent files similar documents
or information in respect of itself and its Subsidiaries with the SEC;

(c) concurrently with the delivery of the financial statements referred to in
Section 6.01(a), a certificate of the independent certified public accountants
reporting on such financial statements (which certificate may be limited to
accounting matters and disclaim responsibility for legal interpretations)
stating that in making the examination necessary therefor no knowledge was
obtained of any Event of Default, except as specified in such certificate (it
being understood that such certificate shall be limited to the items and scope
that independent certified public accountants are permitted to cover in such
certificates pursuant to their processional standards and customs of
profession);

(d) [reserved];

 

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(e) promptly after the same are publicly available, copies of all annual,
regular, periodic and special reports and registration statements which the
Borrower or any Restricted Subsidiary files with the SEC or with any
Governmental Authority that may be substituted therefor (other than amendments
to any registration statement (to the extent such registration statement, in the
form it became effective, is delivered), exhibits to any registration statement
and, if applicable, any registration statement on Form S-8) and in any case not
otherwise required to be delivered to the Lender pursuant hereto; provided that
notwithstanding the foregoing, the obligations in this Section 6.02(f) may be
satisfied if such information is publicly available on the SEC’s EDGAR website;

(f) promptly after the furnishing thereof, copies of any material requests or
material notices received by any Loan Party (other than in the ordinary course
of business) or material statements or material reports furnished to any holder
of debt securities (other than in connection with any board observer rights) of
any Loan Party or of any of its Restricted Subsidiaries pursuant to the terms of
any Indebtedness for borrowed money permitted under Section 7.03 with an
aggregate outstanding principal amount in excess of $100,000,000, any Permitted
Refinancing thereof, and not otherwise required to be furnished to the Lender
pursuant to any other clause of this Section 6.02;

(g) together with the delivery of each Compliance Certificate pursuant to
Section 6.02(a), (i) [reserved], (ii) a description of each event, condition or
circumstance during the last fiscal quarter covered by such Compliance
Certificate requiring a mandatory prepayment under Section 2.05(b) and (iii) a
list of each Subsidiary of the Borrower that identifies each Subsidiary as a
Restricted Subsidiary, an Unrestricted Subsidiary or an Excluded Subsidiary as
of the date of delivery of such Compliance Certificate or confirmation that
there has been no change in such information since the later of the Closing Date
or the date of the last such list; and

(h) promptly, such additional information regarding the business, legal,
financial or corporate affairs of the Loan Parties or any of their respective
Restricted Subsidiaries, or compliance with the terms of the Loan Documents, as
the Lender may from time to time reasonably request.

Section 6.03 Notices.

Promptly after a Responsible Officer of the Borrower or any Guarantor has
obtained knowledge thereof, notify the Lender:

(a) of the occurrence of any Default;

(b) of any matter that has resulted or would reasonably be expected to result in
a Material Adverse Effect;

(c) of the filing or commencement of any action, suit, litigation or proceeding,
whether at law or in equity by or before any Governmental Authority, (i) against
the Borrower or any of its Subsidiaries thereof that would reasonably be
expected to result in a Material Adverse Effect or (ii) with respect to any Loan
Document;

 

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(d) any ERISA Event, as soon as possible and in any event within 10 days after
the Borrower knows or have reason to know thereof; and

(e) of any material amendment or modification to, or material waiver or consent
under, the Operating Leases or Management Agreements.

Each notice pursuant to this Section 6.03 shall be accompanied by a written
statement of a Responsible Officer of the Borrower (x) that such notice is being
delivered pursuant to Sections 6.03(a), 6.03(b) or 6.03(c) (as applicable) and
(y) setting forth details of the occurrence referred to therein and stating what
action the Borrower has taken and proposes to take with respect thereto.

Section 6.04 Payment of Obligations.

Pay, discharge or otherwise satisfy as the same shall become due and payable in
the normal conduct of its business all its obligations and liabilities, except,
in each case, (i) to the extent any such obligation or liability is being
contested in good faith and by appropriate proceedings for which appropriate
reserves have been established in accordance with GAAP or (ii) if such failure
to pay or discharge such obligations and liabilities would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 6.05 Preservation of Existence, Etc.

(a) Preserve, renew and maintain in full force and effect its legal existence
under the Laws of the jurisdiction of its organization except in a transaction
permitted by Section 7.04 or 7.05, (b) take all reasonable action to maintain
all rights, privileges (including its good standing where applicable in the
relevant jurisdiction), permits, licenses and franchises necessary or desirable
in the normal conduct of its business, except, in the case of clause (a) (other
than with respect to the Borrower) or clause (b), to the extent that failure to
do so would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and (c) maintain in effect and enforce
policies and procedures reasonably designed to ensure compliance by the Borrower
and its Subsidiaries and their respective directors, officers and employees with
Anti-Corruption Laws.

Section 6.06 Maintenance of Properties.

Except if the failure to do so could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, maintain, preserve
and protect all of its material tangible or intangible properties and equipment
necessary in the operation of its business in good working order, repair and
condition, ordinary wear and tear excepted and fire, casualty or condemnation
excepted. In addition with respect to each of the Properties that is subject to
an Operating Lease, use commercially reasonable efforts to: (a) cause the
Operating Lessees to maintain, preserve and protect all of its material
properties and equipment necessary in the operation of its business in good
working order and condition, ordinary wear and tear and involuntary Dispositions
excepted; (b) cause the Operating Lessees to make all necessary repairs thereto
and renewals and replacements thereof; (c) cause the Operating Lessees to use
the standard of care typical in the industry in the operation and maintenance of
its facilities and the personal property related thereto; (d) cause the
Operating Lessees to comply in all material

 

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respects with the terms, conditions, restrictions and other requirements of all
recorded documents related thereto; (e) cause the Operating Lessees to comply in
all material respects with the terms, conditions, restrictions and other
requirements set forth in all applicable local, state and federal ordinances,
zoning laws and other applicable laws; and (f) cause the Loan Party owning each
such respective Property to also own all material personal and Real Property
(including, without limitation, furnishings, equipment, software and other
Property) required for the continued operation and maintenance of such Property
in the ordinary course of business (except for (i) such Property as has been
traditionally leased by such Loan Party in connection with such operation and
maintenance, to the extent such leases have been disclosed to the Lender in
writing prior to the date of this Agreement and (ii) the transfer of personal
property related to the Properties to the Operating Lessees as permitted
hereunder).

Section 6.07 Maintenance of Insurance. Maintain or cause to be maintained with
financially sound and reputable insurance companies, insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts (after giving effect to any self-insurance reasonable
and customary for similarly situated Persons engaged in the same or similar
businesses as the Borrower and the Restricted Subsidiaries) as are customarily
carried under similar circumstances by such other Persons, including flood
insurance with respect to each Flood Hazard Property, in each case in compliance
with the National Flood Insurance Act of 1968 and the Flood Disaster Protection
Act of 1973 (where applicable).

Section 6.08 Compliance with Laws.

Comply with the requirements of all Laws and all orders, writs, injunctions and
decrees applicable to it or to its business or property, except if the failure
to comply therewith could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

Section 6.09 Books and Records.

Maintain proper books of record and account, in which entries that are full,
true and correct in all material respects and are in conformity with GAAP
consistently applied and which reflect all material financial transactions and
matters involving the assets and business of the Borrower or a Restricted
Subsidiary, as the case may be (it being understood and agreed that certain
Foreign Subsidiaries maintain individual books and records in conformity with
generally accepted accounting principles in their respective countries of
organization and that such maintenance shall not constitute a breach of the
representations, warranties or covenants hereunder).

Section 6.10 Inspection Rights.

Permit representatives and independent contractors of the Lender to visit and
inspect any of its properties, to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and independent
public accountants (subject to such accountants’ customary policies and
procedures), all at the reasonable expense of the Borrower and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable

 

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advance notice to the Borrower; provided that, excluding any such visits and
inspections during the continuation of an Event of Default, the Lender shall not
exercise such rights more often than once during any calendar year and only one
such time shall be at the Borrower’s expense; provided, further, that when an
Event of Default exists, the Lender (or any of its representatives or
independent contractors) may do any of the foregoing at the expense of the
Borrower at any time during normal business hours and upon reasonable advance
notice. The Lender shall give the Borrower the opportunity to participate in any
discussions with the Borrower’s independent public accountants. Notwithstanding
anything to the contrary in this Section 6.10, none of the Borrower nor any
Restricted Subsidiary shall be required to disclose, permit the inspection,
examination or making copies or abstracts of, or discussion of, any document,
information or other matter (i) that constitutes non-financial trade secrets or
non-financial proprietary information, (ii) in respect of which disclosure to
the Lender (or its representatives or contractors) is prohibited by Law or (iii)
that is subject to attorney-client or similar privilege or constitutes attorney
work-product.

Section 6.11 Additional Guarantors.

At the Borrower’s expense, take all action either necessary or as reasonably
requested by the Lender to:

(a) Upon (x) the formation or acquisition of any new direct or indirect wholly
owned Domestic Subsidiary (in each case, other than an Excluded Subsidiary) by
the Borrower, (y) any Excluded Subsidiary ceasing to constitute an Excluded
Subsidiary or (z) the designation in accordance with Section 6.14 of an existing
direct or indirect wholly owned Domestic Subsidiary (other than an Excluded
Subsidiary) as a Restricted Subsidiary:

(i) within 60 days after such formation, acquisition, cessation or designation,
or such longer period as the Lender may agree in writing in its sole and
reasonable discretion:

(A) cause each such Domestic Subsidiary that is required to become a Guarantor
pursuant to the Guarantee Requirement to duly execute and deliver to the Lender
joinders to this Agreement as Guarantors and other agreements and documents as
reasonably requested by and in form and substance reasonably satisfactory to the
Lender;

(B) [reserved];

(C) [reserved];

(ii) if reasonably requested by the Lender, within 60 days after such request
(or such longer period as the Lender may agree in writing in its reasonable
discretion), deliver to the Lender a signed copy of an opinion, addressed to the
Lender, of counsel for the Loan Parties reasonably acceptable to the Lender as
to such matters set forth in this Section 6.11(a) as the Lender may reasonably
request.

 

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Section 6.12 Compliance with Environmental Laws.

Except, in each case, to the extent that the failure to do so could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect:

(i) comply, and take all commercially reasonable actions to cause all lessees
and other Persons operating or occupying its properties to comply, with all
applicable Environmental Laws and Environmental Permits;

(ii) obtain, maintain and renew all Environmental Permits necessary for its
operations and properties; and

(iii) in each case to the extent the Loan Parties or Subsidiaries are required
to do so by Environmental Laws, conduct any investigation, remedial or other
corrective action necessary to address Hazardous Materials at any Real Property
in accordance with applicable Environmental Laws.

Section 6.13 [Reserved].

Section 6.14 Designation of Subsidiaries.

The Borrower may at any time designate any Restricted Subsidiary of the Borrower
as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted
Subsidiary; provided that (i) immediately before and after such designation, no
Default shall have occurred and be continuing, (ii) immediately after giving
effect to such designation, the Senior Loan-to-Value Ratio, tested on a
Pro-Forma Basis, shall not exceed 45% and, as a condition precedent to the
effectiveness of any such designation, the Borrower shall deliver to the Lender
a certificate setting forth in reasonable detail the calculations demonstrating
such compliance and (iii) no Subsidiary may be designated as an Unrestricted
Subsidiary if it is a “Restricted Subsidiary” for the purpose of any
Indebtedness for borrowed money permitted under Section 7.03 with an aggregate
outstanding principal amount in excess of $100,000,000 or any Junior Financing.
The designation of any Subsidiary as an Unrestricted Subsidiary after the
Closing Date shall constitute an Investment by the Borrower therein at the date
of designation in an amount equal to the fair market value of the Borrower’s or
its Subsidiary’s (as applicable) Investment therein.

The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall
constitute (i) the incurrence at the time of designation of any Investment,
Indebtedness or Liens of such Subsidiary existing at such time and (ii) a return
on any Investment by the Borrower in such Subsidiary pursuant to the preceding
sentence in an amount equal to the fair market value at the date of such
designation of the Borrower’s or its Subsidiary’s (as applicable) Investment in
such Subsidiary.

Section 6.15 Maintenance of Ratings.

In respect of the Borrower, use commercially reasonable efforts to maintain a
public corporate rating (but not any specific rating) from S&P and a public
corporate family rating (but not any specific rating) from Moody’s.

 

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Section 6.16 Post-Closing Covenants.

Except as otherwise agreed by the Lender in its sole and reasonable discretion,
the Borrower shall, and shall cause each of the other Loan Parties to, deliver
each of the documents, instruments and agreements and take each of the actions
set forth on Schedule 6.16 within the time periods set forth therein (or such
longer time periods as determined by the Lender in its sole and reasonable
discretion).

Section 6.17 Taxes.

(a) File or cause to be filed all federal and state Tax returns and other
material Tax returns and reports that are required to be filed and pay all Taxes
shown to be due and payable on such returns or otherwise assessed against it or
imposed on any of its property, and all other material Taxes, fees or other
charges required to be paid by it or imposed on it or any of its property by any
Governmental Authority (other than (i) any Taxes the amount or validity of which
is being contested in good faith and by appropriate proceedings for which
appropriate reserves have been established in accordance with GAAP or (ii) where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect).

(b) Borrower will continue to be treated as and maintain its qualification as a
“real estate investment trust” as defined in Section 856 of the Code for U.S.
federal income tax purposes.

Section 6.18 Use of Proceeds.

The proceeds of the Initial Loans shall be used solely for (i) the repayment in
full of a portion of the Indebtedness of the Borrower and its Subsidiaries under
the Mortgage Loan Agreement and to pay for Transaction Expenses, and (ii) to the
extent any portion of the proceeds of the Initial Loans remain following
application of the proceeds pursuant to the precedent clause (i), for general
corporate purposes.

Section 6.19 Know Your Customer.

The Borrower shall, promptly following a request by the Lender, provide all
documentation and other information that the Lender reasonably requests in order
to comply with its ongoing obligations under applicable “know your customer” and
anti-money laundering rules and regulations, including the USA PATRIOT Act.

Section 6.20 [Reserved]

Section 6.21 Leases.

Use commercially reasonable efforts to enforce and comply with all material
terms and provisions of the Operating Leases in all material respects.

 

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Section 6.22 Management Agreements.

Use commercially reasonable efforts to cause the Operating Lessees to enforce
and comply with all material terms and provisions of the Management Agreements
in all material respects.

Section 6.23 Property.

(a) Cause all Properties located in the United States to be owned by a Loan
Party, an Unrestricted Subsidiary or a Specified Property Owning Entity; and

(b) Cause each Domestic Subsidiary that owns Properties located outside of the
United States to be designated as a Specified Property Owning Entity.

ARTICLE VII

NEGATIVE COVENANTS

So long as the Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, then from and after the Closing Date:

Section 7.01 Liens.

Neither the Borrower nor the Restricted Subsidiaries shall, directly or
indirectly, create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:

(a) without duplication, Liens pursuant to or permitted by any Senior REIT Loan
Document;

(b) Liens existing on the Closing Date and listed on Schedule 7.01(b) and any
modifications, replacements, renewals, refinancings or extensions thereof;
provided that (i) the Lien does not extend to any additional property other than
(A) after-acquired property that is affixed or incorporated into the property
covered by such Lien or financed by Indebtedness permitted under Section 7.03(b)
and (B) proceeds and products thereof, and (ii) the replacement, renewal,
extension or refinancing of the obligations secured or benefited by such Liens,
to the extent constituting Indebtedness, is permitted by Section 7.03(b);

(c) Liens for Taxes (i) that are not yet delinquent or (ii) that are being
contested in good faith and by appropriate actions diligently conducted and for
which adequate reserves with respect thereto are maintained on the books of the
applicable Person to the extent required in accordance with GAAP;

(d) statutory or common law Liens of landlords, sublandlords, carriers,
warehousemen, mechanics, materialmen, repairmen, construction contractors or
other like Liens that secure amounts not overdue for a period of more than 45
days or if more than 45 days overdue, that are unfiled and no other action has
been taken to enforce such Lien or that are being contested in good faith and by
appropriate actions diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person to the extent
required in accordance with GAAP;

 

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(e) (i) pledges or deposits in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other social security
legislation and (ii) pledges and deposits in the ordinary course of business
securing liability for reimbursement or indemnification obligations of
(including obligations in respect of letters of credit or bank guarantees for
the benefit of) insurance carriers providing property, casualty or liability
insurance to the Borrower or any of its Restricted Subsidiaries;

(f) deposits to secure the performance of bids, trade contracts, governmental
contracts and leases (other than Indebtedness for borrowed money), statutory
obligations, surety, stay, customs and appeal bonds, performance bonds and other
obligations of a like nature (including (i) those to secure health, safety and
environmental obligations and (ii) letters of credit and bank guarantees
required or requested by any Governmental Authority in connection with any
contract or Law) incurred in the ordinary course of business;

(g) easements, rights-of-way, restrictions, encroachments, protrusions and other
similar encumbrances and minor title defects affecting Real Property, that do
not in the aggregate materially interfere with the ordinary conduct of the
business of the Borrower or any of its Restricted Subsidiaries, taken as a
whole;

(h) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.01(h);

(i) leases, licenses, subleases or sublicenses granted to others in the ordinary
course of business which do not (i) interfere in any material respect with the
business of the Borrower and its Restricted Subsidiaries, taken as a whole, or
(ii) secure any Indebtedness;

(j) [Reserved];

(k) Liens (i) of a collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection, (ii) attaching to
commodity trading accounts or other commodities brokerage accounts incurred in
the ordinary course of business and (iii) in favor of a banking or other
financial institution arising as a matter of Law or under customary general
terms and conditions encumbering deposits or other funds maintained with a
financial institution (including the right of set-off) and that are within the
general parameters customary in the banking industry or arising pursuant to such
banking institution’s general terms and conditions;

(l) Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment permitted pursuant to Section 7.02(i) or, to the
extent related to any of the foregoing, Section 7.02(r) to be applied against
the purchase price for such Investment, and (ii) consisting of an agreement to
Dispose of any property in a Disposition permitted under Section 7.05 (other
than Section 7.05(e)), in each case, solely to the extent such Investment or
Disposition, as the case may be, would have been permitted on the date of the
creation of such Lien;

 

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(m) Liens (i) in favor of the Borrower or a Restricted Subsidiary on assets of a
Restricted Subsidiary that is not a Loan Party securing permitted intercompany
Indebtedness and (ii) in favor of the Borrower or any Subsidiary Guarantor;

(n) any interest or title of a lessor, sublessor, licensor or sublicensor under
leases, subleases, licenses or sublicenses entered into by the Borrower or any
of its Restricted Subsidiaries in the ordinary course of business;

(o) [Reserved];

(p) Liens deemed to exist in connection with Investments in repurchase
agreements under Section 7.02;

(q) Liens encumbering reasonable customary initial deposits and margin deposits
and similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative
purposes;

(r) Liens that are contractual rights of set-off or rights of pledge (i)
relating to the establishment of depository relations with banks not given in
connection with the issuance of Indebtedness or (ii) relating to pooled deposit
or sweep accounts of the Borrower or any of its Restricted Subsidiaries to
permit satisfaction of overdraft or similar obligations incurred in the ordinary
course of business of the Borrower or any of its Restricted Subsidiaries;

(s) Liens solely on any cash earnest money deposits made by the Borrower or any
of its Restricted Subsidiaries in connection with any letter of intent or
purchase agreement permitted hereunder;

(t) Ground Leases in respect of Real Property on which facilities owned or
leased by the Borrower or any of its Restricted Subsidiaries are located;

(u) Liens to secure Indebtedness permitted under Section 7.03(e); provided that
(i) such Liens are created within 270 days of the acquisition, construction,
repair, lease or improvement of the property subject to such Liens, (ii) such
Liens do not at any time encumber property (except for replacements, additions
and accessions to such property) other than the property financed by such
Indebtedness and the proceeds and products thereof and customary security
deposits and (iii) with respect to Capitalized Leases, such Liens do not at any
time extend to or cover any assets (except for replacements, additions and
accessions to such assets) other than the assets subject to such Capitalized
Leases and the proceeds and products thereof and customary security deposits;
provided that individual financings of equipment provided by one lender may be
cross collateralized to other financings of equipment provided by the Lender;

(v) Liens on property of any Restricted Subsidiary that is not a Loan Party and
that does not constitute “Collateral” under the Senior REIT Loan Documents,
which Liens secure Indebtedness of Restricted Subsidiaries that are not Loan
Parties permitted under Section 7.03;

(w) Liens existing on property at the time of its acquisition or existing on the
property of any Person at the time such Person becomes a Restricted Subsidiary
(other than by designation as a Restricted Subsidiary pursuant to Section 6.14),
in each case after the Closing

 

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Date (other than Liens on the Equity Interests of any Person that becomes a
Restricted Subsidiary); provided that (i) such Lien was not created in
contemplation of such acquisition or such Person becoming a Restricted
Subsidiary, (ii) such Lien does not extend to or cover any other assets or
property (other than the proceeds or products thereof and other than
after-acquired property subjected to a Lien securing Indebtedness and other
obligations incurred prior to such time and which Indebtedness and other
obligations are permitted hereunder that require, pursuant to their terms at
such time, a pledge of after-acquired property, it being understood that such
requirement shall not be permitted to apply to any property to which such
requirement would not have applied but for such acquisition), and (iii) the
Indebtedness secured thereby is permitted under Section 7.03(g);

(x) (i) zoning, building, entitlement and other land use regulations by
Governmental Authorities with which the normal operation of the business
complies, and (ii) any zoning or similar law or right reserved to or vested in
any Governmental Authority to control or regulate the use of any real property
that does not materially interfere with the ordinary conduct of the business of
the Borrower and its Restricted Subsidiaries, taken as a whole;

(y) Liens arising from precautionary Uniform Commercial Code financing statement
or similar filings;

(z) Liens on insurance policies and the proceeds thereof securing the financing
of the premiums with respect thereto;

(aa) the modification, replacement, renewal or extension of any Lien permitted
by Sections 7.01(u) and 7.01(w); provided that (i) such Lien does not extend to
any additional property, other than (A) after-acquired property that is affixed
or incorporated into the property covered by such Lien and (B) proceeds and
products thereof, and (ii) the renewal, extension or refinancing of the
obligations secured or benefited by such Liens is permitted by Section 7.03 (to
the extent constituting Indebtedness);

(bb) [Reserved];

(cc) Liens with respect to property or assets of the Borrower or any of its
Restricted Subsidiaries securing obligations in an aggregate principal amount
outstanding at any time not to exceed the greater of (i) $60,000,000 and (ii) an
amount of obligations that does not exceed in the aggregate an Incremental
Loan-to-Value Ratio of the Borrower and the Restricted Subsidiaries as of the
last day of the most recently ended Test Period on or prior to the date of
determination equal to 1.0%;

(dd) Liens to secure Indebtedness permitted under Sections 7.03(q) or 7.03(s) of
the Senior REIT Credit Agreement;

(ee) Liens securing Indebtedness permitted under Sections 7.03(y) and (z); and

(ff) deposits of cash made in the ordinary course of business with the owner or
lessor of premises leased and operated by the Borrower or any of its Restricted
Subsidiaries to secure the performance of the Borrower’s or such Restricted
Subsidiary’s obligations under the terms of the lease for such premises;

 

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Notwithstanding the foregoing, no consensual Liens shall exist on (x) Equity
Interests that constitute “Collateral” under the Senior REIT Loan Documents, (y)
any Real Property owned by the Borrower or any of its Restricted Subsidiaries
(whether now owned or hereafter acquired) or (z) the Operating Leases, Ground
Leases or Management Agreements (or any right or interest therein (including any
rent payable thereunder)), in each case other than pursuant to Sections 7.01(a),
7.01(dd) and 7.01(ee).

Section 7.02 Investments.

Neither the Borrower nor the Restricted Subsidiaries shall directly or
indirectly, make any Investments, except:

(a) Investments by the Borrower or any of its Restricted Subsidiaries in assets
that were Cash Equivalents when such Investment was made;

(b) loans or advances to officers, directors, managers and employees of any Loan
Party (or any direct or indirect parent thereof) or any of its Subsidiaries (i)
for reasonable and customary business-related travel, entertainment, relocation
and analogous ordinary business purposes, (ii) in connection with such Person’s
purchase of Equity Interests of the Borrower or any direct or indirect parent
thereof directly from such issuing entity (provided that the amount of such
loans and advances shall be contributed to the Borrower in cash as common
equity) and (iii) for any other purposes not described in the foregoing clauses
(i) and (ii); provided that the aggregate principal amount outstanding at any
time under clause (iii) above shall not exceed $5,000,000;

(c) Investments by the Borrower or any of its Restricted Subsidiaries in the
Borrower or any of its Restricted Subsidiaries or any Person that will, upon
such Investment become a Restricted Subsidiary; provided that any Investment
made by any Person that is not a Loan Party in any Loan Party pursuant to this
Section 7.02(c) shall be subordinated in right of payment to the Loans;
provided, further, that the aggregate amount of Investments made pursuant to
this Section 7.02(c) in Restricted Subsidiaries that are not Loan Parties shall
not exceed at any time outstanding an amount of Investments that would result in
an Incremental Loan-to-Value Ratio of the Borrower and the Restricted
Subsidiaries as of the last day of the most recently ended Test Period on or
prior to the date of determination equal to 3.0%;

(d) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors and other credits
to suppliers in the ordinary course of business;

(e) Investments consisting of transactions permitted under Sections 7.03 (other
than 7.03(c) and 7.03(d)), 7.04 (other than 7.04(b)(ii)(y), 7.04(c), 7.04(d) and
7.04(e)), 7.05 (other than 7.05(d)(ii) or 7.05(e)) and 7.13, respectively, or
Investments in the amount that is permitted to be made or declared as a
Restricted Payments under 7.06 (other than 7.06(e));

(f) Investments (i) existing or contemplated on the Closing Date and set forth
on Schedule 7.02(f) and any modification, replacement, renewal, reinvestment or
extension thereof and (ii) existing on the Closing Date by the Borrower or any
Restricted Subsidiary in the

 

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Borrower or any other Restricted Subsidiary and any modification, renewal or
extension thereof; provided that the amount of the original Investment is not
increased except by the terms of such Investment as of the Closing Date or as
otherwise permitted by this Section 7.02;

(g) Investments in Swap Contracts permitted under Section 7.03;

(h) promissory notes and other non-cash consideration received in connection
with Dispositions permitted by Section 7.05;

(i) any acquisition of all or substantially all the assets of a Person, or any
Equity Interests in a Person that becomes a Restricted Subsidiary or a division
or line of business of a Person (or any subsequent Investment made in a Person,
division or line of business previously acquired in a Permitted Acquisition), in
a single transaction or series of related transactions, if immediately after
giving effect thereto: (i) [reserved]; (ii) any acquired or newly formed
Restricted Subsidiary shall not be liable for any Indebtedness except for
Indebtedness otherwise permitted by Section 7.03; (iii) to the extent required
by the Guarantee Requirement, any such newly created or acquired Subsidiary
(other than an Excluded Subsidiary or an Unrestricted Subsidiary) shall become a
Guarantor, in accordance with Section 6.11; (iv) immediately prior to, and after
giving effect thereto, no Event of Default under Section 8.01(a), (f) or (g)
shall have occurred and be continuing or would result therefrom; (v) [reserved];
(vi) any Person or asset or division as acquired in accordance herewith shall be
in the business of owning hotel properties; and (vii) the aggregate amount of
Investments made in Persons that do not become Loan Parties, or, in the case of
an asset acquisition, assets that are not acquired by any Loan Party, when taken
together with the total consideration for all such Persons and assets so
acquired after the Closing Date, shall not exceed at any time outstanding an
amount that would result in an Incremental Loan-to-Value Ratio of the Borrower
and the Restricted Subsidiaries as of the last day of the most recently ended
Test Period on or prior to the date of determination equal to 3.0% (any such
acquisition, a “Permitted Acquisition”); provided that, the Borrower shall
provide to the Lender, prior to the consummation of any Permitted Acquisition
(A) a notice of the Permitted Acquisition and (B) a certificate signed by a
Responsible Officer certifying as to compliance with clauses (i) and (vii)
above;

(j) [Reserved];

(k) Investments in the ordinary course of business consisting of UCC Article 3
endorsements for collection or deposit and UCC Article 4 customary trade
arrangements with customers consistent with past practices;

(l) Investments (including debt obligations and Equity Interests) received in
connection with the bankruptcy or reorganization of suppliers and customers or
in settlement of delinquent obligations of, or other disputes with, customers
and suppliers arising in the ordinary course of business or upon the foreclosure
with respect to any secured Investment or other transfer of title with respect
to any secured Investment;

(m) [Reserved];

(n) [Reserved];

 

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(o) advances of payroll payments to employees in the ordinary course of
business;

(p) Investments to the extent that payment for such Investments is made solely
with Equity Interests (other than Disqualified Equity Interests) of the Borrower
or any direct or indirect parent of the Borrower;

(q) Investments of a Restricted Subsidiary acquired after the Closing Date or of
a Person merged or amalgamated or consolidated into the Borrower or merged,
amalgamated or consolidated with a Restricted Subsidiary in accordance with
Section 7.04 after the Closing Date to the extent that such Investments were not
made in contemplation of or in connection with such acquisition, merger,
amalgamation or consolidation and were in existence on the date of such
acquisition, merger or consolidation;

(r) Investments made by any Restricted Subsidiary that is not a Loan Party to
the extent such Investments are financed with the proceeds received by such
Restricted Subsidiary from an Investment in such Restricted Subsidiary
contemplated pursuant to Section 7.02(i)(vii);

(s) Investments constituting the non-cash portion of consideration received in a
Disposition permitted by Section 7.05;

(t) Guarantees by the Borrower or any of its Restricted Subsidiaries of leases
(other than Capitalized Leases) or of other obligations that do not constitute
Indebtedness, in each case entered into in the ordinary course of business;

(u) so long as, immediately prior to and immediately after giving effect
thereto, no Event of Default has occurred and is continuing, Investments in an
aggregate amount outstanding not to exceed at any time the FFO Builder Basket on
such date;

(v) Investments in Unrestricted Subsidiaries having an aggregate fair market
value, taken together with all other Investments made pursuant to this Section
7.02(v) and Section 7.02(y) that are at the time outstanding, without giving
effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of
such sale do not consist of cash or marketable securities (until such proceeds
are converted to Cash Equivalents), not to exceed the greater of (i)
$200,000,000 and (ii) an amount of Investments that would result in an
Incremental Loan-to-Value Ratio of the Borrower and the Restricted Subsidiaries
as of the last day of the most recently ended Test Period on or prior to the
date of determination equal to 3.0%;

(w) other Investments not to exceed the greater of (x) $200,000,000 and (y) an
amount of Investments that would result in an Incremental Loan-to-Value Ratio of
the Borrower and the Restricted Subsidiaries as of the last day of the most
recently ended Test Period on or prior to the date of determination equal to
3.0% at any time outstanding;

(x) Investments in any Similar Business having an aggregate fair market value
(being measured at the time such Investment is made and without giving effect to
subsequent changes in value), taken together with all other Investments made
pursuant to this clause (x), not to exceed an amount of Investments that would
result in an Incremental Loan-to-Value Ratio of

 

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the Borrower and the Restricted Subsidiaries as of the last day of the most
recently ended Test Period on or prior to the date of determination equal to
2.0% at any time outstanding (at the time such Investment is made) in the
aggregate;

(y) Investments in joint ventures of the Borrower or any of its Restricted
Subsidiaries, taken together with all other Investments made pursuant to this
Section 7.02(y) and Section 7.02(v) that are at that time outstanding, not to
exceed the greater of (i) $200,000,000 and (ii) an amount of Investments that
would result in an Incremental Loan-to-Value Ratio of the Borrower and the
Restricted Subsidiaries as of the last day of the most recently ended Test
Period on or prior to the date of determination equal to 3.0%; and

(z) cash Investments in, or contributions of Real Property to, Specified
Property Owning Entities the proceeds of which are intended to be used by each
such Specified Property Owning Entity to acquire, develop, construct, improve or
renovate Properties.

For purposes of compliance with this Section 7.02, the amount of any Investment
shall be the amount actually invested (measured at the time made), without
adjustment for subsequent increases or decreases in the value of such Investment
but giving effect to any returns or distributions of capital or repayment of
principal actually received in cash by such other Person with respect thereto
(but only to the extent that the aggregate amount of all such returns,
distributions and repayments with respect to such Investment does not exceed the
principal amount of such Investment and less any such amount which increases the
FFO Builder Basket).

Section 7.03 Indebtedness.

Neither the Borrower nor any of the Restricted Subsidiaries shall, directly or
indirectly, create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness of any Loan Party under the Loan Documents;

(b) (i) Indebtedness outstanding on the Closing Date and listed on
Schedule 7.03(b) and any Permitted Refinancing thereof and (ii) Indebtedness
owed to the Borrower or any Restricted Subsidiary outstanding on the Closing
Date and any refinancing thereof with Indebtedness owed to the Borrower or any
Restricted Subsidiary in a principal amount that does not exceed the principal
amount (or accreted value, if applicable) of the intercompany Indebtedness so
refinanced; provided that (x) any amount in excess of $5,000,000 owed by a
Restricted Subsidiary that is not a Loan Party (including a Specified Property
Owning Entity) to a Loan Party shall be evidenced by an Intercompany Note and
(y) all such Indebtedness of any Loan Party owed to any Restricted Subsidiary
that is not a Loan Party shall be unsecured and subordinated to the Obligations
pursuant to an Intercompany Note;

(c) Guarantees by the Borrower and any Restricted Subsidiary in respect of
Indebtedness of the Borrower or any Restricted Subsidiary otherwise permitted
hereunder; provided that (A) in the case of any Guarantee of Indebtedness of any
Restricted Subsidiary that is not a Loan Party by any Loan Party, such Guarantee
is permitted under Section 7.02 and (B) if the Indebtedness being Guaranteed is
subordinated to the Obligations, such Guarantee shall be subordinated to the
Guarantee of the Obligations on terms at least as favorable to the Lender as
those contained in the subordination of such Indebtedness;

 

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(d) Indebtedness of the Borrower or any Restricted Subsidiary owing to the
Borrower or any Restricted Subsidiary; provided that (A) in the case of any
Indebtedness of any Restricted Subsidiary that is not a Loan Party owing to any
Loan Party, such Indebtedness is permitted under Section 7.02; provided that any
amount in excess of $5,000,000 owed by a Restricted Subsidiary that is not a
Loan Party (including a Specified Property Owning Entity) to a Loan Party shall
be evidenced by an Intercompany Note and (B) all such Indebtedness of any Loan
Party owed to any Person or Restricted Subsidiary that is not a Loan Party shall
be evidenced by an Intercompany Note and shall be subordinated in right of
payment to the Loans (for the avoidance of doubt, any such Indebtedness owing to
a Restricted Subsidiary that is not a Loan Party shall be deemed to be expressly
subordinated in right of payment to the Loans unless the terms of such
Indebtedness expressly provide otherwise);

(e) (i) Attributable Indebtedness and other Indebtedness (including Capitalized
Leases) financing an acquisition, construction, repair, replacement, lease or
improvement of a fixed or capital asset incurred by the Borrower or any
Restricted Subsidiary prior to or within 270 days after the acquisition,
construction, repair, replacement, lease or improvement of the applicable asset,
(ii) Attributable Indebtedness arising out of sale-leaseback transactions and
(iii) any Permitted Refinancing of any of the foregoing, in an aggregate
principal amount of Indebtedness at any time outstanding under this Section
7.03(e) not to exceed the greater of (x) $125,000,000 and (y) an amount of
Indebtedness that would result in an Incremental Loan-to-Value Ratio of the
Borrower and the Restricted Subsidiaries as of the last day of the most recently
ended Test Period on or prior to the date of determination equal to 2.0%, in
each case determined at the time of incurrence;

(f) Indebtedness in respect of Swap Contracts designed to hedge against the
Borrower’s or any Restricted Subsidiary’s exposure to interest rates, foreign
exchange rates or commodities pricing risks incurred in the ordinary course of
business and not for speculative purposes;

(g) Indebtedness of the Borrower or any Restricted Subsidiary assumed in
connection with any Permitted Acquisition so long as such Indebtedness is not
incurred in contemplation of such Permitted Acquisition, and any Permitted
Refinancing thereof; provided that immediately after giving pro forma effect to
such Permitted Acquisition and the assumption of such Indebtedness, (i) if
Secured Indebtedness, the Senior Loan-to-Value Ratio as of the last day of the
most recently ended Test Period on or prior to the date of determination is no
greater than 45.0% and (ii) either (x) the Interest Coverage Ratio of the
Borrower and the Restricted Subsidiaries as of the last day of the most recently
ended Test Period on or prior to the date of determination would be greater than
immediately prior to such transactions or (y) after incurring at least $1.00 of
additional Indebtedness the Interest Coverage Ratio of the Borrower and the
Restricted Subsidiaries as of the last day of the most recently ended Test
Period on or prior to the date of determination would be equal to or greater
than 2.0 to 1.0; provided that any such Indebtedness incurred by a Restricted
Subsidiary that is not a Loan Party under this Section 7.03(g), together with
any Indebtedness incurred by a Restricted Subsidiary that is not a Loan Party
pursuant to Sections 7.03(q) or 7.03(w), does not exceed in the aggregate an
Incremental Loan-to-Value Ratio of the Borrower and the Restricted Subsidiaries
as of the last day of the most recently ended Test Period on or prior to the
date of determination equal to 2.0% at any time outstanding determined at the
time of incurrence;

 

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(h) Indebtedness representing deferred compensation to employees of the Borrower
or any of its Restricted Subsidiaries incurred in the ordinary course of
business;

(i) Indebtedness of the Borrower or any Restricted Subsidiary under the Senior
Notes Indenture and the New Senior Notes Indenture in an aggregate principal
amount not to exceed $1,300,000,000 and any Permitted Refinancing thereof;

(j) Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries
in a Permitted Acquisition, any other Investment expressly permitted hereunder
or any Disposition, in each case, constituting indemnification obligations or
obligations in respect of purchase price (including earnouts) or other similar
adjustments;

(k) Indebtedness consisting of obligations of the Borrower or any of its
Restricted Subsidiaries under deferred compensation or other similar
arrangements incurred by such Person in connection with Permitted Acquisitions
or any other Investment expressly permitted hereunder;

(l) obligations in respect of treasury services agreements and other
Indebtedness in respect of netting services, automatic clearinghouse
arrangements, overdraft protections and similar arrangements, in each case in
connection with deposit accounts;

(m) Indebtedness of the Borrower and the Restricted Subsidiaries in aggregate
principal amount at any time outstanding not to exceed the greater of (x)
$250,000,000 and (y) an amount of Indebtedness that would result in an
Incremental Loan-to-Value Ratio of the Borrower and the Restricted Subsidiaries
as of the last day of the most recently ended Test Period on or prior to the
date of determination equal to 4.0%;

(n) Indebtedness consisting of (i) the financing of insurance premiums or (ii)
take-or-pay obligations contained in supply arrangements, in each case, in the
ordinary course of business;

(o) Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries
in respect of letters of credit, bank guarantees, bankers’ acceptances or
similar instruments issued or created in the ordinary course of business,
including in respect of workers’ compensation claims, health, disability or
other employee benefits or property, casualty or liability insurance or
self-insurance or other Indebtedness with respect to reimbursement-type
obligations regarding workers compensation claims; provided that any
reimbursement obligations in respect thereof are reimbursed within 30 days
following the incurrence thereof;

(p) obligations in respect of performance, bid, appeal and surety bonds and
performance and completion guarantees and similar obligations provided by the
Borrower or any of its Restricted Subsidiaries or obligations in respect of
letters of credit, bank guarantees or similar instruments related thereto, in
each case in the ordinary course of business or consistent with past practice;

(q) unsecured Indebtedness in an aggregate principal amount, not to exceed when
aggregated with the Initial Loans and with the amount of Incremental Loans
pursuant to Section 2.14(d)(v)), the greater of (A) $300,000,000 and (B) an
unlimited amount so long as the

 

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Incremental Loan-to-Value Ratio, determined on a Pro Forma Basis as of the last
day of the most recently ended Test Period, as if any Incremental Loans
available under such Incremental Commitments had been outstanding on the last
day of such period, and, in each case, without netting the cash proceeds of any
such Incremental Loans, does not exceed 5.0%;; provided (A) no such Indebtedness
may be guaranteed by any Person which is not a Loan Party and (B) have terms and
conditions (other than pricing, rate floors, discounts, fees, premiums and
optional prepayment or redemption provisions) that in the good faith
determination of the Borrower are not materially less favorable (when taken as a
whole) to the Borrower than the terms and conditions of the Loan Documents (when
taken as a whole) (provided that a certificate of the Borrower as to the
satisfaction of the conditions described in this clause (B) delivered at least
five Business Days prior to the incurrence of such Indebtedness, together with a
reasonably detailed description of the material terms and conditions of such
Indebtedness or drafts of documentation relating thereto, stating that the
Borrower has determined in good faith that such terms and conditions satisfy the
foregoing requirements of this clause (B), shall be conclusive unless the Lender
notifies the Borrower within such five Business Day period that it disagrees
with such determination (including a description of the basis upon which it
disagrees)); provided, further, that any such Indebtedness incurred by a
Restricted Subsidiary that is not a Loan Party under this Section 7.03(q),
together with any Indebtedness incurred by a Restricted Subsidiary that is not a
Loan Party pursuant to Sections 7.03(g) or 7.03(w), does not exceed in the
aggregate an Incremental Loan-to-Value Ratio of the Borrower and the Restricted
Subsidiaries as of the last day of the most recently ended Test Period on or
prior to the date of determination equal to 2.0% at any time outstanding
determined at the time of incurrence;

(r) Indebtedness supported by a letter of credit, in a principal amount not to
exceed the face amount of such letter of credit;

(s) Permitted Ratio Debt and any Permitted Refinancing thereof;

(t) Credit Agreement Refinancing Indebtedness;

(u) without duplication, Indebtedness pursuant to the Senior REIT Loan
Documents;

(v) Indebtedness of Foreign Subsidiaries in an aggregate principal amount at any
one time outstanding not to exceed an amount of Indebtedness that would result
in an Incremental Loan-to-Value Ratio of the Borrower and the Restricted
Subsidiaries as of the last day of the most recently ended Test Period on or
prior to the date of determination equal to 1.0% as of any date of incurrence;

(w) unsecured Indebtedness of the Borrower or any Restricted Subsidiary, so long
as the Interest Coverage Ratio on a consolidated basis for the Borrower and its
Restricted Subsidiaries’ most recently ended four fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such Indebtedness is incurred would have been at least 2.00 to 1.00,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if such Indebtedness had been incurred and the
application of proceeds therefrom had occurred at the beginning of such
four-quarter period and, without duplication, Permitted Refinancings of such
Indebtedness; provided that such Indebtedness (i)

 

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shall have a maturity date that is at least 91 days after the Latest Maturity
Date at the time such Indebtedness is incurred, (ii) shall have a Weighted
Average Life to Maturity not shorter than the longest remaining Weighted Average
Life to Maturity of the Facilities, (iii) shall not be subject to scheduled
amortization and is not subject to mandatory redemption, repurchase, prepayment
or sinking fund obligations (except customary asset sale or change of control
provisions that provide for the prior repayment in full of the Loans and all
other Obligations), in each case on or prior to the Latest Maturity Date at the
time such Indebtedness is incurred, (iv) such Indebtedness may not be guaranteed
by any Person which is not a Loan Party and (v) shall have terms and conditions
(other than pricing, rate floors, discounts, fees, premiums and optional
prepayment or redemption provisions) that in the good faith determination of the
Borrower are not materially less favorable (when taken as a whole) to the
Borrower than the terms and conditions of the Loan Documents (when taken as a
whole) (provided that a certificate of the Borrower as to the satisfaction of
the conditions described in this clause (iv) delivered at least five Business
Days prior to the incurrence of such Indebtedness, together with a reasonably
detailed description of the material terms and conditions of such Indebtedness
or drafts of documentation relating thereto, stating that the Borrower has
determined in good faith that such terms and conditions satisfy the foregoing
requirements of this clause (iv), shall be conclusive unless the Lender notifies
the Borrower within such five Business Day period that it disagrees with such
determination (including a description of the basis upon which it disagrees));
provided, further, that any such Indebtedness incurred by a Restricted
Subsidiary that is not a Loan Party under this Section 7.03(w), together with
any Indebtedness incurred by a Restricted Subsidiary that is not a Loan Party
pursuant to Sections 7.03(g) or 7.03(q) does not exceed in the aggregate an
Incremental Loan-to-Value Ratio of the Borrower and the Restricted Subsidiaries
as of the last day of the most recently ended Test Period on or prior to the
date of determination equal to 2.0% at any time outstanding determined at the
time of incurrence;

(x) Indebtedness consisting of promissory notes issued by the Borrower or any of
its Restricted Subsidiaries to current or former officers, managers,
consultants, directors and employees, their respective estates, spouses or
former spouses to finance the purchase or redemption of Equity Interests of the
Borrower or any direct or indirect parent of the Borrower permitted by Section
7.06(g);

(y) without duplication, “Permitted Ratio Debt” and any “Permitted Refinancing”
thereof (each as defined in the Senior REIT Credit Agreement);

(z) without duplication, “Credit Agreement Refinancing Indebtedness” (as defined
in the Senior REIT Credit Agreement);

(aa) without duplication, amounts incurred under Sections 2.14 and 7.03(q) of
the Senior REIT Credit Agreement; and

(bb) all premiums (if any), interest (including post-petition interest), fees,
expenses, charges and additional or contingent interest on obligations described
in Sections 7.03(a) through 7.03(z) above.

For purposes of determining compliance with this Section 7.03, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
Indebtedness described

 

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in Sections 7.03(a) through 7.03(x) above, the Borrower shall, in its sole
discretion, classify or later divide or classify such item of Indebtedness (or
any portion thereof) and will only be required to include the amount and type of
such Indebtedness in one or more of the above clauses; provided that all
Indebtedness outstanding under the Loan Documents will at all times be deemed to
be outstanding in reliance only on the exception in Section 7.03(a).

Section 7.04 Fundamental Changes.

Neither the Borrower nor any of the Restricted Subsidiaries shall merge,
dissolve, liquidate, consolidate with or into another Person, reorganize itself
in any non-U.S. jurisdiction or Dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except that:

(a) any Restricted Subsidiary may merge, amalgamate or consolidate with (i) the
Borrower (including a merger, the purpose of which is to reorganize the Borrower
into a new jurisdiction); provided that the Borrower shall be the continuing or
surviving Person and such merger does not result in the Borrower ceasing to be a
corporation, partnership or limited liability company organized under the Laws
of the United States, any state thereof or the District of Columbia or (ii) one
or more other Restricted Subsidiaries; provided that when any Person that is a
Loan Party is merging with a Restricted Subsidiary, a Loan Party shall be the
continuing or surviving Person;

(b) (i) any Restricted Subsidiary that is not a Loan Party may merge, amalgamate
or consolidate with or into any other Restricted Subsidiary that is not a Loan
Party and (ii) any Restricted Subsidiary may liquidate or dissolve or the
Borrower or any Restricted Subsidiary may change its legal form (x) if the
Borrower determines in good faith that such action is in the best interest of
the Borrower and its Restricted Subsidiaries and if not materially
disadvantageous to the Lender and (y) to the extent such Restricted Subsidiary
is a Loan Party, any assets or business are otherwise disposed of or transferred
in accordance with Sections 7.02 (other than Section 7.02(e)) or 7.05 (other
than Section 7.05(e)) or, in the case of any such business, discontinued, shall
be transferred to otherwise owned or conducted by another Loan Party after
giving effect to such liquidation or dissolution (it being understood that in
the case of any change in legal form, a Subsidiary that is a Guarantor will
remain a Guarantor unless such Guarantor is otherwise permitted to cease being a
Guarantor hereunder);

(c) any Restricted Subsidiary may Dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or to another
Restricted Subsidiary; provided that if the transferor in such a transaction is
a Guarantor, then (i) the transferee must be a Guarantor or the Borrower or (ii)
to the extent constituting an Investment, such Investment must be a permitted
Investment in or Indebtedness of a Restricted Subsidiary that is not a Loan
Party in accordance with Sections 7.02 (other than Section 7.02(e)) and 7.03,
respectively;

(d) so long as no Default exists or would result therefrom, the Borrower may
merge or consolidate with any other Person; provided that (i) the Borrower shall
be the continuing or surviving corporation or (ii) if the Person formed by or
surviving any such merger or consolidation is not the Borrower (any such Person,
the “Successor Company”), (A) the

 

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Successor Company shall be an entity organized or existing under the Laws of the
United States, any state thereof, the District of Columbia or any territory
thereof, (B) the Successor Company shall expressly assume all the obligations of
the Borrower under this Agreement and the other Loan Documents to which the
Borrower is a party pursuant to a supplement hereto or thereto in form
reasonably satisfactory to the Lender, (C) each Guarantor, unless it is the
other party to such merger or consolidation, shall have confirmed that its
Guaranty shall apply to the Successor Company’s obligations under the Loan
Documents, (D) [reserved], (E) the Borrower shall have delivered to the Lender
an officer’s certificate and an opinion of counsel, each stating that such
merger or consolidation and such supplement to this Agreement preserves the
enforceability of this Agreement and the Guaranty and (F) such merger shall be
permitted or not restricted under Section 7.02; provided, further, that if the
foregoing are satisfied, the Successor Company will succeed to, and be
substituted for, the Borrower under this Agreement;

(e) so long as no Default exists or would result therefrom (in the case of a
merger involving a Loan Party), any Restricted Subsidiary may merge or
consolidate with any other Person in order to effect an Investment permitted
pursuant to Section 7.02 (other than Section 7.02(e)); provided that the
continuing or surviving Person shall be a Restricted Subsidiary or the Borrower,
which together with each of its Restricted Subsidiaries, shall have complied
with the requirements of Section 6.11 to the extent required pursuant to the
Guarantee Requirement; and

(f) so long as no Default exists or would result therefrom, a merger,
dissolution, liquidation, consolidation or Disposition, the purpose of which is
to effect a Disposition permitted pursuant to Section 7.05 (other than Section
7.05(e)).

Section 7.05 Dispositions.

Neither the Borrower nor any of the Restricted Subsidiaries shall, directly or
indirectly, make any Disposition, except:

(a) (i) Dispositions of obsolete, worn out or surplus property, whether now
owned or hereafter acquired, in the ordinary course of business and Dispositions
of property no longer used or useful in the conduct of the business of the
Borrower or any of its Restricted Subsidiaries and (ii) Dispositions of property
no longer used or useful in the conduct of the business of the Borrower and its
Restricted Subsidiaries outside the ordinary course of business in an aggregate
amount not to exceed $15,000,000;

(b) Dispositions of inventory or goods (or other assets, including timeshare and
residential assets, furniture and equipment) held for sale and immaterial assets
(including allowing any registrations or any applications for registration of
any immaterial intellectual property to lapse or go abandoned in the ordinary
course of business), in each case, in the ordinary course of business;

(c) Dispositions of property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or (ii)
the proceeds of such Disposition are promptly applied to the purchase price of
such replacement property;

 

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(d) Dispositions of property to the Borrower or any Restricted Subsidiary;
provided that if the transferor of such property is a Loan Party, (i) the
transferee thereof must be a Loan Party or (ii) if such transaction constitutes
an Investment, such transaction is permitted under Section 7.02;

(e) to the extent constituting Dispositions, transactions permitted by Sections
7.01 (other than Section 7.01(1)(ii)), 7.02 (other than Section 7.02(e) and
Section 7.02(s)), 7.04 (other than Section 7.04(b)(ii) and Section 7.04(f)) and
7.06;

(f) [Reserved];

(g) Dispositions of Cash Equivalents;

(h) (i) by operation of the Operating Leases, (ii) other leases, subleases,
licenses or sublicenses (including the provision of software under an open
source license), in each case in the ordinary course of business and which do
not materially interfere with the business of the Borrower or any of its
Restricted Subsidiaries and (iii) Dispositions of intellectual property that do
not materially interfere with the business of the Borrower or any of its
Restricted Subsidiaries so long as the Borrower or any of its Restricted
Subsidiaries receives a license or other ownership rights to use such
intellectual property;

(i) transfers of property subject to Casualty Events upon receipt of the Net
Proceeds of such Casualty Event;

(j) Dispositions of property; provided that (i) at the time of such Disposition
(other than any such Disposition made pursuant to a legally binding commitment
entered into at a time when no Default exists), no Default shall exist or would
result from such Disposition and (ii) with respect to any Disposition pursuant
to this Section 7.05(j) for a purchase price in excess of $50,000,000 the
Borrower or any of its Restricted Subsidiaries shall receive not less than 75%
of such consideration in the form of cash or Cash Equivalents (in each case,
free and clear of all Liens at the time received, other than nonconsensual Liens
permitted by Section 7.01 and Liens permitted by Sections 7.01(a), 7.01(r)(ii),
7.01(dd) (only to the extent the Obligations are secured by such cash and Cash
Equivalents) and 7.01(ee) (only to the extent the Obligations are secured by
such cash and Cash Equivalents)); provided, however, that for the purposes of
this Section 7.05(j)(ii), the following shall be deemed to be cash: (A) any
liabilities (as shown on the Borrower’s (or the Restricted Subsidiaries’, as
applicable) most recent balance sheet provided hereunder or in the footnotes
thereto) of the Borrower or such Restricted Subsidiary, other than liabilities
that are by their terms subordinated to the payment in cash of the Obligations,
that are assumed by the transferee with respect to the applicable Disposition
and for which the Borrower and all of its Restricted Subsidiaries shall have
been validly released by all applicable creditors in writing, (B) any securities
received by the Borrower or the applicable Restricted Subsidiary from such
transferee that are converted by the Borrower or such Restricted Subsidiary into
cash or Cash Equivalents (to the extent of the cash or Cash Equivalents
received) within 180 days following the closing of the applicable Disposition,
and (C) aggregate non-cash consideration received by the Borrower or the
applicable Restricted Subsidiary having an aggregate fair market value
(determined as of the closing of the applicable Disposition for which such
non-cash consideration is received) not to exceed the greater of (x)
$125,000,000 and (y) an amount that

 

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would result in an Incremental Loan-to-Value Ratio of the Borrower and the
Restricted Subsidiaries as of the last day of the most recently ended Test
Period on or prior to the date of determination equal to 2.0% at any time (net
of any non-cash consideration converted into cash and Cash Equivalents);

(k) [Reserved];

(l) Dispositions or discounts without recourse of accounts receivable in
connection with the compromise or collection thereof in the ordinary course of
business;

(m) Dispositions of property pursuant to sale-leaseback transactions permitted
under Section 7.03(e);

(n) any swap of assets in exchange for services or other assets of comparable or
greater value or usefulness to the business of the Borrower and its Restricted
Subsidiaries as a whole, as determined in good faith by the management of the
Borrower;

(o) any issuance or sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary;

(p) the unwinding of any Swap Contract pursuant to its terms;

(q) Dispositions of Investments in joint ventures to the extent required by, or
made pursuant to customary buy/sell arrangements between, the joint venture
parties set forth in joint venture arrangements and similar binding
arrangements, and

(r) the lapse or abandonment in the ordinary course of business of any
registrations or applications for registration of any immaterial IP Rights,

provided that any Disposition of any property pursuant to this Section 7.05
(except pursuant to Sections 7.05(e) (other than, to the extent constituting
Dispositions, transactions permitted by Sections 7.02 or 7.04), 7.05(i) and
7.05(p) and except for Dispositions from a Loan Party to any other Loan Party)
shall be for no less than the fair market value of such property at the time of
such Disposition.

Section 7.06 Restricted Payments.

Neither the Borrower nor any of the Restricted Subsidiaries shall declare or
make, directly or indirectly, any Restricted Payment, except:

(a) each Restricted Subsidiary may make Restricted Payments to the Borrower and
other Restricted Subsidiaries of the Borrower (and, in the case of a Restricted
Payment by a non-wholly owned Restricted Subsidiary, to the Borrower and any
other Restricted Subsidiary and to each other owner of Equity Interests of such
Restricted Subsidiary based on their relative ownership interests of the
relevant class of Equity Interests);

 

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(b) the Borrower and each Restricted Subsidiary may declare and make Restricted
Payments payable solely in the Equity Interests (other than Disqualified Equity
Interests not otherwise permitted by Section 7.03) of such Person;

(c) the payment of any distribution or other action which the Borrower believes
in good faith is necessary either to maintain the Borrower’s status as a real
estate investment trust under the Code or to enable the Borrower to avoid
payment of any Tax that could be avoided by reason of a distribution or other
action by the Borrower, including actions necessary to maintain the pairing
arrangement of the Borrower’s Class B common stock with the Parent’s common
stock (other than in connection with a voluntary share repurchase by the
Borrower);

(d) the Borrower may make a Restricted Payment with respect to preferred
interests issued to satisfy the “100 shareholders” REIT qualification
requirement under Section 856(a)(5) of the Code (“REIT Distribution”) in an
amount not exceeding $100,000 per annum in the aggregate;

(e) to the extent constituting Restricted Payments, the Borrower and its
Restricted Subsidiaries may enter into and consummate transactions expressly
permitted by any provision of Sections 7.02 (other than Section 7.02(e)), 7.04
or 7.08 (other than Sections 7.08(b) and 7.08(e));

(f) repurchases of Equity Interests in the Borrower (or any direct or indirect
parent thereof) or any Restricted Subsidiary of the Borrower deemed to occur
upon exercise of stock options or warrants if such Equity Interests represent a
portion of the exercise price of such options or warrants;

(g) the Borrower and each Restricted Subsidiary may pay for the repurchase,
retirement or other acquisition or retirement for value of Equity Interests of
such Restricted Subsidiary from any future, present or former employee, officer,
director, manager or consultant of such Restricted Subsidiary (or the Borrower)
upon the death, disability, retirement or termination of employment of any such
Person or pursuant to any employee or director equity plan, employee, manager or
director stock option plan or any other employee or director benefit plan or any
agreement (including any stock subscription or shareholder agreement) with any
employee, manager, director, officer or consultant of such Restricted Subsidiary
(or the Borrower); provided that the aggregate amount of Restricted Payments
made pursuant to this Section 7.06(g) shall not exceed $10,000,000 in any
calendar year (with unused amounts in any calendar year being carried over to
the next succeeding calendar year); provided, further, that such amount in any
calendar year may be increased by an amount not to exceed the net cash proceeds
of key man life insurance policies received by the Borrower or its Restricted
Subsidiaries;

(h) so long as no Default has occurred and is continuing or would result
therefrom, the Borrower may make Restricted Payments in an aggregate amount not
to exceed the FFO Builder Basket on such date;

 

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(i) payments or other transactions pursuant to any Tax-sharing agreement between
the Borrower, any Restricted Subsidiary or any other Person with which the
Borrower or the Restricted Subsidiary files a consolidated Tax return or with
which the Borrower or the Restricted Subsidiary is part of a consolidated group
for Tax purposes, provided that, in the case of a Tax-sharing agreement, such
payments shall not exceed the amount of the Tax liability that would have been
incurred by the Borrower or such Restricted Subsidiary if the Borrower or the
Restricted Subsidiary had filed a separate Tax return on a stand-alone basis for
the period to which such payment is attributable;

(j) payments made or expected to be made by the Borrower or any of the
Restricted Subsidiaries in respect of required withholding or similar non-U.S.
Taxes with respect to any future, present or former employee, director, manager
or consultant and any repurchases of Equity Interests in consideration of such
payments including deemed repurchases in connection with the exercise of stock
options;

(k) the Borrower or any Restricted Subsidiary may pay cash in lieu of fractional
Equity Interests in connection with any dividend, split or combination thereof
or any Permitted Acquisition;

(l) [Reserved];

(m) so long as no Default has occurred and is continuing or would result
therefrom, additional Restricted Payments in an aggregate amount at any time
outstanding not to exceed the greater of (x) $300,000,000 and (y) an amount that
would result in an Incremental Loan-to-Value Ratio of the Borrower and the
Restricted Subsidiaries as of the last day of the most recently ended Test
Period on or prior to the date of determination equal to 5.0%; and

(n) Restricted Payments that are made (i) in an amount equal to the amount of
Excluded Contributions previously received or (ii) without duplication with
clause (i), in an amount equal to the Net Proceeds from a Disposition in respect
of property or assets acquired after the Closing Date, if the acquisition of
such property or assets was financed with Excluded Contributions.

Section 7.07 Change in Nature of Business.

The Borrower shall not, nor shall the Borrower permit any of the Restricted
Subsidiaries to, directly or indirectly, engage in any material line of business
substantially different from those lines of business conducted by the Borrower
and the Restricted Subsidiaries on the Closing Date or any business reasonably
related, complementary, synergistic or ancillary thereto or reasonable
extensions thereof.

Section 7.08 Transactions with Affiliates.

The Borrower shall not, nor shall the Borrower permit any of the Restricted
Subsidiaries to, directly or indirectly, enter into any transaction of any kind
with any Affiliate of the Borrower, whether or not in the ordinary course of
business, in each case involving consideration in excess of $10,000,000 (in one
transaction or a series of related transactions) other than (a) loans and other
transactions among the Borrower and its Restricted Subsidiaries or any entity

 

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that becomes a Restricted Subsidiary as a result of such loan or other
transaction to the extent permitted under this Article VII, (b) on terms
substantially as favorable to the Borrower or such Restricted Subsidiary as
would be obtainable by the Borrower or such Restricted Subsidiary at the time in
a comparable arm’s-length transaction with a Person other than an Affiliate, (c)
[Reserved], (d) [Reserved], (e) Restricted Payments permitted under Section 7.06
and Investments permitted under Section 7.02, (f) employment and severance
arrangements between the Borrower and its Restricted Subsidiaries and their
respective officers and employees in the ordinary course of business and
transactions pursuant to stock option plans and employee benefit plans and
arrangements in the ordinary course of business, (g) the payment of customary
fees and reasonable out of pocket costs to, and indemnities provided on behalf
of, directors, managers, officers, employees and consultants of the Borrower and
its Restricted Subsidiaries (or any direct or indirect parent of the Borrower)
in the ordinary course of business to the extent attributable to the ownership
or operation of the Borrower and its Restricted Subsidiaries, (h) transactions
pursuant to agreements in existence on the Closing Date and set forth on
Schedule 7.08 or any amendment thereto to the extent such an amendment is not
adverse to the Lender in any material respect, (i) customary payments by the
Borrower and any of its Restricted Subsidiaries to the Investors or their
Affiliates made for any financial, advisory, financing, underwriting or
placement services or in respect of other investment banking activities
(including in connection with acquisitions or divestitures) and this Agreement,
(j) a joint venture which would constitute a transaction with an Affiliate
solely as a result of the Borrower or any Restricted Subsidiary owning an equity
interest or otherwise controlling such joint venture or similar entity or (k)
entering into or modifying leases or related agreements among the Borrower, the
Parent and any Restricted Subsidiary with terms that permit the leases or
related agreements to comply with requirements applicable to real estate
investment trusts under the Code, including the requirement that the leases be
respected as “true leases” under the Code, and to enable the Borrower to avoid
the payment of any Tax provided that such new or modified leases or related
agreements are on terms that, taken as a whole, are not materially less
favorable to the Borrower or the relevant Restricted Subsidiary than those that
might reasonably have been obtained at such time from a Person that is not an
Affiliate.

Section 7.09 Burdensome Agreements.

The Borrower shall not, nor shall the Borrower permit any of the Restricted
Subsidiaries to, enter into or permit to exist any Contractual Obligation (other
than this Agreement or any other Loan Document or any Senior REIT Loan Document)
that limits the ability of (a) any Restricted Subsidiary of the Borrower that is
not a Guarantor to make Restricted Payments to the Borrower or any Guarantor or
to make or repay intercompany loans and advances to the Borrower or any
Guarantor or (b) any Loan Party to create, incur, assume or suffer to exist
Liens on property of such Person for the benefit of the Lender with respect to
the Loans and the Obligations or under the Loan Documents; provided that the
foregoing clauses (a) and (b) shall not apply to Contractual Obligations which
(i) (x) exist on the Closing Date and (to the extent not otherwise permitted by
this Section 7.09) are listed on Schedule 7.09 hereto and (y) to the extent
Contractual Obligations permitted by clause (x) are set forth in an agreement
evidencing Indebtedness, are set forth in any agreement evidencing any permitted
modification, replacement, renewal, extension or refinancing of such
Indebtedness so long as such modification, replacement, renewal, extension or
refinancing (taken as a whole) does not expand the scope of such Contractual
Obligation, (ii) are binding on a Restricted Subsidiary at the time

 

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such Restricted Subsidiary first becomes a Restricted Subsidiary of the
Borrower, so long as such Contractual Obligations were not entered into solely
in contemplation of such Person becoming a Restricted Subsidiary of the Borrower
and are not applicable to any other Restricted Subsidiary or the properties or
assets of any other Restricted Subsidiary; provided, further, that this clause
(ii) shall not apply to Contractual Obligations that are binding on a Person
that becomes a Restricted Subsidiary pursuant to Section 6.14, (iii) represent
Indebtedness of a Restricted Subsidiary of the Borrower which is not a Loan
Party which is permitted by Section 7.03 but solely to the extent such
restriction relates to the property financed by or secured by such Indebtedness,
(iv) arise in connection with any Disposition permitted by Sections 7.04 or 7.05
and relate solely to the assets or Person subject to such Disposition, (v) are
customary provisions in joint venture agreements and other similar agreements
applicable to joint ventures permitted under Section 7.02 and applicable solely
to such joint venture entered into in the ordinary course of business, (vi) are
negative pledges and restrictions on Liens in favor of any holder of
Indebtedness permitted under Section 7.03 but solely to the extent any such
negative pledge or restriction on Liens relates to the property the acquisition
of which was financed by such Indebtedness, (vii) are customary restrictions on
leases, subleases, licenses or asset sale agreements otherwise permitted hereby
so long as such restrictions relate to the assets subject thereto, (viii) are
evidenced by the Senior Notes Indenture, the New Senior Notes Indenture or any
agreement or indenture relating to a Permitted Refinancing thereof, (ix) are
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of the Borrower or any Restricted Subsidiary, (x) are
customary provisions restricting assignment of any agreement entered into in the
ordinary course of business, (xi) are restrictions on cash or other deposits
imposed by customers under contracts entered into in the ordinary course of
business, (xii) arise in connection with cash or other deposits permitted under
Sections 7.01 or 7.02 and limited to such cash or deposit and (xiii) are
customary restrictions (as reasonably determined by the Borrower) that arise in
connection with any Lien permitted by Sections 7.01(a), (b), (e), (f), (i), (k),
(l), (p), (s), (u), (w), (z), (aa) and (ee) and relate to the property subject
to such Lien.

Section 7.10 Use of Proceeds.

The Borrower shall not directly, or, to the knowledge of the Borrower,
indirectly, use the proceeds of the Loans, or request any Loan the proceeds of
which will be used, or loaned, contributed, or otherwise made to any Subsidiary,
joint venture partner or, to the knowledge of the Borrower, other Person (i) in
furtherance of an offer, payment, promise to pay, or authorization of the
payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Law, or to fund any activities or business of
or with any Sanctioned Person or in any country or territory that, at the time
of such funding, is subject of any Sanctions to the extent prohibited by
applicable Sanctions or Anti-Corruption Laws or (ii) in any other manner that
would result in a violation of any Anti-Corruption Laws or Sanctions by any
party to this Agreement.

Section 7.11 [Reserved].

Section 7.12 Fiscal Year.

 

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The Borrower shall not make any change in its fiscal year; provided, however,
that the Borrower may, upon written notice to the Lender, change its fiscal year
to any other fiscal year reasonably acceptable to the Lender, in which case, the
Borrower and the Lender will make any adjustments to this Agreement that are
necessary to reflect such change in fiscal year.

Section 7.13 Prepayments, Etc. of Indebtedness.

(a) The Borrower shall not, nor shall the Borrower permit any of the Restricted
Subsidiaries to, directly or indirectly, prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner (it
being understood that payments of regularly scheduled principal and interest
shall be permitted), any subordinated Indebtedness incurred under Section
7.03(g) or any other Indebtedness that is or is required to be subordinated, in
right of payment, to the Obligations pursuant to the terms of the Loan Documents
(collectively, “Junior Financing”) or make any payment in violation of any
subordination terms of any Junior Financing Documentation (in each case, a
“Restricted Debt Payment”), except (i) the refinancing thereof with the Net
Proceeds of any Indebtedness (to the extent such Indebtedness constitutes a
Permitted Refinancing and, if such Indebtedness was originally incurred under
Section 7.03(g), is permitted pursuant to Section 7.03(g)), to the extent not
required to prepay any Loans pursuant to Section 2.05(b), (ii) the conversion of
any Junior Financing to Equity Interests (other than Disqualified Equity
Interests) of the Borrower or any of its direct or indirect parents, (iii) the
prepayment of Indebtedness of the Borrower or any Restricted Subsidiary to the
Borrower or any Restricted Subsidiary to the extent not prohibited by the
subordination provisions contained in the Intercompany Note, (iv) prepayments
permitted under or required by the Senior REIT Loan Documents and (v) so long as
no Default has occurred and is continuing or would result therefrom,
prepayments, redemptions, purchases, defeasances and other payments in respect
of Junior Financings prior to their scheduled maturity in an aggregate amount
not to exceed the FFO Builder Basket at such time.

(b) The Borrower shall not, nor shall it permit any of the Restricted
Subsidiaries to amend, modify or change in any manner materially adverse to the
interests of the Lender any term or condition of any Junior Financing
Documentation without the consent of the Lender (which consent shall not be
unreasonably withheld, conditioned or delayed).

Section 7.14 Certain Amendments.

The Borrower shall not, nor shall the Borrower permit any of the Restricted
Subsidiaries to, directly or indirectly:

(a) terminate, amend, modify or change its respective organizational documents,
if such termination, amendment, modification or change would be materially
adverse to the interests of the Lender;

(b) permit any Loan Party or its Subsidiaries to enter into, terminate, cancel,
amend, restate, supplement or otherwise modify any Material Operating Lease (in
each case, except in connection with an extension or entry into a new Material
Operating Lease in compliance with Section 6.21(b)) in a manner no less
favorable in any material respect, taken as a whole, to the Borrower and the
Restricted Subsidiaries than the Material Operating Lease being

 

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replaced, terminated, canceled, amended, restated, supplemented or otherwise
modified unless (i) consistent with those available in the market at such time
for agreements pertaining to similarly situated properties and among similarly
situated parties (as determined by the Borrower in good faith) and in connection
with which the Lender has received reasonably satisfactory projections for the
12 month period after the date of such termination, cancellation, restatement,
supplement, entry or other modification showing, on a pro forma basis after
giving effect thereto, that the Loan Parties shall be in pro forma compliance
with the financial covenant set forth in Section 7.11 of the Senior REIT Credit
Agreement (without giving effect to the proviso thereto or (ii) otherwise
reasonably satisfactory to the Lender (whose consent to such terms shall not be
unreasonably withheld, conditioned or delayed); provided that nothing in this
clause (b) is intended to restrict (x) mergers or consolidations of Loan Parties
permitted under Section 7.04 or (z) any Disposition completed in accordance with
Section 7.05;

(c) permit any Property to cease to be wholly owned by a Loan Party or ground
leased by a Loan Party pursuant to a long term Ground Lease which has been
reviewed and approved by the Lender (such approval not to be unreasonably
withheld, delayed or conditioned) except in connection with a Disposition
completed in accordance with Section 7.05; or

(d) permit any Operating Lessee to terminate or to amend, modify or change any
Management Agreement in any material respect without the prior written consent
of the Lender (such consent not to be unreasonably delayed, conditioned or
withheld): provided that nothing in this clause (d) is intended to restrict (x)
mergers or consolidations of Loan Parties permitted under Section 7.04, (y)
acquisitions of Properties or (z) any Disposition completed in accordance with
Section 7.05.

Section 7.15 Anti-Money Laundering.

The Borrower shall not, nor shall the Borrower permit any of the Restricted
Subsidiaries to, directly or indirectly:

(a) (i) knowingly conduct any business or engage in making or receiving any
contribution of funds, goods or services to or for the benefit of any Sanctioned
Person, (ii) knowingly deal in, or otherwise engage in any transaction relating
to, any property or interests in property blocked pursuant to any applicable
Sanctions or laws related to money laundering or (iii) knowingly engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any applicable Sanctions.

(b) Cause or permit any of the funds of the Borrower and any Restricted
Subsidiary that are used to repay the Loans to be derived from any unlawful
activity with the result that the making of the Credit Extensions would be in
violation of Law.

Section 7.16 Permitted Activities of Specified Property Owning Entities.

Notwithstanding anything to the contrary in this Agreement, each Specified
Property Owning Entity shall not (a) incur, directly or indirectly, any
Indebtedness for borrowed money other than intercompany indebtedness in
accordance with Section 7.03(b) and (d); (b) create or

 

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suffer to exist any Lien upon any property or assets now owned or hereafter
acquired, leased or licensed by it other than as permitted under Sections
7.01(c), (d), (e), (f), (g), (h), (i), (s), (t) and (x); (c) engage in any
business or activity or own any material assets other than the ownership,
acquisition, development, construction, repair, improvement, renovation,
disposition or leasing of the Properties and activities incidental thereto; (d)
except as otherwise permitted pursuant to Sections 7.04 or 7.05, consolidate
with or merge with or into, or convey, transfer, lease or license all or
substantially all its assets to, any Person other than with, into or to a Loan
Party or any other Specified Property Owning Entity; (e) [reserved]; and (f)
transfer, lease or sell, in one transaction or any combination of transactions,
the assets or all or substantially all of the properties or assets of such
Specified Property Owning Entity except to the extent permitted by the Loan
Documents.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

Section 8.01 Events of Default.

Any of the following from and after the Closing Date shall constitute an event
of default (an “Event of Default”):

(a) Non-Payment. Any Loan Party fails to pay (i) when and as required to be paid
herein, any amount of principal of any Loan, or (ii) within five Business Days
after the same becomes due, any interest on any Loan or any other amount payable
hereunder or with respect to any other Loan Document; or

(b) Specific Covenants. The Borrower or any Restricted Subsidiary fails to
perform or observe any term, covenant or agreement contained in any of Section
6.03(a) or 6.05(a) (solely with respect to the Borrower) or Article VII; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in Sections 8.01(a) or 8.01(b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days after written notice thereof by the Lender to the
Borrower; or

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any
other Loan Party herein, in any other Loan Document, or in any document required
to be delivered in connection herewith or therewith shall be incorrect in any
material respect when made or deemed made; or

(e) Cross-Default. Any Loan Party or any Restricted Subsidiary (A) fails to make
any payment beyond the applicable grace period with respect thereto, if any,
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Indebtedness (other than Indebtedness hereunder)
having an outstanding aggregate principal amount of not less than $100,000,000;
or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness, or any other event occurs (other than, with respect to
Indebtedness consisting of Swap Contracts, termination events or equivalent
events pursuant to

 

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the terms of such Swap Contracts), the effect of which default or other event is
to cause, or to permit the holder or holders of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due or
to be repurchased, prepaid, defeased or redeemed (automatically or otherwise),
or an offer to repurchase, prepay, defease or redeem such Indebtedness to be
made, prior to its stated maturity; provided that this clause (e)(B) shall not
apply to Secured Indebtedness that becomes due as a result of the voluntary sale
or transfer of the property or assets securing such Indebtedness, if such sale
or transfer is permitted hereunder and under the documents providing for such
Indebtedness.

(f) Insolvency Proceedings, Etc. Any Loan Party or any Restricted Subsidiary
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator, administrator, administrative receiver or similar
officer for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator, administrator,
administrative receiver or similar officer is appointed without the application
or consent of such Person and the appointment continues undischarged or unstayed
for 60 calendar days; or any proceeding under any Debtor Relief Law relating to
any such Person or to all or any material part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for 60
calendar days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Restricted
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
part of the property of the Loan Parties, taken as a whole, and is not released,
vacated or fully bonded within 60 days after its issue or levy; or

(h) Judgments. There is entered against any Loan Party or any Restricted
Subsidiary a final judgment or order for the payment of money in an aggregate
amount exceeding $25,000,000 (to the extent not covered by independent
third-party insurance as to which the insurer has been notified of such judgment
or order and has not denied coverage) and such judgment or order shall not have
been satisfied, vacated, discharged or stayed or bonded pending an appeal for a
period of 60 consecutive days; or

(i) Invalidity of Loan Documents. Any material provision of any Loan Document,
at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder (including as a result of a
transaction permitted under Sections 7.04 or 7.05) or as a result of acts or
omissions by the Lender or the satisfaction in full of all the Obligations,
ceases to be in full force and effect; or any Loan Party contests in writing the
validity or enforceability of any provision of any Loan Document; or any Loan
Party denies in writing that it has any or further liability or obligation under
any Loan Document (other than as a result of repayment in full of the
Obligations and termination of the Commitments), or purports in writing to
revoke or rescind any Loan Document; or

(j) Change of Control. There occurs any Change of Control; or

 

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(k) [reserved];

(l) ERISA. (i) An ERISA Event occurs which has resulted or could reasonably be
expected to result in liability of a Loan Party or a Restricted Subsidiary or
any ERISA Affiliate in an aggregate amount which could reasonably be expected to
result in a Material Adverse Effect, or (ii) a Loan Party, any Restricted
Subsidiary or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount which could reasonably be expected to result in a Material
Adverse Effect; or

(m) Operating Leases and Management Agreements. (i) Any default, event of
default or similar event occurs under any Material Operating Lease, subject to
applicable notice or grace periods, as a result of non-payment, or bankruptcy or
insolvency of any party thereto, (ii) any other default, event of default or
similar event occurs under any Material Operating Lease that results in the
acceleration or early termination of such Material Operating Lease, or (iii) any
event of default occurs under any Material Management Agreement, subject to
applicable notice or grace periods, as a result of non-payment, or bankruptcy or
insolvency in relation to the applicable Operating Lessee.

Section 8.02 Remedies Upon Event of Default.

If any Event of Default occurs and is continuing, the Lender may take any or all
of the following actions:

(i) declare the commitment of the Lender to make Loans to be terminated,
whereupon such commitments shall be terminated;

(ii) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower;

(iii) [reserved]; and

(iv) exercise on behalf of itself all rights and remedies available to it under
the Loan Documents or applicable Law or in equity;

provided that, upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Bankruptcy Code of the United
States, the obligation of the Lender to make Loans shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable, in
each case without further act of the Lender.

 

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Section 8.03 Exclusion of Immaterial Subsidiaries.

Solely for the purpose of determining whether a Default or Event of Default has
occurred under Section 8.01(f) or 8.01(g), any reference in any such clause to
any Restricted Subsidiary or Loan Party shall be deemed not to include any
Restricted Subsidiary (an “Immaterial Subsidiary”) affected by any event or
circumstances referred to in any such clause that did not individually, as of
the last day of the most recent completed fiscal quarter of the Borrower, have
assets with a fair market value in excess of 2.5% of Total Assets (and, when
taken together with all other Immaterial Subsidiaries as of such date, did not
have assets with a fair market value in excess of 7.5% of Total Assets).

Section 8.04 Application of Funds.

After the exercise of remedies provided for in Section 8.02 (or after the Loans
have automatically become immediately due and payable), any amounts received on
account of the Obligations shall be applied by the Lender in the following order
(to the fullest extent permitted by mandatory provisions of applicable Law):

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (other than principal and interest, but
including Attorney Costs payable under Section 10.04 and amounts payable under
Article III) payable to the Lender;

Second, [reserved];

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans;

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans;

Fifth, to the payment of all other Obligations of the Borrower that are due and
payable to the Lender on such date;

Sixth, [reserved]; and

Last, the balance, if any, after all of the Obligations have been paid in full,
to the Borrower or as otherwise required by Law.

 

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ARTICLE IX

[RESERVED]

ARTICLE X

MISCELLANEOUS

Section 10.01 Amendments, Etc.

Except as otherwise set forth in this Agreement, no amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent to any
departure by any Loan Party therefrom, shall be effective unless in writing
signed by the Lender and such Loan Party and each such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given;

Notwithstanding anything in this Agreement or any other Loan Document to the
contrary, the Borrower and the Lender may enter into any Incremental Amendment
in accordance with Section 2.14, any Refinancing Amendment in accordance with
Section 2.15 and any Extension Amendment in accordance with Section 2.16 and
such Incremental Amendments, Refinancing Amendments and Extension Amendments
shall be effective to amend the terms of this Agreement and the other applicable
Loan Documents, in each case, without any further action or consent of any other
party to any Loan Document (other than as set forth in such Sections).

Section 10.02 Notices and Other Communications; Facsimile Copies.

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder or under any other Loan Document shall be
in writing (including by facsimile transmission). All such written notices shall
be mailed, faxed or delivered to the applicable address, facsimile number or
electronic mail address, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows: if to the Borrower (or any other Loan Party) or
the Lender, to the address, facsimile number, electronic mail address or
telephone number specified for such Person on Schedule 10.02 or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the other parties.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of Section 10.02(c)),
when delivered; provided that notices and other communications to the Lender
pursuant to Article II shall not be effective until actually received by such
Person. In no event shall a voice mail message be effective as a notice,
communication or confirmation hereunder.

 

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(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile or other electronic communication. The
effectiveness of any such documents and signatures shall, subject to applicable
Law, have the same force and effect as manually signed originals and shall be
binding on all Loan Parties and the Lender.

(c) Reliance Lender. The Lender shall be entitled to rely and act upon any
notices (including telephonic Committed Loan Notices) purportedly given by or on
behalf of the Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrower shall indemnify
each Lender-Related Person and the Lender from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower in the absence of gross
negligence or willful misconduct as determined in a final and non-appealable
judgment by a court of competent jurisdiction. All telephonic notices to the
Lender may be recorded by the Lender, and each of the parties hereto hereby
consents to such recording.

Section 10.03 No Waiver; Cumulative Remedies.

No failure by the Lender to exercise, and no delay by the Lender in exercising,
any right, remedy, power or privilege hereunder or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided, and provided under
each other Loan Document, are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by Law or in equity.

Section 10.04 Attorney Costs and Expenses.

The Borrower agrees (a) if the Closing Date occurs, to pay or reimburse the
Lender for all reasonable and documented out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation and execution of this
Agreement and the other Loan Documents, and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated thereby are consummated), and the consummation and
administration of the transactions contemplated hereby and thereby (including
all Attorney Costs, which shall be limited to Fried, Frank, Harris, Shriver &
Jacobson LLP and Wilkie, Farr and Gallagher LLP, one local counsel as reasonably
necessary in each relevant jurisdiction material to the interests of the Lender
and (b) from and after the Closing Date, to pay or reimburse the Lender for all
reasonable and documented out-of-pocket costs and expenses incurred in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any legal
proceeding, including any proceeding under any Debtor Relief Law, and including
all respective Attorney Costs which shall be limited to Attorney Costs of two
counsels to the Lender (and one local counsel as reasonably necessary in each
relevant jurisdiction material to the interests of the Lender )). The foregoing
costs and expenses shall include all reasonable search, filing, recording and
title

 

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insurance charges (to the extent applicable) and fees related thereto, and other
reasonable and documented out-of-pocket expenses incurred by the Lender. The
agreements in this Section 10.04 shall survive the termination of the
Commitments and repayment of all other Obligations. All amounts due under this
Section 10.04 shall be paid within 30 days of receipt by the Borrower of an
invoice relating thereto setting forth such expenses in reasonable detail
including, if requested by the Borrower and to the extent reasonably available,
backup documentation supporting such reimbursement request; provided that with
respect to the Closing Date, all amounts due under this Section 10.04 shall be
paid on the Closing Date solely to the extent invoiced to the Borrower within
three Business Days of the Closing Date. If any Loan Party fails to pay when due
any costs, expenses or other amounts payable by it hereunder or under any Loan
Document, such amount may be paid on behalf of such Loan Party by the Lender in
its sole discretion. For the avoidance of doubt, this Section 10.04 shall not
apply to Taxes, except any Taxes that represent liabilities, obligations,
losses, damages, penalties, claims, demands, actions, prepayments, suits, costs,
expenses and disbursements arising from any non-Tax claims.

Section 10.05 Indemnification by the Borrower.

The Borrower shall indemnify and hold harmless each Lender-Related Person and
the Lender, and their respective Affiliates, and their respective officers,
directors, employees, partners, agents, advisors and other representatives of
each of the foregoing (collectively the “Indemnitees”) from and against any and
all liabilities (including Environmental Liabilities), obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs, expenses
and disbursements (including Attorney Costs but limited in the case of legal
fees and expenses to the reasonable and documented out-of-pocket fees,
disbursements and other charges of one counsel to all Indemnitees taken as a
whole and, if reasonably necessary, one local counsel for all Indemnitees taken
as a whole in each relevant jurisdiction that is material to the interests of
the Lender, and solely in the case of a conflict of interest, one additional
counsel in each relevant jurisdiction to each group of similarly situated
affected Indemnitees) of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against any such Indemnitee in any way
relating to or arising out of or in connection with (a) the execution, delivery,
enforcement, performance or administration of any Loan Document or any other
agreement, document, letter or instrument delivered in connection with the
transactions contemplated thereby or the consummation of the transactions
contemplated thereby, (b) any Commitment or Loan or the use or proposed use of
the proceeds therefrom or (c) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto in all
cases, whether or not caused by or arising, in whole or in part, out of the
negligence of the Indemnitee; provided that, notwithstanding the foregoing, such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements resulted from (x) the gross
negligence, bad faith or willful misconduct of such Indemnitee or of any of its
Affiliates or their respective directors, officers, employees, partners, agents,
advisors or other representatives, as determined by a final non-appealable
judgment of a court of competent jurisdiction, (y) a material breach of any
obligations under any Loan Document by such Indemnitee or of any of its
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respective directors, officers, employees, partners, advisors or other
representatives, as determined by a final non-appealable judgment of a court of
competent jurisdiction or (z) any dispute solely among Indemnitees (other than
any claims arising out of any act or omission of the Borrower, the Investors or
any of their respective Affiliates). No Indemnitee shall be liable for any
damages arising from the use by others of any information or other materials
obtained through IntraLinks or other similar information transmission systems in
connection with this Agreement, nor shall any Indemnitee, Loan Party or any
Subsidiary have any liability for any special, punitive, indirect or
consequential damages relating to this Agreement or any other Loan Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Closing Date) (other than, in the case of any Loan Party, in
respect of any such damages incurred or paid by an Indemnitee to a third party
and for any out-of-pocket expenses); it being agreed that this sentence shall
not limit the indemnification obligations of the Borrower or any Subsidiary. In
the case of an investigation, litigation or other proceeding to which the
indemnity in this Section 10.05 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by any
Loan Party, any Subsidiary of any Loan Party, its directors, stockholders or
creditors or an Indemnitee or any other Person, whether or not any Indemnitee is
otherwise a party thereto and whether or not any of the transactions
contemplated hereunder or under any of the other Loan Documents are consummated.
All amounts due under this Section 10.05 shall be paid within 30 days after
written demand therefor (together with backup documentation supporting such
reimbursement request); provided, however, that such Indemnitee shall promptly
refund the amount of any payment to the extent that there is a final and
non-appealable judgment from a court of competent jurisdiction that such
Indemnitee was not entitled to indemnification rights with respect to such
payment pursuant to the express terms of this Section 10.05. The agreements in
this Section 10.05 shall survive the replacement of the Lender, the termination
of the Commitments and the repayment, satisfaction or discharge of all the other
Obligations. For the avoidance of doubt, this Section 10.05 shall not apply to
Taxes, except any Taxes that represent liabilities, obligations, losses,
damages, penalties, claims, demands, actions, prepayments, suits, costs,
expenses and disbursements arising from any non-Tax claims.

Section 10.06 Payments Set Aside.

To the extent that any payment by or on behalf of the Borrower is made to the
Lender, or the Lender exercises its right of setoff, and such payment or the
proceeds of such setoff or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall, to the fullest extent possible under provisions of applicable Law, be
revived and continued in full force and effect as if such payment had not been
made or such setoff had not occurred.

Section 10.07 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder

 

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without the prior written consent of the Lender (except as permitted by Section
7.04) and the Lender may not assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee or (ii) by way of
participation in accordance with the provisions of Section 10.07(f). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in Section 10.07(f) and,
to the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

(b) [reserved].

(c) [reserved].

(d) [reserved].

(e) [reserved].

(f) The Lender may at any time sell participations to any Person, subject to the
proviso to Section 10.07(a) (each, a “Participant”), in all or a portion of the
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans owing to it); provided that (i) the
Lender’s obligations under this Agreement shall remain unchanged, (ii) the
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower shall continue to deal
solely and directly with the Lender in connection with the Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
the Lender sells such a participation shall provide that the Lender shall retain
the sole right to enforce this Agreement and the other Loan Documents and to
approve any amendment, modification or waiver of any provision of this Agreement
or the other Loan Documents; provided that such agreement or instrument may
provide that the Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the second proviso
to Section 10.01 that requires the affirmative vote of the Lender. Subject to
Section 10.07(g), the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 3.01, 3.04 and 3.05 (subject to the requirements and
limitations of such Sections) to the same extent as if it were the Lender and
had acquired its interest by assignment pursuant to Section 10.07(c). To the
extent permitted by applicable Law, each Participant also shall be entitled to
the benefits of Section 10.09 as though it were the Lender. When it sells a
participation the Lender shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each participant’s interest in the Loans or other obligations under
this Agreement (the “Participant Register”); provided that the Lender shall not
have any obligation to disclose all or any portion of the Participant Register
to any Person (including the identity of any Participant or any information
relating to a Participant’s interest in any Commitments, Loans or its other
obligations under any Loan Document) except to the extent that such disclosure
is necessary in connection with an audit or other proceeding to establish that
such Commitment, Loan, or other obligation is in registered form under Section
5f.103-1(c) of the United States Department of the Treasury regulations. The
entries in the Participant Register shall be conclusive and the Lender shall
treat each person whose name is recorded in the Participant Register as the
owner of such participation for all purposes of this Agreement notwithstanding
any notice to the contrary.

 

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(g) A Participant shall not be entitled to receive any greater payment under
Sections 3.01, 3.04 or 3.05 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent, not to be unreasonably withheld or delayed.

(h) The Lender may, without the consent of the Borrower, at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement (including under its Note, if any) to secure obligations of the
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank or other central bank having jurisdiction over the Lender; provided
that no such pledge or assignment shall release the Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for the Lender
as a party hereto.

(i) [reserved].

(j) Notwithstanding anything to the contrary contained herein, without the
consent of the Borrower, the Lender may in accordance with applicable Law create
a security interest in all or any portion of the Loans owing to it and the Note,
if any, held by it.

(k) [reserved].

(l) [reserved].

(m) The Lender may, so long as no Default or Event of Default has occurred and
is continuing t, at any time, assign all or a portion of its rights and
obligations with respect to Loans under this Agreement to the Borrower through,
notwithstanding Section 2.12 or any other provision in this Agreement, open
market purchase on a non-pro rata basis; provided that in connection with such
assignments, (A) the principal amount of such Loans, along with all accrued and
unpaid interest thereon, so assigned or transferred to the Borrower shall be
deemed automatically cancelled and extinguished on the date of such
contribution, assignment or transfer and (B) the aggregate outstanding principal
amount of Loans shall reflect such cancellation and extinguishing of the Loans
then held by the Borrower.

Section 10.08 Confidentiality.

The Lender agrees to maintain the confidentiality of the Information and not to
disclose such information, except that Information may be disclosed (a) to its
Affiliates and its Affiliates’ managers, administrators, directors, officers,
employees, trustees, partners, investors, investment advisors and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any Governmental Authority or
self-regulatory authority having or asserting jurisdiction over such Person
(including any Governmental Authority or examiner (including the National
Association of Insurance Commissioners or any other similar organization)
regulating the Lender or its Affiliates); provided that the Lender agrees that
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soon as practicable in the event of any such disclosure by such Person (other
than at the request of a regulatory authority or examiner) unless such
notification is prohibited by law, rule or regulation; (c) [reserved]; (d) to
the extent required by applicable Laws or regulations or by any subpoena or
similar legal process; provided that the Lender agrees that it will notify the
Borrower as soon as practicable in the event of any such disclosure by such
Person (other than at the request of a regulatory authority or examiner) unless
such notification is prohibited by law, rule or regulation; (e) to any other
party to this Agreement; (f) subject to an agreement containing provisions at
least as restrictive as those set forth in this Section 10.08 (or as may
otherwise be reasonably acceptable to the Borrower), to any pledgee referred to
in Section 10.07, counterparty to a Swap Contract, Eligible Assignee of or
Participant in, or any prospective Eligible Assignee of or Participant in any of
its rights or obligations under this Agreement (provided that the disclosure of
any such Information to any Eligible Assignees or Participants shall be made
subject to the acknowledgement and acceptance by such Eligible Assignee or
Participant that such Information is being disseminated on a confidential basis
(on substantially the terms set forth in this Section 10.08 or as otherwise
reasonably acceptable to the Borrower,) in accordance with the standard
processes of the Lender or customary market standards for dissemination of such
type of Information); (g) with the written consent of the Borrower; (h) to the
extent such Information becomes publicly available other than as a result of a
breach of this Section 10.08 or becomes available to the Lender or any of its
Affiliates on a nonconfidential basis from a source other than a Loan Party or
any Investor or their respective Affiliates (so long as such source is not known
to the Lender, or any of its Affiliates to be bound by confidentiality
obligations to any Loan Party); (i) to any Governmental Authority or examiner
(including the National Association of Insurance Commissioners or any other
similar organization) regulating the Lender; (j) to any rating agency when
required by it (it being understood that, prior to any such disclosure, such
rating agency shall undertake to preserve the confidentiality of any Information
relating to Loan Parties and their Subsidiaries received by it from the Lender)
or to the CUSIP Service Bureau or any similar organization; (k) in connection
with the exercise of any remedies hereunder, under any other Loan Document or
the enforcement of its rights hereunder or thereunder or (l) to the extent such
Information is independently developed by the Lender, or any of its Affiliates.
In addition, the Lender may disclose the existence of this Agreement and
publicly available information about this Agreement to market data collectors,
similar service providers to the lending industry, and service providers to the
Lender in connection with the administration and management of this Agreement,
the other Loan Documents, the Commitments, and the Credit Extensions. For the
purposes of this Section 10.08, “Information” means all information received
from the Loan Parties relating to any Loan Party, its Affiliates or its
Affiliates’ directors, managers, officers, employees, trustees, investment
advisors or agents, relating to the Borrower or any of its Subsidiaries or its
business, other than any such information that is publicly available to the
Lender prior to disclosure by any Loan Party other than as a result of a breach
of this Section 10.08; provided that all information received after the Closing
Date from the Borrower or any of its Subsidiaries shall be deemed confidential
unless such information is clearly identified at the time of delivery as not
being confidential.

Section 10.09 Setoff.

In addition to any rights and remedies of the Lender provided by Law, upon the
occurrence and during the continuance of any Event of Default, the Lender and
its Affiliates is authorized at any time and from time to time, without prior
notice to the Borrower, any such

 

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notice being waived by the Borrower (on their own behalf and on behalf of each
Loan Party and each of its Subsidiaries) to the fullest extent permitted by
applicable Law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
Indebtedness at any time owing by, the Lender and its Affiliates to or for the
credit or the account of the respective Loan Parties and their Subsidiaries
against any and all Obligations owing to the Lender and its Affiliates hereunder
or under any other Loan Document, now or hereafter existing, irrespective of
whether or not the Lender or its Affiliate shall have made demand under this
Agreement or any other Loan Document and although such Obligations may be
contingent or unmatured or denominated in a currency different from that of the
applicable deposit or Indebtedness. The rights of the Lender under this
Section 10.09 are in addition to other rights and remedies (including other
rights of setoff) that the Lender may have. No amounts set off from any
Guarantor shall be applied to any Excluded Swap Obligations of such Guarantor.

Section 10.10 Interest Rate Limitation.

Notwithstanding anything to the contrary contained in any Loan Document, the
interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable Law (the “Maximum
Rate”). If the Lender shall receive interest in an amount that exceeds the
Maximum Rate, the excess interest shall be applied to the principal of the Loans
or, if it exceeds such unpaid principal, refunded to the Borrower. In
determining whether the interest contracted for, charged, or received by the
Lender exceeds the Maximum Rate, the Lender may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

Section 10.11 Counterparts.

This Agreement and each other Loan Document may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery by telecopier or
other electronic transmission of an executed counterpart of a signature page to
this Agreement and each other Loan Document shall be effective as delivery of an
original executed counterpart of this Agreement and such other Loan Document.
The Lender may also require that any such documents and signatures delivered by
telecopier or other electronic transmission be confirmed by a manually signed
original thereof; provided that the failure to request or deliver the same shall
not limit the effectiveness of any document or signature delivered by telecopier
or other electronic transmission.

Section 10.12 Integration; Termination.

This Agreement, together with the other Loan Documents, comprises the complete
and integrated agreement of the parties on the subject matter hereof and thereof
and supersedes all prior agreements, written or oral, on such subject matter. In
the event of any conflict between the provisions of this Agreement and those of
any other Loan Document, the provisions of this Agreement shall control;
provided that the inclusion of supplemental rights or remedies in favor of the
Lender in any other Loan Document shall not be deemed a conflict with this
Agreement.

 

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Each Loan Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any
party, but rather in accordance with the fair meaning thereof.

Section 10.13 Survival of Representations and Warranties.

All representations and warranties made hereunder and in any other Loan Document
or other document delivered pursuant hereto or thereto or in connection herewith
or therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Lender,
regardless of any investigation made by the Lender or on its behalf and
notwithstanding that the Lender may have had notice or knowledge of any Default
at the time of any Credit Extension, and shall continue in full force and effect
as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied.

Section 10.14 Severability.

If any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, the legality, validity and enforceability of
the remaining provisions of this Agreement and the other Loan Documents shall
not be affected or impaired thereby. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

Section 10.15 GOVERNING LAW.

(a) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) ANY LEGAL ACTION OR PROCEEDING ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, SHALL BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE SITTING IN THE CITY OF NEW YORK
(BOROUGH OF MANHATTAN), AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
LOAN PARTY AND THE LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS AND AGREES THAT IT WILL NOT
COMMENCE OR SUPPORT ANY SUCH ACTION OR PROCEEDING IN ANOTHER JURISDICTION. EACH
LOAN PARTY AND THE LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR

 

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RELATING TO ANY LOAN DOCUMENTS IN THE MANNER PROVIDED FOR NOTICES (OTHER THAN
TELECOPIER OR OTHER ELECTRONIC TRANSMISSION) IN SECTION 10.02. NOTHING IN THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
NOTWITHSTANDING ANYTHING HEREIN OR IN ANY OTHER LOAN DOCUMENT TO THE CONTRARY, A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.

Section 10.16 WAIVER OF RIGHT TO TRIAL BY JURY.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION 10.16 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 10.17 Binding Effect.

This Agreement shall become effective when it shall have been executed by the
Loan Parties party hereto and the Lender, and thereafter this Agreement shall be
binding upon and inure to the benefit of the Loan Parties, the Lender and their
respective successors and assigns, in each case in accordance with Section 10.07
(if applicable) and except that no Loan Party shall have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lender except as permitted by Section 7.04.

Section 10.18 USA PATRIOT Act.

The Lender hereby notifies the Borrower that pursuant to the requirements of the
USA PATRIOT Act, it may be required to obtain, verify and record information
that identifies each Loan Party, which information includes the name, address
and tax identification number of such Loan Party and other information regarding
such Loan Party that will allow the Lender to identify such Loan Party in
accordance with the USA PATRIOT Act. This notice is given in accordance with the
requirements of the USA PATRIOT Act and is effective as to the Lender.

 

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Section 10.19 No Advisory or Fiduciary Responsibility.

(a) In connection with all aspects of each transaction contemplated hereby, each
Loan Party acknowledges and agrees, and acknowledges its Affiliates’
understanding, that (i) the facilities provided for hereunder and any related
arranging or other services in connection therewith (including in connection
with any amendment, waiver or other modification hereof or of any other Loan
Document) are an arm’s-length commercial transaction between the Borrower and
its Affiliates, on the one hand, and the Lender, on the other hand, and the
Borrower is capable of evaluating and understanding and understands and accepts
the terms, risks and conditions of the transactions contemplated hereby and by
the other Loan Documents (including any amendment, waiver or other modification
hereof or thereof), (ii) in connection with the process leading to such
transaction, the Lender is and has been acting solely as a principal and is not
the financial advisor, agent or fiduciary, for the Borrower or any of its
Affiliates, stockholders, creditors or employees or any other Person, (iii) the
Lender has not assumed and will not assume an advisory, agency or fiduciary
responsibility in favor of the Borrower with respect to any of the transactions
contemplated hereby or the process leading thereto, including with respect to
any amendment, waiver or other modification hereof or of any other Loan Document
(irrespective of whether the Lender has advised or is currently advising the
Borrower or any of its Affiliates on other matters) and the Lender has no
obligation to the Borrower or any of its Affiliates with respect to the
financing transactions contemplated hereby except those obligations expressly
set forth herein and in the other Loan Documents, (iv) the Lender and its
Affiliates may be engaged in a broad range of transactions that involve
interests that differ from, and may conflict with, those of the Borrower and its
Affiliates, the Lender has no obligation to disclose any of such interests by
virtue of any advisory, agency or fiduciary relationship and (v) the Lender has
not provided and will not provide any legal, accounting, regulatory or tax
advice with respect to any of the transactions contemplated hereby (including
any amendment, waiver or other modification hereof or of any other Loan
Document) and the Loan Parties have consulted their own legal, accounting,
regulatory and tax advisors to the extent they have deemed appropriate.

Each Loan Party acknowledges and agrees that the Lender and any Affiliate
thereof may lend money to, invest in, and generally engage in any kind of
business with, any of the Borrower, Parent, any Investor, any Affiliate thereof
or any other person or entity that may do business with or own securities of any
of the foregoing, all as if the Lender or Affiliate thereof were not a Lender or
an Affiliate thereof (or an agent or any other person with any similar role
under the Facilities) and without any duty to account therefor to Parent, the
Borrower, any Investor or any Affiliate of the foregoing. The Lender and any
Affiliate thereof may accept fees and other consideration from Parent, the
Borrower, any Investor or any Affiliate thereof for services in connection with
this Agreement, the Facilities or otherwise without having to account for the
same to any Parent, the Borrower, any Investor or any Affiliate of the
foregoing. The Lender may have directly or indirectly acquired certain equity
interests (including warrants) in Parent, the Borrower, an Investor or an
Affiliate thereof or may have directly or indirectly extended credit on a
subordinated basis to Parent, the Borrower, an Investor or an Affiliate thereof.
Each party hereto, on its behalf and on behalf of its Affiliates, acknowledges
and waives the potential conflict of interest resulting from any the Lender or
an Affiliate thereof holding disproportionate interests in the extensions of
credit under the Facilities or otherwise acting as arranger or agent thereunder
and the Lender or any Affiliate thereof directly or indirectly holding equity
interests in or subordinated debt issued by Parent, the Borrower, an Investor or
an Affiliate thereof.

 

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Section 10.20 [Reserved]

Section 10.21 [Reserved].

Section 10.22 Judgment Currency.

If for the purposes of obtaining judgment in any court it is necessary to
convert a sum due from the Borrower hereunder in the currency expressed to be
payable herein (the “specified currency”) into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures the Lender could purchase the specified currency with such other
currency on the Business Day preceding that on which final judgment is given.
The obligations of the Borrower in respect of any sum due to the Lender
hereunder shall, notwithstanding any judgment in a currency other than the
specified currency, be discharged only to the extent that on the Business Day
following receipt by the Lender of any sum adjudged to be so due in such other
currency the Lender may in accordance with normal banking procedures purchase
the specified currency with such other currency; if the amount of the specified
currency so purchased is less than the sum originally due to the Lender in the
specified currency, the Borrower agrees, to the fullest extent that it may
effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify the Lender against such loss, and if the amount of the
specified currency so purchased exceeds the sum originally due to the Lender in
the specified currency, the Lender agrees to remit such excess to the Borrower.

ARTICLE XI

GUARANTY

Section 11.01 The Guaranty.

Each Guarantor hereby jointly and severally with the other Guarantors
guarantees, as a primary obligor and not merely as a surety to the Lender and
its successors and assigns, the prompt payment in full when due (whether at
stated maturity, by required prepayment, declaration, demand, by acceleration or
otherwise) of the principal of and interest (including any interest, fees, costs
or charges that would accrue but for the provisions of (i) Title 11 of the
United States Code after any bankruptcy or insolvency petition under Title 11 of
the United States Code and (ii) any other Debtor Relief Laws) on the Loans made
by the Lender to, and the Notes held by the Lender of, the Borrower, and all
other Obligations from time to time owing to the Lender by any Loan Party under
any Loan Document strictly in accordance with the terms thereof (such
obligations being herein collectively called the “Guaranteed Obligations”). The
Guarantors hereby jointly and severally agree that if the Borrower or other
Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by
acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors
will promptly pay the same in cash, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due (whether
at extended maturity, by acceleration or otherwise) in accordance with the terms
of such extension or renewal.

 

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Section 11.02 Obligations Unconditional.

The obligations of the Guarantors under Section 11.01 shall constitute a
guarantee of payment and to the fullest extent permitted by applicable Law, are
absolute, irrevocable and unconditional, joint and several, irrespective of the
value, genuineness, validity, regularity or enforceability of the Guaranteed
Obligations of the Borrower under this Agreement, the Notes, if any, or any
other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of any of the
Guaranteed Obligations, and, irrespective of any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
surety or Guarantor (except for payment in full). Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or more
of the following shall not alter or impair the liability of the Guarantors
hereunder which shall remain absolute, irrevocable and unconditional under any
and all circumstances as described above:

(i) at any time or from time to time, without notice to the Guarantors, to the
extent permitted by Law, the time for any performance of or compliance with any
of the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;

(ii) any of the acts mentioned in any of the provisions of this Agreement or the
Notes, if any, or any other agreement or instrument referred to herein or
therein shall be done or omitted;

(iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or
any of the Guaranteed Obligations shall be amended in any respect, or any right
under the Loan Documents or any other agreement or instrument referred to herein
or therein shall be amended or waived in any respect or any other guarantee of
any of the Guaranteed Obligations shall be released or exchanged in whole or in
part or otherwise dealt with;

(iv) [reserved]; or

(v) the release of any other Guarantor pursuant to Section 11.10 or otherwise.

The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and, to the extent permitted by Law, all notices whatsoever, and any
requirement that the Lender exhaust any right, power or remedy or proceed
against the Borrower under this Agreement or the Notes, if any, or any other
agreement or instrument referred to herein or therein, or against any other
person under any other guarantee of, any of the Guaranteed Obligations. The
Guarantors waive, to the extent permitted by Law, any and all notice of the
creation, renewal, extension, waiver, termination or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by the Lender upon
this Guaranty or acceptance of this Guaranty, and the Guaranteed Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred in reliance upon this Guaranty, and all dealings

 

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between the Borrower and the Lender shall likewise be conclusively presumed to
have been had or consummated in reliance upon this Guaranty. This Guaranty shall
be construed as a continuing, absolute, irrevocable and unconditional guarantee
of payment without regard to any right of offset with respect to the Guaranteed
Obligations at any time or from time to time held by the Lender, and the
obligations and liabilities of the Guarantors hereunder shall not be conditioned
or contingent upon the pursuit by the Lender or any other person at any time of
any right or remedy against the Borrower or against any other person which may
be or become liable in respect of all or any part of the Guaranteed Obligations
or against guarantee therefor or right of offset with respect thereto. This
Guaranty shall remain in full force and effect and be binding in accordance with
and to the extent of its terms upon the Guarantors and the successors and
assigns thereof, and shall inure to the benefit of the Lender, and its
successors and assigns, notwithstanding that from time to time during the term
of this Agreement there may be no Guaranteed Obligations outstanding.

Section 11.03 Reinstatement.

The obligations of the Guarantors under this Article XI shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of the Borrower or other Loan Party in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in insolvency, bankruptcy or
reorganization or otherwise.

Section 11.04 Subrogation; Subordination.

Each Guarantor hereby agrees that until the termination of the Commitments and
the payment in full in cash in immediately available funds of all Obligations
(other than contingent indemnification obligations not yet accrued and payable),
it shall waive any claim and shall not exercise any right or remedy, direct or
indirect, arising by reason of any performance by it of its guarantee in Section
11.01, whether by subrogation or otherwise, against the Borrower or any other
Guarantor of any of the Guaranteed Obligations any of the Guaranteed
Obligations. Any Indebtedness of any Loan Party permitted pursuant to Sections
7.03(b)(ii) or 7.03(d) shall be subordinated to such Loan Party’s Obligations in
the manner set forth in the Intercompany Note evidencing such Indebtedness.

Section 11.05 Remedies.

The Guarantors jointly and severally agree that, as between the Guarantors and
the Lender, the obligations of the Borrower under this Agreement and the Notes,
if any, may be declared to be forthwith due and payable as provided in Section
8.02 (and shall be deemed to have become automatically due and payable in the
circumstances provided in Section 8.02) for purposes of Section 11.01,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Guarantors for purposes of Section 11.01.

 

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Section 11.06 Instrument for the Payment of Money.

Each Guarantor hereby acknowledges that the guarantee in this Article XI
constitutes an instrument for the payment of money, and consents and agrees that
the Lender, at its sole option, in the event of a dispute by such Guarantor in
the payment of any moneys due hereunder, shall have the right to bring a
motion-action under New York CPLR Section 3213.

Section 11.07 Continuing Guaranty.

The guarantee in this Article XI is a continuing guarantee of payment, and shall
apply to all Guaranteed Obligations whenever arising.

Section 11.08 General Limitation on Guarantee Obligations.

In any action or proceeding involving any state, corporate limited partnership
or limited liability company law, or any applicable state, federal or foreign
bankruptcy, insolvency, reorganization or other Law affecting the rights of
creditors generally, if the obligations of any Guarantor under Section 11.01
would otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under Section 11.01, then, notwithstanding any
other provision to the contrary, the amount of such liability shall, without any
further action by such Guarantor, any Loan Party or any other person, be
automatically limited and reduced to the highest amount (after giving effect to
the right of contribution established in Section 11.11) that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding. For purposes of the foregoing, all Guarantees of
such Guarantor other than the Guaranty shall be deemed to be enforceable and
payable after the Guaranty.

Section 11.09 Information.

Each Guarantor assumes all responsibility for being and keeping itself informed
of the Borrower’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks that each Guarantor assumes and incurs
under this Guaranty, and agrees that the Lender shall not have any duty to
advise any Guarantor of information known to it regarding those circumstances or
risks.

Section 11.10 Release of Guarantors.

If, in compliance with the terms and provisions of the Loan Documents, (i) all
or substantially all of the Equity Interests or property of any Guarantor are
sold or otherwise transferred to a person or persons, none of which is a Loan
Party or (ii) any Subsidiary Guarantor becomes an Excluded Subsidiary (any such
Subsidiary Guarantor described in the foregoing clause (i) or (ii), a “Released
Guarantor”), such Released Guarantor shall, upon the consummation of such sale
or transfer or upon becoming an Excluded Subsidiary, be automatically released
from its obligations under this Agreement (including under Section 10.05
hereof).

Upon the Discharge of Obligations, this Agreement, the other Loan Documents and
the guarantees made herein shall terminate with respect to all Obligations,
except with respect to

 

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Obligations that expressly survive such Discharge of Obligations pursuant to the
terms of this Agreement or the other Loan Documents. Any execution and delivery
of any document pursuant to the preceding sentence of this Section 11.10 shall
be without recourse to or warranty by the Lender.

Section 11.11 Right of Contribution.

Each Guarantor hereby agrees that to the extent that a Subsidiary Guarantor
shall have paid more than its proportionate share of any payment made hereunder,
such Subsidiary Guarantor shall be entitled to seek and receive contribution
from and against any other Guarantor hereunder which has not paid its
proportionate share of such payment (based on an equitable apportionment of such
payment among all Guarantors based on the relative value of their assets and any
other equitable considerations deemed appropriate by a court of competent
jurisdiction). Each Subsidiary Guarantor’s right of contribution shall be
subject to the terms and conditions of Section 11.04. The provisions of this
Section 11.11 shall in no respect limit the obligations and liabilities of any
Subsidiary Guarantor to the Lender, and each Subsidiary Guarantor shall remain
liable to the Lender for the full amount guaranteed by such Subsidiary Guarantor
hereunder.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

BORROWER:   ESH HOSPITALITY, INC.   By:  

/s/ Jonathan S. Halkyard

    Name:   Jonathan S. Halkyard     Title:   Chief Financial Officer SUBSIDIARY
GUARANTORS:   CP ESH INVESTORS, LLC   EXTENDED STAY LLC   ESH H PORTFOLIO LLC  
ESH SPARTANBURG GROUND LESSEE LLC   ESH ACQUISITIONS HOLDINGS LLC   ESH
ACQUISITIONS LLC   ESH CANADA MEZZANINE C LLC   ESH CANADA MEZZANINE B LLC   ESH
CANADA MEZZANINE A LLC   ESH MEZZANINE C LLC   ESH MEZZANINE B LLC   ESH
MEZZANINE A LLC   ESA P PORTFOLIO MD BENEFICIARY L.L.C.   ESA CANADA BENEFICIARY
L.L:C.   ESA CANADA ADMINISTRATOR L.L.C.   ESA P PORTFOLIO MD BORROWER L.L.C.  
ESA CANADA PROPERTIES BORROWER L.L.C.   By:  

/s/ Jonathan S. Halkyard

    Name:   Jonathan S. Halkyard     Title:   Vice President LENDER:   EXTENDED
STAY AMERICA, INC.   By:  

/s/ Jonathan S. Halkyard

    Name:   Jonathan S. Halkyard     Title:   Chief Financial Officer

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Schedule 1.01A

Commitments

 

Lender

   Commitment  

Extended Stay America, Inc.

   $ 75,000,000.00   

Total

   $ 75,000,000.00   

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Schedule 1.01D

Excluded Subsidiaries

 

i. ESA P Portfolio L.L.C.

 

ii. ESH/TN Properties L.L.C.

 

iii. ESA LVP Portfolio LLC

 

iv ESA UD Properties L.L.C.

 

v ESA P Portfolio MD Trust

 

vi ESA Canada Properties Trust

 

vii ESA P Portfolio MD Borrower L.L.C.

 

viii ESA Canada Properties Borrower L.L.C.

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Schedule 1.01E

Operating Leases

i.    Lease Agreement, dated as of October 8, 2010, as amended pursuant to that
certain First Amendment to Lease Agreement, dated as of April 9, 2012, as
further amended by that certain Second Amendment to Lease Agreement, dated as of
November 30, 2012, as further amended by that certain Third Amendment to Lease
Agreement, dated as of December 13, 2012, as further amended by that certain
Fourth Amendment to Lease Agreement, dated as of April 15, 2013, as further
amended by that certain Fifth Amendment to Lease Agreement, dated as of November
11, 2013, as further amended by that certain Sixth Amendment to Lease Agreement,
dated as of July 28, 2014, as further amended by that certain Seventh Amendment
to Lease Agreement, dated as of December 8, 2015, as further amended by that
certain Eighth Amendment to Lease Agreement, dated as of February 22, 2016, and
as further amended as of the Closing Date, by and between ESA P Portfolio
L.L.C., ESA P Portfolio MD Trust, and ESH/TN Properties L.L.C., individually and
collectively as Landlord, and ESA P Portfolio Operating Lessee Inc., as Tenant.

ii.    Lease Agreement, dated as of October 8, 2010, as amended pursuant to that
certain First Amendment to Lease Agreement, dated as of November 11, 2013, as
further amended pursuant to that certain Second Amendment to Lease Agreement,
dated as of February 22, 2016, and as further amended as of the Closing Date, by
and between ESA UD Properties L.L.C., as Landlord, and ESA 2007 Operating Lessee
Inc., as Tenant.

iii.    Lease Agreement, dated as of December 31, 2013, as amended as of the
Closing Date, by and between ESA LVP Portfolio LLC, as Landlord, and ESA LVP
Operating Lessee LLC, as Tenant.

iv.    Lease Agreement, dated as of October 8, 2010, as amended pursuant to that
certain First Amendment to Lease Agreement, dated as of November 30, 2012 and
effective as of January 1, 2012, as further amended by that certain Second
Amendment to Lease Agreement, dated as of November 11, 2013, as further amended
by that certain Third Amendment to Lease Agreement, dated as of February 22,
2016, and as further amended as of the Closing Date, by and between ESA Canada
Administrator L.L.C., as Landlord, ESA Canada Properties Trust, as Beneficial
Owner, and ESA Canada Operating Lessee ULC, as Tenant.

--------------------------------------------------------------------------------

Schedule 1.01F

Unrestricted Subsidiaries

None.

--------------------------------------------------------------------------------

Schedule 1.01G

Management Agreements

i.    Management Agreement, dated as of November 11, 2013, as amended as of the
Closing Date, by and between ESA Canada Operating Lessee ULC (Lessee) and ESA
Management, LLC (Manager) and HVM Canada Hotel Management ULC (Canada Employer).

ii.    Management Agreement, dated as of November 11, 2013, as amended pursuant
to that certain First Amendment to Management Agreement, dated as of July 28,
2014, as further amended by that certain Agreement Regarding Management
Agreement, dated as of December 8, 2015, and as further amended as of the
Closing Date, by and between ESA P Portfolio Operating Lessee LLC (Lessee) and
ESA Management, LLC (Manager).

iii.    Management Agreement, dated as of November 11, 2013, as amended as of
the Closing Date, by and between ESA 2007 Operating Lessee LLC (Lessee) and ESA
Management, LLC (Manager).

iv.    Management Agreement, dated as of December 31, 2013, as amended as of the
Closing Date, by and between ESA LVP Operating Lessee LLC (Lessee) and ESA
Management, LLC (Manager).

--------------------------------------------------------------------------------

Schedule 5.05

Certain Liabilities

None.

--------------------------------------------------------------------------------

Schedule 5.06

Litigation

None.

--------------------------------------------------------------------------------

Schedule 5.08

Ownership of Property; Liens

Ownership of Property

None.

Liens

None.

--------------------------------------------------------------------------------

Schedule 5.09(a)

Environmental Matters

None.

--------------------------------------------------------------------------------

Schedule 5.11(a)

ERISA Compliance

None.

--------------------------------------------------------------------------------

Schedule 5.12

Subsidiaries and Equity Interests

 

    

Subsidiary

  

Jurisdiction

  

Owner*

1.

  

CP ESH Investors, LLC

  

DE

  

ESH Hospitality, Inc.

2.

  

Extended Stay LLC

  

DE

  

CP ESH Investors, LLC

3.

  

ESA LVP Portfolio LLC

  

DE

  

Extended Stay LLC

4.

  

ESA UD Properties L.L.C.

  

DE

  

Extended Stay LLC

5.

  

ESH H Portfolio LLC

  

DE

  

Extended Stay LLC

6.

  

ESH Spartanburg Ground Lessee LLC

  

DE

  

Extended Stay LLC

7.

  

ESH Acquisitions Holdings LLC

  

DE

  

Extended Stay LLC

8.

  

ESH Acquisitions LLC

  

DE

  

ESH Acquisitions Holdings LLC

9.

  

ESH Mezzanine C LLC

  

DE

  

Extended Stay LLC

10.

  

ESH Canada Mezzanine C LLC

  

DE

  

Extended Stay LLC

11.

  

ESH Mezzanine B LLC

  

DE

  

ESH Mezzanine C LLC

12.

  

ESH Canada Mezzanine B LLC

  

DE

  

ESH Canada Mezzanine C LLC

13.

  

ESH Mezzanine A LLC

  

DE

  

ESH Mezzanine B LLC

14.

  

ESH Canada Mezzanine A LLC

  

DE

  

ESH Canada Mezzanine B LLC

15.

  

ESA P Portfolio L.L.C.

  

DE

  

ESH Mezzanine A LLC

16.

  

ESH/TN Properties L.L.C.

  

DE

  

ESH Mezzanine A LLC

17.

  

ESA P Portfolio MD Beneficiary L.L.C.

  

DE

  

ESH Mezzanine A LLC

18.

  

ESA Canada Beneficiary L.L.C.

  

DE

  

ESH Mezzanine A LLC

19.

  

ESA Canada Administrator L.L.C.

  

DE

  

ESH Mezzanine A LLC

20.

  

ESA P Portfolio MD Trust

  

DE

  

ESA P Portfolio MD Beneficiary L.L.C.

21.

  

ESA Canada Properties Trust

  

DE

  

ESA Canada Beneficiary L.L.C.

22.

  

ESA P Portfolio MD Borrower L.L.C.

  

DE

  

ESA P Portfolio MD Trust

23.

  

ESA Canada Properties Borrower L.L.C.

  

DE

  

ESA Canada Properties Trust

 

* Owner holds 100% of Capital Stock unless otherwise noted.

--------------------------------------------------------------------------------

Schedule 6.16

Post-Closing Covenants

i.    Releases of property-level liens created pursuant to the Mortgage Loan
Agreement on or prior to December 31, 2016.

ii.    ESA P Portfolio MD Borrower L.L.C. shall be unwound or dissolved or
merged with ESA P Portfolio MD Trust on or prior to November 30, 2016, following
which the surviving entity shall be a Specified Property Owning Entity.

ii.    ESA Canada Properties Borrower L.L.C. shall be unwound or dissolved or
merged with ESA Canada Properties Trust on or prior to November 30, 2016,
following which the surviving entity shall be a Specified Property Owning
Entity.

--------------------------------------------------------------------------------

Schedule 7.01(b)

Existing Liens

i.    Property-level liens created under mortgages, deeds of trust or other
security instruments pursuant to the Mortgage Loan Agreement.1

 

1  The Mortgage Loan Agreement and the obligations thereunder have been
terminated as of the Closing Date. Mortgages are to be released in accordance
with the post-closing obligations set forth in Section 6.16.

--------------------------------------------------------------------------------

Schedule 7.02(f)

Existing Investments

None.

--------------------------------------------------------------------------------

Schedule 7.03(b)

Existing Indebtedness

i.    Indebtedness attributable to the redemption of 12.5% preferred stock of
ESH Hospitality, Inc., issued as preferred units by ESH Hospitality, LLC, the
predecessor of ESH Hospitality, Inc., on January 3, 2011, in an amount not to
exceed $187,500.00.

--------------------------------------------------------------------------------

Schedule 7.08

Transactions with Affiliates

None.

--------------------------------------------------------------------------------

Schedule 7.09

Certain Contractual Obligations

Any applicable restrictions found in documentation for property-level liens
created pursuant to the Mortgage Loan Agreement and to be released in connection
with the closing.

--------------------------------------------------------------------------------

Schedule 10.02

Certain Addresses for Notices

Borrower:

c/o ESH Hospitality, Inc.

11525 North Community House Road

Charlotte, North Carolina 28277

Attention: Chief Legal Officer

Facsimile No.: (980) 335-3089

Attention: Chief Financial Officer

Facsimile No.: (980) 345-2090

http://www.extendedstayamerica.com/

with a copy to (which shall not constitute notice):

Centerbridge Partners, L.P.

375 Park Avenue

New York, New York 10152

Attention: William D. Rahm

Facsimile No.: (212) 672-5001

Attention: General Counsel and Scott Hopson

Facsimile No.: (212) 672-4501 and (212) 672-4526

and a copy to (which shall not constitute notice):

Paulson & Co. Inc.

1251 Avenue of the Americas, 50th Floor

New York, New York 10020

Attention: Michael Barr

Facsimile No.: (212) 351-5892

Attention: General Counsel

Facsimile No.: (212) 977-9505

and a copy to (which shall not constitute notice):

The Blackstone Group

345 Park Avenue

New York, New York 10154

Attention: A.J. Agarwal

Facsimile No.: (212) 583-5725

Attention: General Counsel

Facsimile No.: (646) 253-8983

Attention: William J. Stein

Facsimile No.: (212) 583-5726

--------------------------------------------------------------------------------

and a copy to (which shall not constitute notice):

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, New York 10004

Attention: J. Christian Nahr

Facsimile No.: (212) 859-4000

and a copy to (which shall not constitute notice):

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019-6099

Attention: Viktor Okasmaa

Facsimile No.: (212) 728-9270

Lender:

Extended Stay America, Inc.

11525 North Community House Road

Charlotte, North Carolina 28277

Attention: Chief Legal Officer

Facsimile No.: (980) 335-3089

Attention: Chief Financial Officer

Facsimile No.: (980) 345-2090

with a copy to (which shall not constitute notice):

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, New York 10004

Attention: J. Christian Nahr

Facsimile No.: (212) 859-4000

and a copy to (which shall not constitute notice):

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019-6099

Attention: Viktor Okasmaa

Facsimile No.: (212) 728-9270

--------------------------------------------------------------------------------

EXHIBIT A

[FORM OF]

COMMITTED LOAN NOTICE

 

To: Extended Stay America, Inc.

11525 North Community House Road

Attention: Chief Financial Officer

Facsimile No.: (980) 345-2090

            , 20    

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of August 30, 2016 (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among ESH Hospitality, Inc., a Delaware
corporation (the “Borrower”), the Guarantors party thereto from time to time and
Extended Stay America, Inc., as the Lender. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such teams in
the Credit Agreement.

The undersigned Borrower hereby requests a Borrowing of new Loans on
            , 20    

to be made on the terms set forth below:

 

(A)   Class of Borrowing1

 

    

 

(B)   Principal amount2

 

    

  Location and number of the Borrower’s account to which proceeds of Borrowings
are to be disbursed:  

    

 

The above request complies with the notice requirements set forth in the Credit
Agreement.

[The undersigned Borrower hereby represents and warrants to the Lender that, on
the date of this Committed Loan Notice and on the date of the related Borrowing,
the conditions to lending specified in Section 4.02 of the Credit Agreement have
been satisfied.]3

 

1  E.g., “Initial Loans”, “Incremental Loans”, “Refinancing Loans” or “Extended
Loans”.

2  Each Incremental Commitment shall be in an aggregate principal amount that is
not less than $5,000,000 and shall be in an increment of $1,000,000 (provided
that such amount may be less than $5,000,000 if such amount represents all
remaining availability under the limit set forth in Section 2.14(d)(v) of the
Credit Agreement).

3  Delete bracketed language if the Borrower is making a Request for Credit
Extension for an Incremental Loan. Update as needed for borrowings in connection
with acquisitions and investments requiring limited conditionality.

 

A-1

--------------------------------------------------------------------------------

[The undersigned Borrower hereby represents and warrants to the Lender that, on
the date of this Committed Loan Notice and on the date of the related Borrowing,
the conditions to lending specified in Section 2.14(d) of the Credit Agreement
have been satisfied.]4

 

4  Insert bracketed language if the Borrower is making a Request for Credit
Extension for an Incremental Loan (which shall be governed by Section 2.14(d) of
the Credit Agreement). Update as needed for borrowings in connection with
acquisitions and investments requiring limited conditionality.

 

A-2

--------------------------------------------------------------------------------

ESH HOSPITALITY, INC. By:  

 

  Name:   Title:

 

A-3

--------------------------------------------------------------------------------

EXHIBIT B

LENDER: Extended Stay America, Inc.

PRINCIPAL AMOUNT: $[●]

[FORM OF]

NOTE

New York, New York

            , 20    

FOR VALUE RECEIVED, the undersigned, ESH HOSPITALITY, INC., a Delaware
corporation (the “Borrower”), hereby promises to pay to the Lender set forth
above (the “Lender”) or its registered assigns, in lawful money of the United
States of America in immediately available funds at the Lending Office (such
term, and each other capitalized term used but not defined herein, having the
meaning assigned to it in the Credit Agreement, dated as of August 30, 2016 (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among the Borrower, the Guarantors party
thereto from time to time and the Lender) (i) in accordance with the provisions
of the Credit Agreement, the lesser of (A) the principal amount set forth above
and (B) the aggregate unpaid principal amounts of all Loans made by the Lender
to the Borrower pursuant to the Credit Agreement and (ii) interest at the rate
or rates per annum and on such dates as provided in the Credit Agreement on the
unpaid aggregate principal amount of all Loans made by the Lender to the
Borrower pursuant to the Credit Agreement.

The Borrower promises to pay interest, on demand, on any overdue principal and,
to the extent permitted by law, overdue interest from their due dates at the
rate or rates provided in (and to the extent required by) the Credit Agreement.

The Borrower hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever. The nonexercise by the holder hereof of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.

All borrowings evidenced by this note and all payments and prepayments of the
principal hereof and interest hereon and the respective dates thereof shall be
recorded by such holder in its internal records; provided, however, that the
failure of the holder hereof to make such a recordation or any error in such
recordation shall not affect the obligations of the Borrower under this note.

This note is one of the Notes referred to in the Credit Agreement that, among
other things, contains provisions for the acceleration of the maturity hereof
upon the happening of certain events, for optional and mandatory prepayment of
the principal hereof prior to the maturity hereof and for the amendment or
waiver of certain provisions of the Credit Agreement, all upon the terms and
conditions therein specified. This note is entitled to the benefit of the Credit
Agreement and is guaranteed as provided therein and in the Loan Documents
referred to therein.

 

B-1

--------------------------------------------------------------------------------

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

[The remainder of this page is intentionally left blank]

 

B-2

--------------------------------------------------------------------------------

ESH HOSPITALITY, INC. By:  

 

  Name:   Title:

 

B-3

--------------------------------------------------------------------------------

EXHIBIT C-1

[FORM OF]

COMPLIANCE CERTIFICATE

            , 20    

Reference is made to the Credit Agreement, dated as of August 30, 2016 (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among ESH Hospitality, Inc., a Delaware
corporation (the “Borrower”), the Guarantors party thereto from time to time and
Extended Stay America, Inc., a Delaware corporation, as the lender (the
“Lender”). Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement. Pursuant to
Section 6.02(a) of the Credit Agreement, the undersigned, in his/her capacity as
a Responsible Officer of the Borrower, certifies as follows:

 

  (a) [Attached hereto as Exhibit A is the consolidated balance sheet of the
Borrower and its Subsidiaries and Parent and its consolidated Subsidiaries as of
December 31, 20[    ], and the related consolidated statements of income or
operations, stockholders’ equity and cash flows for the fiscal year then ended,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and prepared in accordance with GAAP,
audited and accompanied by a report and opinion of Deloitte & Touche LLP5,
prepared in accordance with generally accepted auditing standards and not
subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit; provided that such
report may contain a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, if such qualification or
exception is related to (i) an upcoming maturity date under any Indebtedness or
(ii) any potential inability to satisfy any financial covenant (whether or not
such failure has occurred). Also attached hereto as Exhibit A is supplemental
financial information necessary to eliminate the accounts of Unrestricted
Subsidiaries (if any) from such consolidated financial statements.]6

 

  (b) [Attached hereto as Exhibit A is the consolidated balance sheet of the
Borrower and its Subsidiaries and Parent and its consolidated Subsidiaries as of
[            ], 20[    ] and the related consolidated statements of income or
operations for the fiscal quarter and the portion of the fiscal year then ended,
setting forth in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, and statements of stockholders’ equity for the current
fiscal quarter and consolidated statement of cash flows for the portion of the
fiscal year then ended, setting forth

 

5  Or any other independent registered public accounting firm of nationally
recognized standing.

6 

To be included if accompanying annual financial statements only. May be
satisfied with respect to such financial information by furnishing the
Borrower’s or Parent’s, as applicable, Form 10-K filed with the SEC.

 

C-1-1

--------------------------------------------------------------------------------

  in each case in comparative form the figures for the corresponding portion of
the previous fiscal year, all in reasonable detail. These financial statements
present fairly in all material respects the financial condition, results of
operations, stockholders’ equity and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes. Also attached hereto as Exhibit A is
supplemental financial information necessary to eliminate the accounts of
Unrestricted Subsidiaries (if any) from such consolidated financial
statements.]7

 

  (c) [Reserved.]

 

  (d) [Reserved.]

 

  (e) [Reserved.]

 

  (f) [Attached as Exhibit B hereto are copies of amendments to the Operating
Leases, Ground Leases and Management Agreements entered into since the later of
the Closing Date the end of the fiscal quarter for which the previous Compliance
Certificate was delivered.]8

 

  (g) Attached as Exhibit C hereto is the information required by Section
6.02(g) of the Credit Agreement.

 

  (h) To my knowledge, except as otherwise disclosed to the Lender pursuant to
the Credit Agreement, no Default has occurred.9

 

7  To be included if accompanying quarterly financial statements only. May be
satisfied with respect to such financial information by furnishing the
Borrower’s or Parent’s, as applicable, Form 10-Q filed with the SEC.

8  To be included when applicable.

9  If unable to provide the foregoing certification, fully describe the reasons
therefor and circumstances thereof and any action taken or proposed to be taken
with respect thereto on Annex A attached hereto.

 

C-1-2

--------------------------------------------------------------------------------

EXHIBIT A TO COMPLIANCE CERTIFICATE

[See attached.]

 

C-1-3

--------------------------------------------------------------------------------

EXHIBIT B TO COMPLIANCE CERTIFICATE

[None.][See attached.]

 

C-1-4

--------------------------------------------------------------------------------

EXHIBIT C TO COMPLIANCE CERTIFICATE

 

1. During the fiscal quarter ending [            ], [the Borrower has made no
mandatory prepayments under Section 2.05(b) of the Credit Agreement][the
Borrower has made the following mandatory prepayments under Section 2.05(b) of
the Credit Agreement: [            ]].

 

2. [Set forth below is a listing of each Restricted Subsidiary, Unrestricted
Subsidiary or Excluded Subsidiary of the Borrower] [There have been no changes
to listing of each Restricted Subsidiary, Unrestricted Subsidiary or Excluded
Subsidiary of the Borrower since [the Closing Date][the delivery of the
Compliance Certificate dated [            ]]].

 

C-1-5

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned, in his/her capacity as a Responsible
Officer of ESH Hospitality, Inc., has executed this certificate for and on
behalf of ESH Hospitality, Inc., and has caused this certificate to be delivered
as of the date first stated above.

 

ESH HOSPITALITY, INC. By:  

 

  Name:   Title:

 

C-1-6

--------------------------------------------------------------------------------

EXHIBIT C-2

[FORM OF]

SOLVENCY CERTIFICATE

of

ESH HOSPITALITY, INC. AND ITS SUBSIDIARIES

            , 20    

Pursuant to the Credit Agreement, dated as of August 30, 2016 (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among ESH Hospitality, Inc., a Delaware
corporation (the “Borrower”), the Guarantors party thereto from time to time and
Extended Stay America, Inc., a Delaware corporation, as Lender, the undersigned
hereby certifies, solely in such undersigned’s capacity as chief financial
officer of the Borrower, and not individually, as follows:

As of the date hereof, after giving effect to the consummation of the
Transactions, including the making of the Loans under the Credit Agreement on
the date hereof, and after giving effect to the application of the proceeds of
such Loans:

 

  a. the fair value of the assets of the Borrower and its Subsidiaries, on a
consolidated basis, exceeds, on a consolidated basis, their debts and
liabilities, subordinated, contingent or otherwise;

 

  b. the present fair saleable value of the property of the Borrower and its
Subsidiaries, on a consolidated basis, is greater than the amount that will be
required to pay the probable liability, on a consolidated basis, of their debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured;

 

  c. the Borrower and its Subsidiaries, on a consolidated basis, are able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
liabilities become absolute and matured; and

 

  d. the Borrower and its Subsidiaries, on a consolidated basis, are not engaged
in, and are not about to engage in, business for which they have unreasonably
small capital.

For purposes of this certificate, the amount of any contingent liability at any
time shall be computed as the amount that would reasonably be expected to become
an actual and matured liability. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to them in the Credit Agreement.

The undersigned is familiar with the business and financial position of the
Borrower and its Subsidiaries. In reaching the conclusions set forth in this
certificate, the undersigned has made such other investigations and inquiries as
the undersigned has deemed appropriate, having taken into account the nature of
the particular business anticipated to be conducted by the Borrower and its
Subsidiaries after consummation of the Transactions.

 

C-2-1

--------------------------------------------------------------------------------

[Signature Page Follows]

 

C-2-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this certificate in such
undersigned’s capacity as chief financial officer of the Borrower, on behalf of
the Borrower, and not individually, as of the date first stated above.

 

ESH HOSPITALITY, INC. By:  

 

  Name:   Title:

 

C-2-3