Exhibit 10.12.2

 

EXECUTION COPY

$75,000,000

 

TERM CREDIT AGREEMENT

 

Dated as of October 26, 2004

 

among

 

SUNSTONE HOTEL PARTNERSHIP, LLC,

 

as Borrower,

 

SUNSTONE HOTEL INVESTORS, INC.,

 

as Parent Guarantor,

 

THE SUBSIDIARY GUARANTORS NAMED HEREIN,

 

as Subsidiary Guarantors,

 

THE INITIAL LENDERS NAMED HEREIN,

 

as Initial Lenders,

 

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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T A B L E  O F  C O N T E N T S

 

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

   20

SECTION 1.03. Accounting Terms

   20

ARTICLE II

AMOUNTS AND TERMS OF THE TERM ADVANCES

    

SECTION 2.01. The Term Advance

   20

SECTION 2.02. Making the Term Advances

   20

SECTION 2.03. Repayment of Term Advances

   21

SECTION 2.04. Mandatory Termination or Reduction of the Commitments

   21

SECTION 2.05. Prepayments

   21

SECTION 2.06. Interest

   23

SECTION 2.07. Fees

   24

SECTION 2.08. Conversion of Term Advances

   24

SECTION 2.09. Increased Costs, Etc.

   24

SECTION 2.10. Payments and Computations

   26

SECTION 2.11. Taxes

   27

SECTION 2.12. Sharing of Payments, Etc.

   29

SECTION 2.13. Use of Proceeds

   30

SECTION 2.14. Evidence of Debt

   30

ARTICLE III

CONDITIONS OF LENDING

    

SECTION 3.01. Conditions Precedent to Borrowing

   31

SECTION 3.02. Determinations Under Section 3.01

   35

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

    

SECTION 4.01. Representations and Warranties of the Loan Parties

   35

ARTICLE V

COVENANTS OF THE LOAN PARTIES

    

SECTION 5.01. Affirmative Covenants

   41

SECTION 5.02. Negative Covenants

   44

SECTION 5.03. Reporting Requirements

   51

SECTION 5.04. Financial Covenants

   54

 

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ARTICLE VI

EVENTS OF DEFAULT

    

SECTION 6.01. Events of Default

   54

ARTICLE VII

GUARANTY

    

SECTION 7.01. Guaranty; Limitation of Liability

   57

SECTION 7.02. Guaranty Absolute

   58

SECTION 7.03. Waivers and Acknowledgments

   59

SECTION 7.04. Subrogation

   60

SECTION 7.05. Guaranty Supplements

   61

SECTION 7.06. Indemnification by Guarantors

   61

SECTION 7.07. Subordination

   61

SECTION 7.08. Continuing Guaranty

   62

ARTICLE VIII

THE AGENTS

    

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

   62

SECTION 8.02. Agents’ Reliance, Etc.

   63

SECTION 8.03. CNAI and Affiliates

   64

SECTION 8.04. Lender Credit Decision

   64

SECTION 8.05. Indemnification by Lenders

   64

SECTION 8.06. Successor Agents

   64

ARTICLE IX

MISCELLANEOUS

    

SECTION 9.01. Amendments, Etc.

   65

SECTION 9.02. Notices, Etc.

   66

SECTION 9.03. No Waiver; Remedies

   67

SECTION 9.04. Costs and Expenses

   67

SECTION 9.05. Right of Set-off

   68

SECTION 9.06. Binding Effect

   69

SECTION 9.07. Assignments and Participations

   69

SECTION 9.08. Execution in Counterparts

   71

SECTION 9.09. Confidentiality

   71

SECTION 9.10. Release of Collateral

   72

SECTION 9.11. Patriot Act Notification

   72

SECTION 9.12. Jurisdiction, Etc.

   72

SECTION 9.13. Governing Law

   72

SECTION 9.14. WAIVER OF JURY TRIAL

   72

 

SCHEDULES

 

Schedule I

  -   

Commitments and Applicable Lending Offices

Schedule 4.01(b)

  -   

Subsidiaries

Schedule 4.01(d)

  -   

Authorizations, Approvals, Actions, Notices and Filings

Schedule 4.01(f)

  -   

Disclosed Litigation

 

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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 F

  -     

Form of Security Agreement

Exhibit G

        

Form of Intercreditor Agreement

 

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TERM CREDIT AGREEMENT

 

TERM 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
Guarantor”), 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”), CITICORP NORTH
AMERICA, INC. (“CNAI”), as administrative agent (together with any successor
administrative agent appointed pursuant to Article VIII, the “Administrative
Agent”) for the Lenders (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 Guarantor most recently ended for which financial statements are
required to be delivered to the Lenders 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 Guarantor 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.

 

“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 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 Lenders.

 

“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.

 

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“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, such Lender’s
Domestic Lending Office in the case of a Base Rate Advance and such Lender’s
Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

 

“Applicable Margin” means 3% per annum for Base Rate Advances and 4% per annum
for Eurodollar Rate Advances.

 

“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 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.

 

“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) ½ of 1% per annum above
the Federal Funds Rate.

 

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“Base Rate Advance” means a Term Advance that bears interest as provided in
Section 2.06(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 Term Advances of the
same Type made by the Lenders.

 

“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 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.

 

“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
Guarantor (or other securities convertible into such Voting Interests)
representing 35% or more of the combined voting power of all Voting Interests of
the Parent Guarantor; 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 Guarantor shall cease

 

3

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for any reason to constitute a majority of the board of directors of the Parent
Guarantor; 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 Guarantor,
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 Guarantor ceases to be the sole managing member of the
Borrower; or (e) the Parent Guarantor ceases to be the legal and beneficial
owner of more than 50% of the membership interests of the Borrower; or (f) the
Parent Guarantor 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” 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.

 

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

 

“Collateral Documents” means the Security Agreement 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.

 

“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 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 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

 

4

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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 Term
Advances of one Type into Term Advances of the other Type pursuant to Section
2.06(d), 2.08 or 2.09.

 

“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.

 

“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

 

5

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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 Guarantor 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 Guarantor 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 Guarantor or any of its Subsidiaries during the
consecutive four fiscal quarters of the Parent Guarantor most recently ended for
which financial statements are required to be delivered to the Lenders 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 Guarantor 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.

 

“Debt Issuance” by a Person shall mean the incurrence or issuance by such Person
of obligations for or in respect of Debt for Borrowed Money, whether pursuant to
a loan or credit agreement, by the issuance of notes, bonds, debentures or
otherwise, provided that the term “Debt Issuance” shall not include Debt for
Borrowed Money incurred under the Revolving Loan Documents or any agreements in
respect of any Non-Recourse Debt of such Person.

 

“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.

 

“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 Guarantor and its
Subsidiaries.

 

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

 

“Domestic Lending Office” means, with respect to any Lender, the office of such
Lender 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, as the case may be, or such other office of such Lender as such Lender
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 Guarantor and its Subsidiaries determined on a
Consolidated

 

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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 Guarantor 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 Guarantor 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 Guarantor 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 Guarantor 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) a Lender; (b) an Affiliate or Fund Affiliate of a
Lender; (c) 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; (d) 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; (e) 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; (f) the central bank of
any country that is a member of the OECD; (g) 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
otherwise investing in commercial loans in the ordinary course of its business
and having total assets in excess of $500,000,000; and (h) any other Person
approved by the Administrative Agent, 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,

 

7

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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 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, the office of
such Lender 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 (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Administrative Agent.

 

8

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“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 a Term Advance that bears interest as provided
in Section 2.06(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.

 

“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 time 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.

 

9

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“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 Guarantor and its Consolidated
Subsidiaries ending on December 31 in any calendar year.

 

“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 Guarantor and its
Subsidiaries for the consecutive four fiscal quarters of the Parent Guarantor
most recently ended for which financial statements are required to be delivered
to the Lenders 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
Guarantor 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 Guarantor 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 Guarantor ending September 30, 2004 computed on a pro
forma basis; provided further, that calculations which pertain to the fiscal
quarters of the Parent Guarantor 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
Guarantor of membership units in the Borrower from the Contributing Entities in
exchange for consideration of cash and the Parent Guarantor’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.

 

10

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“Funds From Operations” means, with respect to the Parent Guarantor, 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.

 

“Guarantors” means the Parent Guarantor and the Subsidiary Guarantors.

 

“Guaranty” means the Guaranty by the 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.

 

“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 or an Affiliate of a Lender 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.

 

“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 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.

 

11

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

 

“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.

 

“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.

 

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

 

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

 

12

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“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 Guarantor
and any of its Subsidiaries by (b) the total book value of all outstanding
Equity Interests in such Joint Venture at such time.

 

“Lenders” means the Initial Lenders 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.

 

“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
Guarantor for which financial statements are required to be delivered to the
Lenders 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 Guaranty Supplement, (e) the Collateral Documents, (f) each Secured
Hedge Agreement, and (g) the Intercreditor Agreement, in each case, as amended.

 

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

 

“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 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 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.

 

13

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“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
$50,000,000 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.

 

“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 Asset Sales Proceeds” has the meaning specified in Section 5.02(e).

 

“Net Available Proceeds” means, in the case of any Debt Issuance, the aggregate
amount of all cash received by the Borrower or any of its Subsidiaries in
respect of such Debt Issuance net of reasonable expenses of the Borrower or such
Subsidiary in connection therewith (including, as applicable, any reasonable
underwriting or other customary commissions and reasonable legal, advisory and
other fees and expenses associated with such Debt Issuance).

 

“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 any Property-Level Subsidiary 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)

 

14

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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 Term 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).

 

“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 (a) the obligation to pay principal,
interest, 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, 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 Taxes” has the meaning specified in Section 2.11(b).

 

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

 

“Patriot Act” has the meaning specified in Section 9.11.

 

“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

 

15

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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.

 

“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 Issuance Date” has the meaning specified in Section 2.05(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 Term Commitment at such time (or, if the Commitments shall have
been terminated pursuant to Section 2.04 or 6.01, such Lender’s Term Commitment
as in effect immediately prior to such termination) and the denominator of which
is the Term Facility at such time (or, if the Term Commitments shall have been
terminated pursuant to Section 2.04 or 6.01, the Term Facility as in effect
immediately prior to such termination).

 

“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.

 

“Reduction Amount” has the meaning specified in Section 2.05(b).

 

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“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 Guarantor’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.

 

“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 aggregate principal amount of the Term Advances outstanding at such time.

 

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

 

“Revolving Loan Documents” means the “Loan Documents” executed and delivered on
the date hereof pursuant to that certain Revolving Credit Agreement dated as of
even date herewith among the Borrower, as borrower, the Parent Guarantor, 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.

 

“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 Lenders and the Hedge Banks.

 

17

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“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).

 

“Senior Debt” means all Consolidated Debt of the Parent Guarantor and its
Subsidiaries (other than Subordinated Debt) as at the end of the most recently
ended fiscal quarter of the Parent Guarantor for which financial statements are
required to be delivered to the Lenders 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 Senior
Debt to EBITDA as at the end of the most recently ended fiscal quarter of the
Parent Guarantor for which financial statements are required to be delivered to
the Lenders 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.

 

“Subordinated Debt” means any Debt of any Loan Party 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

 

18

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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.

 

“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.

 

“Taxes” has the meaning specified in Section 2.11(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 Advance” has the meaning specified in Section 2.01.

 

“Term 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
“Term Commitment” or (b) if such Lender has entered into one or more Assignment
and Acceptances, the amount set forth for such Lender in the Register maintained
by the Administrative Agent pursuant to Section 9.07(d) as such Lender’s “Term
Commitment”, as such amount may be reduced at or prior to such time pursuant to
Section 2.04.

 

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

 

“Termination Date” means the earlier of (a) the fourth anniversary of the
Closing Date and (b) the date of termination in whole of the Term Commitments
pursuant to Section 2.04 or 6.01.

 

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

 

“Total 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 Guarantor for which financial statements are required to be delivered to
the Lenders pursuant to Section 5.03(b) or (c), as the case may be.

 

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

 

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

 

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“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.

 

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 TERM ADVANCES

 

SECTION 2.01. The Term Advance. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make a single advance (a “Term Advance”) to
the Borrower on the Closing Date in an amount equal to such Lender’s Term
Commitment. Such Borrowing shall consist of Term Advances of the same Type made
simultaneously by the Lenders ratably according to their Term Commitments.
Amounts borrowed under this Section 2.01 and repaid or prepaid may not be
reborrowed.

 

SECTION 2.02. Making the Term Advances. (a) Each 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 Term 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 Term 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.

 

20

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(b) Anything in subsection (a) above to the contrary notwithstanding, the
Borrower may not select Eurodollar Rate Advances for any Borrowing made on the
Closing Date 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 2.06(d)(ii), 2.08 or 2.09
and (ii) there may not be more than 10 separate Borrowings outstanding at any
time

 

(c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower.

 

(d) Unless the Administrative Agent shall have received notice from a Lender
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 2.06 to Term 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 Term Advance as part of such
Borrowing for all purposes.

 

(e) The failure of any Lender to make the Term 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 Term Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Term
Advance to be made by such other Lender on the date of any Borrowing.

 

SECTION 2.03. Repayment of Term 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 Term Advances then
outstanding.

 

SECTION 2.04. Mandatory Termination or Reduction of the Commitments. (a) Upon
the making of the Term Advances on the Closing Date and from time to time
thereafter upon each repayment or prepayment of the Term Advances, the aggregate
Term Commitments of the Lenders shall be automatically and permanently reduced,
on a pro rata basis, by an amount equal to the amount by which the aggregate
Term Commitments immediately prior to such reduction exceed the aggregate unpaid
principal amount of the Term Advances outstanding after giving effect to such
repayment or prepayment of the Term Advances.

 

(b) The Term Facility shall be automatically and permanently reduced, on a pro
rata basis, on each date on which prepayment thereof is required to be made
pursuant to Section 2.05(b)(i) or (ii) in an amount equal to the Reduction
Amount, provided that each such reduction of the Term Facility shall be made
ratably among the Lenders in accordance with their Term Commitments.

 

SECTION 2.05. Prepayments. (a) Optional. The Borrower may, during the periods
set forth below and upon payment to the Administrative Agent for the account of
the Lenders of an amount equal to a percentage, determined as set forth below,
of the principal amount of the Term Advances being prepaid:

 

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Period

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

   Percentage

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

 

Closing Date through 4/26/05

   1.50 %

4/27/05 through 10/26/05

   1.00 %

10/27/05 through 4/26/06

   0.50 %

Thereafter

   0.00 %

 

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 Term Advances 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
Term 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
Term Advance, the Borrower shall also pay any amounts owing pursuant to Section
9.04(c).

 

(b) Mandatory. (i) In accordance with Section 5.02(e), the Borrower shall,
within 12 months following the date of receipt of any Net Asset Sales Proceeds
by the Borrower or any of its Subsidiaries, prepay an aggregate principal amount
of the Term Advances, in an aggregate amount equal to the amount of such Net
Asset Sales Proceeds that have not be reinvested as permitted under Section
5.02(f).

 

(ii) In connection with each Debt Issuance by the Borrower or any of its
Subsidiaries to any Person other than any Loan Party, the Borrower shall offer,
by written notice to the Administrative Agent (which shall promptly deliver a
copy thereof to each Lender) given no sooner than 60 days prior to the proposed
date of such Debt Issuance specified in such notice (the “Proposed Issuance
Date”), to prepay the Term Advances in an aggregate amount equal to the Net
Available Proceeds of such Debt Issuance on the Proposed Issuance Date. The
Borrower shall make such prepayment on the Proposed Issuance Date subject to the
following sentence. Any Lender that wishes to decline any such prepayment in
whole or in part shall deliver a notice to such effect to the Administrative
Agent (which shall promptly deliver a copy thereof to the Borrower), specifying
the amount of such prepayment so declined, promptly and in any event not later
than the close of business on the date ten Business Days after it receives
notice of such offer. On the Proposed Issuance Date, the prepayment to be made
to each Lender that has so delivered a notice to the Administrative Agent shall
be reduced by the amount so specified by such Lender in such notice. The amount
of any prepayment so declined may be retained by the Borrower.

 

(iii) In the case of prepayments of the Term Facility required pursuant to
clauses (i) and (ii) above, the amount remaining (if any) after the prepayment
in full of the Term Advances then outstanding (the “Reduction Amount”) may be
retained by the Borrower and the Term Facility shall be permanently reduced as
set forth in Section 2.04(b).

 

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(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 2.06. Interest. (a) Scheduled Interest. The Borrower shall pay interest
on the unpaid principal amount of each Term Advance owing to each Lender from
the date of such Term 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 Term 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 Term Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Term Advance to the sum of (A) the Eurodollar Rate for
such Interest Period for such Term 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 Term 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 Term 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 Term 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.

 

(c) Notice of Interest Period and Interest Rate. The Administrative Agent shall
give prompt 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,

 

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(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 Term Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance (or if such
Term 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 Term 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 2.07. 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.

 

SECTION 2.08. Conversion of Term 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 2.06 and 2.09,
Convert all or any portion of the Term Advances of one Type into Term 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(b), no Conversion of any Term Advances
shall result in more separate Borrowings than permitted under Section 2.02(b)
and each Conversion of Term Advances shall be made ratably among the Lenders in
accordance with their Commitments. Each such notice of Conversion shall, within
the restrictions specified above, specify (i) the date of such Conversion, (ii)
the Term Advances to be Converted and (iii) if such Conversion is into
Eurodollar Rate Advances, the duration of the initial Interest Period for such
Term 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 Term 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 Term Advances into, Eurodollar
Rate Advances shall be suspended.

 

SECTION 2.09. 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 of
agreeing to make or of making, funding or maintaining Eurodollar Rate Advances
(excluding, for purposes of this

 

24

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Section 2.09, any such increased costs resulting from (y) Taxes or Other Taxes
(as to which Section 2.11 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 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 (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost; provided, however, that a Lender claiming
additional amounts under this Section 2.09(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, be otherwise disadvantageous to such Lender. A certificate as to
the amount of such increased cost, submitted to the Borrower by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.

 

(b) If any Lender 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 or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender’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 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,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender in the light of such circumstances, to the extent that
such Lender reasonably determines such increase in capital to be allocable to
the existence of such Lender’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 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 Term
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 Term 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 legal and regulatory restrictions) to designate a
different Eurodollar Lending Office if the

 

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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 2.10. 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 2.12), 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, to such Lenders for the account of their
respective Applicable Lending Offices ratably in accordance with the amounts of
such respective Obligations then payable to such Lenders and (ii) if such
payment by the Borrower is in respect of any Obligation then payable hereunder
to one Lender, to such Lender for the account of its Applicable Lending Office,
in each case to be applied in accordance with the terms of this Agreement. 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 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 and each of its Affiliates, if
and to the extent payment owed to such Lender 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 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 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 or fee 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.

 

(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 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 on such due date an amount equal to
the amount then due such Lender. If and to the extent the Borrower shall not
have so made such payment in full to the Administrative Agent, each such Lender
shall repay to the Administrative Agent forthwith on demand

 

26

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such amount distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the date such
Lender 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 Lenders 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
Lenders 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 indemnification payments, costs and
expenses that are due and payable to the Lenders under Section 9.04, Section 14
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;

 

(iii) third, to the payment of all of the amounts that are due and payable to
the Administrative Agent and the Lenders under Sections 2.09 and 2.11 on such
date, ratably based upon the respective aggregate amounts thereof owing to the
Administrative Agent and the Lenders on such date;

 

(iv) fourth, 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 Lenders under Section
2.06(b) on such date, ratably based upon the respective aggregate amounts of all
such interest owing to the Administrative Agent and the Lenders on such date;

 

(v) fifth, to the payment of all of the accrued and unpaid interest on the Term
Advances that is due and payable to the Administrative Agent and the Lenders
under Section 2.06(a) on such date, ratably based upon the respective aggregate
amounts of all such interest owing to the Administrative Agent and the Lenders
on such date;

 

(vi) sixth, to the payment of the principal amount of all of the outstanding
Term Advances that are due and payable to the Lenders on such date, ratably
based upon the respective aggregate amounts of all such principal the Lenders on
such date; and

 

(vii) seventh, 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 2.11. Taxes. (a) Any and all payments by the Borrower hereunder or under
the Notes shall be made, in accordance with Section 2.10, 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 and the Administrative Agent, taxes that
are

 

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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 or the Administrative Agent, as the case may be, is organized or any
political subdivision thereof and, in the case of each Lender, 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’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 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 2.11) such Lender 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 will, upon
request of the Borrower (such request not to be unduly burdensome to such Lender
and with respect to information concerning such Lender), provide information
necessary to avoid the imposition of such Other Taxes. Nothing herein shall
oblige a Lender to disclose any information that it reasonably considers to be
confidential.

 

(c) The Borrower shall indemnify each Lender and the Administrative Agent for
and hold them harmless against the full amount of Taxes and Other Taxes, and for
the full amount of taxes of any kind imposed by any jurisdiction on amounts
payable under this Section 2.11, imposed on or paid by such Lender 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 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 2.11, the terms “United States” and “United States person” shall have
the meanings specified in Section 7701 of the Internal Revenue Code.

 

(e) Each Lender 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, and on the date of the Assignment
and Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter as requested in writing by the Borrower
(but only so long thereafter as such Lender 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

 

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appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that such Lender 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 at the time such Lender 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 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 becomes a party to this Agreement, the
Lender assignor was entitled to payments under subsection (a) of this Section
2.11 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 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 reasonably considers to be confidential, such Lender 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 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 shall not be entitled to
indemnification under subsection (a) or (c) of this Section 2.11 with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Lender become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.

 

(g) Any Lender claiming any additional amounts payable pursuant to this Section
2.11 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, be otherwise materially
disadvantageous to such Lender.

 

(h) If any Lender 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 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 or the Administrative Agent, as the case may
be, pursuant to this Section 2.11, then such Lender or the Administrative Agent,
as applicable, shall pay such amount, net of any expenses incurred by such
Lender 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 or the Administrative Agent and (ii) neither the
Administrative Agent nor any Lender 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 2.12. Sharing of Payments, Etc. If any Lender shall obtain at any time
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise, other

 

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than as a result of an assignment pursuant to Section 9.07) (a) on account of
Obligations due and payable to such Lender 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 at such time to (ii)
the aggregate amount of the Obligations due and payable to all Lenders hereunder
and under the Notes at such time) of payments on account of the Obligations due
and payable to all Lenders hereunder and under the Notes at such time obtained
by all the Lenders at such time or (b) on account of Obligations owing (but not
due and payable) to such Lender 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 at such time to (ii) the aggregate amount
of the Obligations owing (but not due and payable) to all Lenders hereunder and
under the Notes at such time) of payments on account of the Obligations owing
(but not due and payable) to all Lenders hereunder and under the Notes at such
time obtained by all of the Lenders at such time, such Lender shall forthwith
purchase from the other Lenders 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 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, such purchase from
each other Lender shall be rescinded and such other Lender shall repay to the
purchasing Lender the purchase price to the extent of such Lender’s ratable
share (according to the proportion of (i) the purchase price paid to such Lender
to (ii) the aggregate purchase price paid to all Lenders) of such recovery
together with an amount equal to such Lender’s ratable share (according to the
proportion of (i) the amount of such other Lender’s required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing an
interest or participating interest from another Lender pursuant to this Section
2.12 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 were the
direct creditor of the Borrower in the amount of such interest or participating
interest, as the case may be.

 

SECTION 2.13. Use of Proceeds. The proceeds of the Term Advances shall be
available (and the Borrower agrees that it shall use such proceeds) 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 Term Facility and the other transactions contemplated by
the Loan Documents.

 

SECTION 2.14. Evidence of Debt. (a) Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
the Borrower to such Lender resulting from each Term Advance owing to such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender 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 to evidence
(whether for purposes of pledge, enforcement or otherwise) the Term Advances
owing to, or to be made by, such Lender, the Borrower shall promptly execute and
deliver to such Lender, with a copy to the Administrative Agent, a Note, in
substantially the form of Exhibit A hereto, payable to the order of such Lender
in a principal amount equal to the Term Commitment of such Lender. 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, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, the Type of Term 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

 

30

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principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder, and (iv) the amount of any sum received by
the Administrative Agent from the Borrower hereunder and each Lender’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 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 and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Administrative Agent or such Lender
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.

 

ARTICLE III

CONDITIONS OF LENDING

 

SECTION 3.01. Conditions Precedent to Borrowing. The obligation of each Lender
to make a Term Advance on the Closing Date is subject to the satisfaction of the
following conditions precedent on or before such date:

 

(a) The Administrative Agent shall have received on or before the Closing Date
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:

 

(i) A Note payable to the order of each Lender to the extent requested by such
Lender in accordance with Section 2.14.

 

(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 party thereto, together with:

 

(A) acknowledgment copies of proper financing statements, duly filed on or
before the Closing Date 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 Closing Date,
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, and

 

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(D) 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).

 

(iii) 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.

 

(iv) 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 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.

 

(v) 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.

 

(vi) 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 Closing Date), 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

 

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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 Closing Date, (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 Closing Date and
(E) the absence of any event occurring and continuing, or resulting from the
Borrowing, that constitutes a Default.

 

(vii) 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.

 

(viii) Such financial, business and other information regarding each Loan Party
and its Subsidiaries as the Lenders 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
Lenders’ due diligence review reveals material changes since such financial
statements, as of a later date within 45 days of the Closing Date).

 

(ix) 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 Lenders.

 

(x) 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 through the Administrative Agent may reasonably request.

 

(xi) 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 through the Administrative Agent may reasonably request.

 

(xii) 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 through the Administrative Agent may reasonably
request.

 

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

 

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

 

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(xv) A Notice of Borrowing.

 

(b) The Lenders 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 Lenders 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 Guarantor 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 Guarantor shall have
been listed on the New York Stock Exchange.

 

(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 Lenders) and shall remain in effect, and no law or regulation shall be
applicable in the reasonable judgment of the Lenders 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 Lenders 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 following statements shall be true and the Administrative Agent shall
have received for the account of such Lender, a certificate signed by a duly
authorized officer of the Borrower, dated the Closing Date stating that:

 

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(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 and (B) the application of the proceeds therefrom, as though made on
and as of such date; and

 

(ii) no Default or Event of Default has occurred and is continuing, or would
result from (A) such Borrowing or (B) from the application of the proceeds
therefrom;

 

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

 

SECTION 3.02. Determinations Under Section 3.01. For purposes of determining
compliance with the conditions specified in Section 3.01, each Lender 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 Lenders unless an officer of the
Administrative Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from such Lender prior to the Closing Date
specifying its objection thereto and such Lender shall not have made available
to the Administrative Agent such Lender’s ratable portion of such Borrowing on
the Closing Date.

 

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 Guarantor
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 Guarantor have been validly issued, are fully paid and non-assessable,
and all membership Equity Interests in the Borrower that are owned by the Parent
Guarantor are owned free and clear of all Liens.

 

(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

 

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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 Loan 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 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.

 

(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.

 

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(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 Guarantor, copies of which have been furnished
to each Lender, 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 Guarantor and its Subsidiaries
delivered to the Lenders 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 Guarantor’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 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 Term Advance 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.

 

(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

 

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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 Term Advances, 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 the
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.

 

(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

 

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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 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.

 

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(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 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
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 Lenders, 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.

 

(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.

 

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ARTICLE V

COVENANTS OF THE LOAN PARTIES

 

SECTION 5.01. Affirmative Covenants. So long as any Term Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid or any
Lender 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 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(d) or (e) below).

 

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(f) Visitation Rights. At any reasonable time and from time to time, permit any
of the Agents or Lenders, 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, (x) 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 and (y) to the extent not otherwise prohibited by an Excluded
Subsidiary Agreement, cause each direct and indirect parent of such Excluded
Subsidiary (if it has not already done so) and such Excluded Subsidiary to duly
execute and deliver, to the Administrative Agent a Security Agreement Supplement
in substantially the form of Exhibit A to the Security Agreement, or such other
security agreement supplement in form and substance satisfactory to the
Administrative Agent, securing 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, 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 (1) a copy of such agreement in respect of such
Non-Recourse Debt and (2) 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.

 

(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, or granting security in respect 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

 

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Debt not prohibited hereunder (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 (1) 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 (2) to the extent not
otherwise prohibited by an Excluded Subsidiary Agreement, a Security Agreement
Supplement in substantially the form of Exhibit A to the Security Agreement, or
such other security agreement supplement in form and substance satisfactory to
the Administrative Agent, securing 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, or granting
security in respect 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) 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, 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 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 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
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 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.

 

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(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 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
Guarantor and its Subsidiaries exceeds (B) all Consolidated Debt for Borrowed
Money of the Parent Guarantor 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 Guarantor, 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.

 

(p) NYSE Listing. In the case of the Parent Guarantor, 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 Term Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid or any
Lender shall have any Commitment hereunder, no Loan Party will, at any time:

 

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(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 Guarantor) 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;

 

(vii) Liens securing Non-Recourse Debt, provided that no such Lien shall extend
to or cover any 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) Debt. Create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Debt, except:

 

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(i) in the case of the Borrower, Recourse Debt that ranks pari passu with the
Facility, provided that the proceeds of such Recourse Debt shall be applied in
accordance with Section 2.05(b)(ii);

 

(ii) in the case of any Loan Party or any Subsidiary of a Loan Party, Debt owed
to any other Loan Party or any wholly-owned Subsidiary of any Loan Party,
provided that, in each case, such Debt (y) shall be on terms acceptable to the
Administrative Agent and (z) shall be evidenced by promissory notes in form and
substance satisfactory to the Administrative Agent, which promissory notes shall
(unless payable to the Borrower) by their terms be subordinated to the
Obligations of the Loan Parties under the Loan Documents;

 

(iii) in the case of each Loan Party (other than the Parent Guarantor) and its
Subsidiaries,

 

(A) Debt under the Loan Documents and the Revolving Loan Documents,

 

(B) Debt secured by Liens permitted by Section 5.02(a)(iv),

 

(C) (1) Capitalized Leases not to exceed in the aggregate $5,000,000 at any time
outstanding, and (2) in the case of Capitalized Leases to which any Subsidiary
of a Loan Party is a party, Debt of such Loan Party of the type described in
clause (i) of the definition of “Debt” guaranteeing the Obligations of such
Subsidiary under such Capitalized Leases,

 

(D) the Surviving Debt described on Schedule 4.01(o) hereto and any Debt
extending, refunding or refinancing such Surviving Debt,

 

(E) Debt in respect of Hedge Agreements entered into by the Borrower and
designed to hedge against fluctuations in interest rates or foreign exchange
rates incurred in the ordinary course of business and consistent with prudent
business practice,

 

(F) unsecured Debt incurred in the ordinary course of business for borrowed
money, maturing within one year from the date created, and aggregating, on a
Consolidated basis, not more than $5,000,000 at any one time outstanding, and

 

(G) Non-Recourse Debt (including, without limitation, the JV Pro Rata Share of
Non-Recourse Debt of any Joint Venture) the incurrence of which would not result
in a Default under Section 5.04 or any other provision of this Agreement;

 

(iv) in the case of the Parent Guarantor or the Borrower, Debt under the Loan
Documents and Customary Carve-Out Agreements; and

 

(v) endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.

 

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(c) 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.

 

(d) 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 Guarantor (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) 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(e) would otherwise permit the Transfer
of all Assets owned by such Subsidiary at the time of such sale of Equity
Interests.

 

(e) Sales, Etc. of Assets. (i) In the case of the Parent Guarantor, 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 Guarantor), 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 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 from any Loan Party to another Loan
Party (other than the Parent Guarantor) or from a Subsidiary of a Loan Party to
another Subsidiary of such Loan Party or any other Loan Party (other than the
Parent Guarantor), or

 

(B) the Transfer of any Asset or Assets to any Person that is not a Loan Party,
provided that if the aggregate purchase price paid to such Loan Party or Loan
Parties for any such Transfer or Transfers exceeds $50,000,000 in any 12- month
period, any other Transfer made within such period must meet the following
requirements:

 

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(1) the purchase price paid to the applicable Loan Party for such Asset or
Assets shall not be less than the fair market value of such Asset or Assets at
the time of such sale;

 

(2) at least 75% of the purchase price paid for such Asset or Assets shall be
paid to the applicable Loan Party solely in cash; and

 

(3) if the sales proceeds from any such Transfer, net of expenses incurred and
any Debt of the Parent Guarantor or any of its Subsidiaries required to be
repaid in connection with such Transfer (the “Net Asset Sales Proceeds”), shall
not be reinvested as permitted under Section 5.02(f) (including without
limitation clauses (iii) and (iv) thereof) or used to repay Debt of the Parent
Guarantor or any of its Subsidiaries within 12 months after the date of such
Transfer, then the Borrower shall apply any such unreinvested Net Asset Sales
Proceeds (x) first, to prepay the Term Advances pursuant to, and in the amount
set forth in, Section 2.04, as specified therein and (y) second, to prepay
Revolving Debt.

 

(f) 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
Guarantor) 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(f)(iv);

 

(ii) Investments in Cash Equivalents;

 

(iii) Investments consisting of intercompany Debt owed to any other Loan Party
(other than the Parent Guarantor) 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 Guarantor 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 Guarantor 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 Guarantor and its Subsidiaries, as
determined in accordance with GAAP, at such time, in each case after giving
effect to such Investments,

 

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(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 Guarantor 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 all such Investments made after the
date hereof) not to exceed 15.0% of Consolidated total assets of the Parent
Guarantor and its Subsidiaries, as determined in accordance with GAAP, at such
time or that are otherwise permitted under Section 5.02(e)(iv)(C) of the
Revolving Credit Agreement (as referred to in the definition of Revolving Loan
Documents), and

 

(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 Guarantor 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.

 

(g) Restricted Payments. In the case of the Parent Guarantor, 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 Guarantor 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 Guarantor, 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 Guarantor.

 

(h) 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.

 

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(i) 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.

 

(j) 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.

 

(k) 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 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.

 

(l) 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, 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.

 

(m) 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, 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 Revolving Loan 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 Collateral 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).

 

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(n) Parent Guarantor as Holding Company. In the case of the Parent Guarantor,
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 Revolving Loan 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.

 

(o) 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(m), (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.

 

(p) 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 Term Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid or any
Lender shall have any Commitment hereunder, the Borrower will furnish to the
Administrative Agent for transmission to the Lenders 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 Guarantor setting forth details of such Default
or such event, development or occurrence and the action that the Parent
Guarantor 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 Guarantor and its Subsidiaries, including therein
Consolidated balance sheets of the Parent Guarantor 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 Guarantor and its
Subsidiaries for such Fiscal Year (it being acknowledged that a copy of the
annual audit report filed by the Parent Guarantor 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 Guarantor 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

 

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the action that the Parent Guarantor 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 Guarantor 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 Guarantor
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 Guarantor 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 Guarantor 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 Guarantor 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 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 Guarantor as having been
prepared in accordance with GAAP (it being acknowledged that a copy of the
quarterly financials filed by the Parent Guarantor 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 Guarantor 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 Guarantor 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 Guarantor 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) 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 Guarantor, 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.

 

(e) 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.

 

(f) 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.

 

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(g) 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.

 

(h) 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 Asset,
or could result in a Lien against any Asset.

 

(i) 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 through the Administrative Agent, may from time to time
reasonably request.

 

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SECTION 5.04. Financial Covenants. So long as any Term Advance or any other
Obligation of any Loan Party under any Loan Document shall remain unpaid or any
Lender shall have any Commitment hereunder, the Parent Guarantor will:

 

(a) Maximum Total Leverage Ratio: Maintain (A) at the end of each fiscal quarter
of the Parent Guarantor ending during any of the periods set forth below and (B)
on the Closing Date, 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

 

(b) Maximum Senior Leverage Ratio: Maintain (A) at the end of each fiscal
quarter of the Parent Guarantor ending during any of the periods set forth below
and (B) on the Closing Date,:

 

Period

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

   Senior Leverage Ratio

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

9/30/04 through 12/30/06

   6.50:1.00

12/31/06 and thereafter

   6.00:1.00

 

(c) Minimum Tangible Net Worth: Maintain at all times tangible net worth of the
Parent Guarantor 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 Guarantor 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 Guarantor’s purchase of
Equity Interests of the Borrower contemporaneously with the consummation of the
IPO multiplied by (B) 75%.

 

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

 

All calculations described above in this Section 5.04 that pertain to the fiscal
quarters of the Parent Guarantor 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.

 

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 Term Advance when the same shall become due and payable or (ii)
the Borrower

 

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shall fail to pay any interest on any Term 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 2.13, 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; 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

 

(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

 

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of the Parent Guarantor 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 Guarantor, the Borrower or any of its Subsidiaries that are
the direct owners of a Borrowing Base Asset (as defined in the Revolving Loan
Documents), in excess of $10,000,000 or (y) to any other Subsidiaries of the
Parent Guarantor (exclusive of the Debtor Subsidiary), in excess of $50,000,000,
and; (iii) the total assets of such Debtor Subsidiary do not exceed 5% of the
Consolidated total assets of the Parent Guarantor 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

 

(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;

 

56

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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 and the obligation of each Lender to make
Term Advances, whereupon the same shall forthwith terminate, and (ii) shall at
the request, or may with the consent, of the Required Lenders, 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; 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 and the obligation of each Lender to make Term
Advances 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.

 

ARTICLE VII

GUARANTY

 

SECTION 7.01. Guaranty; Limitation of Liability. (a) Each 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
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 Guarantor, the Administrative Agent and each other Lender 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 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
Guarantor hereunder. To effectuate the foregoing intention, the Guarantors, the
Administrative Agent, the other Lenders and, by their acceptance of the benefits
of this Guaranty, the other Secured Parties hereby irrevocably agree that the
Obligations of each Guarantor under this Guaranty at any time shall be limited
to the maximum amount as will result in the Obligations of such Guarantor under
this Guaranty not constituting a fraudulent transfer or conveyance.

 

(c) Each 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 Guarantor will contribute, to the maximum
extent permitted by law, such amounts to each other 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.

 

57

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SECTION 7.02. Guaranty Absolute. Each 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 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 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 any other Loan Party is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and each 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 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
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.

 

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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 Guarantor hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand 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 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 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 Guarantor, or other rights of
such 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 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 Guarantor waives any claim, right or remedy, direct or indirect, that
such 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 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.

 

59

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(e) Each Guarantor acknowledges that the Administrative Agent may, without
notice to or demand upon such Guarantor and without affecting the liability of
such Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial
sale, and each Guarantor hereby waives any defense to the recovery by the
Administrative Agent and the other Secured Parties against such 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.

 

(f) Each Guarantor hereby unconditionally and irrevocably waives any duty on the
part of the Administrative Agent or any other Secured Party to disclose to such
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 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 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
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 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 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 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 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 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 Secured Hedge Agreements shall have expired or been terminated, the
Administrative Agent and the other Secured Parties will, at such Guarantor’s
request and expense, execute and deliver to such Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment made by such Guarantor
pursuant to this Guaranty.

 

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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 Guarantor hereunder, and each
reference in this Agreement to a “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 “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 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 Guarantors (a) Without limitation on any other
Obligations of any Guarantor or remedies of the Administrative Agent or the
Secured Parties under this Agreement, this Guaranty or the other Loan Documents,
each 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 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 Guarantors or any of their respective Affiliates or any of their
respective officers, directors, employees, agents and advisors, and each
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 Term Facility, the actual or
proposed use of the proceeds of the Term Advances, the Loan Documents or any of
the transactions contemplated by the Loan Documents.

 

SECTION 7.07. Subordination. Each Guarantor hereby subordinates any and all
debts, liabilities and other Obligations owed to such 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 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
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 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 Guarantor receives payment of any Subordinated Obligations.

 

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(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 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 Guarantor under the other provisions of this
Guaranty.

 

(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 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 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 Secured Hedge Obligations, (b) be binding upon the
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 (in its capacity as a Lender 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 Lenders 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 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

 

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“Supplemental Collateral Agent”) with respect to all or any part of the
Collateral. In the event that the 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 14 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 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 Assignment and Acceptance 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 and shall not be responsible to any Lender 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 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 Term
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 and may exercise the
same as though it were not the Administrative Agent or the Collateral Agent; and
the term “Lender” or “Lenders” 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 Lenders.

 

SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon any Agent or any other Lender 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 also acknowledges that it
will, independently and without reliance upon any Agent or any other Lender 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 Lenders. (a) Each Lender severally agrees to
indemnify each Agent (to the extent not promptly reimbursed by the Borrower)
from and against such Lender’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 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 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 or any other
Person.

 

(b) For purposes of this Section 8.05, the Lenders’ respective ratable shares of
any amount shall be determined, at any time, according to their respective Term
Commitments at such time. The failure of any Lender to reimburse any Agent
promptly upon demand for its ratable share of any amount required to be paid by
the Lenders to such Agent as provided herein shall not relieve any other Lender
of its obligation hereunder to reimburse such Agent for its ratable share of
such amount, but no Lender shall be responsible for the failure of any other
Lender to reimburse such Agent for such other Lender’s ratable share of such
amount. Without prejudice to the survival of any other agreement of any Lender
hereunder, the agreement and obligations of each Lender 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 Lenders 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 released from all obligations

 

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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
Lenders, 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 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. (a) 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 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 Section 3.02, (ii) change the number of Lenders or the percentage of (x) the
Commitments or (y) the aggregate unpaid principal amount of the Term Advances
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 Guarantor under Article VII or release
such Guarantor or otherwise limit such Guarantor’s liability with respect to the
Guaranteed Obligations, (iv) release all or substantially all of the Collateral
in any transaction or series of related transactions, or permit the creation,
incurrence, assumption or existence of any Lien on all or substantially all of
the Collateral 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 2.05, or (ix) limit the liability of any Loan Party under any of the
Loan Documents; 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 the Intercreditor Agreement, if applicable.

 

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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, 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 (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 Administrative Agent or the Collateral Agent, at its
address at Two Penns 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 (e) shall be delivered to
the Administrative Agent in an electronic medium in a format acceptable to the
Administrative Agent and the Lenders 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 Lenders 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

 

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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 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 for purposes of this Agreement, provided that if
requested by any Lender, the Administrative Agent shall deliver a copy of the
Communications to such Lender by e-mail or telecopier. Each Lender agrees (i) to
notify the Administrative Agent in writing of such Lender’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 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) 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 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.

 

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 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 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 Term Facility, the

 

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actual or proposed use of the proceeds of the Term Advances, 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 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
Term Facility, the actual or proposed use of the proceeds of the Term Advances,
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 other than on
the last day of the Interest Period for such Advance, as a result of a payment
or Conversion pursuant to Section 2.05, 2.08(b)(i) or 2.09(d), 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 a Term Advance for
which a notice of prepayment has been given or that is otherwise required to be
made, whether pursuant to Section 2.03, 2.05 or 6.01 or otherwise, the Borrower
shall, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender any amounts required to compensate such Lender 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 to
fund or maintain such Term 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, 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 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 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

 

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whether such Agent or such Lender shall have made any demand under this
Agreement or such Note or Notes and although such obligations may be unmatured.
Each Agent and each Lender 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 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 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 Guarantor named on the signature
pages hereto and each Agent and the Administrative Agent shall have been
notified by each Initial Lender that such Initial Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Guarantors named on the signature pages hereto and each Agent and each Lender
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 Lenders.

 

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 Term 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 the Term Facility, (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 $1,000,000 under the
Term Facility or an integral multiple of $500,000 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 Lenders 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 in connection with secondary assignments and
participations only.

 

(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 hereunder and (ii) the
Lender 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 rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).

 

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(c) By executing and delivering an Assignment and Acceptance, each Lender
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 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 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 Acceptance;
(iv) such assignee will, independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender 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.

 

(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
Lenders and the Commitment under the Term Facility of, and principal amount of
the Term Advances owing under the Term Facility to, each Lender 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 Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or the
Administrative Agent or any Lender 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 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 the Term Facility pursuant to such Assignment and Acceptance
and, if any assigning Lender has retained a Commitment hereunder, 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.

 

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(f) Each Lender 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 Term Advances owing to it and the Note or Notes
(if any) held by it); provided, however, that (i) such Lender’s obligations
under this Agreement (including, without limitation, its Commitments) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Note for all purposes of this Agreement, (iv) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’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 was entitled to payments under Section 2.11(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 2.11(e).

 

(g) Any Lender 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 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.

 

(h) Notwithstanding any other provision set forth in this Agreement, any Lender
may at any time create a security interest in all or any portion of its rights
under this Agreement (including, without limitation, the Term 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. Confidentiality. Neither the Administrative Agent nor any Lender
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’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 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.

 

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SECTION 9.10. 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(e)(ii)(B)) 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 9.11. 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 Guarantor 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 9.12. 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.

 

(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 9.13. 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 9.14. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE OTHER LOAN
PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS 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 TERM ADVANCES, 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