Exhibit 10.12.1

 

EXECUTION COPY

 

$150,000,000

 

REVOLVING CREDIT AGREEMENT

 

Dated as of October 26, 2004

 

among

 

SUNSTONE HOTEL PARTNERSHIP, LLC,

 

as Borrower,

 

SUNSTONE HOTEL INVESTORS, INC.,

 

as the Parent,

 

THE SUBSIDIARY GUARANTORS NAMED HEREIN,

 

as Subsidiary Guarantors,

 

THE INITIAL LENDERS, INITIAL ISSUING BANK AND

SWING LINE BANK NAMED HEREIN,

 

as Initial Lenders, Initial Issuing Bank and Swing Line Bank,

 

CITICORP NORTH AMERICA, INC.,

 

as Administrative Agent and as Collateral Agent,

 

CALYON NEW YORK BRANCH and DEUTSCHE BANK SECURITIES INC.,

 

as Co-Documentation Agents,

 

and

 

CITIGROUP GLOBAL MARKETS INC.,

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

 

and

 

MORGAN STANLEY SENIOR FUNDING, INC.

 

as Joint Lead Arrangers and Joint Book Running Managers

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TABLE OF CONTENTS

 

Section

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   Page

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ARTICLE I

    

DEFINITIONS AND ACCOUNTING TERMS

    

SECTION 1.01. Certain Defined Terms

   1

SECTION 1.02. Computation of Time Periods; Other Definitional Provisions

   25

SECTION 1.03. Accounting Terms

   26

ARTICLE II

    

AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

    

SECTION 2.01. The Advances and the Letters of Credit

   26

SECTION 2.02. Making the Advances

   27

SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit

   29

SECTION 2.04. Repayment of Advances

   31

SECTION 2.05. Termination or Reduction of the Commitments

   32

SECTION 2.06. Prepayments

   32

SECTION 2.07. Interest

   33

SECTION 2.08. Fees

   34

SECTION 2.09. Conversion of Advances

   35

SECTION 2.10. Increased Costs, Etc.

   35

SECTION 2.11. Payments and Computations

   37

SECTION 2.12. Taxes

   39

SECTION 2.13. Sharing of Payments, Etc.

   41

SECTION 2.14. Use of Proceeds

   42

SECTION 2.15. Evidence of Debt

   42

SECTION 2.16. Extension of Termination Date

   42

SECTION 2.17. Increase in the Aggregate Commitments

   43

ARTICLE III

    

CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

    

SECTION 3.01. Conditions Precedent to Initial Extension of Credit

   44

SECTION 3.02. Conditions Precedent to Each Borrowing, Issuance and Renewal

   50

SECTION 3.03. Determinations Under Section 3.01

   51

ARTICLE IV

    

REPRESENTATIONS AND WARRANTIES

    

SECTION 4.01. Representations and Warranties of the Loan Parties

   51

ARTICLE V

    

COVENANTS OF THE LOAN PARTIES

    

SECTION 5.01. Affirmative Covenants

   57

SECTION 5.02. Negative Covenants

   62

SECTION 5.03. Reporting Requirements

   68

SECTION 5.04. Financial Covenants

   70

 

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ARTICLE VI

    

EVENTS OF DEFAULT

    

SECTION 6.01. Events of Default

   72

SECTION 6.02. Actions in Respect of the Letters of Credit upon Default

   74

ARTICLE VII

    

GUARANTY

    

SECTION 7.01. Guaranty; Limitation of Liability

   75

SECTION 7.02. Guaranty Absolute

   75

SECTION 7.03. Waivers and Acknowledgments

   76

SECTION 7.04. Subrogation

   78

SECTION 7.05. Guaranty Supplements

   78

SECTION 7.06. Indemnification by Subsidiary Guarantors

   79

SECTION 7.07. Subordination

   79

SECTION 7.08. Continuing Guaranty

   80

ARTICLE VIII

    

THE AGENTS

    

SECTION 8.01. Authorization and Action; Appointment of Supplemental Collateral
Agents

   80

SECTION 8.02. Agents’ Reliance, Etc.

   81

SECTION 8.03. CNAI and Affiliates

   82

SECTION 8.04. Lender Party Credit Decision

   82

SECTION 8.05. Indemnification by Lender Parties

   82

SECTION 8.06. Successor Agents

   83

ARTICLE IX

    

MISCELLANEOUS

    

SECTION 9.01. Amendments, Etc.

   83

SECTION 9.02. Notices, Etc.

   84

SECTION 9.03. No Waiver; Remedies

   85

SECTION 9.04. Costs and Expenses

   86

SECTION 9.05. Right of Set-off

   87

SECTION 9.06. Binding Effect

   87

SECTION 9.07. Assignments and Participations

   88

SECTION 9.08. Execution in Counterparts

   90

SECTION 9.09. No Liability of the Issuing Banks

   90

SECTION 9.10. Confidentiality

   91

SECTION 9.11. Release of Collateral

   91

SECTION 9.12. Patriot Act Notification

   91

SECTION 9.13. Jurisdiction, Etc.

   91

SECTION 9.14. Governing Law

   92

SECTION 9.15. WAIVER OF JURY TRIAL

   92

 

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SCHEDULES

 

Schedule I

   -      Commitments and Applicable Lending Offices

Schedule II

   -      Borrowing Base Assets

Schedule 4.01(b)

   -      Subsidiaries

Schedule 4.01(b)

   -      Subsidiaries

Schedule 4.01(d)

   -      Authorizations, Approvals, Actions, Notices and Filings

Schedule 4.01(f)

   -      Disclosed Litigation

Schedule 4.01(n)

   -      Existing Debt

Schedule 4.01(o)

   -      Surviving Debt

Schedule 4.01(p)

   -      Existing Liens

Schedule 4.01(q)

   -      Owned Real Property

Schedule 4.01(r)

   -      Leased Real Property

Schedule 4.01(s)

   -      Environmental Concerns

Schedule 4.01(x)

   -      Existing Loans to Directors and Executive Officers

Schedule 4.01(y)

   -      Excluded Subsidiaries and Excluded Subsidiary Agreements

Schedule 4.01(z)

   -      Plans and Welfare Plans

EXHIBITS

           

Exhibit A

   -      Form of Note

Exhibit B

   -      Form of Notice of Borrowing

Exhibit C

   -      Form of Guaranty Supplement

Exhibit D

   -      Form of Assignment and Acceptance

Exhibit E-1

   -      Form of Opinion of Counsel to the Loan Parties

Exhibit E-2

   -      Form of Opinion of Maryland Counsel to the Loan Parties

Exhibit E-3

   -      Form of Opinion of Delaware Counsel for the Loan Parties

Exhibit E-4

   -      Form of Opinion of Local Counsel for the Loan Parties

Exhibit F

   -      Form of Security Agreement

Exhibit G

   -      Form of Mortgage

Exhibit H

   -      Form of Assignment of Leases

Exhibit I

   -      Form of Borrowing Base Certificate

Exhibit J

   -      Form of Intercreditor Agreement

Exhibit K

   -      Form of Franchisor Comfort Letter

 

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REVOLVING CREDIT AGREEMENT

 

REVOLVING CREDIT AGREEMENT dated as of October 26, 2004 (this “Agreement”) among
SUNSTONE HOTEL PARTNERSHIP, LLC, a Delaware limited liability company (the
“Borrower”), SUNSTONE HOTEL INVESTORS, INC., a Maryland corporation (the
“Parent”), the entities listed on the signature pages hereof as the guarantors
(together with any Additional Guarantors (as hereinafter defined) acceding
hereto pursuant to Section 7.05, the “Subsidiary Guarantors”), the banks,
financial institutions and other institutional lenders listed on the signature
pages hereof as the initial lenders (the “Initial Lenders”), CITIBANK, N.A., as
the initial issuer of Letters of Credit (as hereinafter defined) (the “Initial
Issuing Bank”), the Swing Line Bank (as hereinafter defined), CITICORP NORTH
AMERICA, INC. (“CNAI”), as administrative agent (together with any successor
administrative agent appointed pursuant to Article VIII, the “Administrative
Agent”) for the Lender Parties (as hereinafter defined), CNAI, as collateral
agent (together with any successor collateral agent appointed pursuant to
Article VIII, the “Collateral Agent”) for the Secured Parties (as hereinafter
defined), CALYON NEW YORK BRANCH and DEUTSCHE BANK SECURITIES INC., as
co-documentation agents (the “Co-Documentation Agents”, and together with the
Administrative Agent and the Collateral Agent, the “Agents”), and CITIGROUP
GLOBAL MARKETS INC. (“CGMI”), MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
(“Merrill Lynch”) and MORGAN STANLEY SENIOR FUNDING, INC. (“Morgan Stanley”), as
joint lead arrangers and joint book running managers (the “Arrangers”).

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

 

“Additional Guarantor” has the meaning specified in Section 7.05.

 

“Adjusted EBITDA” means (a) EBITDA for the consecutive four fiscal quarters of
the Parent most recently ended for which financial statements are required to be
delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case
may be, less (b) the FF&E Reserve for all Assets for such four fiscal quarters;
provided that calculations which pertain to the fiscal quarters of the Parent
ending on or prior to December 31, 2004 shall be made on a pro forma basis,
including to give effect to the IPO and the Formation and Structuring
Transactions.

 

“Adjusted Net Operating Income” means, with respect to any Borrowing Base Asset,
the Net Operating Income attributable to such Borrowing Base Asset less an
amount equal to the sum of (i) the FF&E Reserve for such Borrowing Base Asset
for the consecutive four fiscal quarters most recently ended for which financial
statements are required to be delivered to the Lender Parties pursuant to
Section 5.03(b) or (c), as the case may be, and (ii) the amount, if any, by
which 3.5% of all rental and other income from the operation of such Borrowing
Base Asset for such fiscal period exceeds all management fees payable in respect
of such Borrowing Base Asset for such fiscal period.

 

“Administrative Agent” has the meaning specified in the recital of parties to
this Agreement.

 

“Administrative Agent’s Account” means the account of the Administrative Agent
maintained by the Administrative Agent with Citibank, N.A., at its office at 2
Penns Way, Suite

 

1

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200, New Castle, Delaware 19720, ABA No. 021000089, Account No. 36852248,
Account Name: Agency/Medium Term Finance, Reference: Sunstone, Attention: Global
Loans/Agency, or such other account as the Administrative Agent shall specify in
writing to the Lender Parties.

 

“Advance” means a Revolving Credit Advance, a Swing Line Advance or a Letter of
Credit Advance.

 

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term “control” (including the terms “controlling”, “controlled
by” and “under common control with”) of a Person means the possession, direct or
indirect, of the power to vote 15% or more of the Voting Interests of such
Person or to direct or cause the direction of the management and policies of
such Person, whether through the ownership of Voting Interests, by contract or
otherwise.

 

“Agents” has the meaning specified in the recital of parties to this Agreement.

 

“Agreement” has the meaning specified in the recital of parties to this
Agreement.

 

“Agreement Value” means, for each Hedge Agreement, on any date of determination,
an amount determined by the Administrative Agent equal to: (a) in the case of a
Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross
Border) published by the International Swap and Derivatives Association, Inc.
(the “Master Agreement”), the amount, if any, that would be payable by any Loan
Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as
if (i) such Hedge Agreement was being terminated early on such date of
determination, (ii) such Loan Party or Subsidiary was the sole “Affected Party”,
and (iii) the Administrative Agent was the sole party determining such payment
amount (with the Administrative Agent making such determination pursuant to the
provisions of the form of Master Agreement); or (b) in the case of a Hedge
Agreement traded on an exchange, the mark-to-market value of such Hedge
Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan
Party or Subsidiary of a Loan Party party to such Hedge Agreement determined by
the Administrative Agent based on the settlement price of such Hedge Agreement
on such date of determination, or (c) in all other cases, the mark-to-market
value of such Hedge Agreement, which will be the unrealized loss on such Hedge
Agreement to the Loan Party or Subsidiary of a Loan Party party to such Hedge
Agreement determined by the Administrative Agent as the amount, if any, by which
(i) the present value of the future cash flows to be paid by such Loan Party or
Subsidiary exceeds (ii) the present value of the future cash flows to be
received by such Loan Party or Subsidiary pursuant to such Hedge Agreement;
capitalized terms used and not otherwise defined in this definition shall have
the respective meanings set forth in the above described Master Agreement.

 

“Applicable Lending Office” means, with respect to each Lender Party, such
Lender Party’s Domestic Lending Office in the case of a Base Rate Advance and
such Lender Party’s Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.

 

2

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“Applicable Margin” means, at any date of determination, a percentage per annum
determined by reference to the Leverage Ratio as set forth below:

 

Pricing
Level

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Leverage Ratio

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

   Applicable Margin
for Base Rate
Advances

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  Applicable Margin
for Eurodollar Rate
Advances

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I

   > 6.00:1.00    1.00%   2.00%

II

   > 5.00:1.00 but < 6.00:1.00    0.75%   1.75%

III

   < 5.00:1.00    0.50%   1.50%

 

The Applicable Margin for each Base Rate Advance shall be determined by
reference to the Leverage Ratio in effect from time to time and the Applicable
Margin for any Interest Period for all Eurodollar Rate Advances comprising part
of the same Borrowing shall be determined by reference to the Leverage Ratio in
effect on the first day of such Interest Period; provided, however, that (a) no
change in the Applicable Margin resulting from the Leverage Ratio shall be
effective until three Business Days after the date on which the Administrative
Agent receives (x) the financial statements required to be delivered pursuant to
Section 5.03(b) or (c), as the case may be, and (y) a certificate of the Chief
Financial Officer of the Borrower demonstrating the Leverage Ratio, and (b) the
Applicable Margin shall be at Pricing Level I for so long as the Borrower has
not submitted to the Administrative Agent as and when required under Section
5.03(b) or (c), as applicable, the information described in clause (a) of this
proviso.

 

“Appraisal” means an appraisal complying with the requirements of the Federal
Financial Institutions Reform, Recovery and Enforcement Act of 1989,
commissioned by and prepared for the account of the Collateral Agent (for the
benefit of the Lenders) by a MAI appraiser selected by the Collateral Agent in
consultation with the Borrower, and otherwise in scope, form and substance
satisfactory to the Collateral Agent.

 

“Appraised Value” means, for any Borrowing Base Asset, the fair market value of
such Borrowing Base Asset, determined by the Administrative Agent based on an
Appraisal of such Borrowing Base Asset, after discretionary adjustments of the
value shown in such Appraisal following a review by the Administrative Agent’s
appraisal review department.

 

“Approved Manager” means a nationally recognized hotel manager (a) with (or
controlled by a Person or Persons with) at least ten years of experience in the
hotel management industry, (b) that has hotels under management that have been
rated “upscale”or better by Smith Travel Research, (c) that is engaged pursuant
to a written management agreement and (d) that has entered into a subordination
agreement, in form and substance reasonably satisfactory to the Collateral
Agent. For purposes of this definition, the term “control” (including the term
“controlled by”) of a Person means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of Voting Interests, by contract or
otherwise.

 

“Arrangers” has the meaning specified in the recital of parties to this
Agreement.

 

“Assets” means Hotel Assets, Development Assets and Joint Venture Assets.

 

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender Party and an Eligible Assignee, and accepted by the Administrative Agent,
in accordance with Section 9.07 and in substantially the form of Exhibit D
hereto.

 

“Assignments of Leases” has the meaning specified in Section 3.01(a)(iii).

 

3

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“Assuming Lender” has the meaning specified in Section 2.17(d).

 

“Assumption Agreement” has the meaning specified in Section 2.17(d)(i).

 

“Available Amount” of any Letter of Credit means, at any time, the maximum
amount available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).

 

“Bankruptcy Law” means any applicable law governing a proceeding of the type
referred to in Section 6.01(f) or Title 11, U.S. Code, or any similar foreign,
federal or state law for the relief of debtors.

 

“Base Rate” means a fluctuating interest rate per annum in effect from time to
time, which rate per annum shall at all times be equal to the higher of (a) the
rate of interest announced publicly by Citibank, N.A. in New York, New York,
from time to time, as Citibank, N.A.’s base rate and (b)  1/2 of 1% per annum
above the Federal Funds Rate.

 

“Base Rate Advance” means an Advance that bears interest as provided in Section
2.07(a)(i).

 

“Borrower” has the meaning specified in the recital of parties to this
Agreement.

 

“Borrower’s Account” means the account of the Borrower maintained by the
Borrower with Wells Fargo Bank, N.A. at its office in San Francisco, California,
ABA No. 121 000 248, Account No. 4121 048 995, or such other account as the
Borrower shall specify in writing to the Administrative Agent.

 

“Borrowing” means a borrowing consisting of simultaneous Revolving Credit
Advances of the same Type made by the Lenders or a Swing Line Borrowing.

 

“Borrowing Base Assets” means only those Hotel Assets (a) listed on Schedule II
hereto (as supplemented from time to time pursuant to Section 5.01(j)(iii)) and
(b) for which the applicable conditions (as may be determined by the Collateral
Agent in its sole discretion) in Section 3.01 and, if applicable, 5.01(j) have
been satisfied.

 

“Borrowing Base Certificate” means a certificate in substantially the form of
Exhibit I hereto, duly certified by the Chief Financial Officer (or such person
performing similar functions) of the Parent.

 

“Borrowing Base Conditions” means, with respect to any Proposed Borrowing Base
Asset, that such Proposed Borrowing Base Asset (a) is a Hotel Asset located in
the United States of America that has been in operation for at least one year;
(b) has been rated “upscale”, “upper upscale” or better by Smith Travel
Research; (c) is wholly-owned directly or indirectly by the Borrower either in
fee or subject to a Qualifying Ground Lease; (d) is fully operating, open to the
public, and not under significant development or redevelopment; (e) is free of
all material structural defects or architectural deficiencies, title defects,
environmental conditions or other materially adverse matters; (f) is operated
under a nationally recognized brand by an Approved Manager or any other manager
approved by the Administrative Agent; (g) is not subject to mezzanine Debt
financing (other than the Term Debt); (h) is not, and no interest of the
Borrower or any of its Subsidiaries therein is, subject to any Lien (other than
Permitted Liens) or any Negative Pledge, and (i) if such Asset is owned by a
Subsidiary of the Borrower, (1) none of the

 

4

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Borrower’s or the Parent’s direct or indirect ownership interest in such
Subsidiary is subject to any Lien (other than Permitted Liens) or any Negative
Pledge, (2) on or prior to the date such Asset is added to the Collateral, such
Subsidiary shall have duly executed and delivered to the Administrative Agent a
Guaranty Supplement in substantially the form of Exhibit C hereto, or such other
guaranty supplement in form and substance satisfactory to the Administrative
Agent, guaranteeing the other Loan Parties’ Obligations under the Loan
Documents, and (3) the Borrower directly, or indirectly through a Subsidiary,
has the right to take the following actions without the need to obtain the
consent of any Person: (A) to create Liens on such Asset as security for Debt of
the Borrower of such Subsidiary, as applicable, and (B) to sell, transfer or
otherwise dispose of such Asset.

 

“Borrowing Base Debt Service Coverage Ratio” means, at any date of
determination, the ratio of (a) the aggregate Adjusted Net Operating Income for
all Borrowing Base Assets to (b) the greater of (i) the actual interest expense
of the Borrower under this Agreement for the consecutive four fiscal quarters of
the Parent most recently ended for which financial statements are required to be
delivered pursuant to Section 5.03(b) or (c), as the case may be, and (ii) the
interest that would have been required to be paid by the Borrower under this
Agreement for such fiscal period had the applicable interest rate been equal to
the sum of (such rate, the “DSCR Rate”): (A) the Applicable Margin for
Eurodollar Rate Advances in effect at such date of determination plus (B) the
greater of (1) 3.0% and (2) the rate per annum (rounded upward, if necessary, to
the nearest 1/100 of 1%) as published on Reuters Page ISDAFIX1 (or any successor
page) as the International Swaps and Derivatives Association mid-market par
3-year swap rate, in each case, in effect at such date of determination;
provided, however, that for purposes of computing the Borrowing Base Debt
Service Coverage Ratio at any date of determination occurring during the four
fiscal quarters of the Parent ending September 30, 2005, the amounts described
in clause (b) above shall be deemed equal to (x) the Facility Exposure at such
date of determination multiplied by (y) the DSCR Rate; provided further, that
any calculations described above which pertain to the fiscal quarter of the
Parent ending September 30, 2004 shall be made on a pro forma basis after giving
effect to the IPO and the Formation and Structuring Transactions.

 

“Business Day” means a day of the year on which banks are not required or
authorized by law to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.

 

“Capitalized Leases” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases.

 

“Cash Equivalents” means any of the following, to the extent owned by the
Borrower or any of its Subsidiaries free and clear of all Liens other than Liens
created under the Collateral Documents and having a maturity of not greater than
90 days from the date of issuance thereof: (a) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) certificates of
deposit of or time deposits with any commercial bank that is a Lender Party or a
member of the Federal Reserve System, issues (or the parent of which issues)
commercial paper rated as described in clause (c) below, is organized under the
laws of the United States or any State thereof and has combined capital and
surplus of at least $1,000,000,000 or (c) commercial paper in an aggregate
amount of not more than $50,000,000 per issuer outstanding at any time, issued
by any corporation organized under the laws of any State of the United States
and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1”
(or the then equivalent grade) by S&P.

 

5

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“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.

 

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.

 

“CGMI” has the meaning specified in the recital of parties to this Agreement.

 

“Change of Control” means the occurrence of any of the following: (a) any Person
(other than a Contributing Entity) or two or more Persons (other than the
Contributing Entities) acting in concert shall have acquired and shall continue
to have following the date hereof beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of Voting Interests of the Parent
(or other securities convertible into such Voting Interests) representing 35% or
more of the combined voting power of all Voting Interests of the Parent; or (b)
during any period of up to 12 consecutive months, commencing after the date of
this Agreement, individuals who at the beginning of such 12-month period were
directors of the Parent shall cease for any reason to constitute a majority of
the board of directors of the Parent; or (c) any Person or two or more Persons
acting in concert shall have acquired and shall continue to have following the
date hereof, by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their acquisition of,
the power to direct, directly or indirectly, the management or policies of the
Parent, other than contracts and agreements in effect as of the date hereof,
copies of which have been delivered to the Administrative Agent prior to the
Closing Date; or (d) the Parent ceases to be the sole managing member of the
Borrower; or (e) the Parent ceases to be the legal and beneficial owner of more
than 50% of the membership interests of the Borrower; or (f) the Parent shall
create, incur, assume or suffer to exist any Lien on the Equity Interests in the
Borrower owned by it.

 

“Closing Date” means October 26, 2004 or such other date as may be agreed upon
by the Borrower and the Administrative Agent.

 

“CNAI” has the meaning specified in the recital of parties to this Agreement.

 

“Co-Documentation Agents” has the meaning specified in the recital of parties to
this Agreement.

 

“Collateral” means all “Collateral” and all “Mortgaged Property” referred to in
the Collateral Documents and all other property that is or is intended to be
subject to any Lien in favor of the Collateral Agent for the benefit of the
Secured Parties and will include, without limitation, all Borrowing Base Assets.

 

“Collateral Agent” has the meaning specified in the recital of parties to this
Agreement.

 

“Collateral Documents” means the Security Agreement, the Mortgages, the
Assignments of Leases and any other agreement that creates or purports to create
a Lien in favor of the Collateral Agent for the benefit of the Secured Parties.

 

“Commitment” means a Revolving Credit Commitment, a Swing Line Commitment or a
Letter of Credit Commitment.

 

“Commitment Date” has the meaning specified in Section 2.17(b).

 

6

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“Commitment Increase” has the meaning specified in Section 2.17(a).

 

“Communications” has the meaning specified in Section 9.02(b).

 

“Confidential Information” means information that any Loan Party furnishes to
any Agent or any Lender Party in writing designated as confidential, but does
not include any such information that is or becomes generally available to the
public or that is or becomes available to such Agent or such Lender Party from a
source other than the Loan Parties.

 

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

 

“Contingent Obligation” means, with respect to any Person, any Obligation or
arrangement of such Person to guarantee or intended to guarantee any Debt,
leases, dividends or other payment Obligations (“primary obligations”) of any
other Person (the “primary obligor”) in any manner, whether directly or
indirectly, including, without limitation, (a) the direct or indirect guarantee,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the Obligation of a primary obligor, (b) the Obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement or (c) any Obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure
or hold harmless the holder of such primary obligation against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made (or, if less, the maximum amount of
such primary obligation for which such Person may be liable pursuant to the
terms of the instrument evidencing such Contingent Obligation) or, if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.

 

“Contributing Entities” means Sunstone Hotel Investors, L.L.C., Sunstone/WB
Hotel Investors IV, LLC, WB Hotel Investors, LLC and Sunstone/WB Manhattan
Beach, LLC.

 

“Conversion”, “Convert” and “Converted” each refer to a conversion of Advances
of one Type into Advances of the other Type pursuant to Section 2.07(d), 2.09 or
2.10.

 

“Current Assets” of any Person means all assets of such Person that would, in
accordance with GAAP, be classified as current assets of a company conducting a
business the same as or similar to that of such Person, after deducting adequate
reserves in each case in which a reserve is proper in accordance with GAAP.

 

“Current Liabilities” of any Person means (a) all Debt of such Person that by
its terms is payable on demand or matures within one year after the date of its
creation (excluding any Debt renewable or extendible, at the option of such
Person, to a date more than one year from such date or arising under a revolving
credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date) and (b) all other
items (including taxes accrued as estimated) that in accordance with GAAP would
be classified as current liabilities of such Person.

 

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“Customary Carve-Out Agreement” has the meaning specified in the definition of
Non-Recourse Debt.

 

“Debt” of any Person means, without duplication for purposes of calculating
financial ratios, (a) all Debt for Borrowed Money of such Person, (b) all
Obligations of such Person for the deferred purchase price of property or
services other than trade payables incurred in the ordinary course of business
and not overdue by more than 60 days, (c) all Obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (d) all
Obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Obligations of such Person as lessee under Capitalized
Leases, (f) all Obligations of such Person under acceptance, letter of credit or
similar facilities, (g) all Obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any Equity Interests
in such Person or any other Person (other than Preferred Interests that are
issued by any Loan Party or Subsidiary thereof and classified as either equity
or minority interests pursuant to GAAP) or any warrants, rights or options to
acquire such Equity Interests, (h) all Obligations of such Person in respect of
Hedge Agreements, valued at the Agreement Value thereof, (i) all Contingent
Obligations of such Person and (j) all indebtedness and other payment
Obligations referred to in clauses (a) through (i) above of another Person
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
indebtedness or other payment Obligations; provided, however, that in the case
of the Parent and its Subsidiaries “Debt” shall also include, without
duplication, the JV Pro Rata Share of Debt for each Joint Venture.

 

“Debt for Borrowed Money” of any Person means all items that, in accordance with
GAAP, would be classified as indebtedness on a Consolidated balance sheet of
such Person; provided, however, that in the case of the Parent and its
Subsidiaries “Debt for Borrowed Money” shall also include, without duplication,
the JV Pro Rata Share of Debt for Borrowed Money for each Joint Venture; and
provided further, however, that as used in the definition of “Fixed Charge
Coverage Ratio”, in the case of any acquisition or disposition of any direct or
indirect interest in any Asset (including through the acquisition of Equity
Interests) by the Parent or any of its Subsidiaries during the consecutive four
fiscal quarters of the Parent most recently ended for which financial statements
are required to be delivered to the Lender Parties pursuant to Section 5.03(b)
or (c), as the case may be, the term “Debt for Borrowed Money” (a) shall
include, in the case of an acquisition, any Debt for Borrowed Money directly
relating to such Asset existing immediately following such acquisition computed
as if such indebtedness also existed for the portion of such period that such
Asset was not owned by the Parent or such Subsidiary, and (ii) shall exclude, in
the case of a disposition, for such period any Debt for Borrowed Money to which
such Asset was subject to the extent such Debt for Borrowed Money was repaid or
otherwise terminated upon the disposition of such Asset.

 

“Debtor Subsidiary” has the meaning specified in Section 6.01(f).

 

“Default” means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or both.

 

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“Default Termination Notice” has the meaning specified in Section 2.01(b).

 

“Development Assets” means all Real Property acquired for development into Hotel
Assets that, in accordance with GAAP, would be classified as development
property on a Consolidated balance sheet of the Parent and its Subsidiaries.

 

“Disclosed Litigation” has the meaning specified in Section 3.01(f).

 

“Domestic Lending Office” means, with respect to any Lender Party, the office of
such Lender Party specified as its “Domestic Lending Office” opposite its name
on Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender Party, as the case may be, or such other office of such Lender
Party as such Lender Party may from time to time specify to the Borrower and the
Administrative Agent.

 

“EBITDA” means, for any period, (a) the sum of (i) net income (or net loss) from
continuing operations (excluding gains (or losses) from extraordinary and
unusual items and one-time expenses related to the IPO), (ii) interest expense,
(iii) income tax expense, (iv) depreciation expense, (v) amortization expense,
(vi) gains (or losses) from sales of assets and (vii) impairment charges, in
each case of the Parent and its Subsidiaries determined on a Consolidated basis
and in accordance with GAAP for such period, plus (b) with respect to each Joint
Venture, the JV Pro Rata Share of the sum of (i) net income (or net loss)
(excluding gains (or losses) from extraordinary and unusual items), (ii)
interest expense, (iii) income tax expense, (iv) depreciation expense and (v)
amortization expense of such Joint Venture, in each case determined on a
Consolidated basis and in accordance with GAAP for such period; provided,
however, that for purposes of this definition, in the case of any acquisition or
disposition of any direct or indirect interest in any Asset (including through
the acquisition of Equity Interests) by the Parent or any of its Subsidiaries
during such period, EBITDA will be adjusted (1) in the case of an acquisition,
by adding thereto an amount equal to the acquired Asset’s actual EBITDA
(computed as if such Asset was owned by the Parent or one of its Subsidiaries
for the entire period) generated during the portion of such period that such
Asset was not owned by the Parent or such Subsidiary, and (2) in the case of a
disposition, by subtracting therefrom an amount equal to the actual EBITDA
generated by the Asset so disposed of for such consecutive four fiscal quarter
period; and provided further, that calculations which pertain to the fiscal
quarters of the Parent ending on or prior to December 31, 2004 shall be made on
a pro forma basis, including to give effect to the IPO and the Formation and
Structuring Transactions..

 

“Effective Date” means the first date on which the conditions set forth in
Article III shall be satisfied.

 

“Eligible Assignee” means (a) with respect to the Revolving Credit Facility, (i)
a Lender; (ii) an Affiliate or Fund Affiliate of a Lender; (iii) a commercial
bank organized under the laws of the United States, or any State thereof,
respectively, and having total assets in excess of $500,000,000; (iv) a savings
and loan association or savings bank organized under the laws of the United
States or any State thereof, and having total assets in excess of $500,000,000;
(v) a commercial bank organized under the laws of any other country that is a
member of the OECD or has concluded special lending arrangements with the
International Monetary Fund associated with its General Arrangements to Borrow,
or a political subdivision of any such country, and having total assets in
excess of $500,000,000, so long as such bank is acting through a branch or
agency located in the United States; (vi) the central bank of any country that
is a member of the OECD; (vii) a finance company, insurance company or other
financial institution or fund (whether a corporation, partnership, trust or
other entity) that is engaged in making, purchasing or

 

9

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otherwise investing in commercial loans in the ordinary course of its business
and having total assets in excess of $500,000,000; and (viii) any other Person
approved by the Administrative Agent, such approval not to be unreasonably
withheld or delayed, and (b) with respect to the Letter of Credit Facility, a
Person that is an Eligible Assignee under subclause (iii) or (v) of this
definition and is approved by the Administrative Agent and, unless a Default has
occurred and is continuing at the time any assignment is effected pursuant to
Section 9.07, approved by the Borrower, such approval not to be unreasonably
withheld or delayed; provided, however, that neither any Loan Party nor any
Affiliate of a Loan Party shall qualify as an Eligible Assignee under this
definition.

 

“Environmental Action” means any judicial action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating to any Environmental Law, any Environmental Permit or Hazardous
Material or arising from alleged environmental injury or threat to health or
safety relating to any hazardous materials or the protection of the environment,
including, without limitation, (a) by any governmental or regulatory authority
for enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any governmental or regulatory authority or third party for
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief.

 

“Environmental Law” means any Federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or
judicial or legally-binding agency interpretation, policy or guidance relating
to pollution or protection of the environment, health and safety as it relates
to Hazardous Materials or natural resources, including, without limitation,
those relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Materials.

 

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

 

“Equity Interests” means, with respect to any Person, shares of capital stock of
(or other ownership or profit interests in) such Person, warrants, options or
other rights for the purchase or other acquisition from such Person of shares of
capital stock of (or other ownership or profit interests in) such Person,
securities convertible into or exchangeable for shares of capital stock of (or
other ownership or profit interests in) such Person or warrants, rights or
options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any
date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

 

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a
member of the controlled group of any Loan Party, or under common control with
any Loan Party, within the meaning of Section 414 of the Internal Revenue Code.

 

“ERISA Event” means (a)(i) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC or
(ii) the requirements of Section 4043(b) of ERISA apply with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of

 

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ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or
(13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to
such Plan within the following 30 days; (b) the application for a minimum
funding waiver with respect to a Plan; (c) the provision by the administrator of
any Plan of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a
facility of any Loan Party or any ERISA Affiliate in the circumstances described
in Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA
Affiliate from a Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the
conditions for imposition of a lien under Section 302(f) of ERISA shall have
been met with respect to any Plan; (g) the adoption of an amendment to a Plan
requiring the provision of security to such Plan pursuant to Section 307 of
ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, such Plan.

 

“Eurocurrency Liabilities” has the meaning specified in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.

 

“Eurodollar Lending Office” means, with respect to any Lender Party, the office
of such Lender Party specified as its “Eurodollar Lending Office” opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender Party (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender Party as such Lender Party
may from time to time specify to the Borrower and the Administrative Agent.

 

“Eurodollar Rate” means, for any Interest Period for all Eurodollar Rate
Advances comprising part of the same Borrowing, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in U.S. dollars at 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period for a period equal to such Interest Period or, if
for any reason such rate is not available, the average (rounded upward, if
necessary, to the nearest 1/100 of 1%, if such average is not such a multiple)
of the rate per annum at which deposits in U.S. dollars are offered by the
principal office of each of the Reference Banks in London, England to prime
banks in the London interbank market at 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in an amount substantially
equal to such Reference Bank’s Eurodollar Rate Advance comprising part of such
Borrowing to be outstanding during such Interest Period (or, if such Reference
Bank shall not have such a Eurodollar Rate Advance, $1,000,000) and for a period
equal to such Interest Period by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.

 

“Eurodollar Rate Advance” means an Advance that bears interest as provided in
Section 2.07(a)(ii).

 

“Eurodollar Rate Reserve Percentage” means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.

 

11

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“Events of Default” has the meaning specified in Section 6.01.

 

“Existing Debt” means Debt of each Loan Party and its Subsidiaries outstanding
immediately before giving effect to the Formation and Structuring Transactions.

 

“Excluded Subsidiary” at any time means any direct or indirect Subsidiary of the
Borrower that is unable, or within the 90-day period contemplated by Section
5.01(j)(i) will become unable, to guaranty the Obligations of the Loan Parties
under the Loan Documents at such time because it is or will be party to one or
more Excluded Subsidiary Agreements that prohibit such Excluded Subsidiary from
entering into the Guaranty set forth in Article VII or a Guaranty Supplement.

 

“Excluded Subsidiary Agreement” for each Excluded Subsidiary means any agreement
(and any amendments thereto to the extent not prohibited by the terms of this
Agreement) set forth opposite the name of such Excluded Subsidiary on Schedule
4.01(y) hereto (as such Schedule may be supplemented from time to time pursuant
to Sections 5.01(j)(i) and 5.01(j)(ii)) and any agreement (and any amendments
thereto to the extent not prohibited by the terms of this Agreement) pursuant to
which such Excluded Subsidiary incurs any Debt extending, refunding or
refinancing the Debt, if any, incurred pursuant to such Excluded Subsidiary
Agreement.

 

“Extension Date” has the meaning specified in Section 2.16.

 

“Facility” means the Revolving Credit Facility, the Swing Line Facility or the
Letter of Credit Facility.

 

“Facility Exposure” means, at any date of determination, the sum of the
aggregate principal amount of all outstanding Advances and the Available Amount
under all outstanding Letters of Credit.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

 

“Fee Letter” means the fee letter dated as of September 14, 2004 among the
Borrower, CNAI, CGMI, Merrill Lynch, MLCC and Morgan Stanley, as the same may be
amended from time to time.

 

“FF&E Reserve” means, with respect to any Asset for any fiscal period, an amount
equal to 4% of total revenues from the operation of such Asset during such
fiscal period.

 

“Fiscal Year” means a fiscal year of the Parent and its Consolidated
Subsidiaries ending on December 31 in any calendar year.

 

12

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“Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of
(a) Adjusted EBITDA to (b) the sum of (i) interest (including capitalized
interest) payable on, and amortization of debt discount in respect of (but not
including any amortization of financing costs), all Debt for Borrowed Money plus
(ii) scheduled amortization of principal amounts of all Debt for Borrowed Money
payable (not including maturities) plus (iii) all dividends payable on any
Preferred Interests, in each case, of or by the Parent and its Subsidiaries for
the consecutive four fiscal quarters of the Parent most recently ended for which
financial statements are required to be delivered to the Lender Parties pursuant
to Section 5.03(b) or (c), as the case may be; provided, however, that for
purposes of calculating the Fixed Charge Coverage Ratio at any date of
determination occurring during the fiscal quarter of the Parent ending December
31, 2004, (x) the amount described in clause (a) shall be deemed to equal the
amount of Adjusted EBITDA attributable to the three consecutive fiscal quarters
of the Parent ending September 30, 2004 computed on a pro forma basis, and (y)
the amounts described in clause (b) shall be deemed to equal the sum of such
items for the three consecutive fiscal quarters of the Parent ending September
30, 2004 computed on a pro forma basis; provided further, that calculations
which pertain to the fiscal quarters of the Parent ending on or prior to
December 31, 2004 shall be made on a pro forma basis, including to give effect
to the IPO and the Formation and Structuring Transactions.

 

“Formation and Structuring Transactions” means the acquisition by the Parent of
membership units in the Borrower from the Contributing Entities in exchange for
consideration of cash and the Parent’s contribution of certain assets and cash
to the Borrower in exchange for additional membership units in the Borrower, in
each case, all as more fully described in the Registration Statement and
otherwise on terms reasonably acceptable to the Administrative Agent.

 

“Fund Affiliate” means, with respect to any Lender that is a fund that invests
in bank loans, any other fund that invests in bank loans and is advised or
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

“Funds From Operations” means, with respect to the Parent, net income (computed
in accordance with GAAP), excluding net income from minority interests, gains
(or losses) from sales of property and extraordinary and unusual items, plus
depreciation and amortization, and after adjustments for unconsolidated Joint
Ventures, provided that the determination of Funds From Operations shall be made
on a pro forma basis after giving effect to the IPO and the Formation and
Structuring Transactions; and provided further that Funds From Operations shall
exclude any impairment charges. Adjustments for unconsolidated Joint Ventures
will be calculated to reflect funds from operations on the same basis.

 

“GAAP” has the meaning specified in Section 1.03.

 

“Guaranteed Obligations” has the meaning specified in Section 7.01.

 

“Guaranty” means the Guaranty by the Subsidiary Guarantors pursuant to Article
VII, together with any and all Guaranty Supplements required to be delivered
pursuant to Section 5.01(j).

 

“Guaranty Supplement” means a supplement entered into by an Additional Guarantor
in substantially the form of Exhibit C hereto.

 

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“Hazardous Materials” means (a) petroleum or petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls, radon gas and mold and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

 

“Hedge Agreements” means interest rate swap, cap or collar agreements, interest
rate future or option contracts, currency swap agreements, currency future or
option contracts and other hedging agreements.

 

“Hedge Bank” means any Lender Party or an Affiliate of a Lender Party in its
capacity as a party to a Secured Hedge Agreement.

 

“Hotel Asset” means Real Property (other than any Joint Venture Asset) that
operates or is intended to be operated as a hotel, resort or other lodging for
transient use of rooms or is a structure from which a hotel, resort or other
lodging for transient use of rooms is operated or intended to be operated.

 

“Hotel Management Agreements” means, collectively, each of the Hotel Management
Agreements, each dated as of October 26, 2004, between the lessee Affiliates of
the owners of the Borrowing Base Assets as of the date hereof and Sunstone Hotel
Properties, Inc. and the Management Agreement, dated as of February 28, 1990,
between Windy Hill Associates, L.P. and Hyatt Corporation, as assigned to
Sunstone Windy Hill, L.L.C. pursuant to an Assignment and Assumption of
Management Agreement, dated as of June 6, 2000, and as further assigned to
Sunstone Windy Hills Lessee, Inc. pursuant to an Assignment and Assumption of
Management Agreement, dated on or about October 26, 2004, in each case, as
amended from time to time to the extent permitted under the Loan Documents.

 

“Implied Debt Service Coverage Ratio” means, at any date of determination, the
ratio of (a) the aggregate Adjusted Net Operating Income for all Borrowing Base
Assets for the consecutive four fiscal quarters of the Parent most recently
ended for which financial statements are required to be delivered to the Lender
Parties pursuant to Section 5.03(b) or (c), as the case may be, to (b) the
greater of (i) the actual interest expense of the Borrower under this Agreement
for such fiscal period and (ii) the interest (including capitalized interest)
and principal amortization payments that would have been required to be paid for
such fiscal period on an assumed Debt in an aggregate principal amount equal to
the Facility Exposure applying a debt constant of 8.5%.

 

“Increase Date” has the meaning specified in Section 2.17(a).

 

“Increasing Lender” has the meaning specified in Section 2.17(b).

 

“Indemnified Costs” has the meaning specified in Section 8.05(a).

 

“Indemnified Party” has the meaning specified in Section 7.06(a).

 

“Information Memorandum” means the information memorandum dated October 2004
used by the Arrangers in connection with the syndication of the Commitments.

 

“Initial Extension of Credit” means the earlier to occur of the initial
Borrowing and the initial issuance of a Letter of Credit hereunder.

 

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“Initial Issuing Bank” has the meaning specified in the recital of parties to
this Agreement.

 

“Initial Lenders” has the meaning specified in the recital of parties to this
Agreement.

 

“Insufficiency” means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

 

“Intercreditor Agreement” has the meaning specified in Section 3.01(a)(xvi).

 

“Interest Period” means, for each Eurodollar Rate Advance comprising part of the
same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, as the Borrower may, upon notice received by the
Administrative Agent not later than 12:00 Noon (New York City time) on the third
Business Day prior to the first day of such Interest Period, select; provided,
however, that:

 

(a) the Borrower may not select any Interest Period with respect to any
Eurodollar Rate Advance that ends after the Termination Date;

 

(b) Interest Periods commencing on the same date for Eurodollar Rate Advances
comprising part of the same Borrowing shall be of the same duration;

 

(c) whenever the last day of any Interest Period would otherwise occur on a day
other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; provided, however, that
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day; and

 

(d) whenever the first day of any Interest Period occurs on a day of an initial
calendar month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such Interest Period
shall end on the last Business Day of such succeeding calendar month.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.

 

“Interstate Master Agreement” means the Master Agreement, dated October 26,
2004, between Sunstone TRS Lessee Inc. and Sunstone Hotel Properties, Inc., as
amended from time to time to the extent permitted under the Loan Documents.

 

“Investment” in any Person means any loan or advance to such Person, any
purchase or other acquisition of any Equity Interests or Debt or the assets
comprising a division or business unit or a substantial part or all of the
business of such Person, any capital contribution to such Person or any other
direct or indirect investment in such Person, including, without limitation, any
acquisition by way of a merger or consolidation and any arrangement pursuant to
which the investor incurs Debt of the types referred to in clause (i) or (j) of
the definition of “Debt” in respect of such Person.

 

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“IPO” means the initial public offering of common stock in the Parent and its
registration as a public company with the Securities and Exchange Commission.

 

“Issuing Bank” means the Initial Issuing Bank and any other Lender approved as
an Issuing Bank by the Administrative Agent and the Borrower and any Eligible
Assignee to which a Letter of Credit Commitment hereunder has been assigned
pursuant to Section 9.07 so long as each such Lender or each such Eligible
Assignee expressly agrees to perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as an Issuing Bank and notifies the Administrative Agent of its Applicable
Lending Office and the amount of its Letter of Credit Commitment (which
information shall be recorded by the Administrative Agent in the Register) for
so long as such Initial Issuing Bank, Lender or Eligible Assignee, as the case
may be, shall have a Letter of Credit Commitment.

 

“Joint Venture” means any joint venture (a) in which the Parent or any of its
Subsidiaries holds any Equity Interest, (b) that is not a Subsidiary of the
Parent or any of its Subsidiaries and (c) the accounts of which would not appear
on the Consolidated financial statements of the Parent.

 

“Joint Venture Assets” means, with respect to any Joint Venture at any time, the
assets owned by such Joint Venture at such time.

 

“JV Pro Rata Share” means, with respect to any Joint Venture at any time, the
fraction, expressed as a percentage, obtained by dividing (a) the total book
value of all Equity Interests in such Joint Venture held by the Parent and any
of its Subsidiaries by (b) the total book value of all outstanding Equity
Interests in such Joint Venture at such time.

 

“L/C Cash Collateral Account” means an account of the Borrower to be maintained
with the Administrative Agent, in the name of the Administrative Agent and under
the sole control and dominion of the Administrative Agent and subject to the
terms of this Agreement.

 

“L/C Related Documents” has the meaning specified in Section 2.04(c)(ii)(A).

 

“Lender-Approved Asset” means, with respect to any Borrowing Base Asset that the
Borrower has requested in writing be designated a “Lender-Approved Asset”, that
such Borrowing Base Asset has been approved by the Required Lenders, in their
sole discretion, as a “Lender-Approved Asset” for purposes of this Agreement.
For the avoidance of doubt, all Borrowing Base Assets listed in Schedule II on
the Closing Date are Lender-Approved Assets.

 

“Lender Party” means any Lender, the Swing Line Bank or any Issuing Bank.

 

“Lenders” means the Initial Lenders, each Assuming Lender that shall become a
party hereto pursuant to Section 2.17 and each Person that shall become a Lender
hereunder pursuant to Section 9.07 for so long as such Initial Lender or Person,
as the case may be, shall be a party to this Agreement.

 

“Letter of Credit Advance” means an advance made by any Issuing Bank or any
Lender pursuant to Section 2.03(c).

 

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“Letter of Credit Agreement” has the meaning specified in Section 2.03(a).

 

“Letter of Credit Commitment” means, with respect to any Issuing Bank at any
time, the amount set forth opposite such Issuing Bank’s name on Schedule I
hereto under the caption “Letter of Credit Commitment” or, if such Issuing Bank
has entered into one or more Assignment and Acceptances, set forth for such
Issuing Bank in the Register maintained by the Administrative Agent pursuant to
Section 9.07(d) as such Issuing Bank’s “Letter of Credit Commitment”, as such
amount may be reduced at or prior to such time pursuant to Section 2.05.

 

“Letter of Credit Facility” means, at any time, an amount equal to the lesser of
(a) the aggregate amount of the Issuing Banks’ Letter of Credit Commitments at
such time, and (b) $75,000,000, as such amount may be reduced at or prior to
such time pursuant to Section 2.05.

 

“Letters of Credit” has the meaning specified in Section 2.01(b).

 

“Leverage Ratio” means, at any date of determination, the ratio of Total Debt to
EBITDA as at the end of the most recently ended fiscal quarter of the Parent for
which financial statements are required to be delivered to the Lender Parties
pursuant to Section 5.03(b) or (c), as the case may be.

 

“Lien” means any lien, security interest or other charge or encumbrance of any
kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

 

“Limited Subsidiary” has the meaning specified in Section 5.01(j)(ii).

 

“Loan Documents” means (a) this Agreement, (b) the Notes, (c) the Fee Letter,
(d) each Letter of Credit Agreement, (e) each Guaranty Supplement, (f) the
Collateral Documents, (g) each Secured Hedge Agreement, and (h) the
Intercreditor Agreement, in each case, as amended.

 

“Loan Parties” means the Parent, the Borrower and the Subsidiary Guarantors.

 

“Loan Value” means, with respect to any Borrowing Base Asset, an amount equal to
65% of the most recent Appraised Value of such Borrowing Base Asset.

 

“Margin Stock” has the meaning specified in Regulation U.

 

“Material Adverse Change” means any material adverse change in the business,
condition (financial or otherwise), results of operations or prospects of the
Borrower or the Borrower and its Subsidiaries, taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
condition (financial or otherwise), operations or prospects of the Borrower and
its Subsidiaries, taken as a whole, (b) the rights and remedies of any Agent or
any Lender Party under any Loan Document, (c) the ability of any Loan Party to
perform its Obligations under any Loan Document to which it is or is to be a
party or (d) the value of the Collateral.

 

“Material Contract” means, with respect to any Loan Party, each contract to
which such Loan Party is a party involving aggregate consideration payable to or
by such Loan Party in an

 

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amount of $10,000,000 or more per annum or otherwise material to the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower and its Subsidiaries, taken as a whole. Without
limitation of the foregoing, the Term Loan Documents shall be deemed to comprise
Material Contracts hereunder.

 

“Material Debt” means (i) Recourse Debt in an outstanding principal amount (or,
in the case of any Hedge Agreement, an Agreement Value) of $10,000,000 or more,
either individually or in the aggregate, or (ii) Debt of any Loan Party or any
Subsidiary of a Loan Party (other than Recourse Debt) that is outstanding in a
principal amount (or, in the case of any Hedge Agreement, an Agreement Value) of
$100,000,000 or more, either individually or in the aggregate; in each case (a)
whether the primary obligation of one or more of the Loan Parties or their
respective Subsidiaries, (b) whether the subject of one or more separate debt
instruments or agreements, and (c) exclusive of Debt outstanding under this
Agreement.

 

“Merrill Lynch” has the meaning specified in the recital of parties to this
Agreement.

 

“MLCC” means Merrill Lynch Capital Corporation.

 

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

 

“Morgan Stanley” has the meaning specified in the recital of parties to this
Agreement.

 

“Mortgage Policies” has the meaning specified in Section 3.01(a)(iii)(B).

 

“Mortgages” has the meaning specified in Section 3.01(a)(iii).

 

“Multiemployer Plan” means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.

 

“Multiple Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or
any ERISA Affiliate and at least one Person other than the Loan Parties and the
ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party
or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA
in the event such plan has been or were to be terminated.

 

“Negative Pledge” means, with respect to any asset, any provision of a document,
instrument or agreement (other than a Loan Document or a Term Loan Document)
which prohibits or purports to prohibit the creation or assumption of any Lien
on such asset as security for Debt of the Person owning such asset or any other
Person.

 

“Net Operating Income” means, with respect to any Borrowing Base Asset, (a) the
total rental revenue and other revenues from the operation of such Borrowing
Base Asset, minus (b) all expenses and other proper charges incurred in
connection with the operation and maintenance of such Borrowing Base Asset,
including, without limitation, management fees, repairs, real estate and chattel
taxes and bad debt expenses, but before payment or provision for debt service
charges, income taxes and depreciation, amortization, impairment charges and
other non-cash expenses, all as determined in accordance with GAAP and in each
case for consecutive four fiscal quarters of the Parent most recently ended.

 

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“Non-Recourse Debt” means Debt for Borrowed Money with respect to which recourse
for payment is limited to (a) any building(s) or parcel(s) of real property or
any related assets encumbered by a Lien securing such Debt for Borrowed Money
and/or (b) (i) the general credit of the Property-Level Subsidiary, which has
incurred such Debt for Borrowed Money, and/or the Equity Interests therein
and/or (ii) the general credit of the immediate parent entity of such
Property-Level Subsidiary provided that such parent entity’s assets consist
solely of Equity Interests in one or more Property-Level Subsidiaries and/or
(iii) the general credit of the immediate parent entity of the immediate parent
of such Property-Level Subsidiary (the “grandparent entity”) provided that such
grandparent entity’s assets consist solely of Equity Interests in the immediate
parent of such Property-Level Subsidiary and/or (iv) the general credit of the
immediate parent entity of the grandparent entity of such Property-Level
Subsidiary provided that such parent entity’s assets consist solely of Equity
Interests in the grandparent of such Property-Level Subsidiary, it being
understood that the instruments governing such Debt may include customary
carve-outs to such limited recourse (any such customary carve-outs or agreements
limited to such customary carve-outs, being a “Customary Carve-Out Agreement”)
such as, for example, personal recourse to the Parent or any Subsidiary of the
Parent for fraud, misrepresentation, misapplication or misappropriation of cash,
waste, environmental claims, damage to properties, non-payment of taxes or other
liens despite the existence of sufficient cash flow, interference with the
enforcement of loan documents upon maturity or acceleration, voluntary or
involuntary bankruptcy filings, violation of loan document prohibitions against
transfer of properties or ownership interests therein and liabilities and other
circumstances customarily excluded by lenders from exculpation provisions and/or
included in separate indemnification and/or guaranty agreements in non-recourse
financings of real estate. For the avoidance of doubt, the term “Non-Recourse
Debt” shall not include Recourse Debt.

 

“Note” means a promissory note of the Borrower payable to the order of any
Lender, in substantially the form of Exhibit A hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from the Revolving Credit
Advances, Swing Line Advances and Letter of Credit Advances made by such Lender.

 

“Notice” has the meaning specified in Section 9.02(c).

 

“Notice of Borrowing” has the meaning specified in Section 2.02(a).

 

“Notice of Issuance” has the meaning specified in Section 2.03(a).

 

“Notice of Renewal” has the meaning specified in Section 2.01(b).

 

“Notice of Swing Line Borrowing” has the meaning specified in Section 2.02(b).

 

“Notice of Termination” has the meaning specified in Section 2.01(b).

 

“NPL” means the National Priorities List under CERCLA.

 

“Obligation” means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any creditor
to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 6.01(f).
Without limiting the generality of the foregoing, the Obligations of any Loan
Party under the Loan Documents include

 

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(a) the obligation to pay principal, interest, Letter of Credit commissions,
charges, expenses, fees, attorneys’ fees and disbursements, indemnities and
other amounts payable by such Loan Party under any Loan Document and (b) the
obligation of such Loan Party to reimburse any amount in respect of any of the
foregoing that any Lender Party, in its sole discretion, may elect to pay or
advance on behalf of such Loan Party.

 

“OECD” means the Organization for Economic Cooperation and Development.

 

“Other Lender” has the meaning specified in Section 2.17(e).

 

“Other Taxes” has the meaning specified in Section 2.12(b).

 

“Parent” has the meaning specified in the recital of parties to this Agreement.

 

“Participant” has the meaning specified in Section 2.03(c)(i).

 

“Patriot Act” has the meaning specified in Section 9.12.

 

“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

 

“Permitted Liens” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for taxes, assessments and governmental charges or levies not yet due
and payable; (b) Liens imposed by law, such as materialmen’s, mechanics’,
carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in
the ordinary course of business securing obligations that (i) are not overdue
for a period of more than 30 days and (ii) individually or together with all
other Permitted Liens outstanding on any date of determination do not materially
adversely affect the use of the property to which they relate; (c) pledges or
deposits to secure obligations under workers’ compensation or unemployment laws
or similar legislation or to secure public or statutory obligations; (d)
easements, zoning restrictions, rights of way and other encumbrances on title to
real property that do not render title to the property encumbered thereby
unmarketable or materially adversely affect the use or value of such property
for its present purposes; (e) Tenancy Leases and (f) Liens arising solely by
virtue of any statutory or common law provisions relating to banks’ liens,
rights of set-off or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution.

 

“Person” means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

 

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

 

“Platform” has the meaning specified in Section 9.02(b).

 

“Post Petition Interest” has the meaning specified in Section 7.07(c).

 

“Preferred Interests” means, with respect to any Person, Equity Interests issued
by such Person that are entitled to a preference or priority over any other
Equity Interests issued by such Person upon any distribution of such Person’s
property and assets, whether by dividend or upon liquidation.

 

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“Property-Level Subsidiary” means any Subsidiary of the Borrower or any Joint
Venture that holds a direct fee or leasehold interest in any single building (or
group of related buildings, including, without limitation, buildings pooled for
purposes of a Non-Recourse Debt financing) or parcel (or group of related
parcels, including, without limitation, parcels pooled for purposes of a
Non-Recourse Debt financing) of real property and related assets and not in any
other building or parcel of real property.

 

“Proposed Borrowing Base Asset” has the meaning specified in Section
5.01(j)(iii).

 

“Proposed Increased Commitment” has the meaning specified in Section 2.17(b).

 

“Pro Rata Share” of any amount means, with respect to any Lender at any time,
the product of such amount times a fraction the numerator of which is the amount
of such Lender’s Revolving Credit Commitment at such time (or, if the
Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such
Lender’s Revolving Credit Commitment as in effect immediately prior to such
termination) and the denominator of which is the Revolving Credit Facility at
such time (or, if the Commitments shall have been terminated pursuant to Section
2.05 or 6.01, the Revolving Credit Facility as in effect immediately prior to
such termination).

 

“Qualifying Ground Lease” means a ground lease containing the following terms
and conditions: (a) a remaining term (exclusive of any unexercised extension
options) of 30 years or more from the Closing Date; (b) the obligation of the
lessor to give the holder of any mortgage Lien on such leased property written
notice of any defaults on the part of the lessee and agreement of such lessor
that such lease will not be terminated until such holder has had a reasonable
opportunity to cure or complete foreclosures, and fails to do so; (c) reasonable
transferability of the lessee’s interest under such lease, including ability to
sublease; and (d) such other rights customarily required by mortgagees making a
loan secured by the interest of the holder of a leasehold estate demised
pursuant to a ground lease.

 

“Recourse Debt” means Debt for which the Borrower or any Subsidiary Guarantor
has personal or recourse liability in whole or in part, exclusive of any Debt
for which such personal or recourse liability is limited to obligations under
Customary Carve-Out Agreements.

 

“Real Property” means all right, title and interest of the Borrower and each of
its Subsidiaries in and to any land and any improvements located thereon,
together with all equipment, furniture, materials, supplies and personal
property in which such Person has an interest now or hereafter located on or
used in connection with such land and improvements, and all appurtenances,
additions, improvements, renewals, substitutions and replacements thereof now or
hereafter acquired by such Person.

 

“Reference Banks” means Citibank, N.A., Deutsche Bank AG, and Crédit Lyonnais.

 

“Register” has the meaning specified in Section 9.07(d).

 

“Registration Statement” means the Parent’s Form S-11 Registration Statement
filed with the Securities and Exchange Commission in connection with the IPO.

 

“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

 

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“REIT” means a Person that is qualified to be treated for tax purposes as a real
estate investment trust under Sections 856-860 of the Internal Revenue Code.

 

“Required Lenders” means, at any time, Lenders owed or holding greater than 50%
of the sum of (a) the aggregate principal amount of the Advances outstanding at
such time, (b) the aggregate Available Amount of all Letters of Credit
outstanding at such time and (c) the aggregate Unused Revolving Credit
Commitments at such time. For purposes of this definition, the aggregate
principal amount of Swing Line Advances owing to the Swing Line Bank and of
Letter of Credit Advances owing to any Issuing Bank and the Available Amount of
each Letter of Credit shall be considered to be owed to the Revolving Lenders
ratably in accordance with their respective Revolving Credit Commitments.

 

“Responsible Officer” means any officer of, or any officer of any general
partner or managing member of, any Loan Party or any of its Subsidiaries.

 

“Revolving Credit Advance” has the meaning specified in Section 2.01(a).

 

“Revolving Credit Commitment” means, (a) with respect to any Lender at any time,
the amount set forth opposite such Lender’s name on Schedule I hereto under the
caption “Revolving Credit Commitment” or (b) if such Lender has entered into one
or more Assignment and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 9.07(d) as such
Lender’s “Revolving Credit Commitment”, as such amount may be reduced at or
prior to such time pursuant to Section 2.05.

 

“Revolving Credit Facility” means, at any time, the aggregate amount of the
Lenders’ Revolving Credit Commitments at such time.

 

“RevPar” has the meaning specified in Section 5.02(d)(ii).

 

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

 

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended.

 

“Secured Hedge Agreement” means any Hedge Agreement required or permitted under
Article V that is entered into by and between any Loan Party and any Hedge Bank
and that is secured by the Collateral Documents.

 

“Secured Obligations” means, collectively, the “Secured Obligations” as defined
in Section 2 of the Security Agreement.

 

“Secured Parties” means the Agents, the Lender Parties and the Hedge Banks.

 

“Securities Act” means the Securities Act of 1933, as amended to the date hereof
and from time to time hereafter, and any successor statute.

 

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended
to the date hereof and from time to time hereafter, and any successor statute.

 

“Security Agreement” has the meaning specified in Section 3.01(a)(ii).

 

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“Senior Debt” means all Consolidated Debt of the Parent and its Subsidiaries
(other than Subordinated Debt) as at the end of the most recently ended fiscal
quarter of the Parent for which financial statements are required to be
delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case
may be.

 

“Senior Leverage Ratio” means, at any date of determination, the ratio of (i)
Senior Debt to (ii) EBITDA as at the end of the most recently ended fiscal
quarter of the Parent for which financial statements are required to be
delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case
may be.

 

“Single Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or
any ERISA Affiliate and no Person other than the Loan Parties and the ERISA
Affiliates or (b) was so maintained and in respect of which any Loan Party or
any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.

 

“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person, on a going-concern
basis, is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person, on a going-concern basis, is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay such debts and liabilities as they mature and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time (including, without limitation, after taking
into account appropriate discount factors for the present value of future
contingent liabilities), represents the amount that can reasonably be expected
to become an actual or matured liability.

 

“Standby Letter of Credit” means any Letter of Credit issued under the Letter of
Credit Facility, other than a Trade Letter of Credit.

 

“Subordinated Debt” means any Debt of any Loan Party (including the Term Debt)
that is subordinated to the Obligations of such Loan Party under the Loan
Documents on, and that otherwise contains, terms and conditions satisfactory to
the Required Lenders.

 

“Subordinated Obligations” has the meaning specified in Section 7.07(a).

 

“Subsidiary” of any Person means any corporation, partnership, joint venture,
limited liability company, trust or estate of which (or in which) more than 50%
of (a) the issued and outstanding capital stock having ordinary voting power to
elect a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (c) the beneficial interest in
such trust or estate, in each case, is at the time directly or indirectly owned
or controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person’s other Subsidiaries.

 

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“Subsidiary Guarantor” has the meaning specified in the recital of parties to
this Agreement.

 

“Supplemental Collateral Agent” has the meaning specified in Section 8.01(b).

 

“Surviving Debt” means Debt of each Loan Party and its Subsidiaries outstanding
immediately before and after giving effect to the IPO and the Formation and
Structuring Transactions.

 

“Swing Line Advance” means an advance made by (a) the Swing Line Bank pursuant
to Section 2.01(c) or (b) any Lender pursuant to Section 2.02(b).

 

“Swing Line Bank” means CNAI, in its capacity as the Lender of Swing Line
Advances, and its successors and permitted assigns in such capacity.

 

“Swing Line Borrowing” means a borrowing consisting of a Swing Line Advance made
by the Swing Line Bank pursuant to Section 2.01(c) or the Lenders pursuant to
Section 2.02(b).

 

“Swing Line Commitment” means, with respect to the Swing Line Bank, the amount
of the Swing Line Facility set forth in Section 2.01(b), as such amount may be
reduced at or prior to such time pursuant to Section 2.05.

 

“Swing Line Facility” has the meaning specified in Section 2.01(c).

 

“Taxes” has the meaning specified in Section 2.12(a).

 

“Tenancy Leases” means operating leases, subleases, licenses, occupancy
agreements and rights-of-use entered into by the Borrower or any of its
Subsidiaries in its capacity as a lessor or a similar capacity in the ordinary
course of business that do not materially and adversely affect the use of the
Real Property encumbered thereby for its intended purpose.

 

“Term Debt” means all Debt of the Loan Parties under the Term Loan Documents.

 

“Termination Date” means the earlier of (a) the third anniversary of the Closing
Date, subject to the extension thereof pursuant to Section 2.16 and (b) the date
of termination in whole of the Revolving Credit Commitments, the Letter of
Credit Commitments and the Swing Line Commitment pursuant to Section 2.05 or
6.01.

 

“Term Loan Documents” means the “Loan Documents” executed and delivered on the
date hereof pursuant to that certain Term Credit Agreement dated as of even date
herewith among the Borrower, as borrower, the Parent, and the Subsidiary
Guarantors, as guarantors, the lenders identified therein, CNAI, as
administrative agent and collateral agent and certain other secured parties
identified therein, as the same may be amended to the extent permitted by the
Intercreditor Agreement.

 

“Total Debt” means, at any date of determination, all Consolidated Debt of the
Parent and its Subsidiaries as at the end of the most recently ended fiscal
quarter of the Parent for which financial statements are required to be
delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case
may be.

 

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“Total Leverage Ratio” means, at any date of determination, the ratio of (i)
Total Debt to (ii) EBITDA as at the end of the most recently ended fiscal
quarter of the Parent for which financial statements are required to be
delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case
may be.

 

“Total Loan Value” means an amount equal to the sum of the Loan Values of all
Borrowing Base Assets.

 

“Trade Letter of Credit” means any Letter of Credit that is issued under the
Letter of Credit Facility for the benefit of a supplier of inventory to the
Borrower or any of its Subsidiaries to effect payment for such Inventory.

 

“Transfer” has the meaning specified in Section 5.02(d).

 

“Type” refers to the distinction between Advances bearing interest at the Base
Rate and Advances bearing interest at the Eurodollar Rate.

 

“Unused Fee” has the meaning specified in Section 2.08(a).

 

“Unused Revolving Credit Commitment” means, with respect to any Lender at any
time, (a) such Lender’s Revolving Credit Commitment at such time minus (b) the
sum of (i) the aggregate principal amount of all Revolving Credit Advances,
Swing Line Advances and Letter of Credit Advances made by such Lender (in its
capacity as a Lender) and outstanding at such time plus (ii) such Lender’s Pro
Rata Share of (A) the aggregate Available Amount of all Letters of Credit
outstanding at such time, (B) the aggregate principal amount of all Letter of
Credit Advances made by the Issuing Banks pursuant to Section 2.03(c) and
outstanding at such time and (C) the aggregate principal amount of all Swing
Line Advances made by the Swing Line Bank pursuant to Section 2.01(c) and
outstanding at such time.

 

“Voting Interests” means shares of capital stock issued by a corporation, or
equivalent Equity Interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even if
the right so to vote has been suspended by the happening of such a contingency.

 

“Welfare Plan” means a welfare plan, as defined in Section 3(1) of ERISA, that
is maintained for employees of any Loan Party or in respect of which any Loan
Party could have liability.

 

“Withdrawal Liability” has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.

 

SECTION 1.02. Computation of Time Periods; Other Definitional Provisions. In
this Agreement and the other Loan Documents in the computation of periods of
time from a specified date to a later specified date, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding”. References in the Loan Documents to any agreement or contract “as
amended” shall mean and be a reference to such agreement or contract as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.

 

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SECTION 1.03. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 4.01(g) (“GAAP”).

 

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

 

SECTION 2.01. The Advances and the Letters of Credit. (a) The Revolving Credit
Advances. Each Lender severally agrees, on the terms and conditions hereinafter
set forth, to make advances (each, a “Revolving Credit Advance”) to the Borrower
from time to time on any Business Day during the period from the date hereof
until the Termination Date in an amount for each such Advance not to exceed such
Lender’s Unused Revolving Credit Commitment at such time. Each Borrowing shall
be in an aggregate amount of $1,000,000 or an integral multiple of $250,000 in
excess thereof and shall consist of Revolving Credit Advances made
simultaneously by the Lenders ratably according to their Revolving Credit
Commitments. Within the limits of each Lender’s Unused Revolving Credit
Commitment in effect from time to time and prior to the Termination Date, the
Borrower may borrow under this Section 2.01(a), prepay pursuant to Section
2.06(a) and reborrow under this Section 2.01(a).

 

(b) Letters of Credit. Each Issuing Bank severally agrees, on the terms and
conditions hereinafter set forth, to issue (or cause its Affiliate that is a
commercial bank to issue on its behalf) letters of credit (the “Letters of
Credit”), for the account of the Borrower from time to time on any Business Day
during the period from the date hereof until 60 days before the Termination Date
in an aggregate Available Amount (i) for all Letters of Credit not to exceed at
any time the Letter of Credit Facility at such time, (ii) for all Letters of
Credit issued by such Issuing Bank not to exceed such Issuing Bank’s Letter of
Credit Commitment at such time, and (iii) for each such Letter of Credit not to
exceed the Unused Revolving Credit Commitments of the Lenders at such time. No
Letter of Credit shall have an expiration date (including all rights of the
Borrower or the beneficiary to require renewal) later than the earlier of 60
days before the Termination Date and (A) in the case of a Standby Letter of
Credit one year after the date of issuance thereof, but may by its terms be
automatically renewable or renewable annually upon notice (a “Notice of
Renewal”) given to the Issuing Bank that issued such Standby Letter of Credit
and the Administrative Agent on or prior to any date for notice of renewal set
forth in such Letter of Credit but in any event at least three Business Days
prior to the date of the proposed renewal of such Standby Letter of Credit and
upon fulfillment of the applicable conditions set forth in Article III unless
such Issuing Bank has notified the Borrower (with a copy to the Administrative
Agent) on or prior to the date for notice of termination set forth in such
Letter of Credit but in any event at least 30 Business Days prior to the date of
automatic renewal of its election not to renew such Standby Letter of Credit (a
“Notice of Termination”) and (B) in the case of a Trade Letter of Credit, 60
days after the date of issuance thereof; provided, however, that the terms of
each Standby Letter of Credit that is automatically renewable annually shall (x)
require the Issuing Bank that issued such Standby Letter of Credit to give the
beneficiary named in such Standby Letter of Credit notice of any Notice of
Termination, (y) permit such beneficiary, upon receipt of such notice, to draw
under such Standby Letter of Credit prior to the date such Standby Letter of
Credit otherwise would have been automatically renewed and (z) not permit the
expiration date (after giving effect to any renewal) of such Standby Letter of
Credit in any event to be extended to a date later than 60 days before the
Termination Date. If either a Notice of Renewal is not given by the Borrower or
a Notice of Termination is given by the relevant Issuing Bank pursuant to the
immediately preceding sentence, such Standby Letter of Credit shall expire on
the date on which it otherwise would have been automatically renewed; provided,
however, that even in the absence of receipt of a Notice of Renewal the relevant
Issuing Bank may in its discretion, unless instructed to the contrary by the
Administrative Agent or the Borrower, deem that a Notice of Renewal had been
timely delivered and in such case, a Notice of Renewal shall be deemed to have
been so delivered for all purposes under this Agreement. Each Standby Letter of
Credit shall contain a provision authorizing the Issuing Bank that

 

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issued such Letter of Credit to deliver to the beneficiary of such Letter of
Credit, upon the occurrence and during the continuance of an Event of Default, a
notice (a “Default Termination Notice”) terminating such Letter of Credit and
giving such beneficiary 15 days to draw such Letter of Credit. Within the limits
of the Letter of Credit Facility, and subject to the limits referred to above,
the Borrower may request the issuance of Letters of Credit under this Section
2.01(b), repay any Letter of Credit Advances resulting from drawings thereunder
pursuant to Section 2.03(c) and request the issuance of additional Letters of
Credit under this Section 2.01(b).

 

(c) The Swing Line Advances. The Borrower may request the Swing Line Bank to
make, and the Swing Line Bank agrees to make, on the terms and conditions
hereinafter set forth, Swing Line Advances to the Borrower from time to time on
any Business Day during the period from the date hereof until the Termination
Date (i) in an aggregate amount not to exceed at any time outstanding $5,000,000
(the “Swing Line Facility”) and (ii) in an amount for each such Swing Line
Borrowing not to exceed the aggregate of the Unused Revolving Credit Commitments
of the Lenders at such time. No Swing Line Advance shall be used for the purpose
of funding the payment of principal of any other Swing Line Advance. Each Swing
Line Borrowing shall be in an amount of $250,000 or an integral multiple of
$250,000 in excess thereof and shall be made as a Base Rate Advance. Within the
limits of the Swing Line Facility and within the limits referred to in clause
(ii) above, the Borrower may borrow under this Section 2.01(c), repay pursuant
to Section 2.04(b) or prepay pursuant to Section 2.06(a) and reborrow under this
Section 2.01(c).

 

SECTION 2.02. Making the Advances. (a) Except as otherwise provided in Section
2.03, each Borrowing (other than a Swing Line Borrowing) shall be made on
notice, given not later than 12:00 Noon (New York City time) on the third
Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances, or not later than 1:00 P.M.
(New York City time) on the date one Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances,
by the Borrower to the Administrative Agent, which shall give to each Lender
prompt notice thereof by telex or telecopier. Each such notice of a Borrowing (a
“Notice of Borrowing”) shall be by telephone, confirmed immediately in writing,
or telex or telecopier or e-mail, in each case in substantially the form of
Exhibit B hereto, specifying therein the requested (i) date of such Borrowing,
(ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such
Borrowing and (iv) in the case of a Borrowing consisting of Eurodollar Rate
Advances, initial Interest Period for each such Advance. Each Lender shall,
before 12:00 Noon (New York City time) on the date of such Borrowing in the case
of a Borrowing consisting of Eurodollar Rate Advances and 1:00 P.M. (New York
City time) on the date of such Borrowing in the case of a Borrowing consisting
of Base Rate Advances, make available for the account of its Applicable Lending
Office to the Administrative Agent at the Administrative Agent’s Account, in
same day funds, such Lender’s ratable portion of such Borrowing in accordance
with the respective Commitments of such Lender and the other Lenders. After the
Administrative Agent’s receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower by crediting the Borrower’s Account;
provided, however, that the Administrative Agent shall first make a portion of
such funds equal to the aggregate principal amount of any Swing Line Advances
and Letter of Credit Advances made by the Swing Line Bank or any Issuing Bank,
as the case may be, and by any other Lender and outstanding on the date of such
Borrowing, plus interest accrued and unpaid thereon to and as of such date,
available to the Swing Line Bank or such Issuing Bank, as the case may be, and
such other Lenders for repayment of such Swing Line Advances and Letter of
Credit Advances.

 

(b) Each Swing Line Borrowing shall be made on notice, given not later than
12:00 Noon (New York City time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent.
Each such notice of a Swing Line Borrowing (a “Notice of Swing Line Borrowing”)
shall be by telephone, confirmed immediately in writing or by telecopier or

 

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e-mail, in each case specifying therein the requested (i) date of such
Borrowing, (ii) amount of such Borrowing and (iii) maturity of such Borrowing
(which maturity shall be no later than the earlier of (A) the seventh day after
the requested date of such Borrowing and (B) the Termination Date). The Swing
Line Bank shall, before 1:00 P.M. (New York City time) on the date of such Swing
Line Borrowing, make the amount thereof available to the Administrative Agent at
the Administrative Agent’s Account, in same day funds. After the Administrative
Agent’s receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower by crediting the Borrower’s Account. Upon written
demand by the Swing Line Bank, with a copy of such demand to the Administrative
Agent, each other Lender shall purchase from the Swing Line Bank, and the Swing
Line Bank shall sell and assign to each such other Lender, such other Lender’s
Pro Rata Share of such outstanding Swing Line Advance as of the date of such
demand, by making available for the account of its Applicable Lending Office to
the Administrative Agent for the account of the Swing Line Bank, by deposit to
the Administrative Agent’s Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Swing Line Advance to be
purchased by such Lender. The Borrower hereby agrees to each such sale and
assignment. Each Lender agrees to purchase its Pro Rata Share of an outstanding
Swing Line Advance on (i) the Business Day on which demand therefor is made by
the Swing Line Bank, provided that notice of such demand is given not later than
12:00 Noon (New York City time) on such Business Day or (ii) the first Business
Day next succeeding such demand if notice of such demand is given after such
time. Upon any such assignment by the Swing Line Bank to any other Lender of a
portion of a Swing Line Advance, the Swing Line Bank represents and warrants to
such other Lender that the Swing Line Bank is the legal and beneficial owner of
such interest being assigned by it, but makes no other representation or
warranty and assumes no responsibility with respect to such Swing Line Advance,
the Loan Documents or any Loan Party. If and to the extent that any Lender shall
not have so made the amount of such Swing Line Advance available to the
Administrative Agent, such Lender agrees to pay to the Administrative Agent
forthwith on demand such amount together with interest thereon, for each day
from the date of demand by the Swing Line Bank until the date such amount is
paid to the Administrative Agent, at the Federal Funds Rate. If such Lender
shall pay to the Administrative Agent such amount for the account of the Swing
Line Bank on any Business Day, such amount so paid in respect of principal shall
constitute a Swing Line Advance made by such Lender on such Business Day for
purposes of this Agreement, and the outstanding principal amount of the Swing
Line Advance made by the Swing Line Bank shall be reduced by such amount on such
Business Day.

 

(c) Anything in subsection (a) above to the contrary notwithstanding, (i) the
Borrower may not select Eurodollar Rate Advances for the initial Borrowing
hereunder or for any Borrowing if the aggregate amount of such Borrowing is less
than $1,000,000 or if the obligation of the Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.07(d)(ii), 2.09 or 2.10
and (ii) there may not be more than 10 separate Borrowings outstanding at any
time.

 

(d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall be
irrevocable and binding on the Borrower. In the case of any Borrowing that the
related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund the Advance to be
made by such Lender as part of such Borrowing when such Advance, as a result of
such failure, is not made on such date.

 

(e) Unless the Administrative Agent shall have received notice from a Lender
prior to (x) the date of any Borrowing consisting of Eurodollar Rate Advances or
(y) 12:00 Noon (New York

 

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City time) on the date of any Borrowing consisting of Base Rate Advances that
such Lender will not make available to the Administrative Agent such Lender’s
ratable portion of such Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the date
of such Borrowing in accordance with subsection (a) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay or
pay to the Administrative Agent forthwith on demand such corresponding amount
and to pay interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at such time under Section 2.07 to Advances comprising such Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Administrative Agent such corresponding amount, such amount so
paid shall constitute such Lender’s Advance as part of such Borrowing for all
purposes.

 

(f) The failure of any Lender to make the Advance to be made by it as part of
any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.

 

SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 12:00 Noon (New York City time) on the second
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to any Issuing Bank, which shall give to the
Administrative Agent and each Lender prompt notice thereof by telex, telecopier
or e-mail or by means of the Platform. Each such notice of issuance of a Letter
of Credit (a “Notice of Issuance”) shall be by telephone, confirmed immediately
in writing, telex, telecopier or e-mail, in each case specifying therein the
requested (i) date of such issuance (which shall be a Business Day), (ii)
Available Amount of such Letter of Credit, (iii) expiration date of such Letter
of Credit, (iv) name and address of the beneficiary of such Letter of Credit and
(v) form of such Letter of Credit, and shall be accompanied by such application
and agreement for letter of credit as such Issuing Bank may specify to the
Borrower for use in connection with such requested Letter of Credit (a “Letter
of Credit Agreement”). If (y) the requested form of such Letter of Credit is
acceptable to such Issuing Bank in its sole discretion and (z) it has not
received notice of objection to such issuance from the Required Lenders, such
Issuing Bank will, upon fulfillment of the applicable conditions set forth in
Article III, make such Letter of Credit available to the Borrower at its office
referred to in Section 9.02 or as otherwise agreed with the Borrower in
connection with such issuance. In the event and to the extent that the
provisions of any Letter of Credit Agreement shall conflict with this Agreement,
the provisions of this Agreement shall govern.

 

(b) Letter of Credit Reports. Each Issuing Bank shall furnish (i) to each Lender
on the first Business Day of each month a written report summarizing issuance
and expiration dates of Letters of Credit issued by such Issuing Bank during the
preceding month and drawings during such month under all Letters of Credit
issued by such Issuing Bank and (ii) to the Administrative Agent and each Lender
on the first Business Day of each calendar quarter a written report setting
forth the average daily aggregate Available Amount during the preceding calendar
quarter of all Letters of Credit issued by such Issuing Bank.

 

(c) Letter of Credit Participations; Drawing and Reimbursement. (i) Immediately
upon the issuance by the Issuing Bank of any Letter of Credit, the Issuing Bank
shall be deemed to have sold and transferred to each Lender, and each Lender (in
its capacity under this Section 2.03(c), a “Participant”) shall be deemed
irrevocably and unconditionally to have purchased and received from the

 

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Issuing Bank, without recourse or warranty, an undivided interest and
participation in such Letter of Credit, to the extent of such Participant’s Pro
Rata Share of the Available Amount of such Letter of Credit, each drawing or
payment made thereunder and the obligations of the Borrower under this Agreement
with respect thereto, and any security therefor or guaranty pertaining thereto.
Upon any change in the Revolving Credit Commitments or the Lenders’ respective
Pro Rata Shares pursuant to Section 9.07, it is hereby agreed that, with respect
to all outstanding Letters of Credit and unpaid drawings relating thereto, there
shall be an automatic adjustment to the participations pursuant to this Section
2.03(c) to reflect the new Pro Rata Shares of the assignor and assignee Lenders,
as the case may be.

 

(ii) In determining whether to pay under any Letter of Credit, the Issuing Bank
shall not have any obligation with respect to the other Revolving Credit Lenders
other than to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by the Issuing Bank under or in
connection with any Letter of Credit issued by it shall not create for the
Issuing Bank any resulting liability to the Borrower, any other Loan Party, any
Revolving Credit Lender or any other Person unless such action is taken or
omitted to be taken with gross negligence or willful misconduct on the part of
the Issuing Bank (as determined by a court of competent jurisdiction in a final
non-appealable judgment)

 

(iii) The payment by any Issuing Bank of a draft drawn under any Letter of
Credit shall constitute for all purposes of this Agreement the making by such
Issuing Bank of a Letter of Credit Advance, which shall be a Base Rate Advance,
in the amount of such draft. In the event that the Issuing Bank makes any
payment under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to the Issuing Bank pursuant to Section 2.04(c),
the Issuing Bank shall promptly notify the Administrative Agent, which shall
promptly notify each Participant of such failure, and each Participant shall
promptly and unconditionally pay to the Administrative Agent for the account of
the Issuing Bank the amount of such Participant’s Pro Rata Share of such
unreimbursed payment in U.S. dollars and in same day funds. Upon such
notification by the Administrative Agent to any Participant required to fund a
payment under a Letter of Credit, such Participant shall make available to the
Administrative Agent for the account of the Issuing Bank its Pro Rata Share of
an outstanding Letter of Credit Advance on (i) the Business Day on which demand
therefor is made by the Issuing Bank which made such Advance, provided that
notice of such demand is given not later than 11:00 A.M. (New York City time) on
such Business Day, or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. If such Lender shall pay to the
Administrative Agent such amount for the account of such Issuing Bank on any
Business Day, such amount so paid in respect of principal shall constitute a
Letter of Credit Advance made by such Lender on such Business Day for purposes
of this Agreement, and the outstanding principal amount of the Letter of Credit
Advance made by such Issuing Bank shall be reduced by such amount on such
Business Day. If and to the extent that any Lender shall not have so made the
amount of such Letter of Credit Advance available to the Administrative Agent,
such Lender agrees to pay to the Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
such Issuing Bank until the date such amount is paid to the Administrative
Agent, at the Federal Funds Rate for its account or the account of such Issuing
Bank, as applicable.

 

(iv) Whenever the Issuing Bank receives a payment of a reimbursement obligation
as to which it has received any payments from the Participants pursuant to
clause (iii) above, the Issuing Bank shall pay to the Administrative Agent for
the account of each such Participant that has paid its Pro Rata Share thereof,
in same day funds, an amount equal to such Participant’s share (based upon the
proportionate aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of the
respective participations.

 

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(d) Failure to Make Letter of Credit Advances. The failure of any Lender to make
the Letter of Credit Advance to be made by it on the date specified in Section
2.03(c) shall not relieve any other Lender of its obligation hereunder to make
its Letter of Credit Advance on such date, but no Lender shall be responsible
for the failure of any other Lender to make the Letter of Credit Advance to be
made by such other Lender on such date.

 

SECTION 2.04. Repayment of Advances. (a) Revolving Credit Advances. The Borrower
shall repay to the Administrative Agent for the ratable account of the Lenders
on the Termination Date the aggregate outstanding principal amount of the
Revolving Credit Advances then outstanding.

 

(b) Swing Line Advances. The Borrower shall repay to the Administrative Agent
for the account of (i) the Swing Line Bank and (ii) each other Lender that has
made a Swing Line Advance by purchase from the Swing Line Bank pursuant to
Section 2.02(b), the outstanding principal amount of each Swing Line Advance
made by each of them on the earlier of the maturity date specified in the
applicable Notice of Swing Line Borrowing (which maturity shall be no later than
the seventh day after the requested date of such Swing Line Borrowing) and the
Termination Date.

 

(c) Letter of Credit Advances. (i) The Borrower shall repay to the
Administrative Agent for the account of each Issuing Bank and each other Lender
that has made a Letter of Credit Advance on the same day on which such Advance
was made the outstanding principal amount of each Letter of Credit Advance made
by each of them.

 

(ii) The Obligations of the Borrower under this Agreement, any Letter of Credit
Agreement and any other agreement or instrument relating to any Letter of Credit
(and the obligations of each Lender to reimburse the Issuing Bank with respect
thereto) shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement and
such other agreement or instrument under all circumstances, including, without
limitation, the following circumstances:

 

(A) any lack of validity or enforceability of any Loan Document, any Letter of
Credit Agreement, any Letter of Credit or any other agreement or instrument
relating thereto (all of the foregoing being, collectively, the “L/C Related
Documents”);

 

(B) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Obligations of the Borrower in respect of any L/C Related
Document or any other amendment or waiver of or any consent to departure from
all or any of the L/C Related Documents;

 

(C) the existence of any claim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee of a
Letter of Credit (or any Persons for which any such beneficiary or any such
transferee may be acting), any Issuing Bank or any other Person, whether in
connection with the transactions contemplated by the L/C Related Documents or
any unrelated transaction;

 

(D) any statement or any other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;

 

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(E) payment by any Issuing Bank under a Letter of Credit against presentation of
a draft or certificate that does not strictly comply with the terms of such
Letter of Credit;

 

(F) any exchange, release or non-perfection of any Collateral or other
collateral, or any release or amendment or waiver of or consent to departure
from the Guaranties or any other guarantee, for all or any of the Obligations of
the Borrower in respect of the L/C Related Documents; or

 

(G) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including, without limitation, any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Borrower or a guarantor,

 

provided that, notwithstanding the foregoing, an Issuing Bank shall not be
relieved of any liability it may otherwise have as a result of its gross
negligence or willfull misconduct.

 

SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional. The
Borrower may, upon at least three Business Days’ notice to the Administrative
Agent, terminate in whole or reduce in part the unused portions of the Swing
Line Facility, the Letter of Credit Facility and the Unused Revolving Credit
Commitments; provided, however, that each partial reduction of a Facility (i)
shall be in an aggregate amount of $1,000,000 (or in the case of the Swing Line
Facility, $250,000) or an integral multiple of $250,000 in excess thereof and
(ii) shall be made ratably among the Lenders in accordance with their
Commitments with respect to such Facility.

 

(b) Mandatory. (i) The Letter of Credit Facility shall be permanently reduced
from time to time on the date of each reduction in the Revolving Credit Facility
by the amount, if any, by which the amount of the Letter of Credit Facility
exceeds the Revolving Credit Facility after giving effect to such reduction of
the Revolving Credit Facility.

 

(ii) The Swing Line Facility shall be permanently reduced from time to time on
the date of each reduction in the Revolving Credit Facility by the amount, if
any, by which the amount of the Swing Line Facility exceeds the Revolving Credit
Facility after giving effect to such reduction of the Revolving Credit Facility.

 

SECTION 2.06. Prepayments. (a) Optional. The Borrower may, upon same day notice
in the case of Base Rate Advances and two Business Days’ notice in the case of
Eurodollar Rate Advances, in each case to the Administrative Agent stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given the Borrower shall, prepay the outstanding aggregate principal
amount of the Advances comprising part of the same Borrowing in whole or ratably
in part, together with accrued interest to the date of such prepayment on the
aggregate principal amount prepaid; provided, however, that (i) each partial
prepayment shall be in an aggregate principal amount of $1,000,000 or an
integral multiple of $250,000 in excess thereof or, if less, the amount of the
Advances outstanding and (ii) if any prepayment of a Eurodollar Rate Advance is
made on a date other than the last day of an Interest Period for such Advance,
the Borrower shall also pay any amounts owing pursuant to Section 9.04(c).

 

(b) Mandatory. (i) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Revolving Credit Advances comprising part of the same
Borrowings, the Swing Line Advances and the Letter of Credit Advances and
deposit an amount in the L/C Cash Collateral Account in an amount equal to the
amount by which (A) the sum of the aggregate principal amount of (1) the
Revolving Credit Advances then outstanding, (2) the Swing Line Advances then
outstanding and (3) the Letter of Credit Advances then outstanding plus the
aggregate Available Amount of all Letters of Credit then outstanding exceeds (B)
the lesser of the Revolving Credit Facility and the Total Loan Value on such
Business Day.

 

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(ii) The Borrower shall, on each Business Day, pay to the Administrative Agent
for deposit in the L/C Cash Collateral Account an amount sufficient to cause the
aggregate amount on deposit in the L/C Cash Collateral Account to equal the
amount by which the aggregate Available Amount of all Letters of Credit then
outstanding exceeds the Letter of Credit Facility on such Business Day.

 

(iii) Prepayments of the Revolving Credit Facility made pursuant to clauses (i)
and (ii) above shall be first applied to prepay Letter of Credit Advances then
outstanding until such Advances are paid in full, second applied to prepay Swing
Line Advances then outstanding until such Advances are paid in full, third
applied to prepay Revolving Credit Advances then outstanding comprising part of
the same Borrowings until such Advances are paid in full and fourth deposited in
the L/C Cash Collateral Account to cash collateralize 100% of the Available
Amount of the Letters of Credit then outstanding. Upon the drawing of any Letter
of Credit for which funds are on deposit in the L/C Cash Collateral Account,
such funds shall be applied to reimburse the relevant Issuing Bank or Lenders,
as applicable.

 

(iv) All prepayments under this subsection (b) shall be made together with
accrued interest to the date of such prepayment on the principal amount prepaid.

 

SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower shall pay interest
on the unpaid principal amount of each Advance owing to each Lender from the
date of such Advance until such principal amount shall be paid in full, at the
following rates per annum:

 

(i) Base Rate Advances. During such periods as such Advance is a Base Rate
Advance, a rate per annum equal at all times to the sum of (A) the Base Rate in
effect from time to time plus (B) the Applicable Margin in effect from time to
time, payable in arrears quarterly on the last day of each December, March, June
and September during such periods and on the date such Base Rate Advance shall
be Converted or paid in full.

 

(ii) Eurodollar Rate Advances. During such periods as such Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (A) the Eurodollar Rate for such
Interest Period for such Advance plus (B) the Applicable Margin in effect on the
first day of such Interest Period, payable in arrears on the last day of such
Interest Period and, if such Interest Period has a duration of more than three
months, on each day that occurs during such Interest Period every three months
from the first day of such Interest Period and on the date such Eurodollar Rate
Advance shall be Converted or paid in full.

 

(b) Default Interest. Upon the occurrence and during the continuance of any
Event of Default, the Borrower shall pay interest on (i) the unpaid principal
amount of each Advance owing to each Lender, payable in arrears on the dates
referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid
on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other amount
payable under the Loan Documents that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of interest, on the Type of Advance on which such interest has
accrued pursuant to clause (a)(i) or (a)(ii) above and, in all other cases, on
Base Rate Advances pursuant to clause (a)(i) above.

 

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(c) Notice of Interest Period and Interest Rate. Promptly after receipt of a
Notice of Borrowing pursuant to Section 2.02(a), a notice of Conversion pursuant
to Section 2.09 or a notice of selection of an Interest Period pursuant to the
terms of the definition of “Interest Period”, the Administrative Agent shall
give notice to the Borrower and each Lender of the applicable Interest Period
and the applicable interest rate determined by the Administrative Agent for
purposes of clause (a)(i) or (a)(ii) above, and the applicable rate, if any,
furnished by each Reference Bank for the purpose of determining the applicable
interest rate under clause (a)(ii) above.

 

(d) Interest Rate Determination. (i) Each Reference Bank agrees to furnish to
the Administrative Agent timely information for the purpose of determining each
Eurodollar Rate. If any one or more of the Reference Banks shall not furnish
such timely information to the Administrative Agent for the purpose of
determining any such interest rate, the Administrative Agent shall determine
such interest rate on the basis of timely information furnished by the remaining
Reference Banks.

 

(ii) If Telerate Page 3750 is unavailable and fewer than two Reference Banks are
able to furnish timely information to the Administrative Agent for determining
the Eurodollar Rate for any Eurodollar Rate Advances,

 

(A) the Administrative Agent shall forthwith notify the Borrower and the Lenders
that the interest rate cannot be determined for such Eurodollar Rate Advances,

 

(B) each such Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance (or if such Advance
is then a Base Rate Advance, will continue as a Base Rate Advance), and

 

(C) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.

 

SECTION 2.08. Fees. (a) Unused Fee. The Borrower shall pay to the Administrative
Agent for the account of the Lenders an unused commitment fee (the “Unused
Fee”), from the date hereof in the case of each Initial Lender and from the
effective date specified in the Assignment and Acceptance or the Assumption
Agreement, as the case may be, pursuant to which it became a Lender in the case
of each other Lender until the Termination Date, payable in arrears on the date
of the initial Borrowing hereunder, and thereafter quarterly on the last day of
each December, March, June and September, commencing December 31, 2004, and on
the Termination Date. The Unused Fee payable for the account of each Lender
shall be calculated for each period for which the Unused Fee is payable on the
average daily Unused Revolving Credit Commitment of such Lender during such
period at the rate of 0.50% per annum.

 

(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the Administrative
Agent for the account of each Lender a commission, payable in arrears, (a)
quarterly on the last day of each December, March, June and September,
commencing December 31, 2004, and (b) on the earliest to occur of the full
drawing, expiration, termination or cancellation of any Letter of Credit, and
(c) on the Termination Date, on such Lender’s Pro Rata Share of the average
daily aggregate Available Amount during such quarter of all Letters of Credit
outstanding from time to time at the rate per annum equal to the Applicable
Margin for Eurodollar Rate Advances in effect from time to time.

 

(ii) The Borrower shall pay to each Issuing Bank, for its own account, (A) a
fronting fee for each Letter of Credit issued by such Issuing Bank in an amount
equal to 0.125% of the Available Amount of such Letter of Credit on the date of
issuance of such Letter of Credit, payable on such date and

 

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(B) such other commissions, issuance fees, transfer fees and other fees and
charges in connection with the issuance or administration of each Letter of
Credit as the Borrower and such Issuing Bank shall agree. For the avoidance of
doubt, the extension or renewal of an issued Letter of Credit shall not require
the payment of additional fees or charges.

 

(c) Agents’ Fees. The Borrower shall pay to each Agent for its own account the
fees, in the amounts and on the dates, set forth in the Fee Letter and such
other fees as may from time to time be agreed between the Borrower and such
Agent.

 

(d) Extension Fee. The Borrower shall pay to the Administrative Agent on the
Extension Date, for the account of each Lender, a Facility extension fee, in an
amount equal to 0.25% of each Lender’s Revolving Credit Commitment then
outstanding.

 

SECTION 2.09. Conversion of Advances. (a) Optional. The Borrower may on any
Business Day, upon notice given to the Administrative Agent not later than 12:00
Noon (New York City time) on the third Business Day prior to the date of the
proposed Conversion and subject to the provisions of Sections 2.07 and 2.10,
Convert all or any portion of the Advances of one Type comprising the same
Borrowing into Advances of the other Type; provided, however, that any
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.02(c), no
Conversion of any Advances shall result in more separate Borrowings than
permitted under Section 2.02(c) and each Conversion of Advances comprising part
of the same Borrowing under any Facility shall be made ratably among the Lenders
in accordance with their Commitments under such Facility. Each such notice of
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Advances to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrower.

 

(b) Mandatory. (i) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert into Base Rate Advances.

 

(ii) If the Borrower shall fail to select the duration of any Interest Period
for any Eurodollar Rate Advances in accordance with the provisions contained in
the definition of “Interest Period” in Section 1.01, the Administrative Agent
will forthwith so notify the Borrower and the Lenders, whereupon each such
Eurodollar Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance.

 

(iii) Upon the occurrence and during the continuance of any Event of Default,
(y) each Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (z) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended.

 

SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) adopted or made
after the date hereof, there shall be any increase in the cost to any Lender
Party of agreeing to make or of making, funding or maintaining Eurodollar Rate
Advances or of agreeing to issue or of issuing or maintaining or participating
in Letters of Credit or of agreeing to make or of making or maintaining Letter
of Credit Advances (excluding, for purposes of this Section 2.10, any such
increased

 

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costs resulting from (y) Taxes or Other Taxes (as to which Section 2.12 shall
govern) and (z) changes in the basis of taxation of overall net income or
overall gross income by the United States or by the foreign jurisdiction or
state under the laws of which such Lender Party is organized or has its
Applicable Lending Office or any political subdivision thereof), then the
Borrower shall from time to time, upon demand by such Lender Party (with a copy
of such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender Party additional amounts sufficient to compensate
such Lender Party for such increased cost; provided, however, that a Lender
Party claiming additional amounts under this Section 2.10(a) agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost that may thereafter accrue and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to such Lender
Party. A certificate as to the amount of such increased cost, submitted to the
Borrower by such Lender Party, shall be conclusive and binding for all purposes,
absent manifest error.

 

(b) If any Lender Party determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender Party or any
corporation controlling such Lender Party and that the amount of such capital is
increased by or based upon the existence of such Lender Party’s commitment to
lend or to issue or participate in Letters of Credit hereunder and other
commitments of such type or the issuance or maintenance of or participation in
the Letters of Credit (or similar contingent obligations), then, upon demand by
such Lender Party or such corporation (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to the Administrative Agent for
the account of such Lender Party, from time to time as specified by such Lender
Party, additional amounts sufficient to compensate such Lender Party in the
light of such circumstances, to the extent that such Lender Party reasonably
determines such increase in capital to be allocable to the existence of such
Lender Party’s commitment to lend or to issue or participate in Letters of
Credit hereunder or to the issuance or maintenance of or participation in any
Letters of Credit. A certificate as to such amounts submitted to the Borrower by
such Lender Party shall be conclusive and binding for all purposes, absent
manifest error.

 

(c) If, with respect to any Eurodollar Rate Advances, the Required Lenders
notify the Administrative Agent that the Eurodollar Rate for any Interest Period
for such Advances will not adequately reflect the cost to such Lenders of
making, funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Administrative Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each such Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance and (ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower that such Lenders have determined
that the circumstances causing such suspension no longer exist.

 

(d) Notwithstanding any other provision of this Agreement, if after the date of
this Agreement the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances hereunder, then, on notice thereof and demand therefor by such Lender
to the Borrower through the Administrative Agent, (i) each Eurodollar Rate
Advance will automatically, upon such demand, Convert into a Base Rate Advance
and (ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lender has determined that the circumstances
causing such suspension no longer exist; provided, however, that, before making
any such demand, such Lender agrees to use reasonable efforts (consistent with
its internal policy and

 

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legal and regulatory restrictions) to designate a different Eurodollar Lending
Office if the making of such a designation would allow such Lender or its
Eurodollar Lending Office to continue to perform its obligations to make
Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.

 

SECTION 2.11. Payments and Computations. (a) The Borrower shall make each
payment hereunder and under the Notes, irrespective of any right of counterclaim
or set-off (except as otherwise provided in Section 2.13), not later than 12:00
Noon (New York City time) on the day when due in U.S. dollars to the
Administrative Agent at the Administrative Agent’s Account in same day funds,
with payments being received by the Administrative Agent after such time being
deemed to have been received on the next succeeding Business Day. The
Administrative Agent will promptly thereafter cause like funds to be distributed
(i) if such payment by the Borrower is in respect of principal, interest,
commitment fees or any other Obligation then payable hereunder and under the
Notes to more than one Lender Party, to such Lender Parties for the account of
their respective Applicable Lending Offices ratably in accordance with the
amounts of such respective Obligations then payable to such Lender Parties and
(ii) if such payment by the Borrower is in respect of any Obligation then
payable hereunder to one Lender Party, to such Lender Party for the account of
its Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon any Assuming Lender becoming a Lender hereunder as
a result of a Commitment Increase pursuant to Section 2.17 and upon the
Administrative Agent’s receipt of such Lender’s Assumption Agreement and
recording of the information contained therein in the Register, from and after
the applicable Increase Date, the Administrative Agent shall make all payments
hereunder and under any Notes issued in connection therewith in respect of the
interest assumed thereby to such Assuming Lender. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 9.07(d), from and after the effective date of
such Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender Party assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves.

 

(b) The Borrower hereby authorizes each Lender Party and each of its Affiliates,
if and to the extent payment owed to such Lender Party is not made when due
hereunder or, in the case of a Lender, under the Note held by such Lender, to
charge from time to time, to the fullest extent permitted by law, against any or
all of the Borrower’s accounts with such Lender Party any amount so due.

 

(c) All computations of interest based on the Base Rate shall be made by the
Administrative Agent on the basis of a year of 365 or 366 days, as the case may
be, and all computations of interest based on the Eurodollar Rate or the Federal
Funds Rate and of fees and Letter of Credit commissions shall be made by the
Administrative Agent on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, fees or commissions are
payable. Each determination by the Administrative Agent of an interest rate, fee
or commission hereunder shall be conclusive and binding for all purposes, absent
manifest error.

 

(d) Whenever any payment hereunder or under the Notes shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, that if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

 

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(e) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to any Lender Party hereunder that
the Borrower will not make such payment in full, the Administrative Agent may
assume that the Borrower has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each such Lender Party on such due date
an amount equal to the amount then due such Lender Party. If and to the extent
the Borrower shall not have so made such payment in full to the Administrative
Agent, each such Lender Party shall repay to the Administrative Agent forthwith
on demand such amount distributed to such Lender Party together with interest
thereon, for each day from the date such amount is distributed to such Lender
Party until the date such Lender Party repays such amount to the Administrative
Agent, at the Federal Funds Rate.

 

(f) Whenever any payment received by the Administrative Agent under this
Agreement or any of the other Loan Documents is insufficient to pay in full all
amounts due and payable to the Agents and the Lender Parties under or in respect
of this Agreement and the other Loan Documents on any date, such payment shall
be distributed by the Administrative Agent and applied by the Agents and the
Lender Parties in the following order of priority:

 

(i) first, to the payment of all of the fees, indemnification payments, costs
and expenses that are due and payable to the Agents (solely in their respective
capacities as Agents) under or in respect of this Agreement and the other Loan
Documents on such date, ratably based upon the respective aggregate amounts of
all such fees, indemnification payments, costs and expenses owing to the Agents
on such date;

 

(ii) second, to the payment of all of the fees, indemnification payments, costs
and expenses that are due and payable to the Issuing Banks (solely in their
respective capacities as such) under or in respect of this Agreement and the
other Loan Documents on such date, ratably based upon the respective aggregate
amounts of all such fees, indemnification payments, costs and expenses owing to
the Issuing Banks on such date;

 

(iii) third, to the payment of all of the indemnification payments, costs and
expenses that are due and payable to the Lenders under Section 9.04, Section 20
of the Security Agreement and any similar section of any of the other Loan
Documents on such date, ratably based upon the respective aggregate amounts of
all such indemnification payments, costs and expenses owing to the Lenders on
such date;

 

(iv) fourth, to the payment of all of the amounts that are due and payable to
the Administrative Agent and the Lender Parties under Sections 2.10 and 2.12 on
such date, ratably based upon the respective aggregate amounts thereof owing to
the Administrative Agent and the Lender Parties on such date;

 

(v) fifth, to the payment of all of the fees that are due and payable to the
Lenders under Section 2.08(a), (b)(i) and (d) on such date, ratably based upon
the respective aggregate Commitments of the Lenders under the Facilities on such
date;

 

(vi) sixth, to the payment of all of the accrued and unpaid interest on the
Obligations of the Borrower under or in respect of the Loan Documents that is
due and payable to the Administrative Agent and the Lender Parties under Section
2.07(b) on such date, ratably based upon the respective aggregate amounts of all
such interest owing to the Administrative Agent and the Lender Parties on such
date;

 

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(vii) seventh, to the payment of all of the accrued and unpaid interest on the
Advances that is due and payable to the Administrative Agent and the Lender
Parties under Section 2.07(a) on such date, ratably based upon the respective
aggregate amounts of all such interest owing to the Administrative Agent and the
Lender Parties on such date;

 

(viii) eighth, to the payment of the principal amount of all of the outstanding
Advances and any reimbursement obligations that are due and payable to the
Administrative Agent and the Lender Parties on such date, ratably based upon the
respective aggregate amounts of all such principal and reimbursement obligations
owing to the Administrative Agent and the Lender Parties on such date, and to
deposit into the L/C Cash Collateral Account any contingent reimbursement
obligations in respect of outstanding Letters of Credit to the extent required
by Section 6.02; and

 

(ix) ninth, to the payment of all other Obligations of the Loan Parties owing
under or in respect of the Loan Documents that are due and payable to the
Administrative Agent and the other Secured Parties on such date, ratably based
upon the respective aggregate amounts of all such Obligations owing to the
Administrative Agent and the other Secured Parties on such date.

 

SECTION 2.12. Taxes. (a) Any and all payments by the Borrower hereunder or under
the Notes shall be made, in accordance with Section 2.11, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender Party and the Administrative Agent, taxes
that are imposed on its overall net income by the United States and taxes that
are imposed on its overall net income (and franchise or other similar taxes
imposed in lieu thereof) by the state or foreign jurisdiction under the laws of
which such Lender Party or the Administrative Agent, as the case may be, is
organized or any political subdivision thereof and, in the case of each Lender
Party, taxes that are imposed on its overall net income (and franchise or other
similar taxes imposed in lieu thereof) by the state or foreign jurisdiction of
such Lender Party’s Applicable Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities in respect of payments hereunder or under the Notes
being hereinafter referred to as “Taxes”). If the Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note to any Lender Party or the Administrative Agent, (i) the sum payable by
the Borrower shall be increased as may be necessary so that after the Borrower
and the Administrative Agent have made all required deductions (including
deductions applicable to additional sums payable under this Section 2.12) such
Lender Party or the Administrative Agent, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make all such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.

 

(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property, intangible, mortgage recording or similar taxes,
charges or levies that arise from any payment made hereunder or under the Notes
or from the execution, delivery or registration of, performance under, or
otherwise with respect to, this Agreement, or any other Loan Document
(hereinafter referred to as “Other Taxes”), provided that each Lender Party
will, upon request of the Borrower (such request not to be unduly burdensome to
such Lender Party and with respect to information concerning such Lender Party),
provide information necessary to avoid the imposition of such Other Taxes.
Nothing herein shall oblige a Lender Party to disclose any information that it
reasonably considers to be confidential.

 

(c) The Borrower shall indemnify each Lender Party and the Administrative Agent
for and hold them harmless against the full amount of Taxes and Other Taxes, and
for the full amount of

 

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taxes of any kind imposed by any jurisdiction on amounts payable under this
Section 2.12, imposed on or paid by such Lender Party or the Administrative
Agent (as the case may be) and any liability (including penalties, additions to
tax, interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender Party or
the Administrative Agent (as the case may be) makes written demand therefor.

 

(d) Within 30 days after the date of any payment of Taxes, the Borrower shall
furnish to the Administrative Agent, at its address referred to in Section 9.02,
the original or a certified copy of a receipt evidencing such payment or, if
such receipts are not obtainable, other evidence of such payments by the
Borrower reasonably satisfactory to the Administrative Agent. In the case of any
payment hereunder or under the Notes by or on behalf of the Borrower through an
account or branch outside the United States or by or on behalf of the Borrower
by a payor that is not a United States person, if the Borrower determines that
no Taxes are payable in respect thereof, the Borrower shall furnish, or shall
cause such payor to furnish, to the Administrative Agent, at such address, an
opinion of counsel acceptable to the Administrative Agent stating that such
payment is exempt from Taxes. For purposes of subsections (d) and (e) of this
Section 2.12, the terms “United States” and “United States person” shall have
the meanings specified in Section 7701 of the Internal Revenue Code.

 

(e) Each Lender Party organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Agreement in the case of each Initial Lender Party, and on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender Party in the
case of each other Lender Party, and from time to time thereafter as requested
in writing by the Borrower (but only so long thereafter as such Lender Party
remains lawfully able to do so), provide each of the Administrative Agent and
the Borrower with two original Internal Revenue Service forms W8-ECI or W8-BEN,
as appropriate, or any successor or other form prescribed by the Internal
Revenue Service, certifying that such Lender Party is exempt from or entitled to
a reduced rate of United States withholding tax on payments pursuant to this
Agreement or the Notes. If the forms provided by a Lender Party at the time such
Lender Party first becomes a party to this Agreement indicate a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes unless and until such Lender Party
provides the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such forms; provided, however, that if, at the effective
date of the Assignment and Acceptance pursuant to which a Lender Party becomes a
party to this Agreement, the Lender Party assignor was entitled to payments
under subsection (a) of this Section 2.12 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the Lender Party
assignee on such date. If any form or document referred to in this subsection
(e) requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service form W8-ECI or W8-BEN, that the applicable Lender Party
reasonably considers to be confidential, such Lender Party shall give notice
thereof to the Borrower and shall not be obligated to include in such form or
document such confidential information. Upon the request of the Borrower, any
Lender that is a United States person and is not an exempt recipient for U.S.
backup withholding purposes shall deliver to the Borrower two copies of Internal
Revenue Service form W-9 (or any successor form).

 

(f) For any period with respect to which a Lender Party has failed to provide
the Borrower with the appropriate form described in subsection (e) above (other
than if such failure is due to a change in law occurring after the date on which
a form originally was required to be provided or if such form otherwise is not
required under subsection (e) above), such Lender Party shall not be entitled to
indemnification under subsection (a) or (c) of this Section 2.12 with respect to
Taxes imposed by the

 

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United States by reason of such failure; provided, however, that should a Lender
Party become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Lender Party shall
reasonably request to assist such Lender Party to recover such Taxes.

 

(g) Any Lender Party claiming any additional amounts payable pursuant to this
Section 2.12 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurodollar Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender Party, be
otherwise materially disadvantageous to such Lender Party.

 

(h) If any Lender Party or the Administrative Agent receives a refund (including
if such refund is not actually received but is applied against other Tax or
Other Tax obligations owed by such Lender Party or Administrative Agent to the
same taxing authority) of Taxes or Other Taxes paid by the Borrower or for which
the Borrower has indemnified any Lender Party or the Administrative Agent, as
the case may be, pursuant to this Section 2.12, then such Lender Party or the
Administrative Agent, as applicable, shall pay such amount, net of any expenses
incurred by such Lender Party or the Administrative Agent, to the Borrower
within 30 days of the receipt of such Taxes or Other Taxes. Notwithstanding the
foregoing, (i) the Borrower shall not be entitled to review the tax records or
financial information of any Lender Party or the Administrative Agent and (ii)
neither the Administrative Agent nor any Lender Party shall have any obligation
to pursue (and no Loan Party shall have any right to assert) any refund of Taxes
or Other Taxes that may be paid by the Borrower.

 

SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall obtain at any
time any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise, other than as a result of an assignment pursuant
to Section 9.07) (a) on account of Obligations due and payable to such Lender
Party hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and
payable to such Lender Party at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time) of payments on account of the Obligations due and payable to all
Lender Parties hereunder and under the Notes at such time obtained by all the
Lender Parties at such time or (b) on account of Obligations owing (but not due
and payable) to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations owing to such Lender Party at such time to (ii) the aggregate
amount of the Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all of the Lender Parties at such time,
such Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such Lender Party’s
ratable share (according to the proportion of (i) the purchase price paid to
such Lender Party to (ii) the aggregate purchase price paid to all Lender
Parties) of such recovery together with an amount equal to such Lender Party’s
ratable share (according to the proportion of (i) the amount of such other
Lender Party’s required repayment to (ii) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or payable by the
purchasing Lender Party in respect of the total amount so recovered. The
Borrower agrees that any Lender Party so purchasing an interest or participating
interest from another Lender Party pursuant to this Section 2.13 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such interest or participating interest,
as the case may be, as fully as if such Lender Party were the direct creditor of
the Borrower in the amount of such interest or participating interest, as the
case may be.

 

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SECTION 2.14. Use of Proceeds. The proceeds of the Advances and issuances of
Letters of Credit shall be available (and the Borrower agrees that it shall use
such proceeds and Letters of Credit) solely for general corporate purposes of
the Borrower and its Subsidiaries, for Asset acquisitions, to refinance certain
Existing Debt secured by mortgage liens (as more particularly set forth in the
Registration Statement), and to pay fees and expenses related to the Facilities
and the other transactions contemplated by the Loan Documents.

 

SECTION 2.15. Evidence of Debt. (a) Each Lender Party shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender Party resulting from each Advance
owing to such Lender Party from time to time, including the amounts of principal
and interest payable and paid to such Lender Party from time to time hereunder.
The Borrower agrees that upon notice by any Lender Party to the Borrower (with a
copy of such notice to the Administrative Agent) to the effect that a promissory
note or other evidence of indebtedness is required or appropriate in order for
such Lender Party to evidence (whether for purposes of pledge, enforcement or
otherwise) the Advances owing to, or to be made by, such Lender Party, the
Borrower shall promptly execute and deliver to such Lender Party, with a copy to
the Administrative Agent, a Note, in substantially the form of Exhibit A hereto,
payable to the order of such Lender Party in a principal amount equal to the
Revolving Credit Commitment of such Lender Party. All references to Notes in the
Loan Documents shall mean Notes, if any, to the extent issued hereunder.

 

(b) The Register maintained by the Administrative Agent pursuant to Section
9.07(d) shall include a control account, and a subsidiary account for each
Lender Party, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Advances comprising
such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii)
the terms of each Assignment and Acceptance delivered to and accepted by it,
(iii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender Party hereunder, and (iv) the
amount of any sum received by the Administrative Agent from the Borrower
hereunder and each Lender Party’s share thereof.

 

(c) Entries made in good faith by the Administrative Agent in the Register
pursuant to subsection (b) above, and by each Lender Party in its account or
accounts pursuant to subsection (a) above, 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, in the case of the Register, each Lender Party and, in the
case of such account or accounts, such Lender Party, under this Agreement,
absent manifest error; provided, however, that the failure of the Administrative
Agent or such Lender Party to make an entry, or any finding that an entry is
incorrect, in the Register or such account or accounts shall not limit or
otherwise affect the obligations of the Borrower under this Agreement.

 

SECTION 2.16. Extension of Termination Date. At least 30 days but not more than
60 days prior to the Termination Date, the Borrower, by written notice to the
Administrative Agent, may request, with respect to the Commitments then
outstanding, a single one-year extension of the Termination Date. The
Administrative Agent shall promptly notify each Lender of such request and the
Termination Date in effect at such time shall, effective as at the Termination
Date (the “Extension Date”), be extended for an additional one year period;
provided that on the Extension Date, the following statements shall be true and
the Administrative Agent shall have received for the account of each Lender
Party a certificate signed by a duly authorized officer of the Borrower, dated
the Extension Date, stating that: (x) the representations and warranties
contained in Section 4.01 are true and correct in all material respects on and
as of the Extension Date, and (y) no Default has occurred and is continuing or
would

 

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result from such extension. In the event that an extension is effected pursuant
to this Section 2.16, the aggregate principal amount of all Advances shall be
repaid in full ratably to the Lenders on the Termination Date as so extended. As
of the Extension Date, any and all references in this Agreement, the Notes, if
any, or any of the other Loan Documents to the “Termination Date” shall refer to
the Termination Date as so extended.

 

SECTION 2.17. Increase in the Aggregate Commitments. (a) The Borrower may, at
any time (but no more than once in any consecutive 12-month period), by written
notice to the Administrative Agent, request an increase in the aggregate amount
of the Revolving Credit Commitments by not less than $5,000,000 (each such
proposed increase, a “Commitment Increase”) to be effective as of a date that is
at least 90 days prior to the scheduled Termination Date then in effect (the
“Increase Date”) as specified in the related notice to the Administrative Agent;
provided, however, that (i) in no event shall the aggregate amount of the
Commitments at any time exceed $225,000,000, (ii) in no event shall the Borrower
submit more than four separate requests for a Commitment Increase hereunder, and
(iii) on the date of any request by the Borrower for a Commitment Increase and
on the related Increase Date, the applicable conditions set forth in Article III
shall be satisfied.

 

(b) The Administrative Agent shall promptly notify the Lenders of each request
by the Borrower for a Commitment Increase, which notice shall include (i) the
proposed amount of such requested Commitment Increase, (ii) the proposed
Increase Date and (iii) the date by which Lenders wishing to participate in the
Commitment Increase must commit to an increase in the amount of their respective
Commitments (the “Commitment Date”). Each Lender that is willing to participate
in such requested Commitment Increase (each, an “Increasing Lender”) shall, in
its sole discretion, give written notice to the Administrative Agent on or prior
to the Commitment Date of the amount by which it is willing to increase its
Commitment (the “Proposed Increased Commitment”). If the Lenders notify the
Administrative Agent that they are willing to increase the amount of their
respective Commitments by an aggregate amount that exceeds the amount of the
requested Commitment Increase, the requested Commitment Increase shall be
allocated to each Lender willing to participate therein in an amount equal to
the Commitment Increase multiplied by the ratio of each Lender’s Proposed
Commitment to the aggregate amount of Proposed Commitments.

 

(c) Promptly following each Commitment Date, the Administrative Agent shall
notify the Borrower as to the amount, if any, by which the Lenders are willing
to participate in the requested Commitment Increase. If the aggregate amount by
which the Lenders are willing to participate in any requested Commitment
Increase on any such Commitment Date is less than the requested Commitment
Increase, then the Borrower may extend offers to one or more Eligible Assignees
to participate in any portion of the requested Commitment Increase that has not
been committed to by the Lenders as of the applicable Commitment Date; provided,
however, that the Commitment of each such Eligible Assignee shall be in an
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.

 

(d) On each Increase Date, each Eligible Assignee that accepts an offer to
participate in a requested Commitment Increase in accordance with Section
2.17(c) (an “Assuming Lender”) shall become a Lender party to this Agreement as
of such Increase Date and the Commitment of each Increasing Lender for such
requested Commitment Increase shall be so increased by such amount (or by the
amount allocated to such Lender pursuant to the last sentence of Section
2.17(b)) as of such Increase Date; provided, however, that the Administrative
Agent shall have received on or before such Increase Date the following, each
dated such date:

 

(i) an assumption agreement from each Assuming Lender, if any, in form and
substance satisfactory to the Borrower and the Administrative Agent (each, an
“Assumption Agreement”), duly executed by such Assuming Lender, the
Administrative Agent and the Borrower; and

 

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(ii) confirmation from each Increasing Lender of the increase in the amount of
its Commitment in a writing satisfactory to the Borrower and the Administrative
Agent.

 

On each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.17(d), the Administrative Agent
shall notify the Lenders (including, without limitation, each Assuming Lender)
and the Borrower, on or before 1:00 P.M. (New York City time), by telecopier or
telex, of the occurrence of the Commitment Increase to be effected on such
Increase Date and shall record in the Register the relevant information with
respect to each Increasing Lender and each Assuming Lender on such date.

 

(e) On the Increase Date, each Assuming Lender and each Increasing Lender,
without executing an Assignment and Acceptance, shall be deemed to have
purchased an assignment from each Lender that is not an Assuming Lender or an
Increasing Lender (an “Other Lender”) of a portion of the Advances then
outstanding and owed to such Other Lender under this Agreement in an amount
equal to (x) with respect to each Assuming Lender, (1) such Assuming Lender’s
Pro Rata Share (calculated immediately following the effectiveness of the
increase in the Revolving Credit Facility on the Increase Date) of all Advances
owed to such Other Lender immediately prior to the effectiveness of the increase
in the Revolving Credit Facility on the Increase Date, and (y) with respect to
each Increasing Lender, the product of (1) the ratio, expressed as a percentage,
obtained by dividing (A) the amount by which such Increasing Lender’s Commitment
is increasing on the Increase Date by (B) the amount of the Revolving Credit
Facility immediately following the increase thereof effected on the Increase
Date, multiplied by, (2) all Advances owed to such Other Lender immediately
prior to the effectiveness of the increase in the Revolving Credit Facility on
the Increase Date. The Administrative Agent shall calculate the net amount to be
paid by each Assuming Lender and Increasing Lender and received by each Other
Lender in connection with the assignments effected hereunder on the Increase
Date. Each Assuming Lender and Increasing Lender shall make the amount of its
required payment available to the Administrative Agent, in same day funds, at
the office of the Administrative Agent not later than 12:00 Noon (New York time)
on the Increase Date. The Administrative Agent shall distribute on the Increase
Date the proceeds of such amount to each of the Other Lenders entitled to
receive such payments at its Applicable Lending Office.

 

ARTICLE III

CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

 

SECTION 3.01. Conditions Precedent to Initial Extension of Credit. The
obligation of each Lender to make an Advance or of any Issuing Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:

 

(a) The Administrative Agent shall have received on or before the day of the
Initial Extension of Credit the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to the Administrative Agent
(unless otherwise specified) and (except for the Notes) in sufficient copies for
each Lender Party:

 

(i) A Note payable to the order of each Lender.

 

(ii) A security agreement in substantially the form of Exhibit F hereto
(together with each other security agreement and security agreement supplement
delivered pursuant to Section 5.01(j), in each case as amended, the “Security
Agreement”), duly executed by each Loan Party that owns Borrowing Base Assets,
together with:

 

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(A) acknowledgment copies of proper financing statements, duly filed on or
before the day of the Initial Extension of Credit under the Uniform Commercial
Code of all jurisdictions that the Collateral Agent may deem necessary or
desirable in order to perfect and protect the first priority liens and security
interests created under the Collateral Documents, covering the Collateral
described therein,

 

(B) completed requests for information, dated on or before the date of the
Initial Extension of Credit, listing all effective financing statements filed in
the jurisdictions referred to in clause (A) above and in such other
jurisdictions specified by the Administrative Agent that name any Loan Party as
debtor, together with copies of such other financing statements,

 

(C) evidence of the completion of all other recordings and filings of or with
respect to the Security Agreement that the Collateral Agent may deem necessary
or desirable in order to perfect and protect the Liens created thereby,

 

(D) evidence of the insurance required by the terms of the Security Agreement,

 

(E) copies of the Assigned Agreements referred to in the Security Agreement,
including, without limitation, each of the Hotel Management Agreements with
respect to each Borrowing Base Asset and the Interstate Master Agreement,
together with a consent to such assignment, in substantially the form of Exhibit
C to the Security Agreement, duly executed by each party to such Assigned
Agreements other than the Loan Parties;

 

(F) certified copies of each management agreement and franchise agreement, and
all amendments thereto, entered into on or before the Closing Date with respect
to each Hotel Asset comprising a Borrowing Base Asset,

 

(G) a subordination agreement, in form and substance satisfactory to the
Collateral Agent, executed and delivered by the manager of each Hotel Asset
comprising a Borrowing Base Asset,

 

(H) franchisor comfort letters, substantially in the form of Exhibit K hereto or
otherwise in form and substance satisfactory to the Collateral Agent, executed
and delivered by the franchisors of each Hotel Asset comprising a Borrowing Base
Asset, and

 

(I) evidence that all other action that the Collateral Agent may deem necessary
or desirable in order to perfect and protect the first priority liens and
security interests created under the Security Agreement has been taken
(including, without limitation, receipt of duly executed payoff letters, UCC
termination statements and landlords’ and bailees’ waiver and consent
agreements).

 

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(iii) Deeds of trust, trust deeds and mortgages in substantially the form of
Exhibit G hereto (together with each other deed of trust, trust deed and
mortgage delivered pursuant to Section 5.01(j), in each case as amended, the
“Mortgages”) and assignments of leases and rents in substantially the form of
Exhibit H hereto (together with each other assignment of leases and rents
delivered pursuant to Section 5.01(j), in each case as amended, the “Assignments
of Leases”) (in each case with such changes as may be required to account for
local law matters and otherwise satisfactory in form and substance to the
Collateral Agent) covering all Borrowing Base Assets, duly executed by the
appropriate Loan Party, together with:

 

(A) evidence that counterparts of the Mortgages and Assignments of Leases have
been duly executed, acknowledged and delivered on or before the day of the
Initial Extension of Credit and are in form suitable for filing or recording in
all filing or recording offices that the Collateral Agent may deem necessary or
desirable in order to create a valid first and subsisting Lien on the collateral
described therein in favor of the Collateral Agent for the benefit of the
Secured Parties and that all required affidavits, tax forms and filings
pertaining to any applicable documentary stamp, intangible and mortgage
recordation taxes have been executed and delivered by all appropriate parties
and are in form suitable for filing with all applicable governmental
authorities,

 

(B) fully paid American Land Title Association Lender’s Extended Coverage title
insurance policies (the “Mortgage Policies”) in form and substance, with
endorsements (including zoning endorsements where available) and in amount
acceptable to the Collateral Agent, issued, coinsured and reinsured by title
insurers acceptable to the Collateral Agent, insuring the Mortgages to be valid
first and subsisting Liens on the property described therein, free and clear of
all defects (including, but not limited to, mechanics’ and materialmen’s Liens)
and encumbrances, excepting only Permitted Encumbrances, and providing for such
other affirmative insurance (including endorsements for future advances under
the Loan Documents and for mechanics’ and materialmen’s Liens) and such
coinsurance and direct access reinsurance as the Collateral Agent may deem
necessary or desirable, and with respect to any such property located in a State
in which a zoning endorsement is not available, a zoning compliance letter from
the applicable municipality in a form reasonably acceptable to the Collateral
Agent,

 

(C) American Land Title Association/American Congress on Surveying and Mapping
form surveys for which all necessary fees have been paid, dated no more than 30
days before the date of their delivery to the Collateral Agent, certified to the
Collateral Agent and the issuer of the Mortgage Policies in a manner
satisfactory to the Collateral Agent by a land surveyor duly registered and
licensed in the States in which the property described in such surveys is
located and acceptable to the Collateral Agent, showing all buildings and other
improvements, any off-site improvements, the location of any easements, parking
spaces, rights of way, building set-back lines and other dimensional regulations
and the absence of encroachments, either by such improvements or on to such
property, and other defects, other than encroachments and other defects
acceptable to the Collateral Agent,

 

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(D) engineering, soils, environmental and other similar reports as to the
properties described in the Mortgages, in form and substance and from
professional firms reasonably acceptable to the Collateral Agent,

 

(E) estoppel and consent agreements, in form and substance satisfactory to the
Administrative Agent, executed by each of the lessors of any leased Borrowing
Base Assets listed on Schedule 4.01(r) hereto, along with (1) a memorandum of
lease in recordable form with respect to such leasehold interest, executed and
acknowledge by the owner of the affected Borrowing Base Asset, as lessor, or (2)
evidence that the applicable lease with respect to such leasehold interest or
memorandum thereof has been recorded in all places necessary or desirable, in
the Administrative Agent’s reasonable judgment, to give constructive notice to
third-party purchasers of such leasehold interest or (3) if such leasehold
interest was acquired or subleased from the holder of a recorded leasehold
interest, the applicable assignment or sublease document, executed and
acknowledged by such holder, in each case in form sufficient to give such
constructive notice upon recordation and otherwise in form satisfactory to the
Administrative Agent,

 

(F) evidence of the insurance required by the terms of the Mortgages,

 

(G) an Appraisal of each Borrowing Base Asset described in the Mortgages, and

 

(H) such other consents, agreements and confirmations of lessors and third
parties as the Administrative Agent may reasonably deem necessary or desirable
and evidence that all other action that the Collateral Agent may deem necessary
or desirable in order to create valid first and subsisting Liens on the property
described in the Mortgages has been taken.

 

(iv) Certified copies of the resolutions of the Board of Directors, general
partner or managing member, as applicable, of each Loan Party and of each
general partner or managing member (if any) of each Loan Party approving the
transactions contemplated by the Loan Documents and each Loan Document to which
it is or is to be a party, and of all documents evidencing other necessary
corporate action and governmental and other third party approvals and consents,
if any, with respect to the transactions under the Loan Documents and each Loan
Document to which it is or is to be a party.

 

(v) A copy of a certificate of the Secretary of State (or equivalent authority)
of the jurisdiction of incorporation, organization or formation of each Loan
Party and of each general partner or managing member (if any) of each Loan
Party, dated reasonably near the Closing Date, certifying, if and to the extent
such certification is generally available for entities of the type of such Loan
Party, (A) as to a true and correct copy of the charter, certificate of limited
partnership, limited liability company agreement or other organizational
document of such Loan Party, general partner or managing member, as the case may
be, and each amendment thereto on file in such Secretary’s office and (B) that
(1) such amendments are the only amendments to the charter, certificate of
limited partnership, limited liability company agreement or other organizational
document, as applicable, of such Loan Party, general partner or managing member,
as the case may be, on file in such Secretary’s office and (2) such Loan Party,
general partner or managing member, as the case may be, has paid all

 

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franchise taxes to the date of such certificate and (C) such Loan Party, general
partner or managing member, as the case may be, is duly incorporated, organized
or formed and in good standing or presently subsisting under the laws of the
jurisdiction of its incorporation, organization or formation.

 

(vi) A copy of a certificate of the Secretary of State (or equivalent authority)
of each jurisdiction in which any Loan Party or any general partner or managing
member of a Loan Party owns or leases property or in which the conduct of its
business requires it to qualify or be licensed as a foreign corporation except
where the failure to so qualify or be licensed would not be reasonably likely to
have a Material Adverse Effect, dated reasonably near (but prior to) the Closing
Date, stating, with respect to each such Loan Party, general partner or managing
member, that such Loan Party, general partner or managing member, as the case
may be, is duly qualified and in good standing as a foreign corporation, limited
partnership or limited liability company in such State and has filed all annual
reports required to be filed to the date of such certificate.

 

(vii) A certificate of each Loan Party and of each general partner or managing
member (if any) of each Loan Party, signed on behalf of such Loan Party, general
partner or managing member, as applicable, by its President or a Vice President
and its Secretary or any Assistant Secretary (or those of its general partner or
managing member, if applicable), dated the Closing Date (the statements made in
which certificate shall be true on and as of the date of the Initial Extension
of Credit), certifying as to (A) the absence of any amendments to the
constitutive documents of such Loan Party, general partner or managing member,
as applicable, since the date of the certificate referred to in Section
3.01(a)(v), (B) a true and correct copy of the bylaws, operating agreement,
partnership agreement or other governing document of such Loan Party, general
partner or managing member, as applicable, as in effect on the date on which the
resolutions referred to in Section 3.01(a)(iv) were adopted and on the date of
the Initial Extension of Credit, (C) the due incorporation, organization or
formation and good standing or valid existence of such Loan Party, general
partner or managing member, as applicable, as a corporation, limited liability
company or partnership organized under the laws of the jurisdiction of its
incorporation, organization or formation and the absence of any proceeding for
the dissolution or liquidation of such Loan Party, general partner or managing
member, as applicable, (D) the truth of the representations and warranties
contained in the Loan Documents as though made on and as of the date of the
Initial Extension of Credit and (E) the absence of any event occurring and
continuing, or resulting from the Initial Extension of Credit, that constitutes
a Default.

 

(viii) A certificate of the Secretary or an Assistant Secretary of each Loan
Party (or Responsible Officer of the general partner or managing member of any
Loan Party) and of each general partner or managing member (if any) of each Loan
Party certifying the names and true signatures of the officers of such Loan
Party, or of the general partner or managing member of such Loan Party,
authorized to sign each Loan Document to which it is or is to be a party and the
other documents to be delivered hereunder and thereunder.

 

(ix) Such financial, business and other information regarding each Loan Party
and its Subsidiaries as the Lender Parties shall have reasonably requested,
including, without limitation, information as to possible contingent
liabilities, tax matters, environmental matters, obligations under Plans,
Multiemployer Plans and Welfare Plans, collective bargaining agreements and
other arrangements with employees, audited annual financial statements for the
year ending December 31, 2003, interim financial statements dated the end of the
most recent fiscal quarter for which financial statements are available (or, in
the event the Lender

 

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Parties’ due diligence review reveals material changes since such financial
statements, as of a later date within 45 days of the day of the Initial
Extension of Credit).

 

(x) Evidence of insurance naming the Administrative Agent as loss payee and
additional insured with such responsible and reputable insurance companies or
associations, and in such amounts and covering such risks, as is satisfactory to
the Lender Parties.

 

(xi) An opinion of Sullivan & Cromwell LLP, counsel for the Loan Parties, in
substantially the form of Exhibit E-1 hereto and as to such other matters as any
Lender Party through the Administrative Agent may reasonably request.

 

(xii) An opinion of Venable LLP, Maryland counsel for the Loan Parties, in
substantially the form of Exhibit E-2 hereto and as to such other matters as any
Lender Party through the Administrative Agent may reasonably request.

 

(xiii) An opinion of Richards, Layton & Finger, P.A., Delaware counsel for the
Loan Parties, in substantially the form of Exhibit E-3 hereto and as to such
other matters as any Lender Party through the Administrative Agent may
reasonably request.

 

(xiv) Opinions of local counsel for the Loan Parties in the states in which the
Borrowing Base Assets are located, in substantially the form of Exhibit E-4
hereto and as to such other matters as any Lender Party through the
Administrative Agent may reasonably request.

 

(xv) An opinion of Shearman & Sterling LLP, counsel for the Administrative
Agent, in form and substance satisfactory to the Administrative Agent.

 

(xvi) An intercreditor agreement in substantially the form of Exhibit J hereto
(the “Intercreditor Agreement”), duly executed and delivered by the
Administrative Agent, the Collateral Agent, the administrative agent and
collateral agent under the Term Loan Documents and the Borrower.

 

(xvii) A Notice of Borrowing or Notice of Issuance, as applicable, and a
Borrowing Base Certificate relating to the Initial Extension of Credit.

 

(b) The Lender Parties shall be satisfied with the corporate and legal structure
and capitalization of each Loan Party and its Subsidiaries, including the terms
and conditions of the charter and bylaws, operating agreement, partnership
agreement or other governing document of each of them.

 

(c) The Lender Parties shall be satisfied that all Existing Debt, other than
Surviving Debt, has been prepaid, redeemed or defeased in full or otherwise
satisfied and extinguished and that all Surviving Debt shall be on terms and
conditions as described in the Registration Statement.

 

(d) (i) The Formation and Structuring Transactions and the IPO shall have been,
substantially concurrently herewith, consummated in accordance with the
Registration Statement, (ii) the Parent shall have received primary equity
issuance gross cash proceeds from the IPO in an amount not less than
$250,000,000, and (iii) the common shares of the Parent shall have been listed
on the New York Stock Exchange.

 

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(e) Before and after giving effect to the transactions contemplated by the Loan
Documents, there shall have occurred no Material Adverse Change since December
31, 2003.

 

(f) There shall exist no action, suit, investigation, litigation or proceeding
affecting any Loan Party or any of its Subsidiaries pending or threatened before
any court, governmental agency or arbitrator that (i) would be reasonably likely
to have a Material Adverse Effect other than the matters described on Schedule
4.01(f) hereto (the “Disclosed Litigation”) or (ii) purports to affect the
legality, validity or enforceability of any Loan Document or the consummation of
the transactions contemplated thereby, and there shall have been no adverse
change in the status, or financial effect on any Loan Party or any of its
Subsidiaries, of the Disclosed Litigation from that described on Schedule
4.01(f) hereto.

 

(g) All governmental and third party consents and approvals necessary in
connection with the transactions contemplated by the Loan Documents shall have
been obtained (without the imposition of any conditions that are not acceptable
to the Lender Parties) and shall remain in effect, and no law or regulation
shall be applicable in the reasonable judgment of the Lender Parties that
restrains, prevents or imposes materially adverse conditions upon the
transactions contemplated by the Loan Documents.

 

(h) The Borrower shall have entered into the Hedge Agreements required under
Section 5.01(n) if any are required by such Section.

 

(i) The Borrower shall have paid all accrued fees of the Administrative Agent
and the Lender Parties and all reasonable, out-of-pocket expenses of the
Administrative Agent (including the reasonable fees and expenses of counsel to
the Administrative Agent, subject to the terms of the Fee Letter).

 

(j) The Term Facility (as defined in the Term Loan Documents) shall have been,
or contemporaneously with the initial Borrowing hereunder shall be, drawn in
full, and the Administrative Agent shall have received, in sufficient copies for
each Lender Party, an executed copy of the Term Credit Agreement.

 

SECTION 3.02. Conditions Precedent to Each Borrowing, Issuance and Renewal. The
obligation of each Lender to make an Advance (other than a Letter of Credit
Advance made by an Issuing Bank or a Lender pursuant to Section 2.03(c) and a
Swing Line Advance made by a Lender pursuant to Section 2.02(b)) on the occasion
of each Borrowing (including the initial Borrowing), the obligation of each
Issuing Bank to issue a Letter of Credit (including the initial issuance) or
renew a Letter of Credit, the extension of Commitments pursuant to Section 2.16
and the right of the Borrower to request a Swing Line Borrowing and a Commitment
Increase pursuant to Section 2.17 shall be subject to the further conditions
precedent that on the date of such Borrowing, issuance, renewal, extension or
increase (a) the following statements shall be true and the Administrative Agent
shall have received for the account of such Lender, the Swing Line Bank or such
Issuing Bank (x) a Borrowing Base Certificate dated the date of such Borrowing,
issuance or renewal and (y) a certificate signed by a duly authorized officer of
the Borrower, dated the date of such Borrowing, issuance, renewal, extension or
increase, stating that:

 

(i) the representations and warranties contained in each Loan Document are true
and correct on and as of such date, before and after giving effect to (A) such
Borrowing, issuance, renewal, extension or increase and (B) in the case of any
Borrowing or issuance or renewal, the application of the proceeds therefrom, as
though made on and as of such date;

 

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(ii) no Default or Event of Default has occurred and is continuing, or would
result from (A) such Borrowing, issuance, renewal, extension or increase or (B)
in the case of any Borrowing or issuance or renewal, from the application of the
proceeds therefrom; and

 

(iii) for each Revolving Credit Advance or Swing Line Advance made by the Swing
Line Bank or issuance or renewal of any Letter of Credit, (A) the Total Loan
Value equals or exceeds the Facility Exposure that will be outstanding after
giving effect to such Advance, issuance or renewal, respectively, and (B) before
and after giving effect to such Advance, issuance or renewal, the Parent shall
be in compliance with the covenants contained in Section 5.04, together with
supporting information in form satisfactory to the Administrative Agent showing
the computations used in determining compliance with such covenants;

 

and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender Party through the Administrative Agent may
reasonably request.

 

SECTION 3.03. Determinations Under Section 3.01. For purposes of determining
compliance with the conditions specified in Section 3.01, each Lender Party
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and, if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party’s ratable portion of such Borrowing.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.01. Representations and Warranties of the Loan Parties. Each Loan
Party represents and warrants as follows:

 

(a) Organization and Powers; Qualifications and Good Standing. Each Loan Party
and each of its Subsidiaries and each general partner or managing member, if
any, of each Loan Party (i) is a corporation, limited liability company or
partnership duly incorporated, organized or formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, organization
or formation, (ii) is duly qualified and in good standing as a foreign
corporation, limited liability company or partnership in each other jurisdiction
in which it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure to so qualify
or be licensed would not be reasonably likely to have a Material Adverse Effect
and (iii) has all requisite corporate, limited liability company or partnership
power and authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.
Commencing with its taxable year ending December 31, 2004, the Parent will be
organized in conformity with the requirements for qualification as a REIT under
the Internal Revenue Code, and its proposed method of operation will enable it
to meet the requirements for qualification and taxation as a REIT under the
Internal Revenue Code. All of the outstanding Equity Interests in the Parent
have been validly issued, are fully paid and non-assessable, and all membership
Equity Interests in the Borrower that are owned by the Parent are owned free and
clear of all Liens.

 

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(b) Subsidiaries. Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Subsidiaries of each Loan Party, showing as of the date
hereof (as to each such Subsidiary) the jurisdiction of its incorporation,
organization or formation, the number of shares (or the equivalent thereof) of
each class of its Equity Interests authorized, and the number outstanding, on
the date hereof and the percentage of each such class of its Equity Interests
owned (directly or indirectly) by such Loan Party and the number of shares (or
the equivalent thereof) covered by all outstanding options, warrants, rights of
conversion or purchase and similar rights at the date hereof. All of the
outstanding Equity Interests in each Loan Party’s Subsidiaries has been validly
issued, are fully paid and non-assessable and are owned by such Loan Party or
one or more of its Subsidiaries free and clear of all Liens (other than
Permitted Liens or Liens granted in accordance with the Term Documents).

 

(c) Due Authorization; No Conflict. The execution and delivery by each Loan
Party and of each general partner or managing member (if any) of each Loan Party
of each Loan Document to which it is or is to be a party, and the performance of
its obligations thereunder, and the consummation of the IPO, the Formation and
Structuring Transactions and the other transactions contemplated by the Loan
Documents, are within the corporate, limited liability company or partnership
powers of such Loan Party, general partner or managing member, have been duly
authorized by all necessary corporate, limited liability company or partnership
action, and do not (i) contravene the charter or bylaws, operating agreement,
partnership agreement or other governing document of such Loan Party, general
partner or managing member, (ii) violate any law, rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination or
award, (iii) conflict with or result in the breach of, or constitute a default
or require any payment to be made under, any material contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument binding on or
affecting any Loan Party, any of its Subsidiaries or any of their properties, or
any general partner or managing member of any Loan Party, except for the item
described in Part I of Schedule 4.01(d) hereto or (iv) except for the Liens
created under the Loan Documents or the documents evidencing any Surviving Debt,
result in or require the creation or imposition of any Lien upon or with respect
to any of the properties of any Loan Party or any of its Subsidiaries. No Loan
Party or any of its Subsidiaries is in violation of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
in breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which would be
reasonably likely to have a Material Adverse Effect.

 

(d) Authorizations and Consents. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body or any other third party is required for (i) the due execution, delivery,
recordation, filing or performance by any Loan Party or any general partner or
managing member of any Loan Party of any Loan Document to which it is or is to
be a party or for the consummation of the IPO, the Formation and Structuring
Transactions or the other transactions contemplated by the Loan Documents,
except for the item described in Part I of Schedule 4.01(d) hereto, (ii) the
grant by any Loan Party (or the general partner or managing member of such Loan
Party) of the Liens granted by it pursuant to the Collateral Documents, (iii)
the perfection or maintenance of the Liens created under the Collateral
Documents (including the first priority nature thereof) or, (iv) the exercise by
the Administrative Agent, the Collateral Agent or any Lender Party of its rights
under the Loan Documents or the remedies in respect of the Collateral pursuant
to the Collateral Documents, except for the authorizations, approvals, actions,
notices and filings listed on Part II of Schedule 4.01(d) hereto, all of which
have been duly obtained, taken, given or made and are in full force and effect.

 

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(e) Binding Obligation. This Agreement has been, and each other Loan Document
when delivered hereunder will have been, duly executed and delivered by each
Loan Party and general partner or managing member (if any) of each Loan Party
party thereto. This Agreement is, and each other Loan Document when delivered
hereunder will be, the legal, valid and binding obligation of each Loan Party
and general partner or managing member (if any) of each Loan Party party
thereto, enforceable against such Loan Party, general partner or managing
member, as the case may be, in accordance with its terms except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general principles of equity.

 

(f) Litigation. There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries or any general
partner or managing member (if any) of any Loan Party, including any
Environmental Action, pending or threatened before any court, governmental
agency or arbitrator that (i) would be reasonably likely to have a Material
Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect
the legality, validity or enforceability of any Loan Document or the
consummation of the IPO, the Formation and Structuring Transactions or the other
transactions contemplated by the Loan Documents, and there has been no adverse
change in the status, or financial effect on any Loan Party or any of its
Subsidiaries or any general partner or managing member (if any) of any Loan
Party, of the Disclosed Litigation from that described on Schedule 4.01(f)
hereto.

 

(g) Financial Condition. The Consolidated balance sheets of the Contributing
Entities as at December 31, 2003 and the related Consolidated statements of
income and Consolidated statement of cash flows of the Contributing Entities for
the fiscal year then ended, accompanied by an unqualified opinion of Ernst &
Young LLP, independent public accountants, and the Consolidated balance sheets
of the Contributing Entities as at June 30, 2004, and the related Consolidated
statements of income and Consolidated statement of cash flows of the
Contributing Entities for the six months then ended, duly certified by the Chief
Financial Officer of the Parent, copies of which have been furnished to each
Lender Party, fairly present, subject, in the case of such balance sheet as at
June 30, 2004, and such statements of income and cash flows for the six months
then ended, to year-end audit adjustments, the Consolidated financial condition
of the Contributing Entities as at such dates and the Consolidated results of
operations of the Contributing Entities for the periods ended on such dates, all
in accordance with generally accepted accounting principles applied on a
consistent basis, and since December 31, 2003, there has been no Material
Adverse Change.

 

(h) Forecasts. The Consolidated forecasted balance sheets, statements of income
and statements of cash flows of the Parent and its Subsidiaries delivered to the
Lender Parties pursuant to Section 3.01(a)(ix) or 5.03 were prepared in good
faith on the basis of the assumptions stated therein, which assumptions were
fair in light of the conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, the Parent’s best estimate
of its future financial performance.

 

(i) Disclosure. No information, exhibit or report furnished by or on behalf of
any Loan Party to the Administrative Agent or any Lender Party in connection
with the negotiation and syndication of the Loan Documents or pursuant to the
terms of the Loan Documents contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements made therein
not misleading.

 

(j) Margin Regulations. No Loan Party is engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no proceeds
of any Advance or drawings under any Letter of Credit will be used to purchase
or carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock.

 

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(k) Certain Governmental Regulations. Neither any Loan Party nor any of its
Subsidiaries is an “investment company”, or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company”, as such
terms are defined in the Investment Company Act of 1940, as amended. Without
limiting the generality of the foregoing, each Loan Party and each of its
Subsidiaries: (i) is primarily engaged, directly or through a wholly-owned
subsidiary or subsidiaries, in a business or businesses other than that of (A)
investing, reinvesting, owning, holding or trading in securities or (B) issuing
face-amount certificates of the installment type; (ii) is not engaged in, does
not propose to engage in and does not hold itself out as being engaged in the
business of (A) investing, reinvesting, owning, holding or trading in securities
or (B) issuing face-amount certificates of the installment type; (iii) does not
own or propose to acquire investment securities (as defined in the Investment
Company Act of 1940, as amended) having a value exceeding forty percent (40%) of
the value of such company’s total assets (exclusive of government securities and
cash items) on an unconsolidated basis; (iv) has not in the past been engaged in
the business of issuing face-amount certificates of the installment type; and
(v) does not have any outstanding face-amount certificates of the installment
type. Neither any Loan Party nor any of its Subsidiaries is a “holding company”,
or a “subsidiary company” of a “holding company”, or an “affiliate” of a
“holding company” or of a “subsidiary company” of a “holding company”, as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
Neither the making of any Advances, nor the issuance of any Letters of Credit,
nor the application of the proceeds or repayment thereof by the Borrower, nor
the consummation of the other transactions contemplated by the Loan Documents,
will violate any provision of any such Act or any rule, regulation or order of
the Securities and Exchange Commission thereunder.

 

(l) Materially Adverse Agreements. Neither any Loan Party nor any of its
Subsidiaries is a party to any indenture, loan or credit agreement or any lease
or other agreement or instrument or subject to any charter, corporate,
partnership, membership or other governing restriction that would be reasonably
likely to have a Material Adverse Effect.

 

(m) Perfection and Priority of Security Interests. All filings and other actions
necessary to perfect and protect the security interest in the Collateral created
under the Collateral Documents have been duly made or taken and are in full
force and effect, and the Collateral Documents create in favor of the
Administrative Agent for the benefit of the Secured Parties a valid and,
together with such filings and other actions, perfected first priority security
interest in the Collateral, securing the payment of the Secured Obligations, and
all filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken. The Loan Parties are the legal and
beneficial owners of the Collateral free and clear of any Lien, except for
Permitted Liens and the liens and security interests created under the Loan
Documents.

 

(n) Existing Debt. Set forth on Schedule 4.01(n) hereto is a complete and
accurate list of all Existing Debt (other than Surviving Debt), showing as of
the date hereof the obligor and the principal amount outstanding thereunder.

 

(o) Surviving Debt. Set forth on Schedule 4.01(o) hereto is a complete and
accurate list of all Surviving Debt, showing as of the date hereof the obligor
and the principal amount outstanding thereunder, the maturity date thereof and
the amortization schedule therefor.

 

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(p) Existing Liens. Set forth on Schedule 4.01(p) hereto is a complete and
accurate list of all Liens on the property or assets of any Loan Party or any of
its Subsidiaries, showing as of the date hereof the lienholder thereof, the
principal amount of the obligations secured thereby and the property or assets
of such Loan Party or such Subsidiary subject thereto.

 

(q) Real Property. Set forth on Schedule 4.01(q) hereto is a complete and
accurate list of all Real Property owned by any Loan Party or any of its
Subsidiaries, showing as of the date hereof the street address, county or other
relevant jurisdiction, state, record owner and book value thereof. Each Loan
Party or such Subsidiary has good, marketable and insurable fee simple title to
such Real Property, free and clear of all Liens, other than Liens created or
permitted by the Loan Documents.

 

(r) Leases of Real Property. Set forth on Schedule 4.01(r) hereto is a complete
and accurate list of all leases of Real Property under which any Loan Party or
any of its Subsidiaries is the lessee of Real Property from an entity that is
not an Affiliate of the lessee, showing as of the date hereof the street
address, county or other relevant jurisdiction, state, lessor, lessee,
expiration date and annual rental cost thereof. Each such lease is the legal,
valid and binding obligation of the lessor thereof, enforceable in accordance
with its terms.

 

(s) Environmental Matters. (i) Except as otherwise set forth on Part I of
Schedule 4.01(s) hereto, the operations and properties of each Loan Party and
each of its Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past non-compliance with such
Environmental Laws and Environmental Permits has been resolved without material
ongoing obligations or costs, and no circumstances exist that could be
reasonably likely to (A) form the basis of an Environmental Action against any
Loan Party or any of its Subsidiaries or any of their properties that could
reasonably be expected to have a Material Adverse Effect or (B) cause any such
property to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law.

 

(ii) Except as otherwise set forth on Part II of Schedule 4.01(s) hereto, none
of the properties currently or to the knowledge of each Loan Party and any of
its Subsidiaries formerly owned or operated by any Loan Party or any of its
Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or
any analogous foreign, state or local list or is adjacent to any such property;
there are no and never have been any leaking underground or leaking above ground
storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons
in which Hazardous Materials are being or have been treated, stored or disposed
in a manner that could be expected to result in liability under any
Environmental Law on any property currently owned or operated by any Loan Party
or any of its Subsidiaries or, to the best of its knowledge, on any property
formerly owned or operated by any Loan Party or any of its Subsidiaries; any
asbestos or asbestos-containing material on any property currently owned or
operated by any Loan Party or any of its Subsidiaries is in good condition and
in compliance with Environmental laws; and Hazardous Materials have not been
released, discharged or disposed of on any property currently or formerly owned
or operated by any Loan Party or any of its Subsidiaries in a manner that could
reasonably be expected to result in a material liability.

 

(iii) Except as otherwise set forth on Part III of Schedule 4.01(s) hereto,
neither any Loan Party nor any of its Subsidiaries is undertaking, and has not
completed, either individually or together with other potentially responsible
parties, any investigation or assessment or remedial or response action relating
to any actual or threatened release, discharge or disposal of Hazardous
Materials at any site, location or operation, either voluntarily or pursuant to
the order of any governmental or regulatory authority or the requirements of any
Environmental Law; and all

 

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Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or operated by
any Loan Party or any of its Subsidiaries have been disposed of in a manner not
reasonably expected to result in material liability to any Loan Party or any of
its Subsidiaries.

 

(t) Compliance with Laws. Each Loan Party and each Subsidiary is in compliance
with the requirements of all Laws (including, without limitation, the Securities
Act and the Securities Exchange Act, and the applicable rules and regulations
thereunder, state securities law and “Blue Sky” laws) applicable to it and its
business, where the failure to so comply could reasonably be expected to have a
Material Adverse Effect.

 

(u) Force Majeure. Neither the business nor the properties of any Loan Party or
any of its Subsidiaries are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy or other casualty (whether or not covered by
insurance) that could be reasonably likely to have a Material Adverse Effect.

 

(v) Loan Parties’ Credit Decisions. Each Loan Party has, independently and
without reliance upon the Administrative Agent or any other Lender Party and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement (and in the case
of the Subsidiary Guarantors, to give the guaranty under this Agreement) and
each other Loan Document to which it is or is to be a party, and each Loan Party
has established adequate means of obtaining from each other Loan Party on a
continuing basis information pertaining to, and is now and on a continuing basis
will be completely familiar with, the business, condition (financial or
otherwise), operations, performance, properties and prospects of such other Loan
Party.

 

(w) Solvency. Each Loan Party is individually and together with its
Subsidiaries, Solvent.

 

(x) Sarbanes-Oxley. Except as set forth on Schedule 4.01(x), no Loan Party has
made any extension of credit to any of its directors or executive officers in
contravention of any applicable restrictions set forth in Section 402(a) of
Sarbanes-Oxley.

 

(y) Excluded Subsidiaries. Set forth on Schedule 4.01(y) hereto is a complete
and accurate list of all Excluded Subsidiaries and their respective Excluded
Subsidiary Agreements existing on the date hereof.

 

(z) ERISA Matters. (i) Set forth on Schedule 4.01(z) hereto is a complete and
accurate list of all Plans and Welfare Plans.

 

(ii) No ERISA Event has occurred or is reasonably expected to occur with respect
to any Plan that has resulted in or is reasonably expected to result in a
material liability of any Loan Party or any ERISA Affiliate.

 

(iii) Schedule B (Actuarial Information) to the most recent annual report (Form
5500 Series) for each Plan, copies of which have been filed with the Internal
Revenue Service and furnished to the Lender Parties, is complete and accurate
and fairly presents the funding status of such Plan, and since the date of such
Schedule B there has been no material adverse change in such funding status.

 

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(iv) Neither any Loan Party nor any ERISA Affiliate has incurred or is
reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan.

 

(v) Neither any Loan Party nor any ERISA Affiliate has been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA,
and no such Multiemployer Plan is reasonably expected to be in reorganization or
to be terminated, within the meaning of Title IV of ERISA.

 

(aa) Borrowing Base Conditions. Each of the Assets listed on Schedule II (as
supplemented from time to time pursuant to Section 5.01(j)(iii)) hereto
satisfies all Borrowing Base Conditions.

 

ARTICLE V

COVENANTS OF THE LOAN PARTIES

 

SECTION 5.01. Affirmative Covenants. So long as any Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, each Loan Party will:

 

(a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to
comply, in all material respects, with all applicable laws, rules, regulations
and orders, such compliance to include, without limitation, compliance with
ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the
Organized Crime Control Act of 1970; provided, however that the failure to
comply with the provisions of this Section 5.01(a) shall not constitute a
default hereunder so long as such non-compliance is being contested in good
faith or would not reasonably be expected to have a Material Adverse Effect.

 

(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries
to pay and discharge, before the same shall become delinquent, (i) all material
taxes, assessments and governmental charges or levies imposed upon it or upon
its property and (ii) all lawful claims that, if unpaid, might by law become a
Lien upon its property; provided, however, that neither the Loan Parties nor any
of their Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained, unless
and until any Lien resulting therefrom attaches to its property and becomes
enforceable against its other creditors.

 

(c) Compliance with Environmental Laws. Comply, and cause each of its
Subsidiaries and all lessees and other Persons operating or occupying its
properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew and cause each of
its Subsidiaries to obtain and renew all Environmental Permits necessary for its
operations and properties; and conduct, and cause each of its Subsidiaries to
conduct, any investigation, study, sampling and testing, cleanup, removal,
remedial or other action necessary to remove and clean up all Hazardous
Materials from any of its properties, as required by any Environmental Laws;
provided, however, that neither the Loan Parties nor any of their Subsidiaries
shall be required to undertake any such cleanup, removal, remedial or other
action to the extent that its obligation to do so is being contested in good
faith and by proper proceedings and appropriate reserves are being maintained
with respect to such circumstances.

 

(d) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to
maintain, insurance (including, with respect to the Borrowing Base Assets, the
insurance required

 

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by the terms of the Mortgages) with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which such Loan Party or such Subsidiaries operate.

 

(e) Preservation of Partnership or Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain, its
existence (corporate or otherwise), rights (charter and statutory), permits,
licenses, approvals and franchises except, in the case of Subsidiaries of the
Borrower only, if in the reasonably business judgment of such Subsidiary it is
in its best economic interest not to preserve and maintain such rights or
franchises and such failure to preserve such rights or franchises is not
reasonably likely to result in a Material Adverse Effect (it being understood
that the foregoing shall not prohibit, or be violated as a result of, any
transactions by or involving any Loan Party or Subsidiary thereof otherwise
permitted under Section 5.02(c) or (d) below).

 

(f) Visitation Rights. At any reasonable time and from time to time, permit any
of the Agents or Lender Parties, or any agent or representatives thereof, to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, any Loan Party and any of its Subsidiaries, and
to discuss the affairs, finances and accounts of any Loan Party and any of its
Subsidiaries with any of their general partners, managing members, officers or
directors and with their independent certified public accountants.

 

(g) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper
books of record and account, in which full and correct entries shall be made of
all financial transactions and the assets and business of such Loan Party and
each such Subsidiary in accordance with GAAP.

 

(h) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, all of its properties that are used or
useful in the conduct of its business in good working order and condition,
ordinary wear and tear excepted and will from time to time make or cause to be
made all appropriate repairs, renewals and replacement thereof except where
failure to do so would not have a Material Adverse Effect.

 

(i) Transactions with Affiliates and Excluded Subsidiaries. Conduct, and cause
each of its Subsidiaries to conduct, all transactions otherwise permitted under
the Loan Documents with any of their Affiliates (other than transactions
exclusively among or between the Borrower and one or more of the Guarantors) or
with any Excluded Subsidiary on terms that are fair and reasonable and no less
favorable to such Loan Party or such Subsidiary than it would obtain in a
comparable arm’s-length transaction with a Person not an Affiliate.

 

(j) Covenant to Guarantee Obligations and Give Security. (i) Within 10 days
after any Excluded Subsidiary Agreement terminates or otherwise becomes
ineffective as to the Excluded Subsidiary party to such agreement, cause such
Excluded Subsidiary to duly execute and deliver to the Administrative Agent a
Guaranty Supplement in substantially the form of Exhibit C hereto, or such other
guaranty supplement in form and substance satisfactory to the Administrative
Agent, guaranteeing the other Loan Parties’ Obligations under the Loan
Documents, unless such Excluded Subsidiary shall within 90 days after the
termination of such Excluded Subsidiary Agreement incur Non-Recourse Debt not
prohibited hereunder in respect of assets that are not Borrowing Base Assets,
and in such case the agreement in respect of such Non-Recourse Debt shall be
deemed to be an Excluded Subsidiary Agreement and the Borrower shall, or cause
such Excluded Subsidiary to, promptly deliver to the Administrative Agent (x) a
copy of such agreement in respect of such Non-Recourse Debt and (y) an amended
Schedule 4.01(y) that sets forth such agreement in respect of such Non-Recourse
Debt opposite the name of such Excluded Subsidiary.

 

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(ii) Within 10 days after the formation or acquisition of any new direct or
indirect Subsidiary by any Loan Party, cause each such Subsidiary (other than a
Subsidiary (x) that is prohibited by the terms of any loan agreement or
indenture or other material agreement to which it is a party from providing
guarantees of the Obligations of the Loan Parties under the Loan Documents or
(y) that is being formed for the purpose or in contemplation of incurring
Non-Recourse Debt not prohibited hereunder in respect of Assets that are not
Borrowing Base Assets (any Subsidiary described in clauses (x) or (y) of this
parenthetical, a “Limited Subsidiary”)), and cause each direct and indirect
parent of such Subsidiary (if it has not already done so), to duly execute and
deliver to the Administrative Agent a Guaranty Supplement in substantially the
form of Exhibit C hereto, or such other guaranty supplement in form and
substance satisfactory to the Administrative Agent, guaranteeing the other Loan
Parties’ Obligations under the Loan Documents, provided that upon the formation
or acquisition of any Limited Subsidiary, each such Limited Subsidiary shall be
deemed to be an Excluded Subsidiary and each such loan agreement or indenture or
other material agreement that restricts such Limited Subsidiary from providing
guarantees of the Obligations of the Loan Parties under the Loan Documents shall
be deemed to be an Excluded Subsidiary Agreement, and the Borrower shall, or
cause such Limited Subsidiary to, promptly deliver to the Administrative Agent
(1) copies of such agreements or indentures in respect of such Non-Recourse Debt
and (2) an amended Schedule 4.01(y) that sets forth such agreements or
indentures in respect of such Non-Recourse Debt opposite the name of such
Limited Subsidiary.

 

(iii) Upon the request by the Borrower that any Hotel Asset (a “Proposed
Borrowing Base Asset”) be added as a Borrowing Base Asset, in each case at the
Borrower’s expense:

 

(A) within 10 days after such request, furnish to the Collateral Agent the
following items:

 

(1) a description, in detail satisfactory to the Collateral Agent, of the
Proposed Borrowing Base Asset,

 

(2) an Appraisal of the Proposed Borrowing Base Asset,

 

(3) a certificate of the Chief Financial Officer (or such person performing
similar functions) of the Borrower confirming that (x) such Proposed Borrowing
Base Asset satisfies all Borrowing Base Conditions and (y) the addition of such
Proposed Borrowing Base Asset as a Borrowing Base Asset shall not cause or
result in a Default or Event of Default,

 

(4) confirmation that (x) the Loan Parties are in compliance with the covenants
contained in Section 5.04 (both immediately before and on a pro forma basis
immediately after the addition of such Proposed Borrowing Base Property as a
Borrowing Base Asset) and (y) on the date of such addition, the Implied Debt
Service Coverage Ratio (adjusted on a

 

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pro forma basis to include the Proposed Borrowing Base Asset) shall not be less
than 1.40:1.00, in each case as evidenced by a certificate of the Chief
Financial Officer (or such person performing similar functions) of the Borrower
delivered to the Administrative Agent prior to such addition demonstrating such
compliance,

 

(5) each of the items set forth in Sections 3.01(a)(ii), (iii), (xi), (xiii) and
(xiv), mutatis mutandis, in each case in respect of the Proposed Borrowing Base
Asset, and

 

(6) a revised Schedule II hereto reflecting the addition of such Proposed
Borrowing Base Asset, provided that for purposes of the definition of the term
Borrowing Base Assets (and subject to the proviso immediately following below),
such revised Schedule II shall become effective only upon satisfaction of each
of the conditions set forth in this Section 5.01(j)(iii);

 

provided, however, that the failure to comply with one or more of the Borrowing
Base Conditions or clause (4) above shall not preclude the addition of any
Proposed Borrowing Base Asset as a Borrowing Base Asset so long as the Required
Lenders shall have expressly consented to the addition of such Asset as a
Borrowing Base Asset notwithstanding the failure to satisfy either or both of
such conditions; and

 

(B) as promptly as possible, furnish to the Collateral Agent such other
approvals, opinions or documents as any Lender Party through the Administration
Agent may reasonably request;

 

(iv) At any time and from time to time, promptly execute and deliver any and all
further instruments and documents and take all such other action as any Agent
may deem necessary or desirable in obtaining the full benefits of, or in
perfecting and preserving the Liens of, such guaranties, Mortgages, Assignments
of Leases, pledges, assignments, security agreement supplements, intellectual
property security agreement supplements and security agreements.

 

(k) Further Assurances. (i) Promptly upon reasonable request by any Agent, or
any Lender Party through the Administrative Agent, correct, and cause each of
its Subsidiaries promptly to correct, any material defect or error that may be
discovered in any Loan Document or in the execution, acknowledgment, filing or
recordation thereof.

 

(ii) Promptly upon request by any Agent, or any Lender Party through the
Administrative Agent, do, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register any and all such further acts, deeds,
conveyances, pledge agreements, mortgages, deeds of trust, trust deeds,
assignments of leases and rents, assignments, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments as any Agent, or any Lender Party
through the Administrative Agent, may reasonably require from time to time in
order to (A) carry out more effectively the purposes of the Loan Documents, (B)
to the fullest extent permitted by applicable law, subject any Loan Party’s or
any of its Subsidiaries’ properties, assets, rights or interests to the Liens
now or hereafter intended to be covered by any of the Collateral Documents, (C)
perfect and

 

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maintain the validity, effectiveness and priority of any of the Collateral
Documents and any of the Liens intended to be created thereunder and (D) assure,
convey, grant, assign, transfer, preserve, protect and confirm more effectively
unto the Secured Parties the rights granted or now or hereafter intended to be
granted to the Secured Parties under any Loan Document or under any other
instrument executed in connection with any Loan Document to which any Loan Party
or any of its Subsidiaries is or is to be a party, and cause each of its
Subsidiaries to do so.

 

(iii) Promptly upon the request of the Required Lenders, deliver to the
Collateral Agent a recent Appraisal of each Borrowing Base Asset, provided that
the Loan Parties shall be required to comply with only one such request by the
Required Lenders per calendar year.

 

(l) Performance of Material Contracts. Perform and observe all the terms and
provisions of each Material Contract to be performed or observed by it, maintain
each such Material Contract in full force and effect, enforce each such Material
Contract in accordance with its terms, take all such action to such end as may
be from time to time requested by the Administrative Agent and, upon request of
the Administrative Agent, make to each other party to each such Material
Contract such demands and requests for information and reports or for action as
any Loan Party or any of its Subsidiaries is entitled to make under such
Material Contract, and cause each of its Subsidiaries to do so.

 

(m) Compliance with Terms of Leaseholds. Make all payments and otherwise perform
all obligations in respect of all leases of real property to which the Borrower
or any of its Subsidiaries is a party, keep such leases in full force and effect
and not allow such leases to lapse or be terminated or any rights to renew such
leases to be forfeited or cancelled, except, in the case of Subsidiaries of the
Borrower only, if in the reasonably business judgment of such Subsidiary it is
in its best economic interest not to maintain such lease or prevent such lapse,
termination, forfeiture or cancellation and such failure to maintain such lease
or prevent such lapse, termination, forfeiture or cancellation is not in respect
of a Qualifying Ground Lease for a Borrowing Base Assets and is not otherwise
reasonably likely to result in a Material Adverse Effect, notify the
Administrative Agent of any default by any party with respect to such leases and
cooperate with the Administrative Agent in all respects to cure any such
default, and cause each of its Subsidiaries to do so.

 

(n) Interest Rate Hedging. Enter into prior to the Closing Date, and maintain at
all times thereafter, interest rate Hedge Agreements (i) with Persons acceptable
to the Administrative Agent, (ii) providing either an interest-rate swap for a
fixed rate of interest reasonably acceptable to the Administrative Agent or an
interest-rate cap at an interest rate reasonably acceptable to the
Administrative Agent, (iii) covering a notional amount equal to the amount, if
any, by which (A) 66 2/3% of Consolidated Debt for Borrowed Money of the Parent
and its Subsidiaries exceeds (B) all Consolidated Debt for Borrowed Money of the
Parent and its Subsidiaries then accruing interest at a fixed rate reasonably
acceptable to the Administrative Agent and (iv) otherwise on terms and
conditions reasonably acceptable to the Administrative Agent, provided that the
Lenders hereby acknowledge that the Hedge Agreements in place on the Closing
Date fully satisfy the requirements of this Section 5.01(n).

 

(o) Maintenance of REIT Status. In the case of the Parent, at all times, conduct
its affairs and the affairs of its Subsidiaries in a manner so as to continue to
qualify as a REIT and elect to be treated as a REIT.

 

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(p) NYSE Listing. In the case of the Parent, at all times (i) cause its common
shares to be duly listed on the New York Stock Exchange, the American Stock
Exchange or NASDAQ and (ii) file all reports required to be filed by it in
connection therewith in a timely manner, taking into account the effect of any
extensions allowed by the New York Stock Exchange, the American Stock Exchange
or NASDAQ, as the case may be, or the Securities and Exchange Commission.

 

(q) Sarbanes-Oxley. Comply at all times with all applicable provisions of
Section 402(a) of Sarbanes-Oxley.

 

SECTION 5.02. Negative Covenants. So long as any Advance or any other Obligation
of any Loan Party under any Loan Document shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, no Loan Party will, at any time:

 

(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with
respect to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or sign or file
or suffer to exist, or permit any of its Subsidiaries to sign or file or suffer
to exist, under the Uniform Commercial Code of any jurisdiction, a financing
statement that names such Loan Party or any of its Subsidiaries as debtor, or
sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to
exist, any security agreement authorizing any secured party thereunder to file
such financing statement, or assign, or permit any of its Subsidiaries to
assign, any accounts or other right to receive income, except, in the case of
the Loan Parties (other than the Parent) and their respective Subsidiaries:

 

(i) Liens created under the Loan Documents;

 

(ii) Permitted Liens;

 

(iii) Liens described on Schedule 4.01(p) hereto;

 

(iv) purchase money Liens upon or in equipment acquired or held by such Loan
Party or any of its Subsidiaries in the ordinary course of business to secure
the purchase price of such equipment or to secure Debt incurred solely for the
purpose of financing the acquisition of any such equipment to be subject to such
Liens, or Liens existing on any such equipment at the time of acquisition (other
than any such Liens created in contemplation of such acquisition that do not
secure the purchase price), or extensions, renewals or replacements of any of
the foregoing for the same or a lesser amount; provided, however, that no such
Lien shall extend to or cover any property other than the equipment being
acquired, and no such extension, renewal or replacement shall extend to or cover
any property not theretofore subject to the Lien being extended, renewed or
replaced;

 

(v) Liens arising in connection with Capitalized Leases, provided that no such
Lien shall extend to or cover any Collateral or assets other than the assets
subject to such Capitalized Leases;

 

(vi) Liens on property of a Person existing at the time such Person is acquired
by, merged into or consolidated with any Loan Party or any Subsidiary of any
Loan Party or becomes a Subsidiary of any Loan Party, provided that such Liens
were not created in contemplation of such merger, consolidation or acquisition
and do not extend to any assets other than those of the Person so merged into or
consolidated with such Loan Party or such Subsidiary or acquired by such Loan
Party or such Subsidiary;

 

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(vii) Liens securing Non-Recourse Debt, provided that no such Lien shall extend
to or cover any Borrowing Base Assets or other Collateral; and

 

(viii) the replacement, extension or renewal of any Lien permitted by clause
(iii) above upon or in the same property theretofore subject thereto or the
replacement, extension, refunding, refinancing or renewal (without increase in
the amount or change in any direct or contingent obligor) of the Debt secured
thereby.

 

(b) Change in Nature of Business. Make, or permit any of its Subsidiaries to
make, any material change in the nature of its business as carried on at the
date hereof; or engage in, or permit any of its Subsidiaries to engage in, any
business other than ownership, development and management of hotel and resort
assets primarily in the United States consistent in quality with the Hotel
Assets presently owned by the Borrower and its Subsidiaries, and other business
activities incidental thereto, including, without limitation, the operation of
real estate and hospitality internet purchasing systems.

 

(c) Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or permit any of its Subsidiaries to do so;
provided, however, that (i) any Subsidiary of a Loan Party may merge or
consolidate with or into, or dispose of assets to, any other Subsidiary of such
Loan Party (provided that if one or more of such Subsidiaries is also a Loan
Party, a Loan Party shall be the surviving entity) or any other Loan Party other
than the Parent (provided that such Loan Party or, in the case of any Loan Party
other than the Borrower, another Loan Party shall be the surviving entity), and
(ii) any Loan Party may merge with any Person that is not a Loan Party so long
as such Loan Party or another Loan Party is the surviving entity, provided, in
each case, that no Default shall have occurred and be continuing at the time of
such proposed transaction or would result therefrom. Notwithstanding any other
provision of this Agreement, (y) any Subsidiary of a Loan Party (other than the
Borrower and any Subsidiary that is the direct owner of a Borrowing Base Asset)
may liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and the
assets or proceeds from the liquidation or dissolution of such Subsidiary are
transferred to the Borrower or a Guarantor, provided that no Default or Event of
Default shall have occurred and be continuing at the time of such proposed
transaction or would result therefrom, and (z) any Loan Party or Subsidiary of a
Loan Party shall be permitted to effect any Transfer of Assets through the sale
of Equity Interests in the Subsidiary of such Loan Party that owns such Assets
so long as Section 5.02(d) would otherwise permit the Transfer of all Assets
owned by such Subsidiary at the time of such sale of Equity Interests.

 

(d) Sales, Etc. of Assets. (i) In the case of the Parent, sell, lease, transfer
or otherwise dispose of, or grant any option or other right to purchase, lease
or otherwise acquire any assets and (ii) in the case of the Loan Parties (other
than the Parent), sell, lease (other than enter into Tenancy Leases), transfer
or otherwise dispose of, or grant any option or other right to purchase, lease
(other than any option or other right to enter into Tenancy Leases) or otherwise
acquire, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
dispose of, or grant any option or other right to purchase, lease or otherwise
acquire (each action described in clause (ii) of this subsection (d) being a
“Transfer”), any Asset or Assets (or any direct or indirect

 

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Equity Interests in the owner thereof) other than the following Transfers, which
shall be permitted hereunder only so long as no Default or Event of Default
shall exist or would result therefrom:

 

(A) the Transfer of any Asset or Assets that are not Borrowing Base Assets from
any Loan Party to another Loan Party (other than the Parent) or from a
Subsidiary of a Loan Party to another Subsidiary of such Loan Party or any other
Loan Party (other than the Parent), or

 

(B) the Transfer of any Asset or Assets that are not Borrowing Base Assets to
any Person that is not a Loan Party, provided that the Loan Parties are in
compliance with the covenants hereunder and that the Transfer does not otherwise
cause or result in a Default or Event of Default (in each case, both before and
after giving effect to such Transfer), as evidenced by, in the case of any
Transfer or Transfers for which the aggregate purchase price paid to such Loan
Party or Loan Parties exceeds $50,000,000 in any 12-month period, a certificate
of the Chief Financial Officer (or such person performing similar functions) of
the Borrower delivered to the Administrative Agent prior to the date of such
Transfer.

 

(C) the Transfer of any Borrowing Base Asset or Borrowing Base Assets to any
Person, or the designation of a Borrowing Base Asset or Borrowing Base Assets as
a non-Borrowing Base Asset or non-Borrowing Base Assets, in each case with the
intention that such Borrowing Base Asset or Borrowing Base Assets, upon
consummation of such Transfer or upon such designation, shall no longer
constitute a Borrowing Base Asset or Borrowing Base Assets, provided that:

 

(1) immediately after giving effect to such Transfer, the remaining Borrowing
Base Assets shall continue to satisfy the requirements set forth in clauses (a)
through (h) of the definition of Borrowing Base Conditions,

 

(2) immediately after giving effect to such Transfer, the Implied Debt Service
Coverage Ratio of all remaining Borrowing Base Assets (measured on a pro forma
basis as of the date immediately following such Transfer) shall not be less than
1.40:1.00,

 

(3) immediately after giving effect to such Transfer, the average revenue per
available room (“RevPar”) of all remaining Borrowing Base Assets (measured on a
pro forma basis as of the date immediately following such Transfer) is not less
than 95% of the weighted average RevPar of all Borrowing Base Assets that
existed as of the date immediately preceding the effective date of such
Transfer, and

 

(4) the Loan Parties shall be in compliance with the covenants contained in
Section 5.04 both immediately before and on a pro forma basis immediately after
giving effect to such Transfer,

 

provided, further, that compliance with the foregoing clauses (1), (2) and (3)
shall be evidenced by a certificate of the Chief Financial Officer (or such
person performing similar functions) of the Borrower delivered to the
Administrative Agent prior to the date of such Transfer demonstrating such
compliance, together with supporting information in detail reasonably
satisfactory to the Administrative Agent.

 

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(e) Investments in Other Persons. Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than:

 

(i) Investments by the Loan Parties and their Subsidiaries in their Subsidiaries
outstanding on the date hereof and additional Investments in wholly-owned
Subsidiaries and, in the case of the Loan Parties (other than the Parent) and
their Subsidiaries, Investments in Assets (including by asset or Equity Interest
acquisitions), in each case subject, where applicable, to the limitations set
forth in Section 5.02(e)(iv);

 

(ii) Investments in Cash Equivalents;

 

(iii) Investments consisting of intercompany Debt owed to any other Loan Party
(other than the Parent) or any wholly-owned Subsidiary of any Loan Party (other
than an Excluded Subsidiary), provided that such intercompany Debt is on terms
reasonably acceptable to the Administrative Agent and (unless payable to the
Borrower) is by its terms subordinated to the Obligations of the Loan Parties
under the Loan Documents;

 

(iv) Investments consisting of the following items so long as (y) the aggregate
amount outstanding, without duplication, of all Investments described in this
subsection does not exceed, at any time, 25% of Consolidated total assets of the
Parent and its Subsidiaries, as determined in accordance with GAAP, at such
time, and (z) the aggregate amount of each of the following items of Investments
does not exceed the specified percentage of Consolidated total assets of the
Parent and its Subsidiaries, as determined in accordance with GAAP, set forth
below:

 

(A) loans, advances and extensions of credit to any Person so long as the
aggregate amount of such Investments does not at any time exceed 10.0% of
Consolidated total assets of the Parent and its Subsidiaries, as determined in
accordance with GAAP, at such time, in each case after giving effect to such
Investments,

 

(B) Development Assets that are being constructed or developed as Hotel Assets,
but are not yet completed (including such assets that such Person has contracted
to purchase for development with or without options to terminate the purchase
agreement), so long as the aggregate amount of such Investment, calculated on
the basis of the greater of actual cost or budgeted cost, does not at any time
exceed 15.0% of Consolidated total assets of the Parent and its Subsidiaries, as
determined in accordance with GAAP, at such time,

 

(C) additional Investments after the date hereof in Subsidiaries that are
Excluded Subsidiaries or Subsidiaries that are not wholly-owned Subsidiaries of
any Loan Party in an aggregate amount, for any period of four consecutive fiscal
quarters of the Parent, not to exceed 15.0% of Consolidated total assets of the
Parent and its Subsidiaries (as determined in accordance with GAAP and measured
as of the last day of the fiscal quarter immediately preceding such four
consecutive fiscal quarter period); provided, however, if at any time any
Borrowing Base Asset shall not be a Lender-Approved Asset, then the additional
Investments permitted under this clause (D) shall be limited at such time to an
aggregate amount (for all such Investments made after the date hereof) not to
exceed 15.0% of Consolidated total assets of the Parent and its Subsidiaries (as
determined in accordance with GAAP) at such time, and

 

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(D) Investments in Joint Ventures of any Loan Party so long as the aggregate
amount of such Investments outstanding does not at any time exceed 15.0% of
Consolidated total assets of the Parent and its Subsidiaries, as determined in
accordance with GAAP, at such time;

 

(v) Investments outstanding on the date hereof in Subsidiaries that are Excluded
Subsidiaries or Subsidiaries that are not wholly-owned Subsidiaries of any Loan
Party, and

 

(vi) Investments by the Borrower in Hedge Agreements designed to hedge against
fluctuations in interest rates or foreign exchange rates in the ordinary course
of business and consistent with prudent business practices.

 

(f) Restricted Payments. In the case of the Parent, declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its Equity Interests now or hereafter outstanding, return any capital to its
stockholders, partners or members (or the equivalent Persons thereof) as such,
make any distribution of assets, Equity Interests, obligations or securities to
its stockholders, partners or members (or the equivalent Persons thereof) as
such; provided, however, that the Parent may take such actions only (i) so long
as no Default or Event of Default shall have occurred and be continuing, in an
aggregate amount not to exceed, during any four consecutive fiscal quarters of
the Parent, 95% of Funds From Operations for such four fiscal quarter period, or
(ii) so long as no Event of Default shall have occurred and be continuing, as
may otherwise be required to avoid the imposition of income or excise taxes on
the Parent.

 

(g) Amendments of Constitutive Documents. Amend, or permit any of its
Subsidiaries to amend, in each case in any material respect, its limited
liability company agreement, certificate of incorporation or bylaws or other
constitutive documents, provided that any amendment to any such constitutive
document that would be adverse to any of the Secured Parties shall be deemed
“material” for purposes of this Section; and provided further that any amendment
to any such constitutive document that would designate such Subsidiary as a
“special purpose entity” or otherwise confirm such Subsidiary’s status as a
“special purpose entity” shall be deemed “not material” for purposes of this
Section.

 

(h) Accounting Changes. Make or permit, or permit any of its Subsidiaries to
make or permit, any change in (i) accounting policies or reporting practices,
except as required or permitted by generally accepted accounting principles, or
(ii) Fiscal Year.

 

(i) Speculative Transactions. Engage, or permit any of its Subsidiaries to
engage, in any transaction involving commodity options or futures contracts or
any similar speculative transactions.

 

(j) Payment Restrictions Affecting Subsidiaries. Directly or indirectly, enter
into or suffer to exist, or permit any of its Subsidiaries to enter into or
suffer to exist, any agreement or arrangement limiting the ability of any of its
Subsidiaries to declare or pay dividends or other distributions in respect of
its Equity Interests or repay or prepay any Debt owed to, make loans or advances
to, or otherwise transfer assets to or invest in, the Borrower or any Subsidiary
of the Borrower (whether through a covenant restricting dividends, loans, asset
transfers or investments, a financial covenant or otherwise), except (i) the
Loan Documents, (ii) any agreement or

 

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instrument evidencing Surviving Debt or any Debt extending, refunding or
refinancing such Surviving Debt, (iii) any agreement evidencing any Non-Recourse
Debt permitted under this Agreement so long as any such limiting agreement or
arrangement in such agreement may be triggered only by a default or event of
default under the terms of such agreement; (iv) any agreement in effect at the
time such Subsidiary becomes a Subsidiary of the Borrower, so long as such
agreement was not entered into solely in contemplation of such Person becoming a
Subsidiary of the Borrower, and (iv) any Excluded Subsidiary Agreement.

 

(k) Amendment, Etc. of Material Contracts. Cancel or terminate any Material
Contract or consent to or accept any cancellation or termination thereof, amend
or otherwise modify any Material Contract or give any consent, waiver or
approval thereunder, waive any default under or breach of any Material Contract,
agree in any manner to any other amendment, modification or change of any term
or condition of any Material Contract or take any other action in connection
with any Material Contract that would impair the value of the interest or rights
of any Loan Party thereunder or that would impair or otherwise adversely affect
the interest or rights of the Administrative Agent or any Lender Party, or
permit any of its Subsidiaries to do any of the foregoing, in each case in a
manner that could reasonably be expected to have a Material Adverse Effect, in
each case taking into account the effect of any agreements that supplement or
serve to substitute for, in whole or in part, such Material Contract; provided,
however, that the Loan Parties shall be entitled to modify or amend the Term
Loan Documents to the extent permitted pursuant to the terms of the
Intercreditor Agreement.

 

(l) Negative Pledge. Enter into or suffer to exist, or permit any of its
Subsidiaries to enter into or suffer to exist, any agreement prohibiting or
conditioning the creation or assumption of any Lien upon any of its property or
assets (including, without limitation, any Borrowing Base Assets), except (i)
pursuant to the Loan Documents, (ii) pursuant to any Excluded Subsidiary
Agreement entered into in connection with any Non-Recourse Debt not prohibited
hereunder, (iii) pursuant to the Term Documents or (iv) in connection with (A)
any Surviving Debt and any Debt extending, refunding or refinancing such
Surviving Debt, provided that the terms of any such Debt, and of any agreement
entered into and of any instrument issued in connection therewith, do not
provide for any Lien on any Borrowing Base Assets and are otherwise permitted by
the Loan Documents, (B) any purchase money Debt not prohibited hereunder solely
to the extent that the agreement or instrument governing such Debt prohibits a
Lien on the property acquired with the proceeds of such Debt, (C) any
Capitalized Lease permitted by Section 5.02(b)(iii)(C) solely to the extent that
such Capitalized Lease prohibits a Lien on the property subject thereto, or (D)
any Debt outstanding on the date any Subsidiary of the Borrower becomes such a
Subsidiary (so long as such agreement was not entered into solely in
contemplation of such Subsidiary becoming a Subsidiary of the Borrower).

 

(m) Parent as Holding Company. In the case of the Parent, not enter into or
conduct any business, or engage in any activity (including, without limitation,
any action or transaction that is required or restricted with respect to the
Borrower and its Subsidiaries under Sections 5.01 and 5.02 without regard to any
of the enumerated exceptions to such covenants), other than (i) the holding of
the Equity Interests of the Borrower; (ii) the performance of its duties as
managing member of the Borrower; (iii) the performance of its Obligations
(subject to the limitations set forth in the Loan Documents) under each Loan
Document and Term Document to which it is a party; (iv) the making of equity
Investments in the Borrower and its Subsidiaries, provided each such Investment
shall be on terms reasonably acceptable to the Administrative Agent; (v)
engaging in any activity necessary to continue to qualify as a REIT and (vi)
activities incidental to each of the foregoing.

 

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(n) Excluded Subsidiaries. Enter into or suffer to exist, or permit any Excluded
Subsidiary to enter into or suffer to exist, any agreement prohibiting or
conditioning (i) the guaranty by such Excluded Subsidiary of the Obligations of
the Loan Parties under the Loan Documents or (ii) the creation or assumption of
any Lien upon any of such Excluded Subsidiary’s property or assets, except (x)
as would be permitted under Section 5.02(l), (y) pursuant to an Excluded
Subsidiary Agreement in effect on the later of the Effective Date and the date
on which such Excluded Subsidiary becomes a Subsidiary of such Loan Party or (z)
in connection with the incurrence by such Excluded Subsidiary of Non-Recourse
Debt not prohibited hereunder.

 

(o) Multiemployer Plans. Neither any Loan Party nor any ERISA Affiliate will
contribute to or be required to contribute to any Multiemployer Plan.

 

SECTION 5.03. Reporting Requirements. So long as any Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will furnish to the Administrative Agent for
transmission to the Lender Parties in accordance with Section 9.02(b):

 

(a) Default Notice. As soon as possible and in any event within two days after
the occurrence of each Default or any event, development or occurrence
reasonably likely to have a Material Adverse Effect continuing on the date of
such statement, a statement of the Chief Financial Officer (or person performing
similar functions) of the Parent setting forth details of such Default or such
event, development or occurrence and the action that the Parent has taken and
proposes to take with respect thereto.

 

(b) Annual Financials. As soon as available and in any event within 90 days
after the end of each Fiscal Year, a copy of the annual audit report for such
year for the Parent and its Subsidiaries, including therein Consolidated balance
sheets of the Parent and its Subsidiaries as of the end of such Fiscal Year and
Consolidated statements of income and a Consolidated statement of cash flows of
the Parent and its Subsidiaries for such Fiscal Year (it being acknowledged that
a copy of the annual audit report filed by the Parent with the Securities and
Exchange Commission shall satisfy the foregoing requirements), in each case
accompanied by an opinion acceptable to the Required Lenders of Ernst & Young
LLP or other independent public accountants of recognized standing acceptable to
the Required Lenders, together with (i) a certificate of the Chief Financial
Officer (or person performing similar functions) of the Parent stating that no
Default has occurred and is continuing or, if a default has occurred and is
continuing, a statement as to the nature thereof and the action that the Parent
has taken and proposes to take with respect thereto and (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by the Parent
in determining compliance with the covenants contained in Section 5.04, provided
that in the event of any change in GAAP used in the preparation of such
financial statements, the Parent shall also provide, if necessary for the
determination of compliance with Section 5.04, a statement of reconciliation
conforming such financial statements to GAAP.

 

(c) Quarterly Financials. As soon as available and in any event within 45 days
after the end of each of the first three quarters of each Fiscal Year,
Consolidated balance sheets of the Parent and its Subsidiaries as of the end of
such quarter and Consolidated statements of income and a Consolidated statement
of cash flows of the Parent and its Subsidiaries for the period commencing at
the end of the previous fiscal quarter and ending with the end of such fiscal
quarter and Consolidated statements of income and a Consolidated statement of
cash flows of the Parent and its Subsidiaries for the period commencing at the
end of the previous Fiscal Year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding date or period of the preceding Fiscal Year, all in

 

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reasonable detail and duly certified (subject to normal year-end audit
adjustments) by the Chief Financial Officer (or person performing similar
functions) of the Parent as having been prepared in accordance with GAAP (it
being acknowledged that a copy of the quarterly financials filed by the Parent
with the Securities and Exchange Commission shall satisfy the foregoing
requirements), together with (i) a certificate of said officer stating that no
Default has occurred and is continuing or, if a Default has occurred and is
continuing, a statement as to the nature thereof and the action that the Parent
has taken and proposes to take with respect thereto and (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by the Parent
in determining compliance with the covenants contained in Section 5.04, provided
that in the event of any change in GAAP used in the preparation of such
financial statements, the Parent shall also provide, if necessary for the
determination of compliance with Section 5.04, a statement of reconciliation
conforming such financial statements to GAAP.

 

(d) Borrowing Base Certificate. As soon as available and in any event within 45
days after the end of each fiscal quarter of the Parent, a Borrowing Base
Certificate, as at the end of such fiscal quarter, certified by the Chief
Financial Officer (or person performing similar functions) of the Parent.

 

(e) Borrowing Base Financials. As soon as available and in any event within 15
days after the end of each calendar month, financial information in respect of
all Borrowing Base Assets, in form and detail reasonably satisfactory to the
Administrative Agent.

 

(f) Annual Budgets. As soon as available and in any event no later than 45 days
after the end of each Fiscal Year, forecasts prepared by management of the
Parent, in form satisfactory to the Administrative Agent, of balance sheets,
income statements and cash flow statements on a quarterly basis for the then
current Fiscal Year.

 

(g) Material Litigation. Promptly after the commencement thereof, notice of all
actions, suits, investigations, litigation and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting any Loan Party or any of its Subsidiaries of the
type described in Section 4.01(f), and promptly after the occurrence thereof,
notice of any adverse change in the status or the financial effect on any Loan
Party or any of its Subsidiaries of the Disclosed Litigation from that described
on Schedule 4.01(f) hereto.

 

(h) Securities Reports. Promptly after the sending or filing thereof, copies of
all proxy statements, financial statements and reports that any Loan Party or
any of its Subsidiaries sends to the holders of its Equity Interests, and copies
of all regular, periodic and special reports, and all registration statements,
that any Loan Party or any of its Subsidiaries files with the Securities and
Exchange Commission or any governmental authority that may be substituted
therefor, or with any national securities exchange.

 

(i) Real Property. As soon as available and in any event within 30 days after
the end of each Fiscal Year, a report supplementing Schedules 4.01(q) and
4.01(r) hereto, including an identification of all owned and leased real
property disposed of by any Loan Party or any of its Subsidiaries during such
Fiscal Year, a list and description (including the street address, county or
other relevant jurisdiction, state, record owner, book value thereof and, in the
case of leases of property, lessor, lessee, expiration date and annual rental
cost thereof) of all Real Property acquired or leased by any Loan Party or any
of its Subsidiaries during such Fiscal Year and a description of such other
changes in the information included in such Schedules as may be necessary for
such Schedules to be accurate and complete.

 

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(j) Environmental Conditions. Give notice in writing to the Administrative Agent
(i) promptly upon obtaining knowledge of any material violation of any
Environmental Law affecting any Asset or the operations thereof or the
operations of any of its Subsidiaries, (ii) promptly upon obtaining knowledge of
any known release, discharge or disposal of any Hazardous Materials at, from, or
into any Asset which it reports in writing or is reportable by it in writing to
any governmental authority and which is material in amount or nature or which
could reasonably be expected to materially adversely affect the value of such
Asset, (iii) promptly upon its receipt of any notice of material violation of
any Environmental Laws or of any material release, discharge or disposal of
Hazardous Materials in violation of any Environmental Laws or any matter that
could reasonably be expected to result in an Environmental Action, including a
material notice or claim of liability or potential responsibility from any third
party (including without limitation any federal, state or local governmental
officials) and including notice of any formal inquiry, proceeding, demand,
investigation or other material action with regard to (A) such Loan Party’s or
any other Person’s operation of any Asset, (B) contamination on, from or into
any Asset, or (C) investigation or remediation of off-site locations at which
such Loan Party or any of its predecessors are alleged to have directly or
indirectly disposed of Hazardous Materials, or (iv) upon such Loan Party’s
obtaining knowledge that any expense or loss has been incurred by such
governmental authority in connection with the assessment, containment, removal
or remediation of any Hazardous Materials with respect to which such Loan Party
or any Joint Venture could reasonably be expected to incur material liability or
for which a Lien may be imposed on any Asset, provided that notice is required
for any of the events described in clauses (i) through (iv) above that could
reasonably be expected to have a Material Adverse Effect, could reasonably be
expected to result in a material Environmental Action with respect to any
Borrowing Base Asset or could result in a Lien against any Borrowing Base Asset.

 

(k) Borrowing Base Asset Value. Promptly after discovery of any setoff, claim,
withholdings or other defenses to which any Borrowing Base Assets are subject,
which (i) would have a material adverse effect on the value of such Borrowing
Base Asset, (ii) would have a Material Adverse Effect or (iii) with respect to
such Borrowing Base Asset, would constitute a Lien which is not a Permitted
Lien, provide the Administrative Agent with notice thereof.

 

(l) Compliance with Borrowing Base Asset Conditions. Promptly after discovery of
any condition or event which causes any of the Assets listed as Borrowing Base
Assets on Schedule II hereto to no longer comply with the requirements set forth
in the definition of Borrowing Base Conditions, provide the Administrative Agent
with notice thereof.

 

(m) Other Information. Promptly, such other information respecting the business,
condition (financial or otherwise), operations, performance, properties or
prospects of any Loan Party or any of its Subsidiaries as the Administrative
Agent, or any Lender Party through the Administrative Agent, may from time to
time reasonably request.

 

SECTION 5.04. Financial Covenants. So long as any Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have, at any
time after the Initial Extension of Credit, any Commitment hereunder, the Parent
will:

 

(a) Parent Financial Covenants.

 

(i) Maximum Total Leverage Ratio: Maintain (A) at the end of each fiscal quarter
of the Parent ending during any of the periods set forth below and (B) on the
date of each Advance and the issuance or renewal of any Letter of Credit
occurring during any

 

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of the periods indicated below (both before and after giving effect to such
Advance), a Total Leverage Ratio of less than the correlative ratio indicated:

 

Period

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

   Total Leverage Ratio

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

9/30/04 through 12/30/06

   7.00:1.00

12/31/06 and thereafter

   6.50:1.00

 

(ii) Maximum Senior Leverage Ratio: Maintain (A) at the end of each fiscal
quarter of the Parent ending during any of the periods set forth below and (B)
on the date of each Advance and the issuance or renewal of any Letter of Credit
occurring during any of the periods indicated below (both before and after
giving effect to such Advance), a Senior Leverage Ratio of less than the
correlative ratio indicated:

 

Period

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

   Senior Leverage Ratio

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

9/30/04 through 12/30/06

   6.50:1.00

12/31/06 and thereafter

   6.00:1.00

 

(iii) Minimum Tangible Net Worth: Maintain at all times tangible net worth of
the Parent and its Subsidiaries, as determined in accordance with GAAP, of not
less than the sum of $235,495,000 plus the product of (A) (1) the amount of net
proceeds of all primary issuances or primary sales of Equity Interests of the
Parent or any of its Subsidiaries consummated in connection with the
consummation of the IPO less (2) the amount of proceeds received by the
Contributing Entities in connection with the Parent’s purchase of Equity
Interests of the Borrower contemporaneously with the consummation of the IPO
multiplied by (B) 75%.

 

(iv) Minimum Fixed Charge Coverage Ratio. Maintain (A) at the end of each fiscal
quarter of the Parent and (B) on the date of each Advance (both before and after
giving effect to such Advance), a Fixed Charge Coverage Ratio of not less than
1.50:1.00.

 

All calculations described above in this Section 5.04(a) which pertain to the
fiscal quarters of the Parent ending on or prior to December 31, 2004 shall be
made on a pro forma basis after giving effect to the IPO and the Formation and
Structuring Transactions.

 

(b) Borrowing Base Financial Covenants.

 

(i) Maximum Facility Exposure to Borrowing Base Asset Value: Not permit at any
time the Facility Exposure at such time to exceed the Total Loan Value at such
time.

 

(ii) Minimum Borrowing Base Debt Service Coverage Ratio: Maintain (A) at the end
of each fiscal quarter of the Parent and (B) at the time of each Advance (both
before and after giving effect to such Advance) a Borrowing Base Debt Service
Coverage Ratio of not less than 2.00:1.00.

 

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(iii) Minimum Borrowing Base. Maintain at least 6 Borrowing Base Assets.

 

(iv) Maximum Adjusted Net Operating Income. Not permit any individual Borrowing
Base Asset (other than the Marriott – Napa, California Asset) to account for
greater than 25% of the aggregate Adjusted Net Operating Income for all
Borrowing Base Assets unless approved by the Required Lenders.

 

ARTICLE VI

EVENTS OF DEFAULT

 

SECTION 6.01. Events of Default. If any of the following events (“Events of
Default”) shall occur and be continuing:

 

(a) Failure to Make Payments When Due. (i) The Borrower shall fail to pay any
principal of any Advance when the same shall become due and payable or (ii) the
Borrower shall fail to pay any interest on any Advance, or any Loan Party shall
fail to make any other payment under any Loan Document, in each case under this
clause (ii) within three Business Days after the same becomes due and payable;
or

 

(b) Breach of Representations and Warranties. Any representation or warranty
made by any Loan Party (or any of its officers or the officers of its general
partner or managing member, as applicable) under or in connection with any Loan
Document shall prove to have been incorrect in any material respect when made;
or

 

(c) Breach of Certain Covenants. The Borrower shall fail to perform or observe
any term, covenant or agreement contained in Section 2.14, 5.01(d), (e), (f),
(i), (j), (n), (o), (p) or (q), 5.02, 5.03 or 5.04; or

 

(d) Other Defaults under Loan Documents. Any Loan Party shall fail to perform or
observe any other term, covenant or agreement contained in any Loan Document on
its part to be performed or observed if such failure shall remain unremedied for
30 days after the earlier of the date on which (i) a Responsible Officer becomes
aware of such failure or (ii) written notice thereof shall have been given to
the Borrower by the Administrative Agent or any Lender Party; or

 

(e) Cross Defaults. (i) Any Loan Party or any of its Subsidiaries shall fail to
pay any principal of, premium or interest on or any other amount payable in
respect of any Material Debt when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
following the expiration of the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt or in such Hedge Agreement; or
(ii) any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Material Debt, if (A) the effect of such event
or condition is to permit the acceleration of the maturity of such Material Debt
or otherwise permit the holders thereof to cause such Material Debt to mature,
and (B) such event or condition shall remain unremedied or otherwise uncured for
a period of 30 days and such Material Debt is not repaid within such 30-day
period; or (iii) the maturity of any such Material Debt shall be accelerated or
any such Material Debt shall be declared to be due and payable or required to be
prepaid or redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Material Debt shall be required to be made, in each case prior to
the stated maturity thereof; or

 

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(f) Insolvency Events. Any Loan Party or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against any
Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it) that is being diligently contested by it in good faith, either
such proceeding shall remain undismissed or unstayed for a period of 30 days or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or any Loan Party or any of its Subsidiaries shall take
any corporate action to authorize any of the actions set forth above in this
subsection (f), provided that, if any of the events or circumstances described
in this subsection (f) occur or exist with respect to a Subsidiary of the Parent
that is not a Loan Party (a “Debtor Subsidiary”), such event(s) or
circumstance(s) shall not constitute a Default or an Event of Default so long as
(i) such Debtor Subsidiary has no other Debt other than Non-Recourse Debt, (ii)
such event(s) or circumstance(s) have not resulted in, and will not result in,
any liability, either individually or in the aggregate, (x) to the Parent, the
Borrower or any of its Subsidiaries that are the direct owners of a Borrowing
Base Asset, in excess of $10,000,000 or (y) to any other Subsidiaries of the
Parent (exclusive of the Debtor Subsidiary), in excess of $100,000,000, and;
(iii) the total assets of such Debtor Subsidiary do not exceed 5% of the
Consolidated total assets of the Parent and its Subsidiaries as of the date such
event(s) occur or such circumstance(s) first exist; and (iv) no court of
competent jurisdiction has issued an order substantively consolidating the
assets and liabilities of such Debtor Subsidiary with those of any other Person;
or

 

(g) Monetary Judgments. Any judgments or orders, either individually or in the
aggregate, for the payment of money in excess of $10,000,000 shall be rendered
against any Loan Party or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; provided, however, that any such judgment or
order shall not give rise to an Event of Default under this Section 6.01(g) if
and so long as (A) the amount of such judgment or order which remains
unsatisfied is covered by a valid and binding policy of insurance between the
respective Loan Party and the insurer covering full payment of such unsatisfied
amount and (B) such insurer, which shall be rated at least “A” by A.M. Best
Company, has been notified, and has not disputed the claim made for payment, of
the amount of such judgment or order; or

 

(h) Non-Monetary Judgments. Any non-monetary judgment or order shall be rendered
against any Loan Party or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect, and there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or

 

(i) Unenforceability of Loan Documents. Any provision of any Loan Document after
delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other
than pursuant to the terms thereof) cease to be valid and binding on or
enforceable against any Loan Party party to it, or any such Loan Party shall so
state in writing; or

 

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(j) Security Failure. Any Collateral Document or financing statement after
delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other
than pursuant to the terms thereof) cease to create a valid and perfected first
priority lien on and security interest in the Collateral purported to be covered
thereby; or

 

(k) Change of Control. A Change of Control shall occur; or

 

(l) ERISA Events. Any ERISA Event shall have occurred with respect to a Plan and
the sum (determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans with
respect to which an ERISA Event shall have occurred and then exist (or the
liability of the Loan Parties and the ERISA Affiliates related to such ERISA
Event) exceeds $10,000,000;

 

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each Lender Party and the obligation of each Lender
Party to make Advances (other than Letter of Credit Advances by an Issuing Bank
or a Lender pursuant to Section 2.03(c) and Swing Line Advances by a Lender
pursuant to Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit
to be terminated, whereupon the same shall forthwith terminate, and (ii) shall
at the request, or may with the consent, of the Required Lenders, (A) by notice
to the Borrower, declare the Notes, all interest thereon and all other amounts
payable under this Agreement and the other Loan Documents to be forthwith due
and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower, (B) by notice to each party required under the terms of any agreement
in support of which a Letter of Credit is issued, request that all Obligations
under such agreement be declared to be due and payable and (C) by notice to each
Issuing Bank, direct such Issuing Bank to deliver a Default Termination Notice
to the beneficiary of each Letter of Credit issued by it, and each Issuing Bank
shall deliver such Default Termination Notices; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Borrower under any Bankruptcy Law, (y) the Commitments of each Lender Party and
the obligation of each Lender Party to make Advances (other than Letter of
Credit Advances by an Issuing Bank or a Lender pursuant to Section 2.03(c) and
Swing Line Advances by a Lender pursuant to Section 2.02(b)) and of each Issuing
Bank to issue Letters of Credit shall automatically be terminated and (z) the
Notes, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.

 

SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If any
Event of Default shall have occurred and be continuing, the Administrative Agent
may, or shall at the request of the Required Lenders, irrespective of whether it
is taking any of the actions described in Section 6.01 or otherwise, make demand
upon the Borrower to, and forthwith upon such demand the Borrower will, pay to
the Administrative Agent on behalf of the Lender Parties in same day funds at
the Administrative Agent’s office designated in such demand, for deposit in the
L/C Cash Collateral Account, an amount equal to the aggregate Available Amount
of all Letters of Credit then outstanding. If at any time the Administrative
Agent or the Issuing Bank determines that any funds held in the L/C Cash
Collateral Account are subject to any right or claim of any Person other than
the Administrative Agent and the Lender Parties with respect to the Obligations
of the Loan Parties under the Loan Documents, or that the total amount of such
funds is less than the aggregate Available Amount of all Letters of Credit, the
Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent, as the case may be,
determines to be free and clear of any such right and claim. Upon the drawing of
any Letter of Credit for which funds are on deposit in the L/C Cash Collateral
Account, such funds shall be applied to reimburse the relevant Issuing Bank or
Lenders, as applicable, to the extent permitted by applicable law.

 

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ARTICLE VII

GUARANTY

 

SECTION 7.01. Guaranty; Limitation of Liability. (a) Each Subsidiary Guarantor
hereby absolutely, unconditionally and irrevocably guarantees the punctual
payment when due, whether at scheduled maturity or on any date of a required
prepayment or by acceleration, demand or otherwise, of all Obligations of the
Borrower and each other Loan Party now or hereafter existing under or in respect
of the Loan Documents (including, without limitation, any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations), whether direct or indirect, absolute or contingent, and
whether for principal, interest, premiums, fees, indemnities, contract causes of
action, costs, expenses or otherwise (such Obligations being the “Guaranteed
Obligations”), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Agreement or any
other Loan Document. Without limiting the generality of the foregoing, each
Subsidiary Guarantor’s liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by any other Loan Party to
any Secured Party under or in respect of the Loan Documents but for the fact
that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such other Loan
Party. This Guaranty is a guaranty of payment and not merely of collection.

 

(b) Each Subsidiary Guarantor, the Administrative Agent and each other Lender
Party and, by its acceptance of the benefits of this Guaranty, each other
Secured Party, hereby confirms that it is the intention of all such Persons that
this Guaranty and the Obligations of each Subsidiary Guarantor hereunder not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar foreign, federal or state law to the extent applicable to this
Guaranty and the Obligations of each Subsidiary Guarantor hereunder. To
effectuate the foregoing intention, the Subsidiary Guarantors, the
Administrative Agent, the other Lender Parties and, by their acceptance of the
benefits of this Guaranty, the other Secured Parties hereby irrevocably agree
that the Obligations of each Subsidiary Guarantor under this Guaranty at any
time shall be limited to the maximum amount as will result in the Obligations of
such Subsidiary Guarantor under this Guaranty not constituting a fraudulent
transfer or conveyance.

 

(c) Each Subsidiary Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Secured Party under
this Guaranty or any other guaranty, such Subsidiary Guarantor will contribute,
to the maximum extent permitted by law, such amounts to each other Subsidiary
Guarantor and each other guarantor so as to maximize the aggregate amount paid
to the Secured Parties under or in respect of the Loan Documents.

 

SECTION 7.02. Guaranty Absolute. Each Subsidiary Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of
this Agreement and the other Loan Documents, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Administrative Agent or any other Secured Party with
respect thereto. The Obligations of each Subsidiary Guarantor under or in
respect of this Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under or in respect of this Agreement
or the other the Loan Documents, and a separate action or actions may be brought
and prosecuted against each Subsidiary Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Borrower or any other
Loan Party or whether the Borrower or

 

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any other Loan Party is joined in any such action or actions. The liability of
each Subsidiary Guarantor under this Guaranty shall be irrevocable, absolute and
unconditional irrespective of, and each Subsidiary Guarantor hereby irrevocably
waives any defenses it may now have or hereafter acquire in any way relating to,
any or all of the following:

 

(a) any lack of validity or enforceability of any Loan Document or any agreement
or instrument relating thereto;

 

(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations or any other Obligations of any
other Loan Party under or in respect of the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower, any other
Loan Party or any of their Subsidiaries or otherwise;

 

(c) any taking, exchange, release or non-perfection of any collateral, or any
taking, release or amendment or waiver of, or consent to departure from, any
other guaranty, for all or any of the Guaranteed Obligations;

 

(d) any manner of application of collateral, or proceeds thereof, to all or any
of the Guaranteed Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Guaranteed Obligations or any other Obligations
of any Loan Party under the Loan Documents or any other assets of any Loan Party
or any of its Subsidiaries;

 

(e) any change, restructuring or termination of the corporate structure or
existence of any Loan Party or any of its Subsidiaries;

 

(f) any failure of the Administrative Agent or any other Secured Party to
disclose to any Loan Party any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any other Loan Party now or hereafter known to the Administrative Agent or such
other Secured Party (each Subsidiary Guarantor waiving any duty on the part of
the Administrative Agent and each other Secured Party to disclose such
information);

 

(g) the failure of any other Person to execute or deliver this Agreement, any
other Loan Document, any Guaranty Supplement (as hereinafter defined) or any
other guaranty or agreement or the release or reduction of liability of any
Subsidiary Guarantor or other guarantor or surety with respect to the Guaranteed
Obligations; or

 

(h) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by the
Administrative Agent or any other Secured Party that might otherwise constitute
a defense available to, or a discharge of, any Loan Party or any other guarantor
or surety.

 

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party
or otherwise, all as though such payment had not been made.

 

SECTION 7.03. Waivers and Acknowledgments. (a) Each Subsidiary Guarantor hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand

 

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for performance, notice of nonperformance, default, acceleration, protest or
dishonor and any other notice with respect to any of the Guaranteed Obligations
and this Guaranty and any requirement that the Administrative Agent or any other
Secured Party protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Loan Party
or any other Person or any collateral.

 

(b) Each Subsidiary Guarantor hereby unconditionally and irrevocably waives any
right (including without limitation any such right arising under California
Civil Code Section 2815) to revoke this Guaranty and acknowledges that this
Guaranty is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.

 

(c) Each Subsidiary Guarantor hereby unconditionally and irrevocably waives (i)
any and all rights and defenses available to it by reason of Sections 2787 to
2855, inclusive, 2899 and 3433 of the California Civil Code, including without
limitation any and all rights or defenses such Guarantor may have by reason of
protection afforded to the principal with respect to any of the Guaranteed
Obligations, or to any other guarantor of any of the Guaranteed Obligations with
respect to any of such guarantor’s obligations under its guaranty, in either
case pursuant to the antideficiency or other laws of the State of California
limiting or discharging the principal’s indebtedness or such guarantor’s
obligations, including without limitation Section 580a, 580b, 580d, or 726 of
the California Code of Civil Procedure, (ii) any defense arising by reason of
any claim or defense based upon an election of remedies by the Administrative
Agent or any other Secured Party that in any manner impairs, reduces, releases
or otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Subsidiary Guarantor or other
rights of such Subsidiary Guarantor to proceed against any of the other Loan
Parties, any other guarantor or any other Person or any collateral and (iii) any
defense based on any right of set-off or counterclaim against or in respect of
the Obligations of such Subsidiary Guarantor hereunder. No other provision of
this Guaranty shall be construed as limiting the generality of any of the
covenants and waivers set forth in this paragraph. As provided below, this
Guaranty shall be governed by, and shall be construed and enforced in accordance
with, the laws of the State of New York. This paragraph is included solely out
of an abundance of caution, and shall not be construed to mean that any of the
above-referenced provisions of California law are in any way applicable to this
Guaranty or to any of the Guaranteed Obligations.

 

(d) Each Subsidiary Guarantor waives any claim, right or remedy, direct or
indirect, that such Subsidiary Guarantor now has or may hereafter have against
any Loan Party or any of its assets in connection with this Guaranty or the
performance by such Subsidiary Guarantor of its obligations hereunder, in each
case whether such claim, right or remedy arises in equity, under contract, by
statute (including without limitation under California Civil Code Section 2847,
2848 or 2849), under common law or otherwise and including without limitation
(a) any right of subrogation, reimbursement or indemnification that such
Guarantor now has or may hereafter have against any such Loan Party, (b) any
right to enforce, or to participate in, any claim, right or remedy that any
Secured Party now has or may hereafter have against any Loan Party, and (c) any
benefit of, and any right to participate in, any collateral or security now or
hereafter held by any Secured Party.

 

(e) Each Subsidiary Guarantor acknowledges that the Administrative Agent may,
without notice to or demand upon such Subsidiary Guarantor and without affecting
the liability of such Subsidiary Guarantor under this Guaranty, foreclose under
any mortgage by nonjudicial sale, and each Subsidiary Guarantor hereby waives
any defense to the recovery by the Administrative Agent and the other Secured
Parties against such Subsidiary Guarantor of any deficiency after such
nonjudicial sale and any defense or benefits that may be afforded by Sections
580a and 580d of the California Code of Civil Procedure or any statute or law in
any other jurisdiction having similar effect.

 

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(f) Each Subsidiary Guarantor hereby unconditionally and irrevocably waives any
duty on the part of the Administrative Agent or any other Secured Party to
disclose to such Subsidiary Guarantor any matter, fact or thing relating to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, any other Loan Party or any of their
Subsidiaries now or hereafter known by the Administrative Agent or such other
Secured Party.

 

(g) Each Subsidiary Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by
this Agreement and the other Loan Documents and that the waivers set forth in
Section 7.02 and this Section 7.03 are knowingly made in contemplation of such
benefits.

 

SECTION 7.04. Subrogation. Each Subsidiary Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrower, any other Loan Party or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Subsidiary Guarantor’s Obligations under or in respect of this Guaranty,
this Agreement or any other Loan Document, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of any
Secured Party against the Borrower, any other Loan Party or any other insider
guarantor or any collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower, any other Loan Party
or any other insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have been paid in full
in cash, all Letters of Credit shall have expired or been terminated, all
Secured Hedge Agreements shall have expired or been terminated and the
Commitments shall have expired or been terminated. If any amount shall be paid
to any Subsidiary Guarantor in violation of the immediately preceding sentence
at any time prior to the latest of (a) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty, (b)
the Termination Date and (c) the latest date of expiration or termination of all
Letters of Credit and all Secured Hedge Agreements, such amount shall be
received and held in trust for the benefit of the Secured Parties, shall be
segregated from other property and funds of such Subsidiary Guarantor and shall
forthwith be paid or delivered to the Administrative Agent in the same form as
so received (with any necessary endorsement or assignment) to be credited and
applied to the Guaranteed Obligations and all other amounts payable under this
Guaranty, whether matured or unmatured, in accordance with the terms of the Loan
Documents. If (i) any Subsidiary Guarantor shall make payment to any Secured
Party of all or any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash, (iii) the Termination Date shall have occurred
and (iv) all Letters of Credit and all Secured Hedge Agreements shall have
expired or been terminated, the Administrative Agent and the other Secured
Parties will, at such Subsidiary Guarantor’s request and expense, execute and
deliver to such Subsidiary Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to such Subsidiary Guarantor of an interest in the Guaranteed
Obligations resulting from such payment made by such Subsidiary Guarantor
pursuant to this Guaranty.

 

SECTION 7.05. Guaranty Supplements. Upon the execution and delivery by any
Person of a Guaranty Supplement, (i) such Person shall be referred to as an
“Additional Guarantor” and shall become and be a Subsidiary Guarantor hereunder,
and each reference in this Agreement to a “Subsidiary Guarantor” or a “Loan
Party” shall also mean and be a reference to such Additional Guarantor, and each
reference in any other Loan Document to a “Subsidiary Guarantor” shall also mean
and be a reference to such Additional Guarantor, and (ii) each reference herein
to “this Agreement”, “this Guaranty”, “hereunder”, “hereof” or words of like
import referring to this Agreement and this Guaranty, and each

 

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reference in any other Loan Document to the “Loan Agreement”, “Guaranty”,
“thereunder”, “thereof” or words of like import referring to this Agreement and
this Guaranty, shall mean and be a reference to this Agreement and this Guaranty
as supplemented by such Guaranty Supplement.

 

SECTION 7.06. Indemnification by Subsidiary Guarantors. (a) Without limitation
on any other Obligations of any Subsidiary Guarantor or remedies of the
Administrative Agent or the Secured Parties under this Agreement, this Guaranty
or the other Loan Documents, each Subsidiary Guarantor shall, to the fullest
extent permitted by law, indemnify, defend and save and hold harmless the
Administrative Agent, each other Secured Party and each of their Affiliates and
their respective officers, directors, employees, agents and advisors (each, an
“Indemnified Party”) from and against, and shall pay on demand, any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party in connection with or as a
result of any failure of any Guaranteed Obligations to be the legal, valid and
binding obligations of any Loan Party enforceable against such Loan Party in
accordance with their terms.

 

(b) Each Subsidiary Guarantor hereby also agrees that none of the Indemnified
Parties shall have any liability (whether direct or indirect, in contract, tort
or otherwise) to any of the Subsidiary Guarantors or any of their respective
Affiliates or any of their respective officers, directors, employees, agents and
advisors, and each Subsidiary Guarantor hereby agrees not to assert any claim
against any Indemnified Party on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to the
Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit, the Loan Documents or any of the transactions contemplated by
the Loan Documents.

 

SECTION 7.07. Subordination. Each Subsidiary Guarantor hereby subordinates any
and all debts, liabilities and other Obligations owed to such Subsidiary
Guarantor by each other Loan Party (the “Subordinated Obligations”) to the
Guaranteed Obligations to the extent and in the manner hereinafter set forth in
this Section 7.07.

 

(a) Prohibited Payments, Etc. Except during the continuance of a Default
(including the commencement and continuation of any proceeding under any
Bankruptcy Law relating to any other Loan Party), each Subsidiary Guarantor may
receive regularly scheduled payments or payments made in the ordinary course of
business from any other Loan Party on account of the Subordinated Obligations.
After the occurrence and during the continuance of any Default (including the
commencement and continuation of any proceeding under any Bankruptcy Law
relating to any other Loan Party), however, unless the Administrative Agent
otherwise agrees, no Subsidiary Guarantor shall demand, accept or take any
action to collect any payment on account of the Subordinated Obligations.

 

(b) Prior Payment of Guaranteed Obligations. In any proceeding under any
Bankruptcy Law relating to any other Loan Party, each Subsidiary Guarantor
agrees that the Secured Parties shall be entitled to receive payment in full in
cash of all Guaranteed Obligations (including all interest and expenses accruing
after the commencement of a proceeding under any Bankruptcy Law, whether or not
constituting an allowed claim in such proceeding (“Post Petition Interest”))
before such Subsidiary Guarantor receives payment of any Subordinated
Obligations.

 

(c) Turn-Over. After the occurrence and during the continuance of any Default
(including the commencement and continuation of any proceeding under any
Bankruptcy Law relating to any other Loan Party), each Subsidiary Guarantor
shall, if the Administrative Agent so requests, collect, enforce and receive
payments on account of the Subordinated Obligations as trustee for the Secured
Parties and deliver such payments to the Administrative Agent on account of the
Guaranteed Obligations (including all Post Petition Interest), together with any
necessary endorsements or other instruments of transfer, but without reducing or
affecting in any manner the liability of such Subsidiary Guarantor under the
other provisions of this Guaranty.

 

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(d) Administrative Agent Authorization. After the occurrence and during the
continuance of any Default (including the commencement and continuation of any
proceeding under any Bankruptcy Law relating to any other Loan Party), the
Administrative Agent is authorized and empowered (but without any obligation to
so do), in its discretion, (i) in the name of each Subsidiary Guarantor, to
collect and enforce, and to submit claims in respect of, Subordinated
Obligations and to apply any amounts received thereon to the Guaranteed
Obligations (including any and all Post Petition Interest), and (ii) to require
each Subsidiary Guarantor (A) to collect and enforce, and to submit claims in
respect of, Subordinated Obligations and (B) to pay any amounts received on such
obligations to the Administrative Agent for application to the Guaranteed
Obligations (including any and all Post Petition Interest).

 

SECTION 7.08. Continuing Guaranty. This Guaranty is a continuing guaranty and
shall (a) remain in full force and effect until the latest of (i) the payment in
full in cash of the Guaranteed Obligations and all other amounts payable under
this Guaranty, (ii) the Termination Date and (iii) the latest date of expiration
or termination of all Letters of Credit and all Secured Hedge Obligations, (b)
be binding upon the Subsidiary Guarantors, their successors and assigns and (c)
inure to the benefit of and be enforceable by the Administrative Agent and the
other Secured Parties and their successors, transferees and assigns.

 

ARTICLE VIII

THE AGENTS

 

SECTION 8.01. Authorization and Action; Appointment of Supplemental Collateral
Agents. (a) Each Lender Party (in its capacities as a Lender, the Swing Line
Bank (if applicable) and as an Issuing Bank (if applicable) and on behalf of
itself and its Affiliates as potential Hedge Banks) hereby appoints and
authorizes each Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to such Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. As to any matters
not expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), no Agent shall be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon all Lender Parties and all holders of Notes; provided,
however, that no Agent shall be required to take any action that exposes such
Agent to personal liability or that is contrary to this Agreement or applicable
law. Each Agent agrees to give to each Lender Party prompt notice of each notice
given to it by the Borrower pursuant to the terms of this Agreement.
Notwithstanding anything to the contrary in any Loan Document, no Person
identified as a syndication agent, documentation agent, senior manager, joint
lead arranger or joint book running manager, in such Person’s capacity as such,
shall have any obligations or duties to any Loan Party, the Administrative Agent
or any other Secured Party under any of such Loan Documents. Each of the Secured
Parties hereby consents to the Administrative Agent and the Collateral Agent
entering into the Intercreditor Agreement on behalf of the Secured Parties.

 

(b) Anything contained herein or in the Collateral Documents to the contrary
notwithstanding, the Collateral Agent may from time to time, when the Collateral
Agent deems it to be necessary, appoint one or more trustees, co-trustees,
collateral co-agents or collateral subagents (each, a “Supplemental Collateral
Agent”) with respect to all or any part of the Collateral. In the event that the

 

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Collateral Agent so appoints any Supplemental Collateral Agent with respect to
any Collateral, (i) such Supplemental Collateral Agent shall automatically be
vested, in addition to the Collateral Agent, with all rights, powers,
privileges, interests and remedies of the Collateral Agent under the Collateral
Documents with respect to such Collateral; (ii) such Supplemental Collateral
Agent shall be deemed to be an “Agent” for purposes of this Agreement and the
other Loan Documents, and the provisions of Section 20 of the Security
Agreement, this Article and Section 9.04 hereof that refer to the Agents (or
either of them) shall inure to the benefit of such Supplemental Collateral
Agent, and all references therein and in the other Loan Documents to the
Collateral Agent shall be deemed to be references to the Collateral Agent and/or
such Supplemental Collateral Agent, as the context may require; and (iii) the
term “Collateral Agent,” when used herein or in any applicable Collateral
Document in relation to the Liens on or security interests in such Collateral
granted in favor of the Collateral Agent, and any rights, powers, privileges,
interests and remedies of the Collateral Agent with respect to such Collateral,
shall be deemed to include such Supplemental Collateral Agent; provided,
however, that no such Supplemental Collateral Agent shall be authorized to take
any action with respect to any such Collateral unless and except to the extent
expressly authorized in writing by the Collateral Agent. Should any instrument
in writing from the Borrower or any other Loan Party be required by any
Supplemental Collateral Agent so appointed by the Collateral Agent to more fully
or certainly vest in and confirming to such Supplemental Collateral Agent such
rights, powers, privileges and duties, the Borrower shall, or shall cause such
Loan Party to, execute, acknowledge and deliver any and all such instruments
promptly upon request by the Collateral Agent. If any Supplemental Collateral
Agent, or successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall automatically vest in
and be exercised by the Collateral Agent until the appointment of a new
Supplemental Collateral Agent.

 

SECTION 8.02. Agents’ Reliance, Etc. Neither any Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with the Loan Documents, except
for its or their own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, each Agent: (a) in the case of the
Administrative Agent, may treat the payee of any Note as the holder thereof
until the Administrative Agent receives and accepts an Assumption Agreement
entered into by an Assuming Lender as provided in Section 2.17 or an Assignment
and Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, or, in the case of any other
Agent, such Agent has received notice from the Administrative Agent that it has
received and accepted such Assumption Agreement or Assignment and Acceptance, as
the case may be, in each case as provided in Section 9.07; (b) may consult with
legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (d) shall not have any
duty to ascertain or to inquire as to the performance, observance or
satisfaction of any of the terms, covenants or conditions of any Loan Document
on the part of any Loan Party or the existence at any time of any Default under
the Loan Documents or to inspect the property (including the books and records)
of any Loan Party; (e) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy or telex or other electronic communication) believed by it to be
genuine and signed or sent by the proper party or parties.

 

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SECTION 8.03. CNAI and Affiliates. With respect to its Commitments, the Advances
made by it and the Notes issued to it, CNAI shall have the same rights and
powers under the Loan Documents as any other Lender Party and may exercise the
same as though it were not the Administrative Agent or the Collateral Agent; and
the term “Lender Party” or “Lender Parties” shall, unless otherwise expressly
indicated, include CNAI in its individual capacity. CNAI and its Affiliates may
accept deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from and generally engage in any kind of business
with, any Loan Party, any Subsidiary of any Loan Party and any Person that may
do business with or own securities of any Loan Party or any such Subsidiary, all
as if CNAI were not the Administrative Agent or the Collateral Agent and without
any duty to account therefor to the Lender Parties.

 

SECTION 8.04. Lender Party Credit Decision. Each Lender Party acknowledges that
it has, independently and without reliance upon any Agent or any other Lender
Party and based on the financial statements referred to in Section 4.01 and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender Party
also acknowledges that it will, independently and without reliance upon any
Agent or any other Lender Party and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.

 

SECTION 8.05. Indemnification by Lender Parties. (a) Each Lender Party severally
agrees to indemnify each Agent (to the extent not promptly reimbursed by the
Borrower) from and against such Lender Party’s ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against such Agent in any way relating to or arising out of the Loan Documents
or any action taken or omitted by such Agent under the Loan Documents
(collectively, the “Indemnified Costs”); provided, however, that no Lender Party
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from any Agent’s gross negligence or willful misconduct as found in a
final, non-appealable judgment by a court of competent jurisdiction. Without
limitation of the foregoing, each Lender Party agrees to reimburse each Agent
promptly upon demand for its ratable share of any costs and expenses (including,
without limitation, fees and expenses of counsel) payable by the Borrower under
Section 9.04, to the extent that such Agent is not promptly reimbursed for such
costs and expenses by the Borrower. In the case of any investigation, litigation
or proceeding giving rise to any Indemnified Costs, this Section 8.05 applies
whether any such investigation, litigation or proceeding is brought by any
Lender Party or any other Person.

 

(b) Each Lender Party severally agrees to indemnify each Issuing Bank (to the
extent not promptly reimbursed by the Borrower) from and against such Lender
Party’s ratable share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against such Issuing Bank in any way relating to or
arising out of the Loan Documents or any action taken or omitted by such Issuing
Bank under the Loan Documents; provided, however, that no Lender Party shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Issuing Bank’s gross negligence or willful misconduct as found in a
final, non-appealable judgment by a court of competent jurisdiction. Without
limitation of the foregoing, each Lender Party agrees to reimburse such Issuing
Bank promptly upon demand for its ratable share of any costs and expenses
(including, without limitation, fees and expenses of counsel) payable by the
Borrower under Section 9.04, to the extent that such Issuing Bank is not
promptly reimbursed for such costs and expenses by the Borrower.

 

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(c) For purposes of this Section 8.05, the Lender Parties’ respective ratable
shares of any amount shall be determined, at any time, according to their
respective Revolving Credit Commitments at such time. The failure of any Lender
Party to reimburse any Agent or any Issuing Bank, as the case may be, promptly
upon demand for its ratable share of any amount required to be paid by the
Lender Parties to such Agent or such Issuing Bank, as the case may be, as
provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse such Agent or such Issuing Bank, as the case may be, for
its ratable share of such amount, but no Lender Party shall be responsible for
the failure of any other Lender Party to reimburse such Agent or such Issuing
Bank, as the case may be, for such other Lender Party’s ratable share of such
amount. Without prejudice to the survival of any other agreement of any Lender
Party hereunder, the agreement and obligations of each Lender Party contained in
this Section 8.05 shall survive the payment in full of principal, interest and
all other amounts payable hereunder and under the other Loan Documents.

 

SECTION 8.06. Successor Agents. Any Agent may resign at any time by giving 30
days’ prior written notice thereof to the Lender Parties and the Borrower and
may be removed at any time with or without cause by the Required Lenders;
provided, however, that any removal of the Administrative Agent will not be
effective until it has been replaced as Collateral Agent and it (or its
Affiliate) has been replaced as an Issuing Bank and released from all
obligations in respect thereof. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Agent, which
appointment shall, provided that no Default has occurred and is continuing, be
subject to the consent of the Borrower, such consent not to be unreasonably
withheld or delayed. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent’s giving of notice of resignation or the Required Lenders’
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lender Parties, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $250,000,000 and which appointment
shall, provided that no Default has occurred and is continuing, be subject to
the consent of the Borrower, such consent not to be unreasonably withheld or
delayed. Upon the acceptance of any appointment as an Agent hereunder by a
successor Agent, and, in the case of a successor Collateral Agent, upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such amendments or supplements to the Mortgages and Assignments of
Leases, and such other instruments or notices, as may be necessary or desirable,
or as the Required Lenders may request, in order to continue the perfection of
the Liens granted or purported to be granted by the Collateral Documents, such
successor Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the Loan Documents. If
within 45 days after written notice is given of the retiring Agent’s resignation
or removal under this Section 8.06 no successor Agent shall have been appointed
and shall have accepted such appointment, then on such 45th day (i) the retiring
Agent’s resignation or removal shall become effective, (ii) the retiring Agent
shall thereupon be discharged from its duties and obligations under the Loan
Documents and (iii) the Required Lenders shall thereafter perform all duties of
the retiring Agent under the Loan Documents until such time, if any, as the
Required Lenders appoint a successor Agent as provided above. After any retiring
Agent’s resignation or removal hereunder as an Agent shall have become
effective, the provisions of this Article VIII shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was an Agent under this
Agreement.

 

ARTICLE IX

MISCELLANEOUS

 

SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this
Agreement or the Notes or any other Loan Document, nor consent to any departure
by any Loan Party therefrom, shall in any event be effective unless the same
shall be in writing and signed (or, in the case of

 

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the Collateral Documents, consented to) by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all of the Lenders, do any of
the following at any time: (i) waive any of the conditions specified in Section
3.01 or, in the case of the Initial Extension of Credit, Section 3.02, (ii)
change the number of Lenders or the percentage of (x) the Commitments, (y) the
aggregate unpaid principal amount of the Advances or (z) the aggregate Available
Amount of outstanding Letters of Credit that, in each case, shall be required
for the Lenders or any of them to take any action hereunder, (iii) release the
Borrower with respect to the Obligations or reduce or limit the obligations of
any Subsidiary Guarantor under Article VII or release such Subsidiary Guarantor
or otherwise limit such Subsidiary Guarantor’s liability with respect to the
Guaranteed Obligations, (iv) release any individual Borrowing Base Asset (except
in connection with a Transfer permitted under Section 5.02(d)(ii)(C)) or all or
substantially all of the Collateral, in each case in any transaction or series
of related transactions, or permit the creation, incurrence, assumption or
existence of any Lien on any individual Borrowing Base Asset or all or
substantially all of the Collateral, in each case in any transaction or series
of related transactions, to secure any Obligations other than Obligations owing
to the Secured Parties under the Loan Documents, (v) amend this Section 9.01,
(vi) increase the Commitments of the Lenders or subject the Lenders to any
additional obligations, (vii) reduce the principal of, or interest on, the Notes
or any fees or other amounts payable hereunder, (viii) postpone any date fixed
for any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder or amend Section 2.06, (ix) limit the liability of any
Loan Party under any of the Loan Documents, (x) amend, waive or permit any
departure from the provision in Section 5.01(j)(iii)(A) that permits the
Required Lenders to consent to the addition of a Proposed Borrowing Base Asset
notwithstanding the failure of such Asset to satisfy certain requirements, or
(xi) amend Section 2.16 or otherwise extend the Termination Date, other than as
provided in Section 2.16 in accordance with its terms; provided further that no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Bank or each Issuing Bank, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or obligations of the
Swing Line Bank or of the Issuing Banks, as the case may be, under this
Agreement; and provided further that no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent or the Collateral Agent
in addition to the Lenders required above to take such action, affect the rights
or duties of the Administrative Agent or the Collateral Agent under this
Agreement or the other Loan Documents. Without any limitation to the foregoing,
the Borrower shall be required to obtain such consents as may be required under
Section 5.7 of Intercreditor Agreement, if applicable.

 

SECTION 9.02. Notices, Etc. (a) All notices and other communications provided
for hereunder shall be either (x) in writing (including telecopier or
telegraphic communication) and mailed, telecopied, telegraphed or delivered, (y)
as and to the extent set forth in Section 9.02(b) and in the proviso to this
Section 9.02(a), in an electronic medium and delivered as set forth in Section
9.02(b) or (z) as and to the extent expressly permitted in this Agreement,
transmitted by e-mail, provided that such e-mail shall in all cases include an
attachment (in PDF format or similar format) containing a legible signature of
the person providing such notice, if to the Borrower, at its address at 903
Calle Amanecer, Suite 100, San Clemente, California 92673, Attention: Jon D.
Kline or, if applicable, at jkline@sunstonehotels.com (and in the case of
transmission by e-mail, with a copy by e-mail to Lindsay Monge, at
lmonge@sunstonehotels.com and a copy by U.S. mail to the attention of Jon D.
Kline and Lindsay Monge at 903 Calle Amanecer, Suite 100, San Clemente,
California 92673); if to any Initial Lender, at its Domestic Lending Office or,
if applicable, at the e-mail address specified opposite its name on Schedule I
hereto (and in the case of a transmission by e-mail, with a copy by U.S. mail to
its Domestic Lending Office); if to any other Lender Party, at its Domestic
Lending Office or, if applicable, at the e-mail address specified in the
Assignment and Acceptance pursuant to which it became a Lender Party (and in the
case of a transmission by e-mail, with a copy by U.S. mail to its Domestic
Lending Office); and if to the Initial Issuing Bank, the Administrative Agent or
the Collateral Agent, at its address at Two Penns

 

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Way, New Castle, Delaware 19720, Attention: Elizabeth Weir, Bank Loan
Syndications Department and at its address at 390 Greenwich St., New York, NY
10013, Attention: Blake Gronich, Bank Loan Syndications Department or, if
applicable, at elizabeth.weir@citigroup.com and blake.r.gronich@citigroup.com
(and in the case of a transmission by e-mail, with a copy by U.S. mail to Two
Penns Way, New Castle, Delaware 19720, Attention: Elizabeth Weir, Bank Loan
Syndications Department and to 390 Greenwich St., New York, NY 10013, Attention:
Blake Gronich, Bank Loan Syndications Department) or, as to the Borrower or any
Agent, at such other address as shall be designated by such party in a written
notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telecopied, telegraphed or e-mailed, be effective when deposited in the mails,
telecopied, delivered to the telegraph company or confirmed by e-mail,
respectively, except that notices and communications to the Administrative Agent
pursuant to Article II, III or VIII or to the Collateral Agent under the
Collateral Documents shall not be effective until received by the Administrative
Agent or the Collateral Agent, as the case may be. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of an original executed counterpart
thereof.

 

(b) So long as CNAI is the Administrative Agent, materials required to be
delivered pursuant to Section 5.03(a), (b), (c) and (g) shall be delivered to
the Administrative Agent in an electronic medium in a format acceptable to the
Administrative Agent and the Lender Parties by e-mail at
oploanswebadmin@citigroup.com. The Borrower agrees that the Administrative Agent
may make such materials, as well as any other written information, documents,
instruments and other material relating to the Borrower, any Loan Party, any of
their Subsidiaries or any other materials or matters relating to this Agreement,
the Notes or any of the transactions contemplated hereby (collectively, the
“Communications”) available to the Lender Parties by posting such notices on
Intralinks or a substantially similar electronic transmission system (the
“Platform”). The Borrower acknowledges that (i) the distribution of material
through an electronic medium is not necessarily secure and that there are
confidentiality and other risks associated with such distribution, (ii) the
Platform is provided “as is” and “as available” and (iii) neither the
Administrative Agent nor any of its Affiliates warrants the accuracy, adequacy
or completeness of the Communications or the Platform and each expressly
disclaims liability for errors or omissions in the Communications or the
Platform. No warranty of any kind, express, implied or statutory, including,
without limitation, any warranty of merchantability, fitness for a particular
purpose, non-infringement of third party rights or freedom from viruses or other
code defects, is made by the Administrative Agent or any of its Affiliates in
connection with the Platform.

 

(c) Each Lender Party agrees that notice to it (as provided in the next
sentence) (a “Notice”) specifying that any Communications have been posted to
the Platform shall constitute effective delivery of such information, documents
or other materials to such Lender Party for purposes of this Agreement, provided
that if requested by any Lender Party, the Administrative Agent shall deliver a
copy of the Communications to such Lender Party by e-mail or telecopier. Each
Lender Party agrees (i) to notify the Administrative Agent in writing of such
Lender Party’s e-mail address to which a Notice may be sent by electronic
transmission (including by electronic communication) on or before the date such
Lender Party becomes a party to this Agreement (and from time to time thereafter
to ensure that the Administrative Agent has on record an effective e-mail
address for such Lender Party) and (ii) that any Notice may be sent to such
e-mail address.

 

SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender Party or
the Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

 

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SECTION 9.04. Costs and Expenses. (a) Each Loan Party agrees jointly and
severally to pay on demand (i) all reasonable out-of-pocket costs and expenses
of each Agent in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents (including,
without limitation, (A) all due diligence, collateral review, syndication,
transportation, computer, duplication, appraisal, audit, insurance, consultant,
search, filing and recording fees and expenses, (B) the reasonable fees and
expenses of counsel for such Agent with respect thereto (subject to the terms of
the Fee Letter with respect to counsel fees incurred by the Administrative Agent
through the Closing Date) with respect to advising such Agent as to its rights
and responsibilities (including, without limitation, with respect to reviewing
and advising on any matters required to be completed by the Loan Parties on a
post-closing basis), or the perfection, protection or preservation of rights or
interests, under the Loan Documents, with respect to negotiations with any Loan
Party or with other creditors of any Loan Party or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors’ rights generally and any proceeding ancillary thereto and (C) the
reasonable fees and expenses of counsel for such Agent with respect to the
preparation, execution, delivery and review of any documents and instruments at
any time delivered pursuant to Section 5.01(j)) and (ii) all reasonable
out-of-pocket costs and expenses of each Agent and each Lender Party in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of the Loan Documents, whether in any action, suit or litigation,
or any bankruptcy, insolvency or other similar proceeding affecting creditors’
rights generally (including, without limitation, the reasonable fees and
expenses of counsel for such Agent and each Lender Party with respect thereto).

 

(b) Each Loan Party agrees to indemnify, defend and save and hold harmless each
Indemnified Party from and against, and shall pay on demand, any and all claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) (i) the Facilities, the actual or proposed use of the
proceeds of the Advances or the Letters of Credit, the Loan Documents or any of
the transactions contemplated thereby or (ii) the actual or alleged presence of
Hazardous Materials that could reasonably be expected to require action or
result in claims pursuant to any Environmental Law on any property of any Loan
Party or any of its Subsidiaries or any Environmental Action relating in any way
to any Loan Party or any of its Subsidiaries, except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence or willful misconduct. In the case of an investigation,
litigation or other proceeding to which the indemnity in this Section 9.04(b)
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by any Loan Party, its directors,
shareholders or creditors or an Indemnified Party, whether or not any
Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated by the Loan Documents are consummated. Each Loan Party
also agrees not to assert any claim against any Agent, any Lender Party or any
of their Affiliates, or any of their respective officers, directors, employees,
agents and advisors, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to the
Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit, the Loan Documents or any of the transactions contemplated by
the Loan Documents.

 

(c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made by the Borrower to or for the account of a Lender Party other
than on the last day of the Interest

 

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Period for such Advance, as a result of a payment or Conversion pursuant to
Section 2.06, 2.09(b)(i), 2.10(d) or 2.17(e), acceleration of the maturity of
the Notes pursuant to Section 6.01 or for any other reason, or if the Borrower
fails to make any payment or prepayment of an Advance for which a notice of
prepayment has been given or that is otherwise required to be made, whether
pursuant to Section 2.04, 2.06 or 6.01 or otherwise, the Borrower shall, upon
demand by such Lender Party (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender Party any
amounts required to compensate such Lender Party for any additional losses,
costs or expenses that it may reasonably incur as a result of such payment or
Conversion or such failure to pay or prepay, as the case may be, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Lender
Party to fund or maintain such Advance but excluding any loss of anticipated
profits.

 

(d) If any Loan Party fails to pay when due any costs, expenses or other amounts
payable by it under any Loan Document, including, without limitation, fees and
expenses of counsel and indemnities, such amount may be paid on behalf of such
Loan Party by any Agent or any Lender Party, in its sole discretion.

 

(e) Without prejudice to the survival of any other agreement of any Loan Party
hereunder or under any other Loan Document, the agreements and obligations of
the Borrower and the other Loan Parties contained in Sections 2.10 and 2.12,
Section 7.06 and this Section 9.04 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under any of the
other Loan Documents.

 

SECTION 9.05. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Agent and each Lender Party and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Agent, such Lender Party
or such Affiliate to or for the credit or the account of the Borrower or any
other Loan Party against any and all of the Obligations of the Borrower or such
Loan Party now or hereafter existing under the Loan Documents, irrespective of
whether such Agent or such Lender Party shall have made any demand under this
Agreement or such Note or Notes and although such obligations may be unmatured.
If such deposits are not pledged pursuant to a valid security agreement, the
prior written consent of the Administrative Agent shall be obtained before any
right of set off shall be exercised. Each Agent and each Lender Party agrees
promptly to notify the Borrower or such Loan Party after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Agent
and each Lender Party and their respective Affiliates under this Section 9.05
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) that such Agent, such Lender Party and their respective
Affiliates may have.

 

SECTION 9.06. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower, each Subsidiary Guarantor named on the
signature pages hereto and each Agent and the Administrative Agent shall have
been notified by each Initial Lender and each Initial Issuing Bank that such
Initial Lender or such Initial Issuing Bank, as the case may be, has executed it
and thereafter shall be binding upon and inure to the benefit of the Borrower,
the Subsidiary Guarantors named on the signature pages hereto and each Agent and
each Lender Party and their respective successors and assigns, except that
neither the Borrower nor any other Loan Party shall have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lender Parties.

 

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SECTION 9.07. Assignments and Participations. (a) Each Lender may assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, the Advances owing to it and the Note or Notes held
by it); provided, however, that (i) each such assignment shall be of a uniform,
and not a varying, percentage of all rights and obligations under and in respect
of one or more of the Facilities, (ii) except in the case of an assignment to a
Person that, immediately prior to such assignment, was a Lender, an Affiliate of
any Lender or a Fund Affiliate of any Lender or an assignment of all of a
Lender’s rights and obligations under this Agreement, the aggregate amount of
the Commitments being assigned to such Eligible Assignee pursuant to such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 under each
Facility or an integral multiple of $1,000,000 in excess thereof (or such lesser
amount as shall be approved by the Administrative Agent and, so long as no
Default shall have occurred and be continuing at the time of effectiveness of
such assignment, the Borrower), (iii) each such assignment shall be to an
Eligible Assignee, (iv) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender, an Affiliate of any Lender
or a Fund Affiliate of any Lender and so long as no Default shall have occurred
and be continuing, each assignment shall be made with the consent of the
Borrower, which consent shall not be unreasonably withheld or delayed, (v) no
such assignments shall be permitted (A) until the Administrative Agent shall
have notified the Lender Parties that syndication of the Commitments hereunder
has been completed, without the consent of the Administrative Agent, and (B) at
any other time without the consent of the Administrative Agent (which consent
shall not be unreasonably withheld), and (vi) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and, except if such assignment
is being made by a Lender to an Affiliate or Fund Affiliate of such Lender, a
processing and recordation fee of $3,500.

 

(b) Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance, (i) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the
case may be, hereunder and (ii) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (other than
its rights under Sections 2.10, 2.12, 7.06, 8.05 and 9.04 to the extent any
claim thereunder relates to an event arising prior to such assignment) and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the remaining portion of an assigning
Lender’s or Issuing Bank’s rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).

 

(c) By executing and delivering an Assignment and Acceptance, each Lender Party
assignor thereunder and each assignee thereunder confirm to and agree with each
other and the other parties thereto and hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, any
Loan Document or any other instrument or document furnished pursuant thereto;
(ii) such assigning Lender Party makes no representation or warranty and assumes
no responsibility with respect to the financial condition of any Loan Party or
the performance or observance by any Loan Party of any of its obligations under
any Loan Document or any other instrument or document furnished pursuant
thereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and

 

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Acceptance; (iv) such assignee will, independently and without reliance upon the
Administrative Agent, such assigning Lender Party or any other Lender Party and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Documents as are delegated to the Administrative Agent
by the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Lender or Issuing
Bank, as the case may be.

 

(d) The Administrative Agent shall maintain at its address referred to in
Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lender Parties and the Commitment under each Facility of, and principal amount
of the Advances owing under each Facility to, each Lender Party from time to
time (the “Register”). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lender Parties may treat each Person whose name is
recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or the
Administrative Agent or any Lender Party at any reasonable time and from time to
time upon reasonable prior notice.

 

(e) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender Party and an assignee, together with any Note or Notes subject to such
assignment, the Administrative Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit D hereto, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower and
each other Agent. In the case of any assignment by a Lender, within five
Business Days after its receipt of such notice, the Borrower, at its own
expense, shall, if requested by the applicable Lender, execute and deliver to
the Administrative Agent in exchange for the surrendered Note or Notes a new
Note to the order of such Eligible Assignee in an amount equal to the Commitment
assumed by it under each Facility pursuant to such Assignment and Acceptance
and, if any assigning Lender has retained a Commitment hereunder under such
Facility, a new Note to the order of such assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Note or Notes, if any, shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit A hereto.

 

(f) Each Issuing Bank may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under the undrawn portion of its Letter of
Credit Commitment at any time; provided, however, that (i) except in the case of
an assignment to a Person that immediately prior to such assignment was an
Issuing Bank or an assignment of all of an Issuing Bank’s rights and obligations
under this Agreement, the amount of the Letter of Credit Commitment of the
assigning Issuing Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000 and shall be in an
integral multiple of $1,000,000 in excess thereof, (ii) each such assignment
shall be to an Eligible Assignee and (iii) the parties to each such assignment
shall execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $3,500, provided that such fee shall not be
payable if the assigning Issuing Bank is making such assignment simultaneously
with the assignment in its capacity as a Lender of all or a portion of its
Revolving Credit Commitment to the same Eligible Assignee.

 

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(g) Each Lender Party may sell participations to one or more Persons (other than
any Loan Party or any of its Affiliates) in or to all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Advances owing to it and the Note or Notes (if
any) held by it); provided, however, that (i) such Lender Party’s obligations
under this Agreement (including, without limitation, its Commitments) shall
remain unchanged, (ii) such Lender Party shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
Party shall remain the holder of any such Note for all purposes of this
Agreement, (iv) the Borrower, the Administrative Agent and the other Lender
Parties shall continue to deal solely and directly with such Lender Party in
connection with such Lender Party’s rights and obligations under this Agreement,
(v) no participant under any such participation shall have any right to approve
any amendment or waiver of any provision of any Loan Document, or any consent to
any departure by any Loan Party therefrom, except to the extent that such
amendment, waiver or consent would reduce the principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, or postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or release
all or substantially all of the Collateral and (vi) if, at the time of such
sale, such Lender Party was entitled to payments under Section 2.12(a) in
respect of United States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to such participant on such date; provided that such participant
complies with the requirements of Section 2.12(e).

 

(h) Any Lender Party may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.07, disclose to
the assignee or participant or proposed assignee or participant any information
relating to the Borrower furnished to such Lender Party by or on behalf of the
Borrower; provided, however, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information received by it from such Lender
Party.

 

(i) Notwithstanding any other provision set forth in this Agreement, any Lender
Party may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.

 

SECTION 9.08. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of an original executed counterpart of this Agreement.

 

SECTION 9.09. No Liability of the Issuing Banks. The Borrower assumes all risks
of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither any Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by such Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrower shall have
a

 

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claim against such Issuing Bank, and such Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) such Issuing Bank’s
willful misconduct or gross negligence as determined in a final, non-appealable
judgment by a court of competent jurisdiction in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) such Issuing Bank’s willful failure to make lawful payment under
a Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, such Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.

 

SECTION 9.10. Confidentiality. Neither the Administrative Agent nor any Lender
Party shall disclose any Confidential Information to any Person without the
consent of the Borrower, other than (a) to such Administrative Agent’s or such
Lender Party’s Affiliates and their officers, directors, employees, agents and
advisors and to actual or prospective Eligible Assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process, (c) as requested or required by any state,
Federal or foreign authority or examiner regulating such Lender Party and (d) to
any rating agency when required by it, provided that, prior to any such
disclosure, such rating agency shall undertake to preserve the confidentiality
of any Confidential Information relating to the Loan Parties received by it from
such Lender Party.

 

SECTION 9.11. Release of Collateral. Upon the sale, lease, transfer or other
disposition of any item of Collateral of any Loan Party (including, without
limitation, as a result of the sale, in accordance with the terms of the Loan
Documents, of the Loan Party that owns such Collateral and any Transfers
pursuant to Section 5.02(d)(ii)(B) or (C)) in accordance with the terms of the
Loan Documents, the Collateral Agent will, at the Borrower’s expense, execute
and deliver to such Loan Party such documents as such Loan Party may reasonably
request to evidence the release of such item of Collateral from the assignment
and security interest granted under the Collateral Document in accordance with
the terms of the Loan Documents.

 

SECTION 9.12. Patriot Act Notification. Each Lender and the Administrative Agent
(for itself and not on behalf of any Lender) hereby notifies the Loan Parties
that pursuant to the requirements of the USA Patriot Act (Title III of Pub.L.
107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required
to obtain, verify and record information that identifies each Loan Party, which
information includes the name and address of such Loan Party and other
information that will allow such Lender or the Administrative Agent, as
applicable, to identify such Loan Party in accordance with the Patriot Act. The
Parent and the Borrower shall, and shall cause each of their Subsidiaries to,
provide, to the extent commercially reasonable, such information and take such
actions as are reasonably requested by the Administrative Agent or any Lenders
in order to assist the Administrative Agent and the Lenders in maintaining
compliance with the Patriot Act.

 

SECTION 9.13. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.

 

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(b) Each of the parties hereto irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any of the other Loan Documents
to which it is a party in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

SECTION 9.14. Governing Law. This Agreement and the Notes shall be governed by,
and construed in accordance with, the laws of the State of New York.

 

SECTION 9.15. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE OTHER LOAN
PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDER PARTIES IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES, THE LETTERS OF CREDIT OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

 

[Balance of page intentionally left blank]

 

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

 

[Signature pages distributed/posted separately]

 

Signature Page

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SCHEDULE I

 

COMMITMENTS AND APPLICABLE LENDING OFFICES

 

[to be posted separately]

 

Sch. I

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

SCHEDULE II

 

BORROWING BASE ASSETS

 

[to be posted separately]

 

Sch. II