Exhibit 10.1

 

 

CREDIT AGREEMENT

among

STRATEGIC HOTEL FUNDING, L.L.C.,

as Borrower

and

VARIOUS FINANCIAL INSTITUTIONS,

as the Lenders,

DEUTSCHE BANK AG NEW YORK BRANCH,

as Administrative Agent,

DEUTSCHE BANK SECURITIES INC. and J.P. MORGAN SECURITIES LLC,

as Co-Lead Arrangers

JPMORGAN CHASE BANK, N.A.

as Syndication Agent

and

BANK OF AMERICA, N.A., BMO HARRIS BANK N.A., CAPITAL ONE BANK NATIONAL
ASSOCIATION, SUMITOMO MITSUI BANKING CORPORATION and WELLS FARGO BANK, NATIONAL
ASSOCIATION

as Co-Documentation Agents

 

 

DEUTSCHE BANK SECURITIES INC. and J.P. MORGAN SECURITIES LLC

as Joint Book Running Managers

Dated as of April 25, 2014

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TABLE OF CONTENTS

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.1

  Defined Terms      1   

Section 1.2

  Use of Defined Terms      38   

Section 1.3

  Cross-References      38   

Section 1.4

  Accounting and Financial Determinations      38    ARTICLE II   

REVOLVING LOAN COMMITMENT AND

BORROWING PROCEDURES, NOTES

  

  

Section 2.1

  Commitments      39   

Section 2.2

  Increase/Reduction of the Commitment Amounts      41   

Section 2.3

  Borrowing Procedures      42   

Section 2.4

  Continuation and Conversion Elections      44   

Section 2.5

  Funding      44   

Section 2.6

  Issuance Procedures      44   

Section 2.7

  Loan Accounts and Revolving Notes      48   

Section 2.8

  Intentionally Omitted      49   

Section 2.9

  Swingline Loan Subfacility      49    ARTICLE III    MATURITY DATE;
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES   

Section 3.1

  Maturity Date; Extension Option      51   

Section 3.2

  Repayments and Prepayments; Application      52   

Section 3.3

  Interest Provisions      54   

Section 3.4

  Fees      55    ARTICLE IV    CERTAIN LIBO RATE AND OTHER PROVISIONS   

Section 4.1

  LIBO Rate Lending Unlawful      56   

Section 4.2

  Deposits Unavailable      56   

Section 4.3

  Change of Circumstances      57   

Section 4.4

  Replacement of Lender      57   

Section 4.5

  Funding Losses      58   

Section 4.6

  Taxes      59   

Section 4.7

  Change of Lending Office      62   

Section 4.8

  Payments, Computations, etc.      63   

 

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Section 4.9

  Sharing of Payments      63   

Section 4.10

  Setoff      64    ARTICLE V    CONDITIONS TO EFFECTIVENESS AND TO FUTURE
CREDIT EXTENSIONS   

Section 5.1

  Conditions Precedent to Making of Loans and the Issuance of Letters of Credit
     64   

Section 5.2

  All Credit Extensions      68    ARTICLE VI    REPRESENTATIONS AND WARRANTIES
  

Section 6.1

  Organization, etc.      69   

Section 6.2

  Due Authorization, Non-Contravention, etc.      69   

Section 6.3

  Government Approval, Regulation, etc.      70   

Section 6.4

  Validity, etc.      70   

Section 6.5

  Financial Information      70   

Section 6.6

  No Material Adverse Effect      72   

Section 6.7

  Litigation, etc.      72   

Section 6.8

  Subsidiaries      72   

Section 6.9

  Title      72   

Section 6.10

  Taxes      73   

Section 6.11

  ERISA Compliance      73   

Section 6.12

  Compliance with Environmental Laws      74   

Section 6.13

  Regulations T, U and X      74   

Section 6.14

  Accuracy of Information      74   

Section 6.15

  REIT      75   

Section 6.16

  No Bankruptcy Filing      75   

Section 6.17

  Use of Proceeds      75   

Section 6.18

  Other Debt      75   

Section 6.19

  Pledge Agreement      75   

Section 6.20

  Material Agreements      75   

Section 6.21

  Office of Foreign Assets Control      75   

Section 6.22

  Labor Matters      76   

Section 6.23

  Intellectual Property, Licenses, Franchises and Formulas      76   

Section 6.24

  Compliance      77   

Section 6.25

  Enforceability      77   

Section 6.26

  Insurance      77   

Section 6.27

  Borrowing Base Properties      77   

Section 6.28

  Filing and Recording Taxes      77   

Section 6.29

  Brokers      77   

Section 6.30

  Taxpayer Identification Number      78   

Section 6.31

  Solvency/Fraudulent Conveyance      78   

Section 6.32

  Anti-Corruption Laws and Sanctions      79   

 

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ARTICLE VII    COVENANTS   

Section 7.1

  Affirmative Covenants      79   

Section 7.2

  Negative Covenants      90    ARTICLE VIII    EVENTS OF DEFAULT   

Section 8.1

  Events of Default      98   

Section 8.2

  Action if Bankruptcy      102   

Section 8.3

  Action if Other Event of Default      102   

Section 8.4

  Actions in Respect of Letters of Credit      103    ARTICLE IX    THE AGENTS
  

Section 9.1

  Appointment      105   

Section 9.2

  Hedging Counterparty Intercreditor Agreements      106   

Section 9.3

  Nature of Duties      106   

Section 9.4

  Non-Reliance on the Administrative Agent      107   

Section 9.5

  Certain Rights of the Administrative Agent      107   

Section 9.6

  Reliance      107   

Section 9.7

  Indemnification      108   

Section 9.8

  Administrative Agent in its Individual Capacity      108   

Section 9.9

  Holders      108   

Section 9.10

  Resignation by the Administrative Agent      108   

Section 9.11

  Lead Arrangers; Joint Bookrunners; Syndication Agents      109    ARTICLE X   
MISCELLANEOUS PROVISIONS   

Section 10.1

  Waivers, Amendments, etc.      110   

Section 10.2

  Notices      111   

Section 10.3

  Payment of Costs and Expenses; Indemnification      111   

Section 10.4

  Survival and Recourse Nature of Obligations      113   

Section 10.5

  Headings      113   

Section 10.6

  Execution in Counterparts, Effectiveness, etc.      113   

Section 10.7

  Governing Law; Entire Agreement      113   

Section 10.8

  Successors and Assigns      114   

Section 10.9

  Sale and Transfer of Loans and Notes; Participations in Loans and Notes     
114   

Section 10.10

  Intentionally Omitted      117   

Section 10.11

  Confidentiality      117   

 

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Section 10.12

  Tax Advice      118   

Section 10.13

  Forum Selection and Consent to Jurisdiction      119   

Section 10.14

  Waiver of Jury Trial      119   

 

ANNEX I

 

-

  Lender Information

SCHEDULE I

    Properties

SCHEDULE II

    Approved Managers and Brands

SCHEDULE III

    Borrowing Base Intercompany Indebtedness

SCHEDULE IV

    Disclosure Schedule

SCHEDULE V

    Intentionally Omitted

SCHEDULE VI

    Management Agreements

SCHEDULE VII

    Contingent Hedged Indebtedness

EXHIBIT A

 

-

  Form of Revolving Note

EXHIBIT B-1

 

-

  Form of Borrowing Request

EXHIBIT B-2

 

-

  Form of Issuance Request

EXHIBIT C

 

-

  Form of Continuation and Conversion Elections

EXHIBIT D

 

-

  Form of Closing Date Certificate

EXHIBIT E

 

-

  Form of Borrowing Base and Compliance Certificate

EXHIBIT F

 

-

  Form of Lender Assignment Agreement

EXHIBIT G

 

-

  Form of Pledge Agreement

EXHIBIT H-1

 

-

  Form of Guaranty

EXHIBIT H-2

 

-

  Form of Subsidiary Guaranty and Joinder

EXHIBIT I

 

-

  Form of Solvency Certificate

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT, dated as of April 25, 2014, is among STRATEGIC HOTEL
FUNDING, L.L.C., a Delaware limited liability company (the “Borrower”), DEUTSCHE
BANK AG NEW YORK BRANCH (“DBNY”), as the administrative agent (in such capacity,
the “Administrative Agent”) and the various financial institutions that are or
may become parties hereto as lenders (together with DBNY, collectively, the
“Lenders” and each individually, a “Lender”).

W I T N E S S E T H:

WHEREAS, subject to and on the terms and conditions set forth herein, the
Lenders are willing to make available to the Borrower the respective credit
facilities provided for herein;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1 Defined Terms. The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals, shall, except where
the context otherwise requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):

“Acceptable Appraisal” means an MAI appraisal, in compliance with the Uniform
Standards of Professional Appraisal Practice, reasonably acceptable to
Administrative Agent as to form, substance and appraisal date, prepared by a
professional appraiser that is reasonably acceptable to Administrative Agent.

“Acquisition Cost” means, with respect to any Property, (i) the purchase price
of a Property as set forth in the applicable purchase and sale agreement or
otherwise as approved by the Administrative Agent, plus or minus (ii) increases
or reductions to such purchase price as provided in such purchase and sale
agreement or the final closing statement.

“Adjusted Net Operating Income” means Net Operating Income with respect to each
Borrowing Base Property and Consolidated Group Property, less (a) Deemed FF&E
Reserves for such Borrowing Base Property or Consolidated Group Property,
(b) Deemed Management Fees for such Borrowing Base Property or Consolidated
Group Property and (c) any other monetary obligations paid during the applicable
period with respect to such Borrowing Base Property or Consolidated Group
Property, provided that no deductions will be made for Capital Expenditures
other than Deemed FF&E Reserves included under clause (a) above.

“Administrative Agent” is defined in the preamble and includes each other Person
as shall have subsequently been appointed as the successor Administrative Agent
pursuant to Section 9.10 hereof.

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“Advance Rate” means, at any time, fifty-five percent (55%); provided that
(i) such rate shall be increased to sixty percent (60%) if, and during any time
that the Total Fixed Charge Coverage Ratio at the end of the immediately
preceding Fiscal Quarter, was greater than 1.75:1.0 and (ii) the Advance Rate is
subject to modification under the provisions of the defined term “Available
Commitment” below.

“Affiliate” of any Person means any other Person which, directly or indirectly,
controls, is controlled by or is under common control with such Person
(excluding any trustee under, or any committee with responsibility for
administering, any Plan). With respect to any Lender or the Issuer, a Person
shall be deemed to be “controlled by” another Person if such other Person
possesses, directly or indirectly, power to vote fifty-one percent (51%) or more
of the securities (on a fully diluted basis) having ordinary voting power for
the election of directors or managing general partners of such “controlled”
Person. With respect to all other Persons, a Person shall be deemed to be
“controlled by” another Person if such other Person possesses, directly or
indirectly, power:

(a) to vote ten percent (10%) or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
general partners or managing members of such “controlled” Person; or

(b) to direct or cause the direction of the management and policies of such
“controlled” Person whether through ownership of voting securities, membership
or partnership interests, by contract or otherwise.

In no event shall Administrative Agent or any Lender be deemed to be an
Affiliate of the Borrower.

“Aggregate Commitment” means, as of any date of determination, the aggregate of
the then-current Commitments of all Lenders, which is, as of the Closing Date,
an amount equal to THREE HUNDRED MILLION DOLLARS ($300,000,000), and shall not
exceed such amount except as expressly set forth herein.

“Aggregate Outstanding Balance” means, on any date, the principal sum of all
then outstanding Revolving Loans, Swingline Loans and Letter of Credit
Outstandings, determined as of such date.

“Agreement” means, on any date, this Credit Agreement as amended, supplemented,
amended and restated or otherwise modified from time to time and in effect on
such date.

“Alternate Base Rate” means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum (rounded upward, if necessary,
to the next highest 1/1000 of 1%) equal to the higher of

 

  (a) the Base Rate in effect on such day;

 

  (b) the Federal Funds Rate in effect on such day plus  1⁄2 of 1%; and

 

  (c) the 1-month LIBO Rate plus 1%.

 

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Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Alternate
Base Rate.

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

“Applicable Margin” means the percentage amount set forth below as determined
based on the Total Leverage Ratio, in accordance with Section 7.2.4 hereof;
provided that, during the Appraisal Period, the Applicable Margin shall be
increased, in each case, by 25 basis points:

 

Total Leverage Ratio

   LIBOR Margin     Base Rate Margin  

        < 45%

     1.75 %      0.75 % 

> 45% - < 50%

     1.95 %      0.95 % 

> 50% - < 55%

     2.10 %      1.10 % 

> 55% - < 60%

     2.25 %      1.25 % 

        > 60%

     2.50 %      1.50 % 

“Appraisal Period” means the period from the Closing Date through and including
March 31, 2015.

“Appraised Value” means the “as-is” appraised value of any Property as shown on
the Acceptable Appraisal thereof.

“Approved Bank” means Administrative Agent or any Affiliate thereof or any other
financial institution reasonably approved by Administrative Agent.

“Approved Fund” means any Person (other than a natural Person) that (a) is or
will be engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business, and (b) is administered or managed by a Lender, an Affiliate of a
Lender or an entity or an Affiliate of an entity that administers or manages a
Lender.

“Approved Lender” has the meaning set forth in the definition of “Cash
Equivalents.”

 

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“Approved Manager” means those property managers set forth on Schedule II
attached hereto and such other managers as may be approved by Administrative
Agent from time to time.

“Arrangers” means Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC
in their capacities as Co-Lead Arrangers and Joint Book Running Managers for the
Facility.

“Authorized Financial Officer” means, relative to the Borrower and Guarantor,
any of its chief financial officer, chief accounting officer, treasurer,
assistant treasurer, controller or other officer thereof having substantially
the same authority and responsibility.

“Authorized Officer” means, relative to the Borrower and Guarantor, those of its
officers whose signatures and incumbency shall have been certified to the
Administrative Agent and the Lenders pursuant to Section 5.1.1 hereof and such
other officers of the Borrower or Guarantor as the Borrower or Guarantor,
respectively, designate in writing as such to the Administrative Agent.

“Available Commitment” means, as of any date of determination, the least of
(i) the Aggregate Commitment, (ii) the product of (x) the Advance Rate times
(y) the aggregate Gross Asset Value of all Borrowing Base Properties, and
(iii) an amount which, if it were the Aggregate Outstanding Balance, would
produce a Pro Forma Borrowing Base Coverage Ratio, calculated as of the date of
such determination, of 1.40:1.0 based on Adjusted Net Operating Income of all
Borrowing Base Properties and an annual interest rate equal to the greater of
(a) the weighted average interest rate then in effect on the Loans and (b) 7.0%.
If as of any date of determination the Borrowing Base consists of only four
Borrowing Base Properties and one of the four Properties is Marriott
Lincolnshire, or any other Property that has a Gross Asset Value less than
$50,000,000, then the foregoing calculations shall be modified as follows
(a) the Advance Rate used in clause (ii)(x) above shall be 55% regardless of the
Total Fixed Charge Coverage Ratio at the end of the immediately preceding Fiscal
Quarter), (b) the required Pro Forma Borrowing Base Coverage Ratio in clause
(iii) above shall be 1.50:1.0, (c) no single Borrowing Base Property may
contribute more than 35% of the aggregate Gross Asset Value of all Borrowing
Base Properties used in clause (ii)(y) above, such that the otherwise existing
aggregate Gross Asset Value of all Borrowing Base Properties shall be deemed
reduced by the amount in excess of 35% attributable to each such single
Borrowing Base Property and (d) the aggregate Gross Asset Value of all Borrowing
Base Properties based on such modified calculation must yield an amount that is
at least 75% of the Aggregate Commitment (or, if not, then the Available
Commitment shall be deemed to be $0 as of such date of determination).

“Base Rate” means, at any time, the rate of interest which the Person serving as
the Administrative Agent announces from time to time as its prime lending rate.
The Base Rate is a reference rate and does not necessarily represent the lowest
or best rate of interest actually charged to any customer by the Administrative
Agent, which may make commercial loans or other loans at rates of interest at,
above or below the Base Rate.

“Base Rate Loan” means a Loan bearing interest at a fluctuating rate determined
by reference to the Alternate Base Rate.

 

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“Borrower” is defined in the preamble.

“Borrowing” means the Loans of the same Type and, in the case of LIBO Rate
Loans, having the same Interest Period, made by all Lenders required to make
such Loans on the same Business Day and pursuant to the same Borrowing Request
in accordance with Section 2.1 hereof; provided that Base Rate Loans incurred
pursuant to Section 4.1 hereof shall be considered part of the related Borrowing
of LIBO Rate Loans.

“Borrowing Base” means, as of any date of determination, the Properties which
are Borrowing Base Properties on such date, collectively.

“Borrowing Base Entities” means, collectively, each Property Owner and Operating
Lessee of a Borrowing Base Property.

“Borrowing Base Intercompany Indebtedness” means certain intercompany
indebtedness relating to Borrowing Base Properties and described on Schedule III
and any additional intercompany Indebtedness relating to a Borrowing Base
Property or a Borrowing Base Entity incurred in accordance with Section 7.1.11
hereof.

“Borrowing Base Ownership Entity” means, with respect to each Borrowing Base
Property: (i) each Borrowing Base Entity and (ii) any other wholly-owned
Subsidiary of Borrower that directly or indirectly owns Capital Stock in such
Borrowing Base Entity.

“Borrowing Base Property” means the Initial Borrowing Base Properties, together
with any other Property that is added as a Borrowing Base Property pursuant to
Section 7.1.22 hereof, but excluding any Released Borrowing Base Property and
any Property that has ceased to satisfy the requirements of Section 7.1.22(a).

“Borrowing Base Property Release” is defined in Section 7.1.22(f).

“Borrowing Request” means a Loan request and certificate duly executed by an
Authorized Officer of the Borrower, substantially in the form of Exhibit B-1
hereto, including Borrower’s certified calculation of the Aggregate Commitment
and the Available Commitment after giving effect to the Loan requested
thereunder and certification by such Authorized Officer that each Borrowing Base
Property included in such calculations continues to satisfy all requirements for
a “Borrowing Base Property” hereunder.

“Business Day” means:

(a) any day which is neither a Saturday or Sunday nor a legal holiday on which
banks are authorized or required to be closed in New York, New York; and

(b) relative to the making, continuing, prepaying or repaying of any LIBO Rate
Loans, any day which is a Business Day described in clause (a) above and which
is also a day on which dealings in Dollars are carried on in the London
interbank eurodollar market.

 

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“Capital Expenditures” means, for any period, the aggregate amount of all
expenditures of the Borrower, Guarantor and their respective Subsidiaries for
fixed or capital assets made during such period which, in accordance with GAAP,
would be classified as capital expenditures; provided, however, that the term
“Capital Expenditures” shall not include (i) expenditures made in connection
with the replacement, substitution or restoration of assets (A) to the extent
financed from insurance proceeds paid on account of the loss of or damage to the
assets being replaced, substituted or restored or (B) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced, (ii) the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment to the extent that the
gross amount of such purchase price is reduced by the credit granted by the
seller of such equipment for the equipment being traded in at such time, and
(iii) the purchase of plant, property or equipment made within one (1) year of
the sale of any asset in replacement of such asset to the extent purchased with
the proceeds of such sale and Capitalized Lease Liabilities paid in respect of
such replaced asset.

“Capitalization Rate” means 7.75%.

“Capital Stock” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of capital of such Person, including, if such Person is a
partnership or a limited liability company partnership interests (whether
general or limited) or membership interests, as applicable, and any other
interest or participation that confers on a Person the right to receive a share
of the profits and losses of, or distributions of assets of, such partnership or
limited liability company, as applicable, whether now outstanding or issued
after the Closing Date. For the avoidance of doubt, debt securities evidencing
Unsecured Indebtedness issued by Borrower and that are convertible or
exchangeable, under certain circumstances, into cash and/or common stock of the
Guarantor shall not be deemed Capital Stock of the Borrower or the Guarantor for
purposes of this Agreement or the other Loan Documents.

“Capitalized Lease Liabilities” means all monetary obligations of Borrower,
Guarantor or any of their respective Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, are classified as capitalized
leases, and, for purposes of this Agreement and each other Loan Document, the
amount of such obligations shall be the capitalized amount thereof determined in
accordance with GAAP, and the stated maturity thereof shall be determined in
accordance with GAAP.

“Cash Equivalents” means (a) securities issued or directly and fully guaranteed
or insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America
is pledged in support thereof) having maturities of not more than one (1) year
from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit, and bankers’ acceptances of (i) any Lender, or (ii) any
bank whose short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof
(any such bank, an “Approved Lender”), in each case with maturities of not more
than one (1) year from the date of acquisition, (c) commercial paper issued by
any Lender or Approved Lender or by the parent company of any Lender or Approved
Lender and commercial paper issued by, or guaranteed by, any industrial or
financial company with a short-term commercial paper rating of at least A-2 or
the equivalent

 

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thereof by S&P or at least P-2 or the equivalent thereof by Moody’s, or
guaranteed by any industrial company with a long term unsecured debt rating of
at least A or A2, or the equivalent of each thereof, from S&P or Moody’s, as the
case may be, and in each case maturing within one (1) year after the date of
acquisition, and (d) investments in money market funds (x) substantially all the
assets of which are comprised of securities of the types described in clauses
(a) through (c) above or (y) which have a AAA rating.

“CERCLA” has the meaning specified in the definition of “Environmental Laws.”

“Change of Control” means the occurrence of any of the following events:
(a) Guarantor shall at any time and for any reason whatsoever cease to be the
sole managing member of Borrower; (b) any merger or consolidation of the
Guarantor or Borrower with or into any Person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of the
assets of the Guarantor, on a consolidated basis, in one transaction or a series
of related transactions, if, immediately after giving effect to such
transaction, any Person or group of Persons (within the meaning of Sections 13
or 14 of the Exchange Act), which was not before such transaction(s), is or
becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated by
the SEC under the Exchange Act) of the Capital Stock representing a majority of
the total voting power of the aggregate outstanding securities of the transferee
or surviving entity normally entitled to vote in the election of directors,
managers, or trustees, as applicable, of the transferee or surviving entity;
(c) any Person or group of Persons (within the meaning of Sections 13 or 14 of
the Exchange Act) is or becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated by the SEC under the Exchange Act), which was not before such
transaction(s), of the Capital Stock representing a majority of total voting
power of the aggregate outstanding Capital Stock of the Guarantor normally
entitled to vote in the election of directors of the Guarantor; (d) during any
period of twelve (12) consecutive calendar months, individuals who were
directors of the Guarantor on the first day of such period (together with any
new directors whose election by the board of directors of the Guarantor or whose
nomination for election by the stockholders of the Guarantor was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the board of directors of the Guarantor; or (e) the sale or
disposition, whether directly or indirectly, by the Guarantor, Borrower and/or
their respective Subsidiaries (whether pursuant to a single transaction or
series of related transactions) of tangible assets representing more than 25% of
the Borrower’s assets (determined as of the Closing Date).

“Closing Date” means April 25, 2014.

“Closing Date Certificate” means the Closing Date Certificate executed and
delivered by the Borrower on the Closing Date, substantially in the form of
Exhibit D hereto.

“Co-Lead Arrangers” means Deutsche Bank Securities Inc. and J.P. Morgan
Securities LLC.

“Code” means the Internal Revenue Code of 1986, and the regulations thereunder,
in each case as amended, reformed or otherwise modified from time to time.

 

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“Collateral” means, collectively, all Pledge Agreement Collateral as required to
be granted from time to time pursuant to the terms hereof and subject to the
provisions of release thereof as provided herein or in the other Loan Documents.

“Commitment” means, as the context may require, a Lender’s Revolving Loan
Commitment, Letter of Credit Commitment, or Swingline Commitment, or any of the
foregoing.

“Commitment Amount” means, as the context may require, the Revolving Loan
Commitment Amount, the Letter of Credit Commitment Amount, or the Swingline
Commitment Amount, or any of the foregoing.

“Commitment Termination Event” means:

(a) the occurrence of any Event of Default described in clauses (a) through
(e) of Section 8.1.9 hereof with respect to the Borrower; or

(b) the occurrence and continuance of any other Event of Default and either:

(i) the declaration of all of the Loans to be due and payable pursuant to
Section 8.3 hereof, or

(ii) the giving of notice by the Administrative Agent, acting at the direction,
or with the consent, of the Required Lenders, to the Borrower that the
Commitments have been terminated pursuant to Section 8.3 hereof.

“Compliance Certificate” means a certificate duly completed and executed by an
Authorized Financial Officer of the Borrower, substantially in the form of
Exhibit E hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time, together with such changes thereto as the
Administrative Agent may from time to time reasonably request for the purpose of
monitoring the Borrower’s compliance with the financial covenants contained
herein, including, without limitation, with respect to the Borrowing Base
Properties, Adjusted Net Operating Income, and the then Available Commitment.

“Confidential Information” is defined in Section 10.11 hereof.

“Confidential Memorandum” means the March 2014 Confidential Information
Memorandum prepared by the Arrangers relating to Strategic Hotel & Resorts, Inc.
and the Facility.

“Consolidated” or “consolidated” means “consolidated” in accordance with GAAP.

“Consolidated Debt” means, at any time, the sum of (without duplication) (i) all
indebtedness (including principal, interest, fees and charges) of the
Consolidated Group for borrowed money (including obligations evidenced by bonds,
notes or similar instruments) and for the deferred purchase price of property or
services (excluding ordinary payable and accrued expenses and deferred purchase
price which is not yet a liquidated sum), (ii) the aggregate

 

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amount of all Capitalized Lease Liabilities of the Consolidated Group, (iii) all
Indebtedness of the types described in clause (i) or (ii) of this definition of
Persons other than members of the Consolidated Group secured by any Lien on any
property owned by the Consolidated Group, whether or not such Indebtedness has
been assumed by such Person (provided that, if the Person has not assumed or
otherwise become liable in respect of such Indebtedness, such Indebtedness shall
be deemed to be the outstanding principal amount (or maximum principal amount,
if larger) of such Indebtedness or, if not stated or if indeterminable, in an
amount equal to the fair market value of the property to which such Lien
relates, as determined in good faith by such Person), (iv) all Contingent
Obligations of the Consolidated Group, (v) all Indebtedness of the Consolidated
Group of the type described in clauses (ii) and (vi) of the definition of
Indebtedness contained herein, and (vi) the Borrower’s Share of all such items
described in the foregoing clauses (i) through (v) inclusive, with respect to
Unconsolidated Subsidiaries; provided that for purposes of this definition, the
amount of Indebtedness in respect of Hedging Agreements included pursuant to
preceding clause (v) shall be calculated as the Net Termination Value of all
such Hedging Agreements as of the date of determination, without duplication.

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such
period, adjusted by (x) adding thereto (i) to the extent actually deducted in
determining said Consolidated Net Income, consolidated interest expense,
minority interest and provision for taxes for such period (excluding, however,
consolidated interest expense and taxes attributable to Unconsolidated
Subsidiaries of the Guarantor and any of its Subsidiaries), (ii) the amount of
all amortization of intangibles and depreciation that were deducted determining
Consolidated Net Income for such period, (iii) any non-cash compensation
expense, and (iv) any non-recurring non-cash charges in such period to the
extent that (A) such non-cash charges do not give rise to a liability that would
be required to be reflected on the consolidated balance sheet of the Guarantor
(and so long as no cash payments or cash expenses will be associated therewith
(whether in the current period or for any future period)) and (B) same were
deducted in determining Consolidated Net Income for such period, and
(y) subtracting therefrom, to the extent included in determining Consolidated
Net Income for such period, the amount of non-recurring non-cash gains during
such period; provided that Consolidated EBITDA shall be determined without
giving effect to any extraordinary gains or losses (including any taxes
attributable to any such extraordinary gains or losses) or gains or losses
(including any taxes attributable to such gains or losses) from sales of assets
other than from sales of inventory (excluding real property) in the ordinary
course of business and foreign currency exchange gain or loss applicable to
third party and intercompany Indebtedness and certain balance sheet items held
by foreign Subsidiaries of Borrower.

“Consolidated Group” means, collectively, Borrower, Guarantor and their
Subsidiaries, determined in accordance with GAAP.

“Consolidated Group Properties” means those Properties owned or leased by a
member of the Consolidated Group.

“Consolidated Net Income” means, for any period, the consolidated net income (or
loss) of the Consolidated Group for such period; provided that (without
duplication of exclusions) (i) the net income of any member of the Consolidated
Group (to the extent otherwise included in determining Consolidated Net Income)
shall be excluded to the extent that the

 

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declaration or payment of dividends and distributions by such Person of net
income is not permitted at the date of determination without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
Person or its equityholders, as applicable, and (ii) except for determinations
expressly required to be made on a pro forma basis, the net income (or loss) of
any member of the Consolidated Group accrued prior to the date it becomes a
member of the Consolidated Group, or the date that all or substantially all of
the property or assets of such Person are acquired by a member of the
Consolidated Group, shall be excluded from such determination.

“Consolidated Tangible Net Worth” means, at any time, the tangible net worth of
the Consolidated Group determined in accordance with GAAP, calculated based on
(a) the shareholder book equity of Guarantor’s common Capital Stock, plus
(b) accumulated depreciation and amortization of the Consolidated Group, plus
(c) to the extent not included in clause (a), the amount properly attributable
to the minority interests, if any, shown on the Guarantor’s balance sheet, in
each case determined without duplication and in accordance with GAAP, and
excluding (d) any goodwill and any currency translation adjustment.

“Construction Cost” means, with respect to rehabilitations, renovations or
construction of Properties in which work has begun but has not yet been
substantially completed (substantial completion shall be deemed to mean not less
than ninety percent (90%) completion, as such completion shall be evidenced by a
certificate of occupancy or its equivalent or, in the case of condominium
conversions the sale to buyers of portions of such Property), the aggregate,
good faith estimated cost of construction of such improvements (including, where
applicable, land acquisition costs).

“Contingent Obligation” means any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, with or without
recourse, to provide funds for payment to, to purchase from, to supply funds to,
or otherwise to invest in, a debtor, or otherwise to assure a creditor against
loss) the Indebtedness of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of scheduled
dividends or other distributions upon the shares of any other Person. The amount
of any Person’s obligation under any Contingent Obligation shall (subject to any
limitation set forth therein) be deemed to be the outstanding principal amount
(or maximum principal amount, if larger) of the debt, obligation or other
liability guaranteed thereby or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder), as determined by such Person in good faith.
Notwithstanding the foregoing, the term “Contingent Obligation” shall not
include (a) endorsements of instruments for deposit or collection in the
ordinary course of business, (b) guarantees made by a Person of the obligations
of a Subsidiary of such Person that do not constitute Indebtedness of such
Subsidiary and are incurred in the ordinary course of business of such
Subsidiary, (c) any portion of the Commitment Amount which at any time is
unused, and (d) any portion of an obligation which would otherwise be considered
to be a Contingent Obligation if such portion is secured by cash or Cash
Equivalents, but Contingent Obligations shall include the deferred purchase
price of property or services which is not yet a liquidated sum. In addition, a
guaranty of completion shall not be deemed to be Contingent Obligation unless
and until a claim for payment has been made thereunder, at which time such
guaranty of completion shall be deemed to be a Contingent Obligation in an
amount equal to such claim.

 

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“Contingent Hedged Indebtedness” means Indebtedness that is required to be
hedged under the applicable loan documentation either because interest rates or
an index reach a specified level or certain financial performance conditions
have been triggered; the Indebtedness that currently qualifies as Contingent
Hedged Indebtedness is set forth on Schedule VII, as such Schedule may be
amended by Borrower during the Term but only with Administrative Agent’s
reasonable approval.

“Continuation/Conversion Notice” means a notice of continuation or conversion
and certificate duly executed by an Authorized Officer of the Borrower,
substantially in the form of Exhibit C hereto.

“Credit Extension” means, as the context may require,

(a) the making of Loan by a Lender; or

(b) the issuance of any Letter of Credit, or the extension of any Stated Expiry
Date of any existing Letter of Credit, by the Issuer.

“Credit Hedging Agreements” means one or more Hedging Agreements entered into
between or among Borrower and/or Guarantor, on the one hand, and another Person
(other than Borrower, Guarantor or any Subsidiary of either), to the extent such
other Person is a Lender (even if such Lender subsequently ceases to be a Lender
under this Agreement for any reason) or any affiliate thereof, and their
subsequent successors and assigns, on the other and with respect to which, if
requested by Administrative Agent, such person has entered into a reasonably
acceptable Hedging Counterparty Intercreditor Agreement with Administrative
Agent on behalf of the Lenders.

“Current Preferred Dividend” is defined in Section 7.2.6(a)(iii).

“DBNY” is defined in the preamble.

“Deemed FF&E Reserves” means, with respect to any Property, for any period, a
deemed reserve funding for FF&E equal to four percent (4%) of Gross Hotel
Revenues, for such Property for such period.

“Deemed Management Fees” means, with respect to any Property, for any period, a
deemed base management fee in an amount equal to the greater of the actual
management fees payable in such period for such Property and three percent
(3%) of Gross Hotel Revenues, for such Property for such period.

“Default” means any condition, occurrence or event which, after notice or lapse
of time or both, would constitute an Event of Default.

“Defaulting Lender” means any Lender with respect to which a Lender Default is
in effect.

 

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“Deficiency” is defined in Section 12.4.2(b).

“Development Cost” means, with respect to any Development Property, the
undepreciated “book value” of such Development Property, calculated in
accordance with GAAP.

“Development Property” means a Property being developed or redeveloped by the
applicable Property Owner such that fifty percent (50%) or more of the units at
such Property are under construction, development or redevelopment and not open
for business to the general public, until such time as such Property (or the
relevant portion thereof) has opened to the general public for a period of
twelve (12) calendar months.

“Disclosure Schedule” means the Disclosure Schedule attached hereto as Schedule
IV, as it may be amended, supplemented, amended and restated or otherwise
modified from time to time by the Borrower with the written consent of the
Administrative Agent, provided that the consent of the Administrative Agent
shall not be required to modify the Disclosure Schedule in a manner that causes
the representations and warranties set forth herein to remain true and correct
as long as the state of facts reflected in the modified Disclosure Schedule
would not constitute a breach of the covenants set forth herein.

“Disbursement” is defined in Section 2.6.2.

“Disbursement Date” is defined in Section 2.6.2.

“Disposition” means the sale, conveyance or other disposition of any
Consolidated Group Property, material business or other material property,
interests or assets by the Borrower or any Subsidiary (including Capital Stock
owned by, the Borrower or such Subsidiary, and in all cases whether now owned or
hereafter acquired).

“Dividend” with respect to any Person means that such Person has declared or
paid a dividend or distribution or returned any equity capital to its
stockholders, partners, members or other holders of its Capital Stock or
authorized or made any other distribution, payment or delivery of property or
cash to its holders of Capital Stock as such, or redeemed, retired, purchased,
repurchased or otherwise acquired, directly or indirectly, for a consideration
any shares of any class of its Capital Stock outstanding on or after the Closing
Date (or any options or warrants issued by such Person with respect to its
Capital Stock), or set aside any funds for any of the foregoing purposes, or
shall have permitted any of its Subsidiaries to purchase or otherwise acquire
for a consideration any shares of any class of the Capital Stock of such Person
outstanding on or after the Closing Date (or any options or warrants issued by
such Person with respect to its Capital Stock). Without limiting the foregoing,
“dividends” with respect to any Person shall also include all payments made (or
required to be made in the applicable period) by such Person with respect to any
stock appreciation rights, plans, equity incentive or achievement plans or any
similar plans or setting aside of any funds for the foregoing purposes, in each
case except to the extent (a) the same are paid in common stock of the Guarantor
or (b) such payments reduced Consolidated EBITDA.

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

 

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“Domestic Office” means, relative to any Lender, the office of such Lender
designated below its name in Annex I hereto or as set forth in a Lender
Assignment Agreement, or such other office of a Lender (or any successor or
assign of a Lender) within the United States as may be designated from time to
time by notice from a Lender, as the case may be, to each other Person party
hereto.

“Domestic Subsidiary” means a Subsidiary formed or organized under the laws of
the United States or any state thereof.

“Eligible Assignee” means and includes any Lender (and any Affiliate thereof),
an Approved Fund, any commercial bank, any financial institution, any finance
company, any fund that is regularly engaged in making, purchasing or investing
in loans or any other Person that would satisfy the requirements of an
“accredited investor” (as defined in SEC Regulation D, but excluding a natural
person), but shall not include Borrower, its Subsidiaries or any of their
Affiliates.

“Environmental Claims” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by the
Borrower, Guarantor or any of their respective Subsidiaries (a) in the ordinary
course of such Person’s business or (b) as required in connection with a
financing transaction or an acquisition or disposition of real estate) or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, “Claims”),
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and
(ii) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.

“Environmental Laws” means any and all present and future laws, statutes,
ordinances, rules, regulations, requirements, restrictions, permits, orders, and
determinations of any governmental authority that have the force and effect of
law, pertaining to pollution (including Hazardous Materials), natural resources
or the environment, whether federal, state, or local, including environmental
response laws such as the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, and as the same may be further amended (hereinafter
collectively called “CERCLA”).

“Environmental Occurrence” means any occurrence or event that would cause the
representations set forth in Section 6.12 to become untrue in any material
respect.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

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“ERISA Event” means any of the following if such event or occurrence could,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect: (a) the failure to make a required contribution to a
Pension Plan or a Multiemployer Plan; (b) a withdrawal by the Borrower or any
ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization or insolvent;
(d) the filing of a notice of intent to terminate a Pension Plan or a
Multiemployer Plan, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC
to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA, for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multiemployer Plan; (f) the occurrence of a reportable event
described in Section 4043(c) of ERISA with respect to any Pension Plan or
Multiemployer Plan; or (g) the imposition of any liability under Title IV of
ERISA other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.

“Event of Default” is defined in Section 8.1.

“Excess Cash Collateral” is defined in Section 2.6.7.

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

“Excusable Delay” means a delay solely due to acts of god, governmental
restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion,
fire, casualty, strikes, work stoppages, shortages of labor or materials or
other causes beyond the reasonable control of Borrower or the applicable
Borrowing Base Entity, but Borrower’s or such Borrowing Base Entity’s lack of
funds in and of itself shall not be deemed a cause beyond the control of
Borrower or such Borrowing Base Entity.

“Exercise Period” is defined in Section 14.3.

“Existing Letters of Credit” means Standby Letter of Credit S-19748 in the face
amount of $8,364,749.29 and Standby Letter of Credit CTCS-205195 in the face
amount of $934,400.

“Extended Maturity Date” is defined in Section 3.1(b).

“Extension Notice” is defined in Section 3.1(b).

“Extension Option” is defined in Section 3.1(b).

“Extension Term” is defined in Section 3.1(b).

 

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“Facility” means the $300,000,000 revolving credit facility (as such amount may
be increased or reduced as set forth herein) evidenced by this Agreement, as the
same may be amended, supplemented, amended and restated or otherwise modified
from time to time and in effect on such date.

“Federal Funds Rate” means, for any day, a fluctuating interest rate equal to:

(a) the rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal Reserve Bank
of New York (including any such successor, “H.15(519)”) on the preceding
Business Day opposite the caption “Federal Funds (Effective)”; or

(b) if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Lender from three federal funds brokers of recognized standing selected by it.

“Fee Letters” means those certain confidential letters, dated as of the Closing
Date between the Borrower, the Arrangers, the Lenders, and the Administrative
Agent.

“Fee Owner” means the lessor under a Ground Lease including, but not limited to,
Indian Creek Investors, Inc., the fee owner of the Marriott Lincolnshire.

“FF&E” means furniture, fixtures, and equipment.

“Fiscal Quarter” means any quarter of a Fiscal Year ending on the last day of
March, June, September or December.

“Fiscal Year” means any period of twelve (12) consecutive calendar months ending
on December 31; references to a Fiscal Year with a number corresponding to any
calendar year (e.g., the “2014 Fiscal Year”) refer to the Fiscal Year ending on
December 31 of such calendar year.

“Fiscal Year End” is defined in Section 7.1.13.

“Foreign Non-Borrowing Base Property Subsidiary” means a Subsidiary that does
not, directly or indirectly, own a Borrowing Base Property or any interest
therein and (x) that is a non-Domestic Subsidiary or (y) the only material
assets of which consist of the Capital Stock of a non-Domestic Subsidiary.

“Four Seasons Jackson Hole” means that certain Property currently referred to as
the Four Seasons Jackson Hole and located at 7680 Granite Loop Road, Teton
Village, Wyoming.

“Four Seasons Silicon Valley” means that certain Property currently referred to
as the Four Seasons Palo Alto or Four Seasons Silicon Valley and located at 2050
University Avenue, East Palo Alto, California.

“F.R.S. Board” means the Board of Governors of the U.S. Federal Reserve System
or any successor thereto.

 

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“Funds From Operations” shall be determined in the same manner as “Comparable
Funds From Operations” set forth in the Borrower’s most recent financial
statements submitted to Administrative Agent.

“GAAP” is defined in Section 1.4.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.

“Gross Asset Value” means, as of any date of determination, (1) during the
Appraisal Period, for any Borrowing Base Property and for any Consolidated Group
Property other than New Acquisitions and Development Properties, its Appraised
Value, (2) after the Appraisal Period, for any Borrowing Base Property and for
any Consolidated Group Property other than New Acquisitions and Development
Properties, the Adjusted Net Operating Income, as of the close of the then most
recently ended Fiscal Quarter computed for the period consisting of such Fiscal
Quarter and each of the three immediately preceding Fiscal Quarters, for such
Property divided by the Capitalization Rate, and (3) for any other Property:

(a) for each Consolidated Group Property that is a New Acquisition, an amount
equal to the Acquisition Cost with respect thereto;

(b) for each Consolidated Group Property that is a Development Property, an
amount equal to the Development Cost of such Property; and

(c) at any time and for any Property that is not a Consolidated Group Property,
an amount equal to Borrower’s share, based on its Share of the Unconsolidated
Subsidiary that is the Property Owner of such Property, of the Gross Asset Value
that would have been attributable to such Property pursuant to clause (1), (2),
(3)(a) or (3)(b) of this definition if such Property were a Consolidated Group
Property; provided, however, that the Gross Asset Value of any Property that is
subjected to a condominium regime or similar structure for the purpose of
timeshare, condominium hotel, or fractional interest or similar development will
be (i) for the portion of the Property to be retained by Borrower (or its
Subsidiary) to be operated as a traditional hotel, as set forth in the
Acceptable Appraisal during the Appraisal Period and, thereafter, pursuant to
clause (2) above, and (ii) for the portion of the Property to be held for sale,
the undepreciated “book value” of such portion of the Property.

“Gross Hotel Revenues” means for all Properties, all revenues and receipts of
every kind derived from operating such Properties, as the case may be, and parts
thereof, including, but not limited to: income (from both cash and credit
transactions), before commissions and discounts for prompt or cash payments,
from rentals or sales of rooms, stores, offices, meeting space, exhibit space,
or sales space of every kind (including rentals from timeshare marketing and
sales desks); license, lease, and concession fees and rentals (not including
gross receipts of licensees, lessees, and concessionaires); net income from
vending

 

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machines; health club membership fees; food and beverage sales; sales of
merchandise (other than proceeds from the sale of FF&E no longer necessary to
the operation of such Properties); service charges, to the extent not
distributed to the employees at such Properties as, or in lieu of, gratuities;
interest which accrues on amounts deposited in any FF&E reserve account and
proceeds, if any, from business interruption or other loss of income insurance;
provided, however, that Gross Hotel Revenues shall not include the following:
gratuities to employees of such Properties; federal, state, or municipal excise,
sales, use, or similar taxes collected directly from tenants, patrons, or guests
or included as part of the sales price of any goods or services; insurance
proceeds (other than proceeds from business interruption or other loss of income
insurance); condemnation proceeds; or any proceeds from the sale of all or a
portion of such Properties, including the sale of any condominium units, time
shares or similar fractional ownership interests at a Property.

“Ground Lease” means any long-term Lease of Land in which Borrower or any of its
Affiliates is the tenant of a Borrowing Base Property and is allowed to improve
the land and use it for the term of the Lease, including the Ground Lease for
the Marriott Lincolnshire.

“Ground Lessee” means the Tenant under any Ground Lease, including, but not
limited to, the Property Owner that is the ground lessee of the Marriott
Lincolnshire.

“Guarantor” means Strategic Hotels & Resorts, Inc.

“Guaranty” is defined in Section 5.1.4.

“Hazardous Materials” means any substance that is defined or listed as a
hazardous, toxic or dangerous substance under any present or future
Environmental Law or that is otherwise regulated or prohibited or subject to
investigation or remediation under any present or future Environmental Law
because of its hazardous, toxic, or dangerous properties, including (a) any
substance that is a “hazardous substance” under CERCLA and (b) petroleum wastes
or products.

“Hedging Agreements” means any Interest Rate Protection Agreements and any
foreign exchange contracts, currency swap agreements, commodity agreements or
other similar agreements or arrangements designed to protect against the
fluctuations in currency values or instruments to hedge and protect against
fluctuations in the Guarantor’s, Borrower’s and/or their Subsidiaries cash flow
and earnings from changes in financial markets, including, without limitation,
any and all rate swap transactions, basis swaps, credit derivative transactions,
forward rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward bond or forward bond price or forward bond
index transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, spot contracts, or any other similar transactions or any combination of
any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, and any and all transactions of any kind, and their related
confirmations and schedules, which are subject to the terms and conditions of,
or governed by, any form of master agreement published by the International
Swaps and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement, or any other master agreement.

 

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“Hedging Counterparty Intercreditor Agreement” means an intercreditor agreement
entered into pursuant to Section 9.2 hereof or the definition of “Credit Hedging
Agreement,” among the Administrative Agent on behalf of the Lenders and one or
more counterparties to a Hedging Agreement.

“herein,” “hereof,” “hereto,” “hereunder” and similar terms contained in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.

“Hotel del Coronado” means that certain Property currently referred to as the
Hotel del Coronado and located at 1500 Orange Avenue, Coronado, California.

“Hotel Revenue” means all revenues, income, rents, issues, profits, termination
or surrender fees, penalties and other amounts arising from the use or enjoyment
of all or any portion of a Borrowing Base Property, including, without
limitation, the rental or surrender of any office space, retail space, parking
space, halls, stores, and offices of every kind, the rental or licensing of
signs, sign space or advertising space and all rentals, revenues, receipts,
income, accounts, accounts receivable, cancellation fees, penalties, credit card
receipts and other receivables relating to or arising from rentals, rent
equivalent income, income and profits from guest rooms, meeting rooms,
conference and banquet rooms, food and beverage facilities, health clubs,
vending machines, parking facilities, telephone and television systems, guest
laundry, the provision or sale of other goods and services, and any other items
of revenue, receipts or other income as identified in the Uniform System.

“Impermissible Qualification” means, relative to the opinion or certification of
any independent public accountant as to any financial statement of the Borrower,
any qualification or exception to such opinion or certification

(a) which questions the status of the Borrower and its Subsidiaries, taken as a
whole, as a “going concern”;

(b) which relates to the limited scope of examination of any material portion of
the records of the Borrower and its Subsidiaries relevant to such financial
statement; or

(c) which relates to the treatment or classification of any item in such
financial statement and which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause the Borrower to be
in default of any of its obligations under Section 7.2.4.

“Impositions” means all taxes (including all ad valorem, sales (including those
imposed on lease rentals), use, single business, gross receipts, value added,
intangible transaction, privilege or license or similar taxes), governmental
assessments (including all assessments for public improvements or benefits,
whether or not commenced or completed prior to the Closing

 

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Date and whether or not commenced or completed within the term of this
Agreement), water, sewer or other rents and charges, excises, levies, fees
(including license, permit, inspection, authorization and similar fees), and all
other governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Borrowing Base Properties and/or any Rents and Hotel Revenue (including all
interest and penalties thereon), which at any time prior to, during or in
respect of the term hereof may be assessed or imposed on or in respect of or be
a Lien upon (a) Borrower (including all income, franchise, single business or
other taxes imposed on Borrower for the privilege of doing business in the
jurisdiction in which the applicable Borrowing Base Property is located), (b) a
Borrowing Base Property, or any other Collateral delivered or pledged to
Administrative Agent in connection with the Loan, or any part thereof, or any
Rents or Hotel Revenue therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of, or sales from,
or activity conducted on, or in connection with the Borrowing Base Properties or
the leasing or use of all or any part thereof. Nothing contained in this
Agreement shall be construed to require Borrower, any Borrowing Base Entity or
any Subsidiary to pay any tax, assessment, levy or charge imposed on (i) any
tenant occupying any portion of a Borrowing Base Property, (ii) any third party
manager of the Borrowing Base Properties, including any Manager, or
(iii) Administrative Agent or any Lender in the nature of a capital levy,
estate, inheritance, succession, income or net revenue tax.

“including” and “include” means including without limiting the generality of any
description preceding such term.

“Increase Effective Date” is defined in Section 2.2.3(a).

“Indebtedness” means, as to any Person, without duplication, (i) all
indebtedness (including principal, interest, fees and charges) of such Person
for borrowed money or for the deferred purchase price of property or services
(excluding accounts payable, current trade liabilities and accrued expenses
arising in the ordinary course of business), (ii) the maximum amount available
to be drawn under all letters of credit issued for the account of such Person
and all unpaid drawings in respect of such letters of credit, (iii) all
Indebtedness of the types described in clause (i), (ii), (iv), (v) or (vi) of
this definition secured by any Lien on any property owned by such Person,
whether or not such Indebtedness has been assumed by such Person (provided that,
if the Person has not assumed or otherwise become liable in respect of such
Indebtedness, such Indebtedness shall be deemed to be the outstanding principal
amount (or maximum principal amount, if larger) of such Indebtedness or, if not
stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof, as determined by such Person in good faith), (iv) all
obligations for the payment of money relating to a Capitalized Lease Liability,
(v) all Contingent Obligations of such Person and (vi) all obligations under any
Hedging Agreement or under any similar type of agreement.

“Indemnified Liabilities” is defined in Section 10.3.

“Indemnitees” is defined in Section 10.3.

 

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“Independent” means, when used with respect to any Person, a Person who:
(i) does not have any direct financial interest or any material indirect
financial interest in Borrower or in any Affiliate of Borrower, (ii) is not
connected with any Borrower or any Affiliate of Borrower as an officer,
employee, promoter, underwriter, trustee, partner, member, manager, creditor,
director, supplier, customer or person performing similar functions and (iii) is
not a member of the immediate family of a Person defined in (i) or (ii) above.

“Independent Architect” means an architect, engineer or construction consultant
selected by Borrower which is Independent, licensed to practice in the
jurisdiction and has at least five (5) years of architectural experience and
which is reasonably acceptable to Administrative Agent.

“Initial Borrowing Base Properties” means, individually and collectively, each
of the Ritz Carlton Laguna Niguel, the Ritz Carlton Half Moon Bay, the Four
Seasons Silicon Valley, the Four Seasons Jackson Hole, and the Marriott
Lincolnshire.

“Initial Maturity Date” means April 25, 2018 (i.e., the four-year anniversary
date of the Closing Date).

“Insurance Policies” means satisfactory evidence (including appropriate
certificates or certified copies of policies) of insurance and reinsurance
policies (whether individual or blanket).

“Insurance Requirements” means all of the terms of any insurance policy required
pursuant to this Agreement.

“Interest Period” means, relative to any LIBO Rate Loan, the period beginning on
(and including) the date on which such LIBO Rate Loan is made or continued as,
or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4 and shall end
on (but exclude) the day which numerically corresponds to such date one, two,
three or six months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), as the Borrower may
select in its relevant notice pursuant to Section 2.3 or 2.4; provided, however,
that:

(a) the Borrower shall not be permitted to select Interest Periods to be in
effect at any one time which have expiration dates occurring on more than five
different dates;

(b) if such Interest Period would otherwise end on a day which is not a Business
Day, such Interest Period shall end on the next following Business Day (unless
such next following Business Day is the first Business Day of a calendar month,
in which case such Interest Period shall end on the Business Day next preceding
such numerically corresponding day);

(c) no Interest Period for any LIBO Rate Loan may end later than the Maturity
Date; and

(d) no Interest Period may be elected at any time when an Event of Default is
then in existence unless Lenders in their sole discretion otherwise agree.

 

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“Interest Rate Protection Agreement” means any interest rate swap agreement,
interest rate cap agreement, interest collar agreement, interest rate hedging
agreement or other similar agreement or arrangement.

“Investment” means, relative to any Person,

(a) any loan or advance made by such Person to any other Person;

(b) any Contingent Obligation of such Person incurred in connection with loans
or advances described in clause (a) above;

(c) any ownership or similar interest held or acquired by such Person in any
other Person and any capital contribution made by such Person in any other
Person; and

(d) any other acquisition by such Person of any assets or properties of another
Person outside the ordinary course of business of such first Person.

The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity, or distributions or dividends
paid, thereon and shall, if made by the transfer or exchange of property other
than cash, be deemed to have been made in an original principal or capital
amount equal to the fair value of such property at the time of such Investment,
as determined in good faith by the Borrower.

“Issuance Request” means a Letter of Credit request and certificate duly
executed by an Authorized Officer of the Borrower, substantially in the form of
Exhibit B-2 hereto, including Borrower’s certified calculation of the Aggregate
Commitment and the Available Commitment after giving effect to the issuance of
the Letter of Credit requested thereunder and certification by such Authorized
Officer that each Borrowing Base Property included in such calculations
continues to satisfy all requirements for a “Borrowing Base Property” hereunder.

“Issuer” means DBNY in its capacity as issuer of the Letters of Credit, together
with each other Person as shall have subsequently been appointed as the
successor Issuer in accordance with Section 9.10. At the request of Borrower,
upon providing notice to Administrative Agent, another Lender with a Revolving
Loan Commitment or an Affiliate of DBNY (including, without limitation, JPMorgan
Chase Bank and/or Deutsche Bank Trust Company Americas, each of which issued an
Existing Letter of Credit) may, with such other Lender’s or Affiliate’s (as
applicable) consent, in its sole discretion, issue one or more Letters of Credit
hereunder and shall be deemed to be the Issuer with respect to such Letter(s) of
Credit.

“Joinder” means a Joinder duly executed by an Authorized Officer of any
Subsidiary, substantially in the form of Exhibit H-2 hereto.

“Joint Book Running Managers” means Deutsche Bank Securities Inc. and J.P.
Morgan Securities LLC.

“Joint Venture” means a partnership, limited liability company, corporation or
other entity held or owned, directly or indirectly, jointly by the Guarantor,
Borrower or a Subsidiary of Borrower and one or more Persons which Persons are
not Consolidated with Borrower.

 

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“Lease” means any lease, sublease or sub-sublease, letting, license, concession
or other agreement (whether written or oral and whether now or hereafter in
effect) pursuant to which any Tenant is granted by Borrower a possessory
interest in, or right to use or occupy all or any portion of any space in any
Borrowing Base Properties, and every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.

“Legal Requirements” shall mean all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations and
requirements, and irrespective of the nature of the work to be done, of every
Governmental Authority including, without limitation, Environmental Laws and all
covenants, restrictions and conditions now or hereafter of record which may be
applicable to Borrower or any Borrowing Base Entity or to the Property and the
Improvements, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or reconstruction of the Property and the
Improvements, including, without limitation, building and zoning codes and
ordinances and laws relating to handicapped accessibility.

“Lender Assignment Agreement” means a lender assignment agreement substantially
in the form of Exhibit F hereto.

“Lender Default” means (i) the wrongful refusal (which has not been retracted)
or the failure of a Lender to make available its portion of any Borrowing or to
fund its portion of any unreimbursed payment or to purchase participating
interests under Section 2.6.1 or (ii) a Lender having notified in writing any
Borrower and/or the Administrative Agent that such Lender does not intend to
comply with its obligations under Section 2.1 in circumstances where such
non-compliance would constitute a breach of such Lender’s obligations under the
respective Section.

“Lenders” is defined in the preamble and in addition shall include any Eligible
Assignee that becomes a Lender pursuant to Section 10.9.1.

“Letter of Credit” is defined in Section 2.1.2.

“Letter of Credit Collateral” is defined in Section 8.4(b).

“Letter of Credit Collateral Account” is defined in Section 8.4(a).

“Letter of Credit Commitment” means, with respect to the Issuer, the Issuer’s
obligation to issue Letters of Credit pursuant to Section 2.1.2 and, with
respect to each of the other Lenders that has a Revolving Loan Commitment, the
obligations of each such Lender to participate in such Letters of Credit
pursuant to Section 2.6.1.

 

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“Letter of Credit Commitment Amount” means, on any date, a maximum amount equal
to the lesser of (i) Seventy-Five Million Dollars ($75,000,000.00), as such
amount may be permanently reduced from time to time pursuant to Section 2.2, and
(ii) the Revolving Loan Commitment Amount on such date.

“Letter of Credit Outstandings” means, on any date, an amount equal to the sum
of the then aggregate amount which is undrawn and available under all issued and
outstanding Letters of Credit, plus the then aggregate amount of all unpaid and
outstanding Reimbursement Obligations.

“LIBO Office” means, relative to any Lender, the office of such Lender
designated below its name in Annex I hereto or as set forth in a Lender
Assignment Agreement, or such other office of a Lender as designated from time
to time by notice from such Lender to the Borrower and the Administrative Agent,
whether or not outside the United States, which shall be making or maintaining
LIBO Rate Loans of such Lender hereunder.

“LIBO Rate” means, with respect to each day during each Interest Period
pertaining to a LIBO Rate Loan, the rate of interest per annum equal to the
IntercontinentalExchange Group Inc.’s LIBOR Rate (“ICE LIBOR”), as published by
Reuters (or other commercially available source providing quotations of ICE
LIBOR as designated by the Administrative Agent from time to time) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period.

“LIBO Rate Loan” means a Revolving Loan bearing interest, at all times during an
Interest Period applicable to such Revolving Loan, at a fixed rate of interest
determined by reference to the LIBO Rate.

“Licenses” is defined in Section 6.33.

“Lien” means any mortgage, deed of trust, pledge, security interest,
hypothecation, charge, lien (statutory or other), escrow or similar encumbrance
of any kind, or any other type of similar preferential arrangement (including
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).

“Loan Documents” means, collectively, this Agreement, the Notes (if any), the
Letters of Credit, the Security Documents, the Guaranty, the Subsidiary
Guaranty, the Fee Letters, the Pledge Agreement, each Borrowing Request and each
Issuance Request.

“Loans” means a Revolving Loan or a Swingline Loan of any Type.

“Management Agreement” means the management agreements with respect to each
Initial Borrowing Base Property as set forth on Schedule VI attached to this
Agreement or with respect to any Property that becomes a Borrowing Base Property
after the Closing Date, in each case pursuant to which the Manager is to provide
management and other services with respect to the applicable Borrowing Base
Property, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time in accordance with the terms hereof.

 

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“Manager” means (i) with respect to the Four Seasons Silicon Valley and the Four
Seasons Jackson Hole, Four Seasons Hotel Limited, a corporation incorporated
under the laws of Ontario, Canada, (ii) with respect to Marriott Lincolnshire,
Marriott Hotel Services, Inc., a Delaware corporation and (iii) with respect to
Ritz Carlton Laguna Niguel and the Ritz Carlton Half Moon Bay, The Ritz-Carlton
Hotel Company, L.L.C., a Delaware limited liability company, together with, in
each instance, any successor management company permitted hereunder or, subject
to Section 7.2.14, under the applicable Management Agreement for any Borrowing
Base Property.

“Mandatory Borrowing” is defined in Section 2.9(b).

“Marriott Lincolnshire” means that certain Property currently referred to as
Lincolnshire Marriott and located at Ten Marriott Drive, Lincolnshire, Illinois.

“Material Adverse Effect” means a circumstance or condition that, either
individually or in the aggregate has had, or could reasonably be expected to
have, a material adverse effect on (i) the business, assets, operations,
properties, or financial condition of the Borrower and its Subsidiaries taken as
a whole, (ii) the ability of the Borrower to perform its obligations under this
Agreement and the other Loan Documents taken as a whole, (iii) the ability of
the Guarantor and the Subsidiary Guarantors, taken together as a whole, to
perform their obligations under this Agreement and the other Loan Documents
taken as a whole, (iv) the legality, validity or enforceability of the Loan
Documents taken as a whole, or (v) the rights and remedies of the Administrative
Agent and the Lenders under this Agreement and the other Loan Documents.

“Material Agreements” means any license, contract, joint venture, management, or
other agreement, the loss of which could reasonably be expected to have a
Material Adverse Effect.

“Maturity Date” means the Initial Maturity Date unless the Extension Option is
properly exercised pursuant to Section 3.1, in which case “Maturity Date” means
the Extended Maturity Date.

“Mezzanine Indebtedness” means Non-Recourse Indebtedness secured by direct or
indirect beneficial interests in the Capital Stock of a Property Owner or
Operating Lessee and customary recourse guaranties provided in connection
therewith.

“Monthly Payment Date” means the last day of each calendar month, or, if any
such day is not a Business Day, the next succeeding Business Day.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage Indebtedness” means (x) with respect to any Property located in the
United States, Property-level Non-Recourse Indebtedness, where the borrower
under such Indebtedness is a special purpose bankruptcy-remote entity, and
(y) with respect to any Property located other than in the United States,
Indebtedness described in (x) or Non-Recourse Indebtedness secured by a mortgage
(or local equivalent) on such Property, where the borrower under such
Indebtedness and the owner of such Property are each foreign (non-Domestic)
Subsidiaries of the Borrower.

 

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“Multiemployer Plan” means a “multiemployer plan,” within the meaning of
Section 4001(a)(3) of ERISA, with respect to which the Borrower or any ERISA
Affiliate may have any liability.

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto with similar authority.

“Net Asset Value” means the sum of (i) the Gross Asset Value of wholly-owned
Properties less the then outstanding amount of Indebtedness with respect to such
Properties and (ii) the Borrower’s Share of the amount described in clause
(i) with respect to any Properties owned through Joint Ventures.

“Net Operating Income” means the amount obtained by subtracting Operating
Expenses from Operating Income.

“Net Termination Value” means at any time, with respect to all Hedging
Agreements for which a Net Termination Value is being determined, the excess, if
positive, of (i) the aggregate of the unrealized net loss position, if any, of
the Guarantor, Borrower and/or their Subsidiaries under each such Hedging
Agreement on a marked-to-market basis determined no more than one month prior to
such time less (ii) the aggregate of the unrealized net gain position, if any,
of the Guarantor, Borrower and/or their Subsidiaries under each such Hedging
Agreement on a marked-to-market basis determined no more than one (1) month
prior to such time, with each marked-to market determination made pursuant to
clauses (i) and (ii) above in connection with a determination of “Net
Termination Value” to be made on the same date.

“New Acquisitions” means a Property that has been owned or leased for fewer than
twelve (12) full calendar months.

“New Lease” is defined in Section 7.1.32(a).

“New Lender” is defined in Section 2.2.3(a).

“Non-Defaulting Lender” means and includes each Lender other than a “Defaulting
Lender.”

“Non-Disturbance Agreement” is defined in Section 7.1.32(f).

“Non-Recourse Indebtedness” means Indebtedness with respect to which the right
of recovery of the obligee is limited to recourse against the collateral
securing such Indebtedness or, if the obligor is a Subsidiary of Borrower
structured as a “special/single purpose entity” the assets of which consist
primarily of either a Property or direct or indirect interests in the Capital
Stock of a Property Owner, then the right of recovery of the obligee is limited
to the assets of the special/single purpose entities that are the obligor(s)
with respect to such Indebtedness. Notwithstanding the foregoing, Non-Recourse
Indebtedness may include customary “bad boy” recourse guaranties provided by or
on behalf of the obligor in connection therewith. For the

 

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avoidance of doubt, Non-Recourse Indebtedness shall not include any Indebtedness
that is guaranteed, whether partially or entirely, by recourse payment
guaranties provided by or on behalf of the obligor in connection therewith
(other than customary “bad boy” recourse guaranties referred to in the previous
sentence).

“Non-U.S. Lender” is defined in clause (e) of Section 4.6.

“Non-U.S. Participant” means a Participant that is not incorporated or organized
in or under the laws of the United States or a state thereof.

“Note” means a Revolving Note.

“Obligations” means all monetary obligations (whether absolute or contingent,
matured or unmatured, direct or indirect, choate or inchoate, sole, joint,
several or joint and several, due or to become due, heretofore or hereafter
contracted or acquired) of the Borrower, Guarantor and each Subsidiary Guarantor
to any Lender or the Issuer or the Administrative Agent arising under this
Agreement, the Notes, the Letters of Credit and each other Loan Document.

“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the
Treasury.

“Operating Expenses” means, for any specified period and any Property, without
duplication, all expenses actually paid or payable by or on behalf of Property
Owner during such period in connection with the ownership or operation of the
Property, including costs (including labor) of providing services including
rooms, food and beverage, telecommunications, garage and parking and other
operating departments, as well as real estate and other business taxes, rental
expenses, insurance premiums, utilities costs, administrative and general costs,
repairs and maintenance costs, third-party franchise fees, other costs and
expenses relating to the Property, legal expenses (incurred in connection with
the ordinary course operation of the Property), determined, in each case on an
accrual basis, in accordance with GAAP. “Operating Expenses” shall not include
(i) depreciation or amortization or other noncash items, (ii) the principal of
and interest on Indebtedness for borrowed money, (iii) income taxes or other
taxes in the nature of income taxes, (iv) any expenses (including legal,
accounting and other professional fees, expenses and disbursements) incurred in
connection with and allocable to the issuance of the Revolving Note,
(v) distributions to the shareholders of the Property Owner or (vi) Capital
Expenditures or management fees actually paid or payable by or on behalf of
Property Owner during such period.

“Operating Income” means for any specified period and any Property, all income
received by Property Owner from any Person during such period in connection with
the ownership or operation of the Property, determined on an accrual basis of
accounting determined in accordance with GAAP, including the following:

(i) all amounts payable to Property Owner or to the applicable manager for the
account of Property Owner by any Person as rent and/or Hotel Revenue;

 

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(ii) all amounts payable to Property Owner pursuant to any reciprocal easement
and/or operating agreements, covenants, conditions and restrictions, condominium
documents and similar agreements affecting the Property and binding upon and/or
benefiting Property Owner and other third parties, but specifically excluding
any management agreement;

(iii) condemnation awards to the extent that such awards are compensation for
lost rent allocable to such specified period;

(iv) business interruption and loss of “rental value” insurance proceeds (but
allocating such proceeds to the period to which they relate); and

(v) all investment income with respect to any collateral accounts.

Notwithstanding the foregoing clauses (i) through (v), Operating Income shall
not include (A) any insurance proceeds (other than of the types described in
clauses (iii) and (iv) above), (B) any proceeds resulting from the sale,
exchange, transfer, financing or refinancing of all or any part of the Property
(other than of the types described in clause (i), (iii) and (v) above), (C) any
repayments received from tenants of principal loaned or advanced to tenants by
Property Owner, (D) any type of income that would otherwise be considered
Operating Income pursuant to the provisions above but is paid directly by any
tenant to a Person other than Property Owner or its agent and (E) any fees or
other amounts payable by a tenant or another Person to Property Owner that are
reimbursable to tenant or such other Person.

“Operating Lease Subordination Agreement” means that Operating Lease
Subordination Agreement, dated as of the Closing Date, by and between each
Borrowing Base Entity and Administrative Agent on behalf of Lenders.

“Operating Lessee” means a Taxable REIT Subsidiary that is owned, directly or
indirectly, wholly or through a Joint Venture, by the Borrower and that leases a
Property.

“Organizational Document” means, relative to Borrower, each Subsidiary and
Guarantor or Joint Venture, as applicable, its certificate of incorporation,
by-laws, certificate of partnership, partnership agreement, certificate of
formation or limited liability company agreement and any certificate of
designations or similar instrument relating to the rights of shareholder,
including preferred shareholders, of such Person.

“Other Charges” means maintenance charges, impositions other than Impositions,
and any other charges, including, without limitation, vault charges and license
fees for the use of vaults, chutes and similar areas adjoining a Borrowing Base
Property, now or hereafter levied or assessed or imposed against such Borrowing
Base Property or any part thereof by any Governmental Authority, other than
those required to be paid by a tenant or Manager pursuant to its respective
Lease or Management Agreement.

“Other Taxes” means any present or future stamp, court or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, this Agreement or
any other Loan Document.

 

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“Pari-Pasu Hedging Agreement” means (A) a Hedging Agreement (i) between a
counterparty which is not a Lender or affiliate of a Lender and Borrower (or
Guarantor), (ii) that has been pledged by Borrower (or Guarantor) as additional
Collateral for the Facility, and (iii) with respect to which a Hedging
Counterparty Intercreditor Agreement is in effect and (B) a Credit Hedging
Agreement.

“Pari-Pasu Hedging Counterparty” means a Person (other than Borrower, Guarantor
or any Subsidiary of either), that is party to a Pari-Pasu Hedging Agreement.

“Participant” is defined in Section 10.9.2.

“Participant Register” is defined in Section 10.9.2.

“Patriot Act” is defined in Section 6.21.

“PBGC” means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA
(other than a Multiemployer Plan) with respect to which the Borrower or any
ERISA Affiliate may have any liability.

“Percentage” means, relative to any Lender, the applicable fraction, expressed
as a percentage, relating to Revolving Loans and Letter of Credit Outstandings,
the numerator of which shall be such Lender’s Commitment and the denominator of
which shall be the Commitment Amount, as such percentage may be adjusted from
time to time.

“Permitted Borrowing Base Debt” means, with respect to any Borrowing Base
Property or Borrowing Base Ownership Entity: (a) trade payables incurred in the
ordinary course of such Borrowing Base Ownership Entity’s business, not secured
by Liens on the Property or the Capital Stock of a Borrowing Base Ownership
Entity, not exceeding one percent (1%) of the Gross Asset Value of such
Borrowing Base Property at any one time outstanding, payable by or on behalf of
the Borrowing Base Ownership Entity for or in respect of the operation of the
Borrowing Base Property in the ordinary course of operating such Borrowing Base
Ownership Entity’s business, provided that (but subject to the remaining terms
of this definition) each such amount shall be paid within sixty (60) days
following the date on which each such amount is incurred (except in the case of
a bona fide dispute being diligently contested in good faith and for which
adequate reserves have been set aside), (b) purchase money indebtedness, capital
lease obligations or other indebtedness, in each case for FF&E incurred in the
ordinary course of business (but, in any case, not with respect to Property
acquisitions or in any event recourse to Borrower or Guarantor) in the aggregate
not exceeding three percent (3%) of the Gross Asset Value of such Borrowing Base
Property at any one time outstanding with respect to such Borrowing Base
Property, (c) the Borrowing Base Intercompany Indebtedness, (d) indebtedness
under this Agreement, and (e) obligations due and payable by Borrower pursuant
to a permitted

 

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Material Agreement or any other agreement approved by Administrative Agent and
not secured by Liens on such Borrowing Base Property or Borrowing Base Ownership
Entity’s Capital Stock, each in the ordinary course of operating such Borrowing
Base Property.

“Permitted Borrowing Base Liens” means, with respect to a Borrowing Base
Property or Borrowing Base Ownership Entity:

(a) Liens for taxes, assessments or governmental charges or levies on such
Borrowing Base Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith and
by appropriate proceedings and for which adequate reserves shall have been set
aside on the books of the Borrower or the applicable Borrowing Base Ownership
Entity;

(b) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ liens
and other similar liens arising in the ordinary course of business which secure
payment of obligations not more than sixty (60) days past due or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on the books of the Borrower or such
Borrowing Base Ownership Entity;

(c) Liens (other than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business in connection with workmen’s compensation,
unemployment insurance or other forms of governmental insurance or benefits, or
to secure performance of tenders, statutory and regulatory obligations, bids,
leases and contracts or other similar obligations (other than for borrowed
money) entered into in the ordinary course of business or to secure obligations
on surety bonds or performance or return-of-money bonds;

(d) Liens securing permitted indebtedness of the type described in clause (b) of
the definition of Permitted Borrowing Base Debt so long as such Lien is only in
respect of the specific property relating to such obligation;

(e) Liens securing Borrowing Base Intercompany Indebtedness;

(f) Easements, rights-of-way, municipal and zoning ordinances or similar
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances against Real Property as are of a nature generally existing with
respect to properties of a similar character and which do not in any material
and adverse way affect the marketability of the Borrowing Base Property or
interfere with the use thereof in the business of the Borrower or its
Subsidiaries;

(g) Liens arising solely by virtue of any statutory or common law provision
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, provided that such deposit account is not a cash collateral
account;

(h) Leases for space entered into in the ordinary course of business affecting
any Property (to tenants as tenants only, without purchase rights or options);

(i) Liens and security interests created or permitted by the Loan Documents; and

 

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(j) with respect to the Borrowing Base Properties, all Liens, encumbrances and
other matters approved by Administrative Agent, but in no event any Mortgage
Indebtedness or Mezzanine Indebtedness.

“Permitted Construction Indebtedness” means Indebtedness for Construction Costs
secured by, a Property and/or the Capital Stock of a Property Owner (including
customary recourse guaranties provided in connection therewith), where the
borrower under such Indebtedness is a special purpose bankruptcy-remote entity,
which does not provide for or require any pre-event of default cash flow sweeps
or cash traps, whether resulting from low debt service coverage or otherwise,
and the maximum principal amount of which does not exceed seventy-five percent
(75%) of the Construction Costs of such Property.

“Person” means any natural person, corporation, limited liability company,
partnership, joint venture, joint stock company, firm, association, trust or
unincorporated organization, government, governmental agency, court or any other
legal entity, whether acting in an individual, fiduciary or other capacity.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Borrower sponsors or maintains or to which the Borrower makes, is
making or is obligated to make contributions and includes any Pension Plan.

“Pledge Agreement” means that certain Pledge Agreement dated as of the Closing
Date, by and among Borrower, the Borrowing Base Ownership Entities and the
Administrative Agent, as the same may be hereafter modified, supplemented or
amended from time to time.

“Pledge Agreement Collateral” means all “Collateral” under, and as defined in,
the Pledge Agreement.

“Pre-Increase Lenders” is defined in Section 2.2.3(c).

“Prior Facility” means that certain Credit Agreement, dated as of June 30, 2011,
by and among Borrower, Deutsche Bank Trust Company Americas as Administrative
Agent, and various financial institutions as Lenders.

“Post-Increase Lenders” is defined in Section 2.2.3(c).

“Pro Forma Borrowing Base Coverage Ratio” means, as of any date of
determination, the ratio of (a) Adjusted Net Operating Income allocable to the
Borrowing Base Properties for the immediately preceding trailing twelve calendar
month period, adjusted on a pro forma basis for Borrowing Base Property
acquisitions and dispositions consummated during the period of determination, to
(b) Pro Forma Interest Expense.

“Pro Forma Interest Expense” means, as of any date of determination, the
interest expense that would be payable under the Facility for a twelve
(12) month period, assuming: (1) an interest rate equal to the greater of
(i) the lesser of (x) the sum of the Base Rate plus the

 

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Applicable Margin and (y) the sum of the LIBO Rate plus the Applicable Margin,
each as of such date of determination and (ii) 7.0%; and (2) an outstanding
principal balance equal to the Aggregate Outstanding Balance as of such date of
determination, after giving effect to the requested Borrowing/Letter of Credit.

“Projections” is defined in Section 5.1.19(a).

“Properties” means all hotels and resorts owned or leased by Guarantor, Borrower
or any of its Subsidiaries or Unconsolidated Subsidiaries. Schedule I contains a
list of the Properties as of the Closing Date.

“Property Owner” means a Person that is the fee owner or ground lessee of a
Property.

“Property Release Notice” is defined in Section 7.1.22(f).

“Qualified Ground Lease” means a ground lease that (x) has a remaining term of
at least thirty (30) years (including, for this purpose, any renewal option
exercisable at the sole option of the ground lessee with no veto or approval
rights by the ground lessor or any lender to such ground lessor), (y) can be
mortgaged without the consent of the ground lessor and (z) contains customary
leasehold mortgagee protection rights (including, without limitation, the right
to receive notice of any ground lease default, the right to cure any such
default and the right to a new ground lease in favor of the leasehold mortgagee
or its designee in the event that the ground lease should terminate on account
of a default thereunder or for any other reason) as reasonably determined by the
Administrative Agent.

“Quarterly Payment Date” means the last day of each March, June, September and
December, or, if any such day is not a Business Day, the next succeeding
Business Day.

“Real Estate” means all land, buildings and improvements owned or leased by the
Borrower or any of its Subsidiaries, but excluding all operating fixtures and
equipment, whether or not incorporated into improvements.

“Real Property” means, collectively, the Land, the Improvements and the
Appurtenances.

“Recourse Indebtedness” means Indebtedness that is not Non-Recourse
Indebtedness.

“Register” is defined in Section 10.9.1(c).

“Reimbursement Obligation” is defined in Section 2.6.3.

“REIT” means a real estate investment trust under Sections 856 through 860 of
the Code.

“Release Date” is defined in Section 7.1.22(f)(i).

 

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“Released Borrowing Base Property” means any Borrowing Base Property that has
been released from the Borrowing Base pursuant to Section 7.1.22(f) or has
ceased to satisfy the requirements for a Borrowing Base Property under
Section 7.1.22(a) and with respect to which the provisions of Section 7.1.22(g)
have been complied with.

“Release Instruments” is defined in Section 7.1.22(f)(ii).

“Rents” means all rents, rent equivalents, moneys payable as damages or in lieu
of rent or rent equivalents, royalties (including, without limitation, all oil
and gas or other mineral royalties and bonuses), income, receivables, receipts,
revenues, deposits (including, without limitation, security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for the
account of or benefit of a Borrowing Base Entity from any and all sources
arising from or attributable to a Borrowing Base Property and proceeds, if any,
from business interruption or other loss of income insurance.

“Replaced Lender” is defined in Section 4.4.

“Replacement Lender” is defined in Section 4.4.

“Required Lenders” means, at any time, Non-Defaulting Lenders having or holding
at least fifty percent (50%) of the sum (without duplication) of the aggregate
outstanding principal amount of the Revolving Loans, the aggregate amount of the
Letter of Credit Outstandings and the unfunded amount of the Revolving Loan
Commitment Amount, in each case, taken as a whole, of the Non-Defaulting
Lenders, but in no event fewer than three (3) Lenders.

“Requirement of Law” means, as to any Person, any law, treaty, rule or
regulation or determination of an arbitrator or of a Governmental Authority, in
each case applicable to or legally binding upon the Person or any of its
property or to which the Person or any of its property is subject.

“Responsible Officer” means, with respect to any Person, its chief executive
officer, its president or any vice president, managing director, chief financial
officer, treasurer, controller or other officer thereof having substantially the
same authority and responsibility.

“Revolving Loan Commitment” means, for each Lender, the commitment by such
Lender to make Revolving Loans pursuant to Section 2.1 as set forth on its
signature page hereto or as set forth in a Lender Assignment Agreement.

“Revolving Loan Commitment Amount” means THREE HUNDRED MILLION DOLLARS
($300,000,000), as such amount may be increased or reduced from time to time
pursuant to Section 2.2.

“Revolving Loan Commitment Termination Date” means the earliest of:

(a) the Maturity Date;

 

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(b) the date on which the Revolving Loan Commitment Amount is terminated in full
or reduced to zero pursuant to Section 2.2; and

(c) the date on which any Commitment Termination Event occurs.

Upon the occurrence of any event described in the preceding clause (b) or (c),
the Revolving Loan Commitments shall terminate automatically and without any
further action.

“Revolving Loan Commitments” means, relative to any Lender, such Lender’s
obligation (if any) to make Revolving Loans pursuant to Section 2.1.1.

“Revolving Loans” is defined in Section 2.1.1.

“Revolving Note” means a promissory note, if any, executed by the Borrower and
payable to any Lender, in the form of Exhibit A hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrower to such Lender resulting from
outstanding Revolving Loans, and also means all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.

“Ritz Carlton Half Moon Bay” means that certain Property currently referred to
as the Ritz Carlton Half Moon Bay and located at One Miramontes Point Road, Half
Moon Bay, California.

“Ritz Carlton Laguna Niguel” means that certain Property currently referred to
as the Ritz Carlton Laguna Niguel and located at One Ritz-Carlton Drive, Dana
Point, California.

“S&P” means Standard & Poor’s Rating Services.

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

“Sanctioned Country” means, at any time, a country or territory which is the
subject or target of any Sanctions.

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

“SEC” means the U.S. Securities and Exchange Commission.

 

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“Security Deposits” means shall mean any cash, cash equivalents, letters of
credit or other tenant guarantees delivered to Borrower, Operating Lessee or any
of their Affiliates as security for any obligation under a Lease.

“Secured Creditors” means and includes each of the Administrative Agent, the
Issuer, the Lenders, the Pari-Pasu Hedging Counterparties, and their respective
subsequent assigns.

“Security Documents” means: (i) the Pledge Agreement (including any supplements
or Joinders thereto); (ii) financing statements to be filed with the appropriate
state and/or county offices for the perfection of a security interest in any of
the Collateral or any other collateral or security for the Obligations;
(iii) all other agreements, documents, and instruments evidencing, securing, or
pertaining to the Obligations or any part thereof, as shall from time to time be
executed and delivered by Borrower, Guarantor, or any other Person in favor of
any Secured Creditor; and (iv) all renewals, extensions, and restatements of,
and amendments and supplements to, any of the foregoing.

“Share” means, for any Person, such Person’s share of the assets, liabilities,
revenues, income, losses, or expenses of a Subsidiary or an Unconsolidated
Subsidiary based upon such Person’s percentage ownership of such Subsidiary or
Unconsolidated Subsidiary.

“Share Repurchase” is defined in Section 7.2.6(b).

“Specified Acquisition” means an acquisition of a portfolio of one or more hotel
properties (whether by purchasing such properties directly or by acquiring an
entity or entities that own such properties) with a minimum gross purchase price
of $400,000,000.

“Specified Change of Law” means the occurrence, after the date of this
Agreement, of any of the following: (a) the adoption or taking effect of any
law, rule, regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation, implementation or application
thereof by any Governmental Authority or (c) the making or issuance of any
request, rule, guideline or directive (whether or not having the force of law)
by any Governmental Authority; provided that notwithstanding anything herein to
the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines or directives thereunder or issued in
connection therewith and (y) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law,” regardless of the date enacted,
adopted or issued.

“Specified Default” means any Default under Section 8.1.1 or 8.1.9.

“Stated Amount” of each Letter of Credit means the total amount available to be
drawn under such Letter of Credit upon the issuance thereof, as such amount may
be amended from time to time.

“Stated Expiry Date” is defined in Section 2.6.

 

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“Stop Issue Notice” means a notice received by Issuer from the Administrative
Agent, whether on its own initiative or at the direction of the Required
Lenders, that one or more of the conditions specified in Article V are not then
satisfied, or that the issuance of a Letter of Credit would violate
Section 2.1.4.

“Subsidiary” means, for any Person, any other Person in whom such first Person
or a Subsidiary of such Person holds Capital Stock and whose financial results
would be consolidated under GAAP with the financial results of such first Person
on the consolidated financial statements of such first Person.

“Subsidiary Guarantor” means, individually and collectively, each Borrowing Base
Ownership Entity that is, or becomes, party to the Subsidiary Guaranty.

“Subsidiary Guaranty” is defined in Section 5.1.4.

“Swingline Borrowing” means a Borrowing under Section 2.9 hereof.

“Swingline Bond Notice” is defined in Section 2.9(b)(i).

“Swingline Commitment” is defined in Section 2.9(a).

“Swingline Lender” means the Administrative Agent and any other Lender
designated by the Borrower from among those Lenders identified by the
Administrative Agent as permissible Swingline Lenders; provided that no Lender
may be designated as a Swingline Lender without such Lender’s consent, in its
sole discretion.

“Swingline Loan” means a loan made by the Swingline Lender pursuant to
Section 2.9.

“Syndication Agent” means JPMorgan Chase Bank, N.A.

“Taking” means a temporary or permanent taking by any Governmental Authority as
the result or in lieu or in anticipation of the exercise of the right of
condemnation or eminent domain, of all or any part of a Borrowing Base Property,
or any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting such Borrowing Base Property or any
part thereof.

“Taxable REIT Subsidiary” means a Subsidiary that has elected to be treated as a
“taxable REIT subsidiary” under Section 856(l)(1) of the Code.

“Taxes” means any and all present or future taxes, levies, assessments, imposts,
duties, deductions, fees, withholdings or similar charges, and all liabilities
with respect thereto, excluding, in the case of each Lender and the
Administrative Agent, respectively, taxes imposed on any Lender or the
Administrative Agent as a result of a present or former connection between such
Lender or the Administrative Agent and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from such
Lender or the Administrative Agent having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement).

 

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“Tenant” means any Person leasing, subleasing or otherwise occupying any portion
of a Borrowing Base Property pursuant to a Lease, other than a Manager, an
Operating Lessee or their respective employees, agents and assigns.

“Title Searches” means title commitments and/or searches from each recording
district in which a Borrowing Base Property is located evidencing no Liens other
than Permitted Borrowing Base Liens with respect to each Borrowing Base
Property.

“Total Fixed Charge Coverage Ratio” means, as of the close of any Fiscal
Quarter, the ratio computed for the period consisting of such Fiscal Quarter and
each of the three immediately prior Fiscal Quarters, of (a) Consolidated EBITDA
for such period (computed without duplication to include the EBITDA from the pro
rata share of ownership in the Hotel del Coronado) to (b) the sum, on a
consolidated basis, of (i) Total Interest Expense for such period; plus (ii) the
principal amount of all scheduled amortization payments (but not final balloon
payments at maturity and excluding “low cash flow sweep” or other “springing”
variable pay down requirements) for such period on all Indebtedness of the
Consolidated Group; plus (iii) distributions on preferred membership units
payable by Borrower for the latest Fiscal Quarter and distributions made by the
Borrower for the latest Fiscal Quarter for the purpose of paying Dividends on
preferred shares in Guarantor multiplied by four (4) (but excluding any Share
Repurchase of such preferred shares made in compliance with Section 7.2.6); plus
(iv) an amount equal to the aggregate Deemed FF&E Reserves for the Consolidated
Group Properties for such period; plus (v) amounts paid by or on behalf of the
Consolidated Group into cash reserves as required pursuant to the terms of other
Indebtedness unless and until applied to pay amounts due under such
Indebtedness; plus (vi) without duplication, Borrower’s pro rata share of the
amounts described in clauses (i) – (v) above that relate to the Hotel del
Coronado.

“Total Interest Expense” means the aggregate cash interest expense of the
Consolidated Group for such period, as determined in accordance with GAAP,
including capitalized interest and the portion of any payments made in respect
of Capitalized Lease Liabilities allocable to interest expense, but excluding
(i) deferred financing costs, (ii) other non-cash interest expense and (iii) any
capitalized interest relating to construction financing for a Property to the
extent an interest reserve or a loan “holdback” is maintained in respect of such
capitalized interest pursuant to the terms of such financing as reasonably
approved by the Administrative Agent.

“Total Leverage Ratio” means, at any time, the ratio of: (a) Consolidated Debt
to (b) the sum of the aggregate Gross Asset Value in respect of all of the
Properties plus unrestricted cash and Cash Equivalents of the Borrower and its
wholly-owned Subsidiaries.

“Transaction” means the entering into of this Agreement and the other Loan
Documents on the Closing Date and the incurrence of Loans, if any, hereunder on
the Closing Date.

 

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“Transfer” means to, directly or indirectly, sell, assign, convey, mortgage,
transfer, pledge, hypothecate, encumber, grant a security interest in, exchange
or otherwise dispose of any beneficial interest or grant any option or warrant
with respect to, or where used as a noun, a direct or indirect sale, assignment,
conveyance, transfer, pledge or other disposition of any beneficial interest by
any means whatsoever whether voluntary, involuntary, by operation of law or
otherwise.

“Type” means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.

“UCC” means the Uniform Commercial Code as from time to time in effect in the
State of New York.

“UCC Searches” means central and local current financing statement searches from
the State of Delaware and each state in which a Property is located, and such
other jurisdictions as Administrative Agent may request, covering Guarantor,
Borrower, and each of its Subsidiaries, together with copies of all financing
statements listed in such searches.

“Unconsolidated Subsidiary” means, for any Person, any other Person in whom such
first Person holds Capital Stock and whose financial results would not be
consolidated under GAAP with the financial results of such first Person on the
consolidated financial statements of such first Person.

“Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA over the current value of that Plan’s assets,
determined in accordance with the assumptions used for funding the Plan pursuant
to Section 412 of the Code for the applicable plan year.

“Uniform System” means the Uniform System of Accounts for Hotels, 9th Edition,
International Association of Hospitality Accountants (1996), as from time to
time amended.

“United States” or “U.S.” means the United States of America, its fifty states
and the District of Columbia.

“Units” is defined in Section 11.2.3.

“Unsecured Indebtedness” means Recourse Indebtedness that is not secured by a
Lien.

“U.S. Lender” is defined in Section 4.6(d).

“wholly-owned” means, with respect to any direct or indirect Subsidiary, any
Subsidiary all of the outstanding Capital Stock of which is owned directly or
indirectly by the Borrower.

“Work” is defined in Section 12.4.1.

 

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Section 1.2 Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in each other Loan Document, the Disclosure
Schedule, or any Borrowing Request, Issuance Request, Closing Date Certificate,
Compliance Certificate, solvency certificate, Lender Assignment Agreement,
notice or other communications delivered from time to time in connection with
this Agreement or any other Loan Document.

Section 1.3 Cross-References. Unless otherwise specified, references in this
Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.

Section 1.4 Accounting and Financial Determinations. Unless otherwise specified,
all accounting terms used herein or in any other Loan Document or solvency
certificate, shall be interpreted, all accounting determinations and
computations hereunder or thereunder (including under Section 7.2.4) shall be
made, and all financial statements required to be delivered hereunder or
thereunder shall be prepared, in accordance with, those generally accepted
accounting principles (“GAAP”) applied in the preparation of the financial
statements referred to in Section 5.1.23; provided, however, that at any time
the computations determining compliance with Section 7.2 utilize accounting
principles different from those utilized in the financial statements furnished
to the Lenders pursuant to Section 7.1.1, such financial statements shall be
accompanied by reconciliation work-sheets. Unless otherwise expressly provided,
all financial covenants and defined financial terms shall be computed on a
consolidated basis for the Guarantor, Borrower and its Subsidiaries, in each
case without duplication.

If at any time any change in GAAP (including conversion to IFRS as described
below) would affect the computation of any financial covenant or ratio set forth
in any Loan Document, and either the Borrower or the Required Lenders shall so
request, the Administrative Agent and the Borrower shall negotiate in good faith
to amend such financial covenant or ratio (and provisions in this Agreement that
reference such covenant or ratio) to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such covenant or ratio shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Administrative Agent and the Lenders a written
reconciliation in form and substance reasonably satisfactory to the
Administrative Agent, between calculations of such covenant or ratio made before
and after giving effect to such change in GAAP. If the Borrower notifies the
Administrative Agent that it is required to report under IFRS or has elected to
do so through an early-adoption policy, “GAAP” shall mean international
financial reporting standards pursuant to IFRS (provided that after such
conversion, the Borrower cannot elect to report under U.S. generally accepted
accounting principles).

 

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ARTICLE II

REVOLVING LOAN COMMITMENT AND

BORROWING PROCEDURES, NOTES

Section 2.1 Commitments. On the terms and subject to the conditions of this
Agreement (including Section 2.1.3, Section 2.1.4, Section 2.1.5 and Article V),
the Lenders and the Issuer severally agree to make Credit Extensions as set
forth below.

Section 2.1.1 Revolving Loan Commitment. From time to time on any Business Day
occurring from and after the Closing Date to but excluding the Revolving Loan
Commitment Termination Date, each Lender severally agrees through the
Administrative Agent to make loans (relative to such Lender, its “Revolving
Loans”) to the Borrower equal to such Lender’s Percentage of the aggregate
amount of each Borrowing of the Revolving Loans requested by the Borrower to be
made on such day, provided that the making of any such Revolving Loan shall not:
(a) cause the Aggregate Outstanding Balance to exceed the Aggregate Commitment;
or (b) cause the Aggregate Outstanding Balance to exceed the Available
Commitment, in each case after giving effect to such Revolving Loan.

The commitment of each such Lender described in this Section 2.1.1 is herein
referred to as its “Revolving Loan Commitment.” On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow the Revolving Loans.

Section 2.1.2 Letter of Credit Commitment. From time to time on any Business Day
occurring from and after the Closing Date but prior to the tenth (10th) Business
Day prior to the Revolving Loan Commitment Termination Date, the Issuer will:

(a) issue one or more standby letters of credit in the form customarily used by
the Issuer or in such other form as requested by Borrower and approved by the
Issuer (each, a “Letter of Credit”) for the account of the Borrower in the
Stated Amount requested by the Borrower on such day; or

(b) extend the Stated Expiry Date of an existing standby Letter of Credit
previously issued hereunder to a date not later than the earlier of (x) the last
Business Day prior to the Maturity Date and (y) one (1) year from the date of
the then-current Stated Expiry Date, provided that the Issuer shall be under no
obligation to issue any Letter of Credit, or extend a Stated Expiry Date, if at
the time of such issuance:

(i) any order, judgment or decree of any Governmental Authority or arbitrator
shall purport by its terms to enjoin or restrain such Issuer from issuing such
Letter of Credit or any requirement of law applicable to such Issuer or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Issuer shall prohibit, or
request that such Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon such
Issuer with respect to such Letter of Credit any restriction or reserve or

 

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capital requirement (for which such Issuer is not otherwise compensated) not in
effect on the Closing Date, or any unreimbursed loss, cost or expense which was
not applicable, in effect or known to such Issuer as of the Closing Date and
which such Issuer reasonably and in good faith deems material to it; or

(ii) such Issuer shall have received a Stop Issue Notice from the Administrative
Agent prior to the issuance of such Letter of Credit.

Each Letter of Credit shall be issued in Dollars and on a sight basis only.

The parties acknowledge that an Affiliate of the Issuer and an Affiliate of the
Syndication Agent have issued Existing Letters of Credit to the Borrower
pursuant to the Prior Facility; however, the Existing Letters of Credit shall be
amended and deemed to be issued hereunder (and accordingly the Existing Letters
of Credit shall be deemed Letter of Credit Outstandings hereunder and, until
returned to the Issuer, shall reduce the amount available under the Letter of
Credit Commitment Amount).

Section 2.1.3 Lenders Not Permitted or Required to Make Loans. No Lender shall
be permitted or required to make any Loan if, after giving effect thereto, the
aggregate outstanding principal amount of all Revolving Loans, Swingline Loans
and all Letter of Credit Outstandings with respect to such Lender would exceed
the then existing Revolving Loan Commitment of such Lender, including such
Lender’s Percentage of the aggregate amount of all Letter of Credit Outstandings
and outstanding Swingline Loans.

Section 2.1.4 Issuer Not Permitted or Required to Issue Letters of Credit. The
Issuer shall not be permitted or required to issue any Letter of Credit if,
after giving effect thereto, (i) the aggregate amount of all Letter of Credit
Outstandings would exceed the Letter of Credit Commitment Amount or (ii) the sum
of the aggregate amount of all Letter of Credit Outstandings plus the aggregate
principal amount of all Revolving Loans and Swingline Loans then outstanding
would exceed any of (A) the Revolving Loan Commitment Amount, (B) the
then-current Aggregate Commitment, or (C) the then-current Available Commitment;
or if a Lender Default known to the Issuer exists, unless the Issuer has entered
into arrangements reasonably satisfactory to it and the Borrower to eliminate
the Issuer’s risk with respect to the participation in Letter of Credit
Outstandings by each Defaulting Lender, including cash collateralizing such
Defaulting Lender’s Percentage of Letter of Credit Outstandings in respect
thereof.

Section 2.1.5 Swingline Lender Not Permitted or Required to Make Swingline
Loans. The Swingline Lender shall not be permitted or required to make any
Swingline Loan if, after giving effect thereto, (i) the aggregate amount of all
outstanding Swingline Loans would exceed the Swingline Commitment or (ii) the
sum of the aggregate amount of all outstanding Swingline Loans, plus Letter of
Credit Outstandings plus the aggregate principal amount of all Revolving Loans
then outstanding would exceed any of (A) the Revolving Loan Commitment Amount,
(B) the then-current Aggregate Commitment, or (C) the then-current Available
Commitment; or if a Lender Default known to the Issuer exists, unless the
Swingline Lender has entered into arrangements reasonably satisfactory to it and
the Borrower to eliminate the Swingline Lender’s risk with respect to the
participation in Swingline Loans by each Defaulting Lender, including cash
collateralizing such Defaulting Lender’s Percentage of Swingline Loans in
respect thereof.

 

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Section 2.2 Increase/Reduction of the Commitment Amounts. The Commitment Amounts
are subject to increase and/or reduction from time to time pursuant to this
Section 2.2.

Section 2.2.1 Optional Reduction. The Borrower may, from time to time on any
Business Day occurring after the Closing Date, voluntarily reduce the amount of
the Revolving Loan Commitment Amount or the Letter of Credit Commitment Amount
on the Business Day so specified by the Borrower; provided, however, that
(a) all such reductions shall require at least three (3) Business Day’s prior
written notice to the Administrative Agent and shall be permanent, and any
partial reduction of any Commitment Amount shall be in a minimum amount of
$1,000,000 and in an integral multiple of $500,000 in excess thereof and (b) in
no event shall the Borrower be permitted to cancel Commitments for which a
Letter of Credit has been issued and is outstanding unless the Borrower returns
(or causes to be returned) such Letter of Credit to the Issuer.

Section 2.2.2 Mandatory Reduction. The Commitment Amount shall be reduced to
zero on the Revolving Loan Commitment Termination Date.

Section 2.2.3 Increase of Commitment Amount.

(a) Borrower may, upon written notice to the Administrative Agent and each
Lender, request an increase to the existing Revolving Loan Commitment by an
amount not to exceed, in the aggregate, $100,000,000. Each such notice shall
specify (i) the amount by which the Borrower desires to increase the Revolving
Loan Commitment, which shall not be less than $10,000,000 and shall not exceed,
together with any other increases to the Revolving Loan Commitment, $100,000,000
and (ii) the date on which Borrower proposes that the increased Revolving Loan
Commitment shall be effective and the time period within which each Lender is
requested to respond, which in each case shall be a date not fewer than ten
(10) Business Days after the date on which such notice is received by the
Administrative Agent and the Lenders. Each Lender in its sole and absolute
discretion may notify Administrative Agent within such time period whether or
not it agrees to increase its Revolving Loan Commitment and, if so, whether by
an amount equal to, greater than, or less than its Percentage of such requested
increase. Any Lender not responding within such time period shall be deemed to
have declined to increase its Revolving Loan Commitment. Administrative Agent
shall notify Borrower and each Lender of the Lenders’ responses to each request
made hereunder. If the existing Lenders do not agree to the full amount of a
requested increase, Borrower may then invite additional financial institutions,
that each qualify as an Eligible Assignee, to become Lenders hereunder and fund
any such deficiency (a “New Lender”). The date that any increased or new
Revolving Loan Commitments shall become effective shall be the “Increase
Effective Date.”

 

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(b) The increased Revolving Loan Commitments shall become effective, as of such
Increase Effective Date; provided that (i) each of the conditions set forth in
Section 5.2 shall be satisfied and Borrower shall deliver an Officer’s
Certificate which confirms and certifies that all applicable representations and
warranties contained in the Loan Documents are true and correct in all material
respects as if made on and as of the Increase Effective Date (unless they
expressly relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date), (ii) after giving pro forma effect to any Borrowings to be made
on the Increase Effective Date, Borrower shall be in compliance with the
covenants set forth in Section 7.2.4, (iii) Borrower shall deliver or cause to
be delivered any documentation reasonably requested by the Administrative Agent
in connection therewith and (iv) any New Lender shall have paid a processing fee
in the amount of $3,500 to the Administrative Agent.

(c) The increased or new Revolving Loan Commitments shall be effected by a
joinder agreement executed by Borrower, the Administrative Agent and each Lender
or New Lender making such increased or new Revolving Loan Commitment, in form
and substance satisfactory to each of them. In addition, unless otherwise
specifically provided herein, all references in Loan Documents to Revolving
Loans shall be deemed, unless the context otherwise requires, to include
references to Revolving Loans made pursuant to such new or increased Revolving
Loan Commitments. As of the Increase Effective Date, the existing Lenders (the
“Pre-Increase Lenders”) shall assign to any Lender or New Lender which is
acquiring a new or additional Revolving Loan Commitment on the Increase
Effective Date (the “Post-Increase Lenders”), and such Post-Increase Lenders
shall purchase from each Pre-Increase Lender, at the principal amount thereof,
such interests in any Revolving Loans, Letters of Credit and Swingline Loans
outstanding on such Increase Effective Date as shall be necessary in order that,
after giving effect to all such assignments and purchases, such Revolving Loans,
Letters of Credit and Swingline Loans will be held by Pre-Increase Lenders and
Post-Increase Lenders ratably in accordance with their Commitments after giving
effect to such increased Commitments and Percentages.

(d) The Revolving Loans and Commitments established pursuant to this
Section 2.2.3 shall constitute Revolving Loans and Commitments under, and shall
be entitled to all the benefits afforded by, this Agreement and the other Loan
Documents, and shall, without limiting the foregoing, benefit equally and
ratably from any guarantees and security interests created hereunder or under
the Loan Documents. Borrower shall, and shall cause its Subsidiaries to, take
any actions reasonably required by the Administrative Agent in order to effect
the foregoing. Any New Lender making a Revolving Loan Commitment hereunder shall
constitute a Lender under, and shall be entitled to all the benefits and
obligated by all the obligations created by, this Agreement and the other Loan
Documents.

Section 2.3 Borrowing Procedures. Revolving Loans shall be made by the Lenders
in accordance with Section 2.3.1.

 

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Section 2.3.1 Revolving Loans. By delivering a Borrowing Request to the
Administrative Agent on or before 1:00 p.m., New York City time, on a Business
Day, the Borrower may from time to time irrevocably request, on not less than
one (1) Business Day’s notice in the case of Base Rate Loans or three
(3) Business Days’ notice in the case of LIBO Rate Loans, that a Borrowing be
made, in the case of LIBO Rate Loans, in a minimum amount of $3,000,000 and an
integral multiple of $500,000 in excess thereof, in the case of Base Rate Loans,
in a minimum amount of $3,000,000 and in integral multiples of $500,000 in
excess thereof or, in either case, in the unused amount of the Revolving Loan
Commitment, and in any case in not to exceed the Available Commitment. On the
terms and subject to the conditions of this Agreement, each Borrowing shall be
comprised of the Revolving Loans, and shall be made on the Business Day,
specified in such Borrowing Request. On or before 12:00 noon, New York City
time, on such Business Day, each Lender shall deposit with the Administrative
Agent same day funds in an amount equal to such Lender’s Percentage of the
requested Borrowing. Such deposit will be made to an account which the
Administrative Agent shall specify from time to time by notice to the Lenders.
To the extent funds are received from the Lenders, the Administrative Agent
shall make such funds available to the Borrower by wire transfer to the accounts
the Borrower shall have specified in its Borrowing Request. Unless
Administrative Agent shall have been notified by any Lender prior to the date of
Borrowing that such Lender does not intend to make available to Administrative
Agent its portion of the Borrowing or Borrowings to be made on such date,
Administrative Agent may assume that such Lender has made such amount available
to Administrative Agent on such date of Borrowing, and Administrative Agent, in
reliance upon such assumption, may (in its sole discretion and without any
obligation to do so) make available to Borrower a corresponding amount. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender and Administrative Agent has made available same to Borrower, then
Administrative Agent shall be entitled to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon Administrative Agent’s demand therefor, then Administrative Agent shall
promptly notify Borrower, and Borrower shall, within five (5) Business Days, pay
such corresponding amount to Administrative Agent. Administrative Agent shall
also be entitled to recover from such Lender or Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by Administrative Agent to Borrower to
the date such corresponding amount is recovered by Administrative Agent, at a
rate per annum equal to the then applicable rate of interest, calculated in
accordance with Section 3.2, for the respective Loans. No Lender’s obligation to
make any Loan shall be affected by any other Lender’s failure to make any Loan.
At any time that an Event of Default has occurred and is continuing, Borrower
shall not be entitled to elect or request LIBO Rate Loans.

Section 2.3.2 Telephonic Notice. Without in any way limiting the obligation of
Borrower to confirm in writing any telephonic notice permitted to be given
hereunder, Administrative Agent may act prior to receipt of written confirmation
without liability upon the basis of such telephonic notice believed by
Administrative Agent in good faith to be from an Authorized Officer of Borrower
entitled to give telephonic notices under this Agreement on behalf of Borrower.
In each such case, Administrative Agent’s record of the terms of such telephonic
notice shall be conclusive absent manifest error and Borrower hereby waives the
right to dispute such record.

 

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Section 2.4 Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 1:00
p.m., New York City time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than one (1) Business Day’s notice in the case of
any Revolving Loans that are to be continued as, or converted into Base Rate
Loans, or three (3) Business Days’ notice in the case of any Revolving Loans
that are to be continued as, or converted into, LIBO Rate Loans, that all, or
any portion in an aggregate minimum amount of $3,000,000 and in integral
multiples of $500,000 in excess thereof, in the case of any Revolving Loans that
are to be continued as, or converted into, LIBO Rate Loans, or an aggregate
minimum amount of $3,000,000 and an integral multiple of $500,000 in excess
thereof, in the case of any Revolving Loans that are to be continued as, or
converted into, Base Rate Loans, be, in the case of Base Rate Loans, converted
into LIBO Rate Loans or continued as Base Rate Loans, or be, in the case of LIBO
Rate Loans, converted into Base Rate Loans or continued as LIBO Rate Loans (in
the absence of delivery of a Continuation/Conversion Notice with respect to any
LIBO Rate Loan at least three (3) Business Days before the last day of the
then-current Interest Period with respect thereto, such LIBO Rate Loan shall, on
such last day, automatically be continued as a LIBO Rate Loan having an Interest
Period of one (1) month); provided, however, that (x) each such conversion or
continuation shall be prorated among the applicable outstanding Revolving Loans
of all Lenders, and (y) if any Event of Default is in existence at the
applicable time of any proposed continuation of, or conversion into, any LIBO
Rate Loans, the Borrower may not elect to have a Revolving Loan converted into
or continued as a LIBO Rate Loan and any outstanding LIBO Rate Loans shall be
automatically converted on the last day of the current Interest Period
applicable thereto into Base Rate Loans. Administrative Agent shall give each
Lender prompt notice of any such proposed conversion affecting any of its Loans.

Section 2.5 Funding. Each Lender may, if it so elects, fulfill its obligation to
make, continue or convert LIBO Rate Loans hereunder by causing one of its
foreign branches or Affiliates (or an international banking facility created by
such Lender) to make or maintain such LIBO Rate Loan; provided, however, that
such LIBO Rate Loan shall nonetheless be deemed to have been made and to be held
by Lender, and the obligation of the Borrower to repay such LIBO Rate Loan shall
nevertheless be to Lender for the account of such foreign branch, Affiliate or
international banking facility; provided, further, that in no event shall the
Borrower be obligated to pay to Lender any amounts pursuant to Section 4.1, 4.2,
4.3, 4.5 or 4.6 that would not have arisen but for such Lender’s election
pursuant to the first sentence of this Section (it being acknowledged and agreed
that any change in lending office or other action taken by Lender in accordance
with Section 4.7 shall not be considered to be an “election” by such Lender
under this Section).

Section 2.6 Issuance Procedures. By delivering to the Administrative Agent and
the Issuer an Issuance Request (including by way of facsimile) on or before
11:00 a.m., New York City time, on a Business Day, the Borrower may, from time
to time irrevocably request, on not less than three (3) nor more than ten
(10) Business Days’ notice, in the case of an initial issuance of a Letter of
Credit for the account of the Borrower, that the Issuer issue an irrevocable
Letter of Credit in such form as may be requested by the Borrower and approved
by the Issuer. Any

 

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standby Letter of Credit theretofore issued which contains an “evergreen” or
similar automatic extension feature shall, unless the Borrower shall have
notified the Issuer in writing not less than thirty (30) days (or such shorter
period as may be acceptable to the Issuer in its sole discretion or such longer
period as may be required by the beneficiary of such Letter of Credit) prior to
the date that such standby Letter of Credit is scheduled to be automatically
extended that the Borrower desires that such standby Letter of Credit not be so
extended, be automatically extended in accordance with the terms thereof subject
to the Issuer’s right not to so extend if the conditions precedent to the
issuance of such a Letter of Credit would not be satisfied. Each Letter of
Credit shall by its terms be stated to expire on a date (its “Stated Expiry
Date”) no later than the earlier to occur of (i) the last Business Day prior to
the Maturity Date and (ii) one (1) year from the date of its issuance.

Section 2.6.1 Other Lenders’ Participation. Upon the issuance of each Letter of
Credit issued by the Issuer pursuant hereto, and without further action, each
Lender (other than the Issuer) shall be deemed to have irrevocably purchased, to
the extent of its Percentage to make Revolving Loans, a participation interest
in such Letter of Credit (including the Contingent Obligation and any
Reimbursement Obligation with respect thereto), and such Lender shall, to the
extent of its Percentage, be responsible for reimbursing promptly (and in any
event within one (1) Business Day) the Issuer for Reimbursement Obligations
which have not been reimbursed by the Borrower in accordance with Section 2.6.3.
In addition, such Lender shall, to the extent of its Percentage to make
Revolving Loans, be entitled to receive a ratable portion of the Letter of
Credit fees payable pursuant to Section 3.4.3 with respect to each Letter of
Credit (other than the issuance and processing fees and other charges payable to
the Issuer of such Letter of Credit pursuant to the last sentence of
Section 3.4.3) and of interest payable pursuant to Section 3.4 with respect to
any Reimbursement Obligation. To the extent that any Lender has reimbursed the
Issuer for a Disbursement as required by this Section, such Lender shall be
entitled to receive its ratable portion of any amounts subsequently received
(from the Borrower or otherwise) in respect of such Disbursement.

Section 2.6.2 Disbursements. The Issuer will notify the Borrower and the
Administrative Agent promptly of the presentment for payment of any Letter of
Credit issued by the Issuer, together with notice of the date (the “Disbursement
Date”) such payment shall be made (each such payment, a “Disbursement”). The
Administrative Agent shall apply all funds then on deposit with the
Administrative Agent pursuant to Section 3.2.1(b)(B), Section 8.2, Section 8.3
or Section 8.4 for the purpose of cash collateralizing the Letter of Credit
Outstandings to reimburse the Issuer for any such Disbursement, provided such
cash collateral, after giving effect to such disbursement would not otherwise be
required to be re-deposited under any such Section. Subject to the terms and
provisions of such Letter of Credit and this Agreement, the Issuer shall make
such payment to the beneficiary (or its designee) of such Letter of Credit.
Prior to 1:00 p.m., New York City time, on the first Business Day following the
Disbursement Date, the Borrower will reimburse the Administrative Agent, for the
account of Issuer, for all amounts which the Issuer has disbursed under such
Letter of Credit to the extent that the amounts on deposit with the
Administrative Agent are insufficient to satisfy such disbursement, together
with interest thereon at a rate per annum equal to the Alternate Base Rate then
in effect for Base Rate Loans (with the Applicable Margin for Revolving

 

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Loans maintained as Base Rate Loans accruing on such amount) pursuant to
Section 3.3 for the period from the Disbursement Date through the date of such
reimbursement. Notwithstanding anything contained herein to the contrary,
however, unless the Borrower shall have notified the Administrative Agent and
the Issuer prior to 1:00 P.M. (New York City time) on the Business Day
immediately preceding the date of such drawing that the Borrower intends to
reimburse the Issuer for the amount of such drawing with funds other than the
proceeds of the Loans, the Borrower shall be deemed to have timely given a
Notice of Borrowing pursuant to Section 2.3 to the Administrative Agent,
requesting a Borrowing of Base Rate Loans on the date on which such drawing is
honored and in an amount equal to the amount of such drawing less amounts, if
any, applied, or required to be applied, to reimburse the Issuer pursuant to the
second sentence of this Section 2.6.2. Each Lender (other than the Issuer)
shall, in accordance with Section 2.3.1, make available its pro rata share of
such Borrowing to the Administrative Agent, the proceeds of which shall be
applied directly by the Administrative Agent to reimburse the Issuer for the
amount of such draw. Without limiting in any way the foregoing and
notwithstanding anything to the contrary contained herein, the Borrower hereby
acknowledges and agrees that it shall be obligated to reimburse the Lender as
set forth herein upon each Disbursement of a Letter of Credit.

Section 2.6.3 Reimbursement Obligations. The obligation (a “Reimbursement
Obligation”) of the Borrower under Section 2.6.2 to reimburse the Issuer with
respect to each Disbursement (including interest thereon), and, upon the failure
of the Borrower to reimburse the Issuer, each Lender’s obligation under
Section 2.6.1 to reimburse the Issuer, shall be absolute and unconditional under
any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower or such Lender, as the case may be, may
have or have had against the Issuer or any such Lender, including any defense
based upon the failure of any Disbursement to conform to the terms of the
applicable Letter of Credit (if, in the Issuer’s good faith opinion, such
Disbursement is determined to be appropriate) or any non-application or
misapplication by the beneficiary of the proceeds of such Letter of Credit;
provided, however, that after paying in full its Reimbursement Obligation
hereunder, nothing herein shall preclude the right of such Lender to commence
any proceeding against the Issuer for any wrongful Disbursement made by the
Issuer under a Letter of Credit as a result of acts or omissions constituting
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction on the part of the Issuer in a final and non-appealable decision);
provided, further, that, in any event, the Borrower may have a claim against the
Issuer, and the Issuer may be liable to the extent (but only to the extent) of
any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which were caused by the Issuer’s willful misconduct or gross
negligence as determined by a court of competent jurisdiction in a final and
non-appealable decision or the Issuer’s willful failure to pay under any Letter
of Credit after the presentation to it by the beneficiary of a demand for
payment strictly complying with the terms and conditions of such Letter of
Credit.

Section 2.6.4 Extended Letters of Credit. Notwithstanding anything to the
contrary herein, a Letter of Credit may, as a result of its express terms or as
the result of the effect of an automatic extension provision, have an expiration
date of not more than one (1) year beyond the then applicable Maturity Date (any
such Letter of Credit being

 

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referred to as an “Extended Letter of Credit”), so long as the Borrower, no
later than ten (10) Business Days prior to the then applicable Maturity Date,
delivers to the Administrative Agent, for the benefit of the Issuer and the
Lenders and for deposit in the Letter of Credit Collateral Account, cash
collateral to collateralize the Borrower’s reimbursement obligations with
respect to such Letter of Credit in an aggregate amount equal to the amount of
Letter of Credit Outstandings with respect to such Letter of Credit. If the
Borrower fails to provide cash collateral with respect to any Extended Letter of
Credit by the date that is ten (10) Business Days prior to the then applicable
Maturity Date, such failure shall be treated as a drawing under such Extended
Letter of Credit (in an amount equal to the maximum Stated Amount of such Letter
of Credit), which shall be reimbursed to the Issuer, on demand by the
Administrative Agent, by the Borrower, or by the Lenders if the Borrower fails
to do so, in each case as provided in Section 2.6.2 and Section 2.6.3, with the
proceeds of such reimbursement being utilized to provide cash collateral for
such Letter of Credit. Each Lender confirms that its reimbursement and funding
obligations under this Agreement shall be reinstated in full and apply if the
delivery of any cash collateral in respect of an Extended Letter of Credit is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under the Bankruptcy Code, other similar Legal
Requirements or otherwise.

Section 2.6.5 Nature of Reimbursement Obligations. The Borrower and, to the
extent set forth in Section 2.6.1, each Lender shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by the beneficiary thereof.
The Issuer (except to the extent of its own gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final and
non-appealable decision)) shall not be responsible for:

(a) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any Letter of Credit or any document submitted by any party in connection with
the application for and issuance of a Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged;

(b) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or the proceeds thereof in
whole or in part, which may prove to be invalid or ineffective for any reason;

(c) failure of the beneficiary to comply fully with conditions required in order
to demand payment under a Letter of Credit;

(d) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise; or

(e) any loss or delay in the transmission or otherwise of any document or draft
required in order to make a Disbursement under a Letter of Credit.

 

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None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Issuer or any Lender hereunder. In furtherance
and extension and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by the Issuer in good faith (and not
constituting gross negligence or willful misconduct) shall be binding upon the
Borrower and each Lender, and shall not put the Issuer under any resulting
liability to the Borrower or any Lender, as the case may be.

Section 2.6.6 Certain Notifications Regarding Letters of Credit. Promptly after
the issuance of, or any modification or amendment to, any standby Letter of
Credit, the Issuer shall notify the Borrower and the Administrative Agent in
writing of such issuance, modification or amendment. Promptly after receipt of
such notice, the Administrative Agent shall notify the Lenders in writing of
such issuance, modification or amendment. On the first Business Day of each
week, the Issuer shall furnish the Administrative Agent with a written
(including via facsimile) report of the daily aggregate outstandings of Letters
of Credit issued by the Issuer for the immediately preceding week.

Section 2.6.7 Excess Cash Collateral. Subject to Section 8.4, unless a Default
or an Event of Default has occurred and is continuing, if the amount on deposit
with the Administrative Agent designated for, or intended to be used for, the
purpose of cash collateralizing the Letter of Credit Outstandings is in excess
of the Letter of Credit Outstandings at such time and would not otherwise be
required to be deposited under Section 3.2.1(b)(B), Section 8.2, Section 8.3, or
Section 8.4 (the amount of any such excess is referred to herein as the “Excess
Cash Collateral”), the Administrative Agent shall promptly return to the
Borrower the Excess Cash Collateral.

Section 2.7 Loan Accounts and Revolving Notes. All Loans under this Agreement
shall be made by Lenders pro rata on the basis of their respective Revolving
Loan Commitments, it being understood that no Lender shall be responsible for
any default by any other Lender in its obligation to make Loans hereunder or any
other breach by any other Lender of this Agreement and that each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its commitments hereunder.

(a) The Loans made by each Lender and the Letters of Credit issued by the Issuer
shall be evidenced by one or more loan accounts or records maintained by such
Lender or the Issuer, as the case may be, in the ordinary course of business.
The loan accounts or records maintained by the Administrative Agent, the Issuer
and each Lender shall be conclusive absent clearly demonstrable error of the
amount of the Loans made by the Lenders to, and the Letters of Credit issued by
the Issuer for the account of, the Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Loans and the Reimbursement Obligations.

(b) Upon the request of any Lender made through the Administrative Agent, the
Loans made by such Lender may be evidenced by (and the Borrowers agree to issue)
one or more Revolving Notes, instead of or in addition to loan accounts. Each
such Lender is irrevocably authorized by the Borrower to endorse on the
Revolving

 

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Note(s) the date, amount and maturity of each Loan made, continued or converted
by it and the amount of each payment of principal made by the Borrower with
respect thereto. Each such Lender’s record shall be conclusive absent clearly
demonstrable error; provided, however, that the failure of a Lender to make, or
an error in making, a notation thereon with respect to any Loan shall not limit
or otherwise affect the obligations of the Borrower hereunder or under any such
Revolving Note to such Lender. The reasonable costs and expenses incurred in
connection with the issuance of each Note shall be for the account of the
Borrower.

Section 2.8 Intentionally Omitted.

Section 2.9 Swingline Loan Subfacility.

(a) Swingline Commitment. Subject to the terms and conditions of this
Section 2.9, the Swingline Lender, in its individual capacity, agrees to make
certain revolving credit loans to the Borrower (each, a “Swingline Loan” and,
collectively, the “Swingline Loans”) from time to time prior to the Revolving
Loan Commitment Termination Date; provided, however, that the aggregate amount
of Swingline Loans outstanding at any time shall not exceed the lesser of
(i) Fifty Million Dollars ($50,000,000), and (ii) the Revolving Loan Commitment
Amount (the “Swingline Commitment”). Subject to the limitations set forth
herein, any amounts repaid in respect of Swingline Loans may be reborrowed.

(b) Swingline Borrowings.

(i) Notice of Borrowing. With respect to any Swingline Borrowing, the Borrower
shall give the Swingline Lender and the Administrative Agent notice in writing
(a “Swingline Bond Notice”) which shall be received by the Swingline Lender and
Administrative Agent not later than 12:00 noon (New York City time) on the
proposed date of such Swingline Borrowing (and confirmed by telephone by such
time), specifying (A) that a Swingline Borrowing is being requested, (B) the
amount of such Swingline Borrowing, (C) the proposed date of such Swingline
Borrowing, which shall be a Business Day and (D) that no Default or Event of
Default has occurred and is continuing both before and after giving effect to
such Swingline Borrowing. Such notice shall be irrevocable.

(ii) Minimum Amounts. Each Swingline Borrowing shall be in a minimum principal
amount of $500,000, or an integral multiple of $100,000 in excess thereof.

(iii) Repayment of Swingline Loans. Each Swingline Loan, including all interest
accrued thereon, shall be due and payable on the earliest of (A) five
(5) Business Days from and including the date of the applicable Swingline
Borrowing, (B) the date of the next Borrowing of a Revolving Loan or (C) the
Maturity Date. If, and to the extent, any Swingline Loans shall be outstanding
on the date of any Borrowing of a Revolving Loan, such

 

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Swingline Loans shall first be repaid from the proceeds of such Borrowing of a
Revolving Loan prior to the disbursement of the same to the Borrower. If, and to
the extent, a Borrowing of a Revolving Loan is not requested prior to the
Maturity Date or the end of the five Business Day period after a Swingline
Borrowing, or unless the Borrower shall have notified the Administrative Agent
and the Swingline Lender prior to 1:00 P.M. (New York City time) on the fourth
(4th) Business Day after the Swingline Borrowing that the Borrower intends to
reimburse the Swingline Lender for the amount of such Swingline Borrowing with
funds other than proceeds of the Loans, the Borrower shall be deemed to have
requested a Borrowing comprised entirely of Base Rate Loans in the amount of the
applicable Swingline Loan then outstanding, the proceeds of which shall be used
to repay such Swingline Loan to the Swingline Lender. In addition, if (x) the
Borrower does not repay the Swingline Loan on or prior to the end of such five
Business Day period, or (y) a Default or Event of Default shall have occurred
during such five Business Day period, the Swingline Lender may, at any time, in
its sole discretion, by written notice to the Borrower and the Administrative
Agent, demand repayment of its Swingline Loans by way of a Borrowing, in which
case the Borrower shall be deemed to have requested a Borrowing comprised
entirely of Base Rate Loans in the amount of such Swingline Loans then
outstanding, the proceeds of which shall be used to repay such Swingline Loans
to the Swingline Lender. Any Borrowing which is deemed requested by the Borrower
in accordance with this Section 2.9(b)(iii) is hereinafter referred to as a
“Mandatory Borrowing.” Each Lender hereby irrevocably agrees to make Loans
promptly upon receipt of notice from the Swingline Lender of any such deemed
request for a Mandatory Borrowing in the amount and in the manner specified in
the preceding sentences and on the date such notice is received by such Lender
(or the next Business Day if such notice is received after 12:00 noon (New York
City time)) notwithstanding (I) that the amount of the Mandatory Borrowing may
not comply with the minimum amount of Borrowings otherwise required hereunder,
(II) whether any conditions specified in Section 5.2 are then satisfied, (III)
whether a Default or an Event of Default then exists, (IV) failure of any such
deemed request for a Borrowing to be made by the time otherwise required in
Section 2.1, (V) the date of such Mandatory Borrowing (provided that such date
must be a Business Day), or (VI) any termination of the Commitments immediately
prior to such Mandatory Borrowing or contemporaneously therewith; provided,
however, that no Lender shall be obligated to make Loans in respect of a
Mandatory Borrowing if a Default or an Event of Default then exists and the
applicable Swingline Loan was made by the Swingline Lender without receipt of a
Swingline Bond Notice in the form specified in subclause (i) above or after the
Administrative Agent has delivered a notice of Default or Event of Default which
has not been rescinded.

(c) Purchase of Participations. In the event that any Mandatory Borrowing cannot
for any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the

 

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Bankruptcy Code with respect to the Borrower), then each Lender hereby agrees
that it shall forthwith purchase (as of the date the Mandatory Borrowing would
otherwise have occurred, but adjusted for any payment received from the Borrower
on or after such date and prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as shall be necessary to cause
each such Lender to share in such Swingline Loans ratably based upon its
Percentage (determined before giving effect to any termination of the
Commitments pursuant hereto), provided that (A) all interest payable on the
Swingline Loans with respect to any participation shall be for the account of
the Swingline Lender until but excluding the day upon which the Mandatory
Borrowing would otherwise have occurred, and (B) in the event of a delay between
the day upon which the Mandatory Borrowing would otherwise have occurred and the
time any purchase of a participation pursuant to this sentence is actually made,
the purchasing Lender shall be required to pay to the Swingline Lender interest
on the principal amount of such participation for each day from and including
the day upon which the Mandatory Borrowing would otherwise have occurred to but
excluding the date of payment for such participation, at the rate equal to the
Federal Funds Rate, for the two (2) Business Days after the date the Mandatory
Borrowing would otherwise have occurred, and thereafter at a rate equal to the
Base Rate. Notwithstanding the foregoing, no Lender shall be obligated to
purchase a participation in any Swingline Loan if a Default or an Event of
Default then exists and such Swingline Loan was made by the Swingline Lender
without receipt of a written Notice of Borrowing in the form specified in
subclause (i) above or after the Administrative Agent has delivered a notice of
Default or Event of Default which has not been rescinded.

(d) Interest Rate. Each Swingline Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Swingline Loan is made
until the date it is repaid, at a rate per annum equal to the Federal Funds Rate
plus the Applicable Margin for LIBO Rate Loans for such day.

ARTICLE III

MATURITY DATE; REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

Section 3.1 Maturity Date; Extension Option.

(a) Initial Maturity Date. The term of the Loans shall terminate and expire on
the Initial Maturity Date, unless extended by Borrower pursuant to clause
(b) below.

(b) Extended Maturity Date. Subject to the provisions of this Section 3.1(b),
Borrower shall have the option (the “Extension Option”), by irrevocable written
notice (the “Extension Notice”) delivered to Administrative Agent no later than
sixty (60) days prior to the Initial Maturity Date, to extend the Initial
Maturity Date for a period of twelve (12) months (the “Extension Term”) to the
fifth (5th) anniversary of the Closing Date (the “Extended Maturity Date”).
Borrower’s right to so extend the Initial Maturity Date shall be subject to the
satisfaction (or waiver, in the sole discretion of the Required Lenders) of the
following conditions precedent prior to the commencement of the Extension Term:

(i) payment by Borrower to Administrative Agent for the account of each Lender
in accordance with each Lender’s Percentage on the Initial Maturity Date of an
extension fee equal to 0.25% of the aggregate Revolving Loan Commitment Amount
as of such date, together with all costs and expenses (including reasonable
attorneys’ fees and expenses) incurred by the Lenders in connection with the
Extension Option;

 

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(ii) no monetary Default or Event of Default shall have occurred and be
continuing on the date Borrower delivers the Extension Notice or as of the
Initial Maturity Date; and

(iii) Borrower shall deliver (1) an Officer’s Certificate which confirms and
certifies that all applicable representations and warranties contained in the
Loan Documents are true and correct in all material respects as if made on and
as of the Initial Maturity Date and (2) such other acknowledgments and
ratifications from the Guarantor and Subsidiary Guarantors as the Administrative
Agent may request.

(c) Extension Documentation. As soon as practicable following any extension of
the Maturity Date pursuant to this Section 3.1, Borrower shall, if requested by
Administrative Agent, execute and deliver an amendment or restatement of the
Notes and shall, if requested by Administrative Agent, enter into such other
amendments or modifications to the related Loan Documents as may be necessary or
appropriate to evidence the extension of the Maturity Date as provided in this
Section 3.1; provided, however, that failure by Borrower to enter into any such
amendments and/or restatements, in and of itself, shall not affect the rights or
obligations of Borrower or Administrative Agent with respect to the extension of
the Maturity Date.

Section 3.2 Repayments and Prepayments; Application.

Section 3.2.1 Repayments and Prepayments. The Borrower shall repay in full the
unpaid principal amount of all Loans on the Maturity Date. Prior thereto,
payments and prepayments of Loans shall or may be made as set forth below.

(a) Voluntary Prepayments. From time to time on any Business Day, the Borrower
may make a voluntary prepayment, in whole or in part, of the outstanding
principal amount of any Loans, provided that

(A) any such prepayment of the Revolving Loans shall be made pro rata among the
Revolving Loans of the same Type and, if applicable, having the same Interest
Period of all Lenders that have made such Revolving Loans;

(B) all such voluntary prepayments shall require at least one (1) Business Days’
prior written notice to the Administrative Agent; and

 

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(C) all such voluntary partial prepayments shall be, in an aggregate minimum
amount of $1,000,000 and an integral multiple of $500,000 in excess thereof (or,
if less, in the remaining outstanding principal amount thereof), except in the
case of Swingline Loans, which shall be in the minimum amount of $100,000, and
integral multiples of $100,000.

(b) Exceeding Commitment Amounts.

(A) On each date when the Aggregate Outstanding Balance exceeds the then-current
Revolving Loan Commitment Amount (as it may, from time to time, be increased or
reduced including pursuant to Section 2.2), or the then-current Available
Commitment, as the case may be, including, without limitation upon a Borrowing
Base Property ceasing to satisfy the requirements of Section 7.1.22(a) or
becoming a Released Borrowing Base Property, the Borrower shall make a mandatory
prepayment of the Swingline Loans and/or Revolving Loans in an aggregate amount
equal to the amount by which the Aggregate Outstanding Balance exceeds the
then-current Revolving Loan Commitment Amount or the then-current Available
Commitment, as applicable.

(B) On each date when the aggregate amount of all Letter of Credit Outstandings
exceeds the Letter of Credit Commitment Amount (as it may be reduced from time
to time, including pursuant to Section 2.2), the Borrower shall give cash
collateral to the Administrative Agent, pursuant to Section 8.4 hereof, to
collateralize Letter of Credit Outstandings in an aggregate amount (taking into
account any amounts then on deposit in the Letter of Credit Collateral Account)
equal to such excess.

(c) Acceleration of Maturity. Immediately upon any acceleration of any Loans
pursuant to Section 8.2 or Section 8.3, the Borrower shall repay all the Loans.

Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.5. No prepayment of
principal of any Revolving Loans pursuant to clause (a) or (b) of this Section
shall cause a reduction in the Revolving Loan Commitment Amount.

Section 3.2.2 Application. Each prepayment or repayment of the principal of the
Revolving Loans shall be applied, to the extent of such prepayment or repayment,
as the Borrower shall direct (and in the absence of such direction, shall be
applied first, to the principal amount thereof being maintained as Base Rate
Loans, second to the principal amount thereof being maintained as LIBO Rate
Loans with respect to which the date of such prepayment or repayment is the last
day of the Interest Period applicable thereto and third, to the principal amount
thereof being maintained as LIBO Rate Loans with the shortest Interest Periods
remaining); provided, that prepayments or repayments of LIBO Rate Loans not made
on the last day of the Interest Period with respect thereto, shall be prepaid or
repaid subject to the provisions of Section 4.5 (together with a payment of all
accrued interest).

 

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Section 3.3 Interest Provisions. Interest on the outstanding principal amount of
Loans shall accrue and be payable in accordance with this Section 3.3.

Section 3.3.1 Rates. Pursuant to an appropriately delivered Borrowing Request or
Continuation/Conversion Notice, the Borrower may elect that Loans comprising a
Borrowing accrue interest at a rate per annum:

(a) on that portion maintained from time to time as a Base Rate Loan, equal to
the sum of the Alternate Base Rate from time to time in effect plus the
Applicable Margin as calculated at the time such Base Rate Loan was made and
recalculated on each Monthly Payment Date (inclusive, during the Appraisal
Period, of the 0.25% premium referenced in the definition of “Applicable
Margin”); and

(b) on that portion maintained as a LIBO Rate Loan, during each Interest Period
applicable thereto, equal to the sum of the LIBO Rate for such Interest Period
plus the Applicable Margin as calculated at the time such LIBO Rate Loan was
made and recalculated on the last day of the applicable Interest Period
(inclusive, during the Appraisal Period, of the 0.25% premium referenced in the
definition of “Applicable Margin”); provided that if an Interest Period is
longer than three months, then on the date which is three months after the first
day of such Interest Period.

All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan. All
Base Rate Loans shall bear interest from and including the day they are made to
and excluding the day they are repaid or converted into LIBO Rate Loans.

Section 3.3.2 Post-Maturity Rates. After the date any principal amount of any
Loan or Reimbursement Obligation is due and payable (whether on the Maturity
Date, upon acceleration, an Event of Default or otherwise), or after any other
monetary Obligation of the Borrower shall have become due and payable, the
Borrower shall pay, but only to the extent permitted by law, interest (after as
well as before the entry of judgment thereon) on such amounts at a rate per
annum equal to 2% in excess of the Base Rate plus the Applicable Margin per
annum. Anything herein to the contrary notwithstanding, the obligations of the
Borrower to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Lender, and in such
event the Borrower shall pay such Lender interest at the highest rate permitted
by applicable law.

Section 3.3.3 Payment Dates. Interest accrued on each Loan shall be payable,
without duplication:

(a) on the Maturity Date;

 

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(b) on the date of any payment or prepayment, in whole or in part, of principal
outstanding on such Loan on the principal amount so paid or prepaid;

(c) with respect to Base Rate Loans, in arrears on each Monthly Payment Date
occurring after the Closing Date;

(d) with respect to LIBO Rate Loans, in arrears on the last day of each
applicable Interest Period; provided that if an Interest Period is longer than
three months, then on the date which is three months after the first day of such
Interest Period;

(e) with respect to any Base Rate Loans converted into LIBO Rate Loans on a day
when interest would not otherwise have been payable pursuant to clause (c)
above, on the date of such conversion;

(f) with respect to Swingline Loans, as provided in Section 2.9; and

(g) on that portion of any Loans which is accelerated pursuant to Section 8.2 or
Section 8.3, immediately upon such acceleration.

Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Maturity Date, upon acceleration or otherwise) shall be
payable upon demand.

Section 3.4 Fees. The Borrower agrees to pay the fees set forth in this
Section 3.4. All such fees shall be non-refundable.

Section 3.4.1 Revolving Loan Unused Fee. Borrower agrees to pay to
Administrative Agent each Fiscal Quarter for the account of each Lender in
accordance with each Lender’s Percentage for the period (including any portion
thereof when any of its Commitments are suspended by reason of Borrower’s
inability to satisfy any condition of Article V of this Agreement) commencing on
the Closing Date and continuing through the Revolving Loan Commitment
Termination Date, an unused fee calculated as follows: (i) for each day during
the applicable Fiscal Quarter that the Aggregate Outstanding Balance is less
than 50% of the Revolving Loan Commitment, an unused fee at a rate per annum
equal to 0.30% multiplied by the sum of the unused portion of the Aggregate
Commitment plus any outstanding Swingline Loans, on such day, or (ii) for each
day during the applicable Fiscal Quarter that the Aggregate Outstanding Balance
is equal to or greater than 50% of the Revolving Loan Commitment, an unused fee
at a rate per annum equal to 0.20% multiplied by the sum of the unused portion
of the Aggregate Commitment plus any outstanding Swingline Loans, on such day.
All unused fees payable pursuant to this Section shall be calculated on a year
comprised of 360 days and payable by the Borrower in arrears on each Quarterly
Payment Date, commencing with the first Quarterly Payment Date following the
Closing Date, and on the Revolving Loan Commitment Termination Date.
Notwithstanding anything to the contrary in this Section 3.4.1, Borrower shall
not be obligated to pay any of the foregoing fees to a Defaulting Lender that
would otherwise have been payable to such Lender for the time period during
which such Lender shall have been a Defaulting Lender; provided, however, each
Lender’s Percentage shall be adjusted, as applicable, to account for any
Non-Defaulting

 

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Lender who funds additional amounts to Borrower in lieu of any amounts not
funded by a Defaulting Lender so that such Non-Defaulting Lender would receive
the foregoing fees payable to such Defaulting Lender for the time period during
which the applicable Lender Default existed.

Section 3.4.2 Fees. The Borrower agrees to pay to the Arrangers, the
Administrative Agent, and the Lenders, each for its own account, the fees in the
amounts and on the dates set forth in the Fee Letters.

Section 3.4.3 Letter of Credit Fee. The Borrower agrees to pay to the
Administrative Agent, for the pro rata account of each Lender, a Letter of
Credit fee for each Letter of Credit in an amount equal to a rate per annum
equal to the then Applicable Margin for LIBO Rate Loans on the Stated Amount of
each such Letter of Credit, with such fees being payable in arrears on each
Quarterly Payment Date. The Borrower further agrees to pay to the Issuer, for
its own account, (x) quarterly in arrears payable on each Quarterly Payment Date
for each Letter of Credit issued by it, a fronting fee at a rate per annum equal
to the greater of (A) $1,500 and (B) 0.125% multiplied by the Stated Amount of
each such Letter of Credit, and (y) from time to time promptly after demand, the
normal issuance, payment, amendment and other processing fees, and other
standard administrative costs and charges of the Issuer relating to Letters of
Credit as from time to time in effect.

ARTICLE IV

CERTAIN LIBO RATE AND OTHER PROVISIONS

Section 4.1 LIBO Rate Lending Unlawful. If any Lender shall reasonably determine
(which determination shall, upon notice thereof to the Borrower and the
Administrative Agent, be conclusive and binding on the Borrower) that the
introduction of or any change in or in the interpretation of any law makes it
unlawful, or any central bank or other Governmental Authority asserts that it is
unlawful, for such Lender to make, continue or maintain any Revolving Loan as,
or to convert any Revolving Loan into, a LIBO Rate Loan, the obligations of such
Lender to make, continue or maintain or to convert any Revolving Loan into, a
LIBO Rate Loan shall, upon such determination, forthwith be suspended until such
Lender shall notify the Administrative Agent that the circumstances causing such
suspension no longer exist, and all outstanding LIBO Rate Loans of such Lender
shall automatically convert into Base Rate Loans at the end of the then-current
Interest Periods with respect thereto or sooner, if required by such law or
assertion. Each Lender agrees to promptly give notice to the Administrative
Agent and the Borrower when the circumstances causing such suspension cease to
exist.

Section 4.2 Deposits Unavailable. If the Required Lenders shall have reasonably
determined that (a) Dollar deposits in the relevant amount and for the relevant
Interest Period are neither available to such Required Lenders in the eurodollar
market nor available to them in their respective relevant markets, or (b) by
reason of circumstances affecting the eurodollar market, adequate means do not
exist for ascertaining the interest rate applicable hereunder to LIBO Rate
Loans, then, upon notice from the Administrative Agent to the Borrower and the
Lenders, the obligations of all Lenders under Section 2.3 and Section 2.4 to
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Loans as, or to convert any Revolving Loans into, LIBO Rate Loans shall
forthwith be suspended until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer exist.
Upon receipt of notice from the Administrative Agent that the Required Lenders
are unable to determine the LIBO Rate, the Borrower may revoke any Borrowing
Request or Continuation/Conversion Notice then submitted by it. If the Borrower
does not revoke such Borrowing Request or Conversion/Continuation Notice, the
Lenders shall make, convert or continue the Revolving Loans, as proposed by the
Borrower, in the amount specified in the applicable notice submitted by the
Borrower, but such Revolving Loans shall be made, converted or continued as Base
Rate Loans instead of LIBO Rate Loans. The Administrative Agent agrees to give
prompt notice to the Borrower and the Lenders when it ascertains that the
circumstances causing such suspension cease to exist.

Section 4.3 Change of Circumstances. If, after the Closing Date, the
introduction of or any change in or in the interpretation of, or any change in
the application of, any law or any regulation (including Regulation D of the
F.R.S. Board and including any Specified Change of Law) or guideline issued by
any central bank or other Governmental Authority (whether or not having the
force of law), or by the NAIC or any other comparable agency charged with the
interpretation or administration thereof or including any reserve or special
deposit requirement or any tax (other than Taxes covered by Section 4.6 and
taxes on a Lender’s overall net income) or any capital requirement, has, due to
a Lender’s compliance the effect, directly or indirectly, of (i) increasing the
cost to such Lender or any corporation controlling such Lender of performing its
obligations hereunder (including the making, continuing or maintaining of any
Revolving Loans as or converting any Revolving Loans into, LIBO Rate Loans);
(ii) reducing any amount received or receivable by such Lender or any
corporation controlling such Lender hereunder or its effective return hereunder
or on its capital; or (iii) causing such Lender or any corporation controlling
such Lender to make any payment or to forego any return based on any amount
received or receivable by such Lender hereunder, then upon demand of such Lender
to the Borrower through the Administrative Agent, accompanied by written notice
showing in reasonable detail the basis for calculation of any such amounts, from
time to time, the Borrower shall be obligated to pay such amounts and shall
compensate such Lender promptly after receipt of such notice and demand for any
such cost, reduction, payment or foregone return. Any certificate of Lender in
respect of the foregoing will be conclusive and binding upon the Borrower,
except for clearly demonstrable error.

Section 4.4 Replacement of Lender. If (a) the Borrower receives notice from any
Lender requesting increased costs or additional amounts under Section 4.3 or
4.6, (b) any Lender is affected in the manner described in Section 4.1 or (c) a
Lender becomes a Defaulting Lender, then in each case, the Borrower shall have
the right, so long as no Event of Default shall have occurred and be continuing
and unless, in the case of clause (a) above, such Lender has removed or cured
the conditions which resulted in the obligation to pay such increased costs or
additional amounts or agreed to waive and otherwise forego any right it may have
to any payments provided for under Section 4.3 or 4.6 in respect of such
conditions, to replace in its entirety such Lender (the “Replaced Lender”), upon
prior written notice to the Administrative Agent and such Replaced Lender, with
one or more other Eligible Assignee(s) (collectively, the “Replacement Lender”)
acceptable to the Administrative Agent and the Issuer (which acceptance, in each
case, shall not be unreasonably withheld); provided, however, that, at the time
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pursuant to this Section 4.4, the Replaced Lender and the Replacement Lender
shall enter into (each Replaced Lender hereby unconditionally agreeing to enter
into) one or more Lender Assignment Agreements (appropriately completed),
pursuant to which (A) the Replacement Lender shall acquire all of the
Commitments and outstanding Revolving Loans of, and participations in Letter of
Credit Outstandings of, the Replaced Lender and, in connection therewith, shall
pay (x) to the Replaced Lender in respect thereof an amount equal to the sum of
(1) an amount equal to the principal of, and all accrued but unpaid interest on,
all outstanding Loans of the Replaced Lender and (2) an amount equal to all
accrued but theretofore unpaid fees owing to the Replaced Lender pursuant to
Section 3.4 and (y) to the Issuer, an amount equal to any portion of the
Replaced Lender’s funding of an unpaid drawing under a Letter of Credit as to
which the Replaced Lender is then in default; and (B) the Borrower shall pay to
the Replaced Lender any other amounts payable to the Replaced Lender under this
Agreement (including amounts payable under Sections 4.3, 4.5 and 4.6 which have
accrued to the date of such replacement). Upon the execution of the Lender
Assignment Agreement(s), the payment to the Administrative Agent of the
processing fee referred to in clause (a) of Section 10.9.1, the payment of the
amounts referred to in the preceding sentence and, if so requested by the
Replacement Lender in accordance with clause (b) of Section 10.9.1, delivery to
the Replacement Lender of a Revolving Note executed by the Borrower, the
Replacement Lender shall automatically become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions under this Agreement, which shall survive
as to such Replaced Lender. It is understood and agreed that if any Replaced
Lender shall fail to enter into a Lender Assignment Agreement in accordance with
the foregoing, it shall be deemed to have entered into such a Lender Assignment
Agreement.

Section 4.5 Funding Losses. In the event any Lender shall reasonably incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any
Revolving Loan as, or to convert any portion of the principal amount of any
Revolving Loan into, a LIBO Rate Loan) as a result of (a) any conversion or
repayment or prepayment of the principal amount of any LIBO Rate Loans on a date
other than the scheduled last day of the Interest Period applicable thereto,
whether pursuant to Section 3.2 or otherwise, or (b) any Revolving Loans not
being made or continued as, or converted into, LIBO Rate Loans as a result of a
withdrawn or revoked Borrowing Request or Continuation/Conversion Notice or for
any other reason (other than a default by such Lender or the Administrative
Agent), then, upon the written notice of such Lender to the Borrower (with a
copy to the Administrative Agent), the Borrower shall, promptly after its
receipt thereof and prior to the expiration of the applicable Interest Period,
pay to the Administrative Agent for the account of such Lender such amounts
required to compensate such Lender for any additional losses, costs or expenses
that such Lender may reasonably incur as a result of such payment, failure to
convert or failure to continue, including any loss, cost or expense (excluding
loss of anticipated profits) actually incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such LIBO Rate Loan. Such written notice (which shall set forth in
reasonable detail the basis for requesting such amount and include calculations
in reasonable detail in support thereof) shall, in the absence of clearly
demonstrable error, be conclusive and binding on the Borrower.

 

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Section 4.6 Taxes.

(a) Any and all payments by the Borrower to each Lender and the Administrative
Agent under this Agreement and under any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes and any and
all interest, penalties, or similar liabilities with respect to such Taxes. In
addition, the Borrower shall pay all Other Taxes to the relevant taxing
authority or other authority in accordance with applicable law.

(b) If the Borrower shall be required by law to deduct or withhold any Taxes or
Other Taxes from or in respect of any sum payable hereunder to any Lender or the
Administrative Agent, then:

(i) the sum payable shall be increased as necessary so that, after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section), 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 or withholdings been made;

(ii) the Borrower shall make such deductions and withholdings; and

(iii) the Borrower shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable law
and shall as promptly as possible thereafter send to the Administrative Agent
for its own account or for the account of such Lender, as the case may be, a
certified copy of an original receipt (or other written evidence) showing
payment thereof.

(c) The Borrower agrees to indemnify and hold harmless each Lender and the
Administrative Agent for the full amount of (i) Taxes and (ii) Other Taxes that
are payable by such Lender or the Administrative Agent and any penalties,
interest, additions to tax, expenses or other similar liabilities arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be made
within forty-five (45) days after the date such Lender or the Administrative
Agent makes written demand therefor.

(d) Each Lender that is a U.S. Person (as such term is defined in
Section 7701(a)(30) of the Code) (a “U.S. Lender”) shall:

(i) deliver to the Borrower and the Administrative Agent, prior to the first day
on which the Borrower is required to make any payments hereunder to Lender, two
(2) copies of United States Internal Revenue Service Form W-9 (or successor
forms). Each U.S. Lender that shall become a Participant pursuant to
Section 10.9.2 or a Lender pursuant to Section 10.9.1 shall, upon the
effectiveness of the related transfer, be required to provide all the forms and
statements required pursuant to this Section 4.6(d), provided that in the case
of a Participant such Participant shall furnish all such required forms and
statements to the Lender from which the related participation shall have been
purchased; and

 

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(ii) deliver to the Borrower and the Administrative Agent two (2) further copies
of any such form of certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower.

(e) Each Lender that is not a U.S. Person (as such term is defined in
Section 7701(a)(30) of the Code) (a “Non-U.S. Lender”) shall:

(i) deliver to the Borrower and the Administrative Agent, prior to the first day
on which the Borrower is required to make any payments hereunder to Lender, two
(2) copies of either United States Internal Revenue Service Form W-8BEN or Form
W-8ECI (or successor forms) or, in the case of a Non-U.S. Lender claiming
exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of “portfolio interest,” a Form W-8BEN, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8BEN (with respect to the portfolio interest exemption), a
certificate representing that such Non-U.S. Lender (x) is not a bank for
purposes of Section 881(c) of the Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been treated as a
bank for purposes of any tax, securities law or other filing or submission made
to any Governmental Agency, any application made to a rating agency or
qualification for any exemption from tax, securities law or other legal
requirements, (y) is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and (z) is not a controlled
foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement;

(ii) deliver to the Borrower and the Administrative Agent two (2) further copies
of any such form of certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower; and

(iii) obtain such extensions of time for filing and completing such forms or
certifications as may reasonably be requested by the Borrower or the
Administrative Agent;

unless in any such case any change in treaty, law or regulation has occurred
prior to the date on which any such delivery would otherwise be required that
renders any such form inapplicable or would prevent such Lender from duly
completing and delivering any such form with respect to it

 

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and such Lender so advises the Borrower and the Administrative Agent. Each
Non-U.S. Lender that shall become a Participant pursuant to Section 10.9.2 or a
Lender pursuant to Section 10.9.1 shall, upon the effectiveness of the related
transfer, be required to provide all the forms and statements required pursuant
to this Section 4.6(e), provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.

(f) If a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
Section 4.6(e), “FATCA” shall include any amendments made to FATCA after the
date of this Agreement.

(g) Notwithstanding anything to the contrary herein, the Borrower shall not be
required to indemnify any U.S. Lender or the Administrative Agent, or to pay any
additional amounts to such U.S. Lender or the Administrative Agent pursuant to
this Section 4.6 to the extent that the obligation to pay such additional
amounts would not have arisen but for a failure by such U.S. Lender to comply
with the provisions of clause (d) above.

(h) Notwithstanding anything to the contrary herein, the Borrower shall not be
required to indemnify any Non-U.S. Lender or the Administrative Agent, or to pay
any additional amounts to such Non-U.S. Lender or the Administrative Agent, in
respect of U.S. Federal withholding tax pursuant to this Section 4.6 to the
extent that (i) the obligation to withhold amounts with respect to U.S. Federal
withholding tax existed on the date such Non-U.S. Lender became a party to this
Agreement (or, in the case of a Non-U.S. Participant, on the date such
Participant became a Participant hereunder) or as of the date such Non-U.S.
Lender changes its applicable lending office; provided, however, that this
clause (i) shall not apply to the extent that (x) in the case of an assignee
Lender or a Participant or a change in the Lender’s applicable lending office,
the indemnity payments or additional amounts Lender (or Participant) would be
entitled to receive (without regard to this clause (i)) do not exceed the
indemnity payment or additional amounts that the Person making the assignment,
participation, transfer or change in lending office would have been entitled to
receive in the absence of such assignment, participation, transfer or change in
lending office, or (y) such assignment, participation, transfer or change in
lending office had been requested by the Borrower, (ii) the obligation to pay
such additional amounts would not have arisen but for a failure by such Non-U.S.
Lender or Non-U.S. Participant to comply with the provisions of clause (e)

 

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above or (iii) any of the representations or certifications made by a Non-U.S.
Lender or Non-U.S. Participant pursuant to clause (e) above are incorrect at the
time a payment hereunder is made, other than by reason of any change in treaty,
law or regulation having effect after the date such representations or
certifications were made.

(i) If the Borrower determines in good faith that a reasonable basis exists for
contesting any Taxes for which indemnification has been demanded hereunder, the
relevant Lender or the Administrative Agent, as applicable (to the extent such
Lender or the Administrative Agent reasonably determines in good faith that it
will not suffer any adverse effect as a result thereof), shall, subject to
clause (i) of the proviso in the immediately succeeding sentence, cooperate with
the Borrower in challenging such Taxes at the Borrower’s expense if so requested
by the Borrower in writing. If any Lender or the Administrative Agent, as
applicable, receives a refund of, or a credit relating to a Tax for which a
payment has been made or borne by the Borrower pursuant to this Agreement, which
refund in the good faith judgment of such Lender or the Administrative Agent, as
the case may be, is attributable to such payment, then such Lender or the
Administrative Agent, as the case may be, shall reimburse the Borrower for such
amount as such Lender or the Administrative Agent, as the case may be,
determines to be the proportion of the refund as will leave it, after such
reimbursement, in no better or worse position than it would have been in if the
payment by or borne by the Borrower had not been required; provided, however,
that (i) any Lender or the Administrative Agent may determine, in its reasonable
discretion consistent with the policies of such Lender or the Administrative
Agent, whether to seek a refund and (ii) any Taxes that are imposed on a Lender
or the Administrative Agent as a result of a disallowance or reduction of any
refund with respect to which such Lender or the Administrative Agent has made a
payment to the Borrower pursuant to this clause (h) shall be treated as a Tax
for which the Borrower is obligated to indemnify such Lender or the
Administrative Agent pursuant to this Section 4.6. Neither the Lenders nor the
Administrative Agent shall be obliged to disclose information regarding its tax
affairs or computations to the Borrower in connection with this clause (h) or
any other provision of this Section 4.6.

(j) Promptly after the date of any payment by the Borrower of Taxes or Other
Taxes, the Borrower shall furnish to each Lender and the Administrative Agent
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to such Lender or the Administrative
Agent.

(k) For purposes of this Section 4.6, the term “Lender” includes any Issuer and
the term “applicable law” includes FATCA.

Section 4.7 Change of Lending Office. Each Lender agrees that, as promptly as
practicable after it becomes aware of the occurrence of an event or the
existence of a condition that would give rise to the operation of Sections 4.1,
4.3, 4.6(a), 4.6(b) or 4.6(c) with respect to such Lender, it will exercise
commercially reasonable efforts to make, fund or maintain the affected Revolving
Loans of such Lender through another lending office and to take such other
actions as it deems appropriate to remove or lessen the impact of such condition
and if, as determined by such Lender in its discretion, the making, funding or
maintaining of such affected Revolving Loans through such other lending office
or the taking of such other actions would not

 

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otherwise adversely affect such Revolving Loans or such Lender and would not, in
such Lender’s discretion, be commercially unreasonable. Nothing in this
Section 4.7 shall affect or postpone any of the Obligations of the Borrower or
the right of any Lender provided in Sections 4.1, 4.3, 4.6(b) or 4.6(c).

Section 4.8 Payments, Computations, etc. Unless otherwise expressly provided,
all payments by the Borrower pursuant to this Agreement, the Notes, each Letter
of Credit or any other Loan Document shall be made by the Borrower to the
Administrative Agent for the pro rata account of the Lenders entitled to receive
such payment. All such payments required to be made to the Administrative Agent
shall be made, without setoff, deduction or counterclaim, not later than 1:00
p.m., New York City time, on the date due, in same day or immediately available
funds, to such account as the Administrative Agent shall specify from time to
time by notice to the Borrower. Funds received after 2:00 p.m., New York City
time, on such due date shall be deemed to have been received by the
Administrative Agent on the next succeeding Business Day. The Administrative
Agent shall promptly remit in same day funds to each Lender its share, if any,
of such payments received by the Administrative Agent for the account of such
Lender. All computations of interest for LIBO Rate Loans and all computations of
Letter of Credit fees and issuance fees pursuant to Section 3.3.3, in each case
shall be made on the basis of a 360-day year and actual days elapsed, and, with
respect to LIBO Rate Loans, on the expiration of the applicable LIBO contract.
All computations of interest and fees for Base Rate Loans (whether calculated at
the Federal Funds Rate or the Base Rate) shall be made on the basis of a
365/366-day year and actual days elapsed. Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by clause (c) of the definition of the term
“Interest Period”) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.

Section 4.9 Sharing of Payments. If any Lender shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of setoff by such
Lender or its Affiliates, or otherwise) on account of any Loan or Reimbursement
Obligation (other than pursuant to the terms of Section 4.3, 4.4, 4.5 or 4.6) in
excess of its pro rata share of payments then or therewith obtained by all
Lenders, such Lender shall purchase from the other Lenders such participations
in Credit Extensions made by them as shall be necessary to cause such purchasing
Lender to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the purchase shall
be rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such recovery together with an amount equal to such selling Lender’s
ratable share (according to a fraction having a numerator of (a) the amount of
such selling Lender’s required repayment to the purchasing Lender and a
denominator of (b) 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
a participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including pursuant
to Section 4.10) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a

 

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setoff to which this Section applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section to share
in the benefits of any recovery on such secured claim.

Section 4.10 Setoff. Each Lender (including for the purposes the Affiliates of
such Lender) shall, if the Loans have been accelerated or otherwise have become
due and payable or upon the occurrence and during the continuance of any Event
of Default described in Section 8.1.1 or in clauses (a) through (e) of
Section 8.1.9 with respect to the Borrower or, with the consent of the Required
Lenders, upon the occurrence and during the continuance of any other Event of
Default, without prior notice to the Borrower (any such notice being waived by
the Borrower to the fullest extent permitted by law), have the right to
appropriate and apply to the payment of the Obligations then due or owing to it,
any and all balances, credits, deposits, accounts or moneys of the Borrower then
or thereafter maintained with such Lender; provided, however, that any such
appropriation and application shall be subject to the provisions of Section 4.9.
Each Lender agrees promptly to notify the Borrower and the Administrative Agent
after any such setoff and application made by such Lender (or its Affiliate);
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff under applicable law or otherwise) which such Lender may have.

ARTICLE V

CONDITIONS TO EFFECTIVENESS AND TO FUTURE CREDIT EXTENSIONS

Section 5.1 Conditions Precedent to Making of Loans and the Issuance of Letters
of Credit. The obligations of the Lenders to make any Loans and the obligations
of the Issuer to issue any Letter of Credit shall be subject to the prior or
concurrent satisfaction or waiver of each of the conditions precedent set forth
in this Section 5.1, in Section 5.2 and in Section 10.6 on or before the Closing
Date.

Section 5.1.1 Resolutions, etc. The Administrative Agent shall have received
from the Borrower, Guarantor and each Subsidiary Guarantor, as applicable,
(i) good standing certificates for each such Person from the Secretary of State
(or similar applicable Governmental Authority) of such Person’s state of
incorporation and each state where the Borrower or such other Person, as the
case may be, is qualified to do business as a foreign corporation as of a recent
date, together with a bring-down certificate by facsimile, dated a date
reasonably close to the Closing Date, (ii) a chart depicting the ownership
structure for the Borrower, Guarantor and their Subsidiaries and (iii) a
certificate, dated the Closing Date and with counterparts for each Lender, duly
executed and delivered by such Person’s Secretary or Assistant Secretary, as to

(a) resolutions of each such Person’s Board of Directors then in full force and
effect authorizing, to the extent relevant, the execution, delivery and
performance of this Agreement, the Notes, each other Loan Document to be
executed by such Person and the transactions contemplated hereby and thereby;

 

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(b) the incumbency and signatures of those of its officers authorized to act
with respect to this Agreement, the Notes and each other Loan Document to be
executed by such Person; and

(c) each Organizational Document of such Person,

upon which certificates the Administrative Agent and each Lender may
conclusively rely until it shall have received a further certificate of the
Secretary or Assistant Secretary of any such Person canceling or amending the
prior certificate of such Person.

Section 5.1.2 Credit Agreement; Revolving Notes. On or prior to the Closing
Date, there shall have been delivered to the Administrative Agent for the
account of each of the Lenders duly executed copies of (i) this Agreement and
(ii) the appropriate Revolving Notes executed by the Borrower, in each case in
the amount, maturity and as otherwise provided herein.

Section 5.1.3 Pledge Agreement. The Borrower and each other pledgor under the
Pledge Agreement shall have duly authorized, executed and delivered to the
Administrative Agent the Pledge Agreement substantially in the form of Exhibit G
hereto (as modified, supplemented or amended from time to time, the “Pledge
Agreement”), and shall have delivered to the Administrative Agent all of the
certificated Pledge Agreement Collateral referred to therein (to the extent
required to be pledged by the Pledge Agreement), together with duly executed and
undated stock powers, or, if any Pledge Agreement Collateral are uncertificated
securities, confirmation and evidence reasonably satisfactory to the
Administrative Agent that the security interest in such uncertificated
securities has been transferred to and perfected by the Administrative Agent for
the benefit of the Lenders in accordance with Article 8 of the Uniform
Commercial Code, as in effect in the State of New York, and all laws otherwise
applicable to the perfection of the pledge of such shares; and the
Administrative Agent and its counsel shall be satisfied that:

(i) the Lien granted to the Administrative Agent, for the benefit of the
Lenders, in the Pledge Agreement Collateral is a first priority security
interest; and

(ii) no Lien exists on any of the Pledge Agreement Collateral other than the
Lien created in favor of the Administrative Agent, for the benefit of the
Lenders, pursuant to the Pledge Agreement.

Section 5.1.4 Guaranties. The Guarantor shall have duly authorized, executed and
delivered to the Administrative Agent the Guaranty in the form of Exhibit H-1
hereto (as modified, supplemented or amended from time to time, the “Guaranty”),
and the Guaranty shall be in full force and effect. Each Borrowing Base
Ownership Entity as a Subsidiary Guarantor shall have duly authorized, executed
and delivered to the Administrative Agent the Subsidiary Guaranty in the form of
Exhibit H-2 hereto (as modified, supplemented or amended from time to time, the
“Subsidiary Guaranty”), and the Subsidiary Guaranty shall be in full force and
effect.

 

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Section 5.1.5 UCC Financing Statements. Administrative Agent shall have received
evidence that the UCC financing statements relating to the Agreement have been
delivered to Administrative Agent for filing in the applicable jurisdictions.

Section 5.1.6 Initial Borrowing Base Properties. Administrative Agent shall have
received and approved for each Initial Borrowing Base Property, (i) an
Acceptable Appraisal, (ii) true, correct and complete copies of the Management
Agreements and, in the case of the Lincolnshire Marriott, the Ground Lease
related hereto, and (iii) Title Searches, including judgment, tax liens,
building violations, mechanics liens and water and sewer charges, in each case
satisfactory to Administrative Agent.

Section 5.1.7 Entity Searches. Administrative Agent shall have received searches
with respect to each of Borrower, Guarantor and each Borrowing Base Ownership
Entity for liens, federal tax liens, state tax liens, bankruptcies and
judgments.

Section 5.1.8 Compliance Certificates. Administrative Agent shall have received
a Compliance Certificate with respect to the Initial Borrowing Base Properties
and compliance with the financial covenants set forth in Section 7.2.4
(including reconciliation to GAAP, if applicable).

Section 5.1.9 Appraisals. Administrative Agent shall have received Acceptable
Appraisals with respect to each Property.

Section 5.1.10 Prior Facility. Administrative Agent shall have received evidence
that the Prior Facility shall have been terminated and all amounts payable
thereunder and with respect to such termination shall have been paid by
Borrower.

Section 5.1.11 Lincolnshire Ground Lease Estoppel. If requested by
Administrative Agent, the Fee Owner of the Marriot Lincolnshire shall have duly
authorized, executed and delivered to Administrative Agent a Ground Lessor
Estoppel with respect to the Marriott Lincolnshire Ground Lease, in form and
substance reasonably satisfactory to Administrative Agent.

Section 5.1.12 Manager Consent and Estoppel. If requested by Administrative
Agent, the Manager at each Borrowing Base Property shall have duly authorized,
executed and delivered to Administrative Agent a Manager’s Consent to Pledge and
Estoppel Certificate in form and substance reasonably satisfactory to
Administrative Agent.

Section 5.1.13 Intentionally Omitted.

Section 5.1.14 Litigation. There shall exist no pending or threatened action,
suit, investigation, litigation or proceeding in any court or before any
arbitrator or governmental instrumentality which (x) purports to affect the
consummation of the Transaction or the legality or validity of this Agreement or
any other Loan Document or (y) could reasonably be expected to have a Material
Adverse Effect.

 

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Section 5.1.15 No Material Adverse Effect. On or prior to the Closing Date, in
the determination of the Administrative Agent, no Material Adverse Effect shall
have occurred; and neither Administrative Agent nor the Lenders shall have
become aware of any facts, conditions or other information not previously known
to it which could reasonably be expected to have a Material Adverse Effect.

Section 5.1.16 Approvals. All governmental and third party approvals necessary
in connection with the financing contemplated hereby and the continuing
operations of the Borrower and its Subsidiaries shall have been obtained and
shall be in full force and effect except as could not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, and all
applicable waiting periods, if any, shall have expired without any action being
taken or threatened by any competent authority which could restrain, prevent or
otherwise impose materially adverse conditions on the financing contemplated
hereby.

Section 5.1.17 Opinions of Counsel. The Administrative Agent shall have received
opinions, each dated the Closing Date and addressed to the Administrative Agent,
each Lender and the Issuer, from Perkins Coie LLP and Venable LLP, each as
special counsel to the Borrower and Guarantor, in form and substance reasonably
satisfactory to the Administrative Agent.

Section 5.1.18 Closing Date Certificate. The Administrative Agent shall have
received, with counterparts for each Lender, the Closing Date Certificate, dated
the Closing Date and duly executed and delivered by an Authorized Officer of the
Borrower, in which certificate the Borrower shall agree and acknowledge that the
statements made therein shall be deemed to be true and correct representations
and warranties in all material respects of the Borrower made as of such date and
under this Agreement, and, at the time such certificate is delivered, such
statements shall in fact be true and correct in all material respects. All
documents and agreements required to be appended to the Closing Date Certificate
shall be in form and substance reasonably satisfactory to the Administrative
Agent and such certificate shall specify that none of such documents or
agreements have been modified except as set forth in such certificate.

Section 5.1.19 Projections; Solvency Certificate. On or prior to the Closing
Date, there shall have been delivered to the Lenders:

(a) projected financial and cash flow statements for the Consolidated Group for
the period from the Closing Date to and including at least December 31, 2015
(the “Projections”), which Projections shall reflect the forecasted financial
condition, income and expenses and cash flows of the Consolidated Group after
giving effect to the Transaction; and

(b) a solvency certificate as to the Borrower and its Subsidiaries, taken as a
whole, from an Authorized Financial Officer, substantially in the form of
Exhibit I hereto, addressed to the Administrative Agent and the Lenders and
dated the Closing Date.

 

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Section 5.1.20 Other Diligence. Administrative Agent shall have received the
following due diligence materials for the Properties: (i) summaries of Insurance
Policies together with certificates evidencing coverage, (ii) UCC Searches, and
(iii) Title Searches, all in form and substance acceptable to Administrative
Agent.

Section 5.1.21 Closing Fees, Expenses, etc. The Administrative Agent shall have
received evidence of payment by the Borrower of (or a draw request with respect
to) all accrued and unpaid fees, costs and expenses to the extent then due and
payable under this Agreement on the Closing Date, together with all reasonable
legal costs and expenses of the Administrative Agent to the extent invoiced
prior to or on the Closing Date, including any such fees, costs and expenses
arising under or referenced in Sections 3.3 and 10.3.

Section 5.1.22 Other Loan Documents. On or prior to the Closing Date, there
shall have been delivered to the Administrative Agent for the account of each of
the Lenders duly executed copies of each Loan Document not explicitly described
in this Section 5.1.

Section 5.1.23 Lender Fees. The Administrative Agent shall have received
evidence of payment by the Borrower of the fees payable under the Fee Letters.

Section 5.1.24 Signatories. Upon the request of any Lender, the signatories
hereto on behalf of Borrower shall supply such Lender with a valid driver’s
license or passport as proof of identity.

Section 5.2 All Credit Extensions. The obligation of each Lender and the Issuer
to make any Credit Extension shall be subject to Sections 2.1.3, 2.1.4 and 2.1.5
and the satisfaction of each of the conditions precedent set forth in this
Section 5.2.

Section 5.2.1 Representations and Warranties, No Default, etc. Both before and
after giving effect to any Credit Extension:

(a) the representations and warranties set forth in Article VI, XI and XIII of
this Agreement and in each other Loan Document shall, in each case, be true and
correct in all material respects with the same effect as if then made (unless
stated to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date);

(b) no Default or Event of Default shall have then occurred and be continuing;

(c) the occurrence of such Credit Extension on such date does not violate any
Requirement of Law and is not enjoined, temporarily, preliminarily or
permanently and no litigation shall be pending or threatened, which in the good
faith judgment of Administrative Agent or the Required Lenders would enjoin,
prohibit or restrain, or impose or result in the imposition of any material
adverse condition upon, such Credit Extension or any member of the Consolidated
Group’s obligations with respect thereto; and

 

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(d) Administrative Agent shall have received a Borrowing Request or an Issuance
Request in the form attached as Exhibit B-1 and Exhibit B-2.

Section 5.2.2 Credit Extension Request, etc. Subject to Section 2.6.2, the
Administrative Agent shall have received a Borrowing Request if Loans are being
requested, or an Issuance Request if a Letter of Credit is being requested or
extended. Each of the delivery of a Borrowing Request and the acceptance by the
Borrower of the proceeds of such Credit Extension shall constitute a
representation and warranty by the Borrower that on the date of such Credit
Extension (both immediately before and after giving effect to such Credit
Extension and the application of the proceeds thereof) the conditions set forth
in clauses (a) and (b) of Section 5.2.1 have been satisfied.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

In order to induce the Lenders, the Issuer and the Administrative Agent to enter
into this Agreement and to make Credit Extensions hereunder, the Borrower
represents and warrants unto the Administrative Agent, the Issuer and each
Lender as set forth in this Article VI.

Section 6.1 Organization, etc. Each of Guarantor, Borrower, the Borrowing Base
Ownership Entities, and, in the case of each other member of the Consolidated
Group except where failure could not reasonably be expected to have a Material
Adverse Effect:

(a) is a corporation, limited liability company, or partnership, as the case may
be, validly organized and existing and in good standing under the laws of the
state or jurisdiction of its incorporation or organization;

(b) is duly qualified to do business and is in good standing as a foreign
corporation, limited liability company or partnership, as the case may be, in
each jurisdiction where the nature of its business requires such qualification;
and

(c) has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement, the Notes and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business substantially
as currently conducted by it.

Section 6.2 Due Authorization, Non-Contravention, etc. The execution, delivery
and performance by the Borrower of this Agreement, the Notes and each other Loan
Document executed or to be executed by it, the execution, delivery and
performance by Guarantor and each Subsidiary Guarantor of each Loan Document
executed or to be executed by it, the granting of the Liens contemplated by the
Security Documents and the Borrower’s, and each Subsidiary Guarantor’s or
Guarantor’s participation in the consummation of all aspects of the transactions
contemplated hereby, are in each case within each such Person’s corporate,
limited liability company or partnership powers, as the case may be, have been
duly authorized by all necessary corporate, limited liability company or
partnership action, as the case may be, and do not

 

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(a) contravene any such Person’s Organizational Documents;

(b) contravene any material contractual restriction binding on or affecting any
such Person or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under the terms of any material
indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement
or other material instrument to which the Borrower or any of the Subsidiaries or
Guarantor is a party or by which it or any of its property or assets is bound;

(c) contravene (i) any court decree or order binding on or affecting any such
Person or (ii) any law or governmental regulation binding on or affecting any
such Person; or

(d) result in, or require the creation or imposition of, any Lien on any of such
Person’s material properties (except as permitted by this Agreement).

Section 6.3 Government Approval, Regulation, etc. No approval, consent,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority or regulatory body or other Person (other than those that
have been, or on the Closing Date will be, duly obtained or made and which are,
or on the Closing Date will be, in full force and effect and other than those,
singly or in the aggregate, with respect to which the failure to obtain or make
could not reasonably be expected to have a Material Adverse Effect) is necessary
or required for the consummation of the transactions contemplated hereby or the
due execution, delivery or performance by, or to make enforceable against, the
Borrower, Guarantor or Subsidiary Guarantor, the Notes or any other Loan
Document to which it is a party or the granting of the Liens contemplated by the
Security Documents. Neither the Borrower nor any Subsidiary nor Guarantor is an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

Section 6.4 Validity, etc. This Agreement constitutes, and the Notes and each
other Loan Document, executed by the Borrower will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms; and each other Loan Document executed pursuant hereto by each Subsidiary
Guarantor or Guarantor will, on the due execution and delivery thereof by such
Subsidiary Guarantor or Guarantor, constitute the legal, valid and binding
obligation of such Subsidiary Guarantor or Guarantor enforceable against such
Subsidiary Guarantor or Guarantor in accordance with its terms (except, in any
case above, as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights generally
and by principles of equity).

Section 6.5 Financial Information.

(a) The financial statements furnished to the Administrative Agent and the
Lenders pursuant to Section 5.1.23 have been prepared in accordance with GAAP
consistently applied, except as otherwise expressly noted therein, and present
fairly in all material respects the consolidated financial condition of the
Persons covered thereby as at the dates thereof and the results of their
operations for the periods then ended. All

 

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balance sheets, all statements of operations, shareholders’ equity, earnings and
cash flow and all other financial information of each member of the Consolidated
Group and the Unconsolidated Subsidiaries furnished pursuant to Section 7.1.1
have been and will for periods following the Closing Date be prepared in
accordance with GAAP consistently applied, except as otherwise expressly noted
therein, and do or will present fairly in all material respects the consolidated
financial condition of the Persons covered thereby as at the dates thereof and
the results of their operations for the periods then ended.

(b) On and as of the Closing Date, after giving effect to all Indebtedness
(including the Loans) being incurred or assumed and Liens created by the
Borrower and Guarantor in connection therewith, (a) the sum of the assets, at a
fair valuation, of the Guarantor and its Subsidiaries taken as a whole and the
Borrower on a stand-alone basis will exceed their respective debts;
(b) Guarantor and its Subsidiaries taken as a whole and the Borrower on a
stand-alone basis have not incurred and do not intend to incur, and do not
believe that they will incur, debts beyond their ability to pay such debts as
such debts mature; and (c) the Guarantor and its Subsidiaries taken as a whole
and the Borrower on a stand-alone basis will have sufficient capital with which
to conduct their respective businesses. For purposes of this Section 6.5(b),
“debt” means any liability on a claim, and “claim” means (i) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.

(c) Except as disclosed in the financial statements delivered pursuant to
Section 6.5(a) or in Item 6.5(c) of the Disclosure Schedule and the Indebtedness
incurred in connection with the Commitments, there were as of the Closing Date
no liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
has had or could reasonably be expected to have a Material Adverse Effect. As of
the Closing Date, Borrower does not know of any basis for the assertion against
it or any of its Subsidiaries of any liability or obligation of any nature
whatsoever that is not disclosed in the financial statements delivered pursuant
to Section 6.5(a) which, either individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect.

(d) On and as of the Closing Date, the Projections have been prepared in good
faith and are based on assumptions believed by Borrower to be reasonable and
attainable under the then known facts and circumstances, and there are no
statements or conclusions in any of the Projections which are based upon or
include information known to the Borrower to be misleading in any material
respect or which knowingly fail to take into account material information
regarding the matters reported therein; it being understood, however, that
nothing contained herein shall constitute a representation that the results
forecasted in such Projections will in fact be achieved.

 

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Section 6.6 No Material Adverse Effect. Since the Closing Date, there has been
no change in the business, assets, operations, properties or financial condition
of the Consolidated Group that, either individually or in the aggregate, has
had, or could reasonably have, a Material Adverse Effect.

Section 6.7 Litigation, etc. There is no pending or, to the knowledge of the
Borrower, threatened litigation, action, proceeding or controversy affecting the
Borrower or any of its Subsidiaries or Guarantor, or any of their respective
Properties, businesses, assets or revenues, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 6.8 Subsidiaries. The Borrower has no Subsidiaries, except those
Subsidiaries existing on the Closing Date which are identified in Item 6.8 of
the Disclosure Schedule.

Section 6.9 Title.

(a) The Borrower or, as applicable, each Property Owner (other than the Property
Owner of a Borrowing Base Property), has good title, or leasehold interests in,
or indirect ownership of all of its Properties and assets, real and personal,
tangible and intangible, of any nature whatsoever, free and clear in each case
of all Liens or claims, except for Liens permitted pursuant to Section 7.2.3 and
except where the failure to have such good title or leasehold interests could
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

(b) Each Property Owner of a Borrowing Base Property, other than any Ground
Lessee, has good, marketable and insurable fee simple title with respect to each
Borrowing Base Property to the Land and the Improvements, and each Ground
Lessee, including with respect to the Marriott Lincolnshire, has good,
marketable and insurable leasehold title to the Land and the Improvements to its
Borrowing Base Property, in each case free and clear of all Liens whatsoever
except the Permitted Borrowing Base Liens, such other Liens as are permitted
pursuant to the Loan Documents and the Liens created by the Loan Documents. Each
Property Owner of a Borrowing Base Property has good and marketable title to the
remainder of the applicable Borrowing Base Property, free and clear of all Liens
whatsoever except the Permitted Borrowing Base Liens. There are no claims for
payment for work, labor or materials affecting a Borrowing Base Property which
are or may become a lien prior to, or of equal priority with, the Liens created
by the Loan Documents except as permitted by the Loan Documents. None of the
Permitted Borrowing Base Liens will materially and adversely affect (i) the
ability of a Borrowing Base Entity to pay any of its obligations to any Person
as and when due, (ii) the fair market value of the applicable Borrowing Base
Property, (iii) the marketability of title to the applicable Borrowing Base
Property, or (iv) the use or operation of the applicable Borrowing Base Property
as of the Closing Date and thereafter. Borrower shall cause each Property Owner
of a Borrowing Base Property, subject to the provisions of the Loan Documents,
to preserve its right, title and interest in and to the applicable Borrowing
Base Property for so long as the Facility remains outstanding and to warrant and
defend the same and the validity and priority of the Lien hereof from and
against any and all claims whatsoever, other than the Permitted Borrowing Base
Liens.

 

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Section 6.10 Taxes. The members of the Consolidated Group and all other Persons
with whom the members of the Consolidated Group join in the filing of a
consolidated return have filed all Federal income tax returns and other material
tax returns and reports, domestic and foreign, required by law to have been
filed, and have paid all material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable except those not yet delinquent or those which
are being diligently contested in good faith and for which adequate reserves
have been established (in the good faith judgment of the Borrower) in accordance
with GAAP. The members of the Consolidated Group and each such other Person with
whom the members of the Consolidated Group join in the filing of a consolidated
return have paid, or have provided adequate reserves (in the good faith judgment
of the management of the Borrower) in accordance with GAAP for the payment of
all such material taxes, assessments, fees and charges relating to all prior
taxable years and the current taxable year of the members of the Consolidated
Group and each such other Person with whom the members of the Consolidated Group
join in the filing of a consolidated return. To the best knowledge of the
Borrower, there is no proposed tax assessment against the members of the
Consolidated Group or any such other Person with whom the members of the
Consolidated Group join in the filing of a consolidated return that, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

Section 6.11 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the terms thereof
and the applicable provisions of ERISA, the Code and other federal or state law
except to the extent that failure to comply could not result, either
individually or in the aggregate, in an amount of liability that could
reasonably be expected to have a Material Adverse Effect. The Borrower and each
ERISA Affiliate have made all required contributions to each Plan, except to the
extent that a failure to do so could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code or Section 302 of ERISA has been made with
respect to any Plan subject to either such Section of the Code or ERISA.

(b) There are no pending or, to the best knowledge of Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Pension Plan which has resulted or could reasonably be expected
to result in, either individually or in the aggregate, a Material Adverse
Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability in an amount which could
reasonably be expected to have a Material Adverse Effect if such Pension Plan
were then terminated; and (iii) neither the Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

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Section 6.12 Compliance with Environmental Laws. The Borrower and each of its
Subsidiaries is in compliance with all applicable Environmental Laws in respect
of the conduct of its business and the ownership of its property, except such
noncompliance as could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. Without limiting the effect of
the preceding sentence:

(a) neither the Borrower nor any of its Subsidiaries has received a complaint,
order, citation, notice or other written communication with respect to the
existence or alleged existence of a violation of, or liability arising under,
any Environmental Law, the outcome of which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;

(b) to the best of the Borrower’s knowledge, after due inquiry, there are no
environmental, health or safety conditions existing or reasonably expected to
exist at any real property owned, operated, leased or used by the Borrower or
any of its existing or former Subsidiaries or any of their respective
predecessors, including off-site treatment or disposal facilities used by the
Borrower or its existing or former Subsidiaries for wastes treatment or
disposal, which could reasonably be expected to require any construction or
other capital costs or clean-up obligations to be incurred prior to the Maturity
Date in order to assure compliance with any Environmental Law, including
provisions regarding clean-up, to the extent that any of such conditions,
construction or other capital costs or clean-up obligations, either individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect; and

(c) neither the Borrower nor any of its Subsidiaries has treated, stored,
transported or disposed of Hazardous Materials at or from any currently or
formerly owned Real Estate or facility relating to its business in a manner
that, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

Section 6.13 Regulations T, U and X. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, and no use of any proceeds of any Credit
Extensions will violate F.R.S. Board Regulation T, U or X. Terms for which
meanings are provided in F.R.S. Board Regulation T, U or X or any regulations
substituted therefor, as from time to time in effect, are used in this Section
with such meanings.

Section 6.14 Accuracy of Information. All factual information (taken as a whole)
heretofore or contemporaneously furnished by or on behalf of the Consolidated
Group in writing to the Administrative Agent, the Issuer or any Lender on or
before the Closing Date (including (i) the Confidential Memorandum and (ii) all
information contained in the Loan Documents) for purposes of or in connection
with this Agreement or any transaction contemplated hereby is true and complete
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time in light of
the circumstances under which such information was provided, it being understood
and agreed that for purposes of this Section 6.14, such factual information
shall not include Projections and pro forma financial information.

 

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Section 6.15 REIT. Guarantor is qualified as a REIT and its proposed methods of
operation will enable it to continue to be so qualified.

Section 6.16 No Bankruptcy Filing. None of the members of the Consolidated Group
are contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of such entity’s assets or property, and Borrower has no knowledge of
any Person contemplating the filing of any such petition against it or against
any Guarantor or Subsidiary, except for any such filing or liquidation after the
Closing Date which would not constitute an Event of Default hereunder and
regarding which the Administrative Agent has received written notice.

Section 6.17 Use of Proceeds. The proceeds of all Loans shall be used by the
Borrower and its Subsidiaries, subject to the other restrictions set forth in
this Agreement, for their working capital, capital expenditures, acquisitions
and other general corporate, partnership or limited liability company purposes.
Each Letter of Credit may be used in support of any purpose not prohibited by
this Agreement or the other Loan Documents.

Section 6.18 Other Debt. No member of the Consolidated Group is in default in
the payment of any other Indebtedness or under any agreement, mortgage, deed of
trust, security agreement, or lease to which it is a party, which default could
reasonably be expected to have a Material Adverse Effect.

Section 6.19 Pledge Agreement. Once executed and delivered, and until terminated
in accordance with the terms thereof, the Pledge Agreement creates, as security
for the obligations purported to be secured thereby, a valid and enforceable
first priority Lien on all of the Pledge Agreement Collateral subject thereto
from time to time, superior to and prior to the rights of all third Persons in
favor of the Administrative Agent, for the benefit of the Lenders. No filings or
recordings are required in order to perfect the security interests created under
the Pledge Agreement except for such filings as have been made, or provided for
to the satisfaction of Administrative Agent, at the time of the execution and
delivery thereof. No consent of any party is required for the granting or
foreclosure of the Pledge Agreement Collateral.

Section 6.20 Material Agreements. Each management agreement (including, without
limitation, the Management Agreements) and each other Material Agreement is in
full force and effect, and no terminating event, default, or failure or
performance has accrued thereunder except where such terminating event, default,
or failure of performance could not reasonably be expected to have a Material
Adverse Effect. The Material Agreements furnished to Administrative Agent
constitute all Material Agreements of the Borrower and Guarantor as of the
Closing Date. No party to any management agreement or any Material Agreement has
challenged or denied the validity or enforceability of any such agreement. The
Borrower shall promptly furnish to Administrative Agent copies of all Material
Agreements of the Borrower or the Guarantor entered into after the Closing Date.

Section 6.21 Office of Foreign Assets Control. Neither Borrower nor Guarantor
shall (a) be or become subject at any time to any law, regulation, or list of
any government agency (including, without limitation, the OFAC List) that
prohibits or limits any Lender from making any advance or extension of credit to
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Borrower and/or Guarantor, or (b) fail to provide documentary and other evidence
of Borrower’s identity as may be requested by the Administrative Agent at any
time to enable the Administrative Agent to verify Borrower’s identity or to
comply with any applicable law or regulation, including, without limitation,
Section 326 of the USA Patriot Act of 2001, 31 U.S.C. § 5318 (the “Patriot
Act”). In addition, Borrower hereby agrees to provide Administrative Agent with
any additional information that Administrative Agent deems reasonably necessary
from time to time in order to ensure compliance with all Legal Requirements
concerning money laundering and similar activities. In order for Administrative
Agent to comply with the Patriot Act, prior to any Lender or Participant that is
organized under the laws of a jurisdiction outside of the United States of
America becoming a party hereto, Administrative Agent may request, and such
Lender or Participant shall provide, its name, address, tax identification
number and such other identification information as shall be necessary for
Administrative Agent to comply with the Patriot Act.

Section 6.22 Labor Matters. None of Guarantor, Borrower, nor any of its
Subsidiaries has received written notice, or otherwise has reason to believe
that it is engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect. There is (i) no unfair labor
practice complaint pending against Guarantor, Borrower or any of its
Subsidiaries or, to the best knowledge of Borrower, threatened against any of
them, before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against Guarantor, Borrower or any of its Subsidiaries or, to the best
knowledge of Borrower, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against Guarantor, Borrower or any of its
Subsidiaries or, to the best knowledge of Borrower, threatened against
Guarantor, Borrower or any of its Subsidiaries and (iii) to the best knowledge
of Borrower, no union representation question existing with respect to the
employees of Guarantor, Borrower or any of its Subsidiaries and, to the best
knowledge of Borrower, no union organizing activities are taking place, except
(with respect to any matter specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as could not reasonably be expected to
have a Material Adverse Effect. To Borrower’s knowledge, no Borrowing Base
Entity nor the Manager of any Borrowing Base Property (i) is involved in or
threatened with any material labor dispute, grievance or litigation relating to
material labor matters involving any employees and other laborers at the
Borrowing Base Property, including, without limitation, violation of any
federal, state or local labor, safety or employment laws (domestic or foreign)
and/or charges of unfair labor practices or discrimination complaints, (ii) has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act or the Railway Labor Act or (iii) is a party to, or bound by, any
collective bargaining agreement or union contract with respect to employees and
other laborers at any Borrowing Base Property and no such agreement or contract
is currently being negotiated by Borrower, Manager or any Borrowing Base Entity.

Section 6.23 Intellectual Property, Licenses, Franchises and Formulas.
Guarantor, Borrower and each of its Subsidiaries owns, or has the right to use,
all the patents, trademarks, permits, service marks, trade names, copyrights,
licenses, franchises, proprietary information (including, but not limited to,
rights in computer programs and databases) and formulas, or other rights with
respect to the foregoing, or has obtained assignments of all leases and other
rights of whatever nature, necessary for the present conduct of its business,
without any known conflict with the rights of others which, or the failure to
obtain which, as the case may be, could reasonably be expected to result in a
Material Adverse Effect.

 

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Section 6.24 Compliance. Borrower, each Borrowing Base Entity, the Borrowing
Base Properties and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes. To the best knowledge of Borrower, Borrower is not
in default or in violation of any order, writ, injunction, decree or demand of
any Governmental Authority and no Borrowing Base Ownership Entity is in default
or in violation of any order, writ, injunction, decree or demand of any
Governmental Authority. To the best knowledge of Borrower, there has not been
committed by Borrower or any Borrowing Base Ownership Entity any act or omission
affording the federal government or any other Governmental Authority the right
of forfeiture as against the Borrowing Base Properties or any part thereof or
any monies paid in performance of Borrower’s or such Borrowing Base Entity’s
obligations under any of the Loan Documents.

Section 6.25 Enforceability. The Loan Documents are not subject to any existing
right of rescission, set-off, counterclaim or defense by Borrower, including,
without limitation, the defense of usury, nor would the operation of any of the
terms of the Loan Documents, or the exercise of any right thereunder, render the
Loan Documents unenforceable (subject to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law)), and Borrower has
not asserted any right of rescission, set-off, counterclaim or defense with
respect thereto.

Section 6.26 Insurance. Borrower has obtained and has delivered to
Administrative Agent certified copies or originals of all insurance policies
required under the Agreement, reflecting the insurance coverages, amounts and
other requirements set forth in this Agreement. Borrower has not, and to the
best of Borrower’s knowledge no Person has, done by act or omission anything
which would impair the coverage of any such policy. Borrower is in compliance as
of the Closing Date with the Insurance Requirements.

Section 6.27 Borrowing Base Properties. Each Borrowing Base Property satisfies
the criteria set forth in Section 7.1.22(a).

Section 6.28 Filing and Recording Taxes. All filing, recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents have been paid.

Section 6.29 Brokers. Borrower has not dealt with any broker or finder with
respect to the transactions contemplated by the Loan Documents and has not done
any acts, had any negotiations or conversations, or made any agreements or
promises which will in any way create or give rise to any obligation or
liability for the payment of any brokerage fee, charge, commission or other
compensation to any Person with respect to the transactions contemplated by this
Agreement. Administrative Agent has not dealt with any broker or finder with
respect to the transactions contemplated by the Loan Documents and has not done
any acts, had any negotiations or conversations, or made any agreements or
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or give rise to any obligation or liability for the payment of any brokerage
fee, charge, commission or other compensation to any Person with respect to the
transactions contemplated by this Agreement. Borrower and Administrative Agent
shall each indemnify and hold harmless the other from and against any loss,
liability, cost or expense, including any judgments, attorneys’ fees, or costs
of appeal, incurred by the other party and arising out of or relating to any
breach or default by the indemnifying party of its representations, warranties
and/or agreements set forth in this Section 6.40. The provisions of this
Section 6.40 shall survive the expiration and termination of the Agreement and
the payment of the Indebtedness.

Section 6.30 Taxpayer Identification Number. Borrower’s Federal taxpayer
identification number is 36-4200430. The Federal taxpayer number for each
Property Owner of a Borrowing Base Property located in the United States of
America is 36-4312527 (with respect to SHC Laguna Niguel I LLC), 36-4312523
(with respect to SHC Lincolnshire LLC), 65-1230709 (with respect to SHC Half
Moon Bay LLC), 27-4867722 (with respect to SHR Jackson Hole LLC), and 27-4867313
(with respect to SHR Palo Alto LLC). The Federal taxpayer number for each
Operating Lessee of a Borrowing Base Property located in the United States of
America is 20-4707064 (with respect to DTRS Laguna, L.L.C.), 20-1232041 (with
respect to DTRS Lincolnshire, L.L.C.), 65-1230714 (with respect to DTRS Half
Moon Bay, LLC), 27-4867522 (with respect to DTRS Jackson Hole LLC), and
27-4866831 (with respect to DTRS Palo Alto LLC).

Section 6.31 Solvency/Fraudulent Conveyance. Borrower and the Borrowing Base
Entities (a) have not entered into the transaction contemplated by this
Agreement or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor and (b) have received reasonably equivalent value in
exchange for their obligations under the Loan Documents. After giving effect to
the Facility and the provisions of the Loan Documents, the fair saleable value
of Borrower’s assets exceeds and will, immediately following the making of the
Facility, exceed Borrower’s total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. After giving
effect to the Facility and the provisions of the Loan Documents, the fair
saleable value of the assets of each Borrowing Base Entity exceeds and will,
immediately following the execution and delivery of this Agreement, exceed the
total liabilities of such Borrowing Base Entity, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower’s assets is and will, immediately following the
execution and delivery of this Agreement, be greater than Borrower’s probable
liabilities, including the maximum amount of its contingent liabilities on its
Indebtedness as such Indebtedness become absolute and matured. The fair saleable
value of the assets of each Borrowing Base Entity is and will, immediately
following the execution and delivery of this Agreement, be greater than the
probable liabilities of such Borrowing Base Entity, including the maximum amount
of its contingent liabilities on its Indebtedness as such Indebtedness becomes
absolute and matured. The assets of Borrower and each Borrowing Base Entity do
not and, immediately following the execution and delivery of this Agreement will
not, constitute unreasonably small capital to carry out each party’s business as
conducted or as proposed to be conducted. Each of Borrower and each Borrowing
Base Entity does not intend to, and does not believe that it will, incur
Indebtedness and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such Indebtedness and liabilities as they
mature (taking into account the timing and amounts of cash to be received by
Borrower or such Borrowing Base Entity and the amounts to be payable on or in
respect of obligations of Borrower or such Borrowing Base Entity).

 

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Section 6.32 Anti-Corruption Laws and Sanctions. The Borrower has implemented
and maintains in effect policies and procedures designed to ensure compliance by
the Borrower, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws and applicable Sanctions, and the
Borrower, its Subsidiaries and their respective officers and employees, to the
knowledge of the Borrower, its directors, and agents, are in compliance with
Anti-Corruption Laws and applicable Sanctions in all material respects. None of
(a) the Borrower, any Subsidiary or, to the knowledge of the Borrower or such
Subsidiary, any of their respective directors, officers or employees, or (b) to
the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that
will act in any capacity in connection with or benefit from the Facility
established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit,
use of proceeds or other transaction contemplated by this Agreement will violate
Anti-Corruption Laws or applicable Sanctions.

ARTICLE VII

COVENANTS

Section 7.1 Affirmative Covenants. The Borrower hereby agrees with the
Administrative Agent, the Issuer and each Lender that, until all Commitments
have terminated, the Letter of Credit Commitment has terminated or expired and
all Obligations have been paid and performed in full, the Borrower will perform
or cause to be performed the obligations set forth in this Section 7.1.

Section 7.1.1 Financial Information, Reports, Notices, etc. The Borrower will
furnish, or will cause to be furnished, to the Administrative Agent (for
distribution to the Issuer and each Lender) copies of the following financial
statements, reports, notices and information:

(a) as soon as available and in any event within 45 days after the end of each
of the first three (3) Fiscal Quarters of each Fiscal Year of the Borrower,
(i) unaudited consolidated balance sheets of the Consolidated Group as of the
end of such Fiscal Quarter and unaudited consolidated statements of operations
and cash flow of the Consolidated Group for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending with the end
of such Fiscal Quarter, certified by an Authorized Financial Officer as fairly
presenting in all material respects, in accordance with GAAP (subject to
year-end audit adjustments), the financial position and results of operations of
the Consolidated Group covered thereby as of the date thereof, and
(ii) management’s discussion and analysis of the important operational and
financial developments during such Fiscal Quarter;

(b) as soon as available and in any event within 90 days after the end of each
Fiscal Year of the Borrower, (i) a copy of the annual audited financial
statements for such Fiscal Year for the Consolidated Group, including therein
consolidated balance sheets of the Consolidated Group as of the end of such
Fiscal Year and consolidated

 

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statements of operations and cash flow of the Consolidated Group for such Fiscal
Year, in each case as audited (without any Impermissible Qualification) by
Deloitte & Touche LLP or other nationally recognized independent public
accountants and (ii) management’s discussion and analysis of the important
operational and financial developments during such Fiscal Year;

(c) as soon as available and in any event within 60 days after the end of each
of the first three Fiscal Quarters of each Fiscal Year of the Consolidated Group
and within 120 days after the end of each Fiscal Year of the Consolidated Group,
a Compliance Certificate, executed and certified by an Authorized Financial
Officer of the Borrower, showing (in reasonable detail, including with respect
to appropriate calculations and computations) compliance with the financial
covenants set forth in Section 7.2.4 (including reconciliation to GAAP, if
applicable) and compliance of the Borrowing Base Properties with the
requirements of Section 7.1.22;

(d) promptly after preparation, and no later than forty-five (45) days after the
last day of each the first three Fiscal Quarters of each Fiscal Year of the
Consolidated Group and within 90 days after the end of each Fiscal Year of the
Consolidated Group, with respect to each Property, (i) certified Property
report(s) by an Authorized Officer of Borrower, setting forth in reasonable
detail the date acquired, location, appraised value, real estate taxes,
insurance, gross revenues, FF&E reserves, and EBITDA, and (ii) monthly or
quarterly operating statements for each of the Properties which shall detail the
revenues, expenses, Net Operating Income, average daily room rate, occupancy
levels, Capital Expenditures, and revenue per available room for each of the
Properties, in each case for the period then ended (provided, however, with
respect to each Borrowing Base Property, Borrower shall deliver such statement
within twenty five (25) Business Days after the end of each calendar month) and
(iii) with respect to each Borrowing Base Property, the foregoing information
together with Borrower’s certification that such Property continues to satisfy
all requirements for a “Borrowing Base Property” hereunder;

(e) promptly upon receipt, in the case of the Unconsolidated Subsidiaries,
copies of such financial statements, statements of operations and cash flow,
balance sheets, and similar financial information received with respect to any
Unconsolidated Subsidiary, it being acknowledged and agreed that Borrower shall
exercise reasonable efforts to obtain the materials and information described in
clauses (a)-(c) above with respect to each such Unconsolidated Subsidiary as
soon as reasonably practicable;

(f) promptly, and in any event within seven (7) Business Days after any
Responsible Officer of the Borrower obtains knowledge of the occurrence of a
Default or an Event of Default, a statement of an Authorized Officer of the
Borrower setting forth details of such Default or Event of Default and the
action which the Borrower has taken and proposes to take with respect thereto;

 

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(g) written notice, promptly and in any event within seven (7) Business Days
after any Responsible Officer of the Borrower obtains knowledge of (x) the
occurrence of any material adverse development with respect to the Borrower or
Guarantor, (y) the commencement of any litigation, action, proceeding, hotel
management or labor controversy which could reasonably be expected to have a
Material Adverse Effect on any Borrowing Base Property or which could reasonably
be expected to result in a Material Adverse Effect, or (z) the occurrence of any
development or circumstance with respect to any litigation, action, proceeding,
hotel management, labor controversy or other development which could reasonably
be expected to have a material adverse effect on any Borrowing Base Property or
which could reasonably be expected to result in a Material Adverse Effect;

(h) (i) as soon as available (but the Borrower will use reasonable efforts to
deliver on or before December 31 of each Fiscal Year), a preliminary annual
operating budget and capital expenditure schedule for each Property for the
following Fiscal Year, (ii) as soon as available, and in any event on or before
March 1 of each Fiscal Year, the final annual operating budget and Capital
Expenditure schedule for each Property for the such Fiscal Year, in each case
satisfactory to Administrative Agent as to form, and (iii) within 45 days after
June 30 and December 31, a statement containing a listing of all Development
Properties and other Properties then undergoing significant rehabilitation;

(i) promptly upon filing thereof, copies of any reports filed on Forms 10-K,
10-Q, and 8-K, effective registration statements filed on Forms S-1, S-2, S-3,
S-4 or S-11, and any proxy statements, as well as any substitute or similar
documents to substantially the same effect as the foregoing, including, to the
extent requested by the Administrative Agent, the schedules and exhibits
thereto, in such each case as filed with the SEC by the Consolidated Group
(other than immaterial amendments to any such registration statement);

(j) promptly after transmission thereof, copies of any notices or reports that
the Consolidated Group shall send to the holders of any publicly issued debt of
the Consolidated Group;

(k) promptly after a Responsible Officer of Borrower obtains knowledge of the
occurrence of any ERISA Event (but in no event more than ten (10) days after a
Responsible Officer of Borrower obtains knowledge of such ERISA Event), notice
thereof together with a copy of any notice with respect to such event that is
filed with a Governmental Authority and any notice delivered by a Governmental
Authority to the Consolidated Group or any ERISA Affiliate with respect to such
event;

(l) promptly when available and in any event within sixty (60) Business Days
after the last day of each Fiscal Year of the Borrower, a budget for the
then-current Fiscal Year of the Borrower as customarily prepared by the
management of the Borrower for its internal use, which budget shall be prepared
on a Fiscal Quarter basis and shall set forth the principal assumptions on which
such budget is based;

 

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(m) promptly after obtaining knowledge of any one or more of the following
environmental matters, unless such environmental matters could not, either
individually or when aggregated with all other such matters, be reasonably
expected to affect a Borrowing Base Property or to result in a Material Adverse
Effect, written notice of:

(i) any pending or threatened Environmental Claim against the Guarantor,
Borrower or any of its Subsidiaries or any Real Estate;

(ii) any condition or occurrence on any Real Estate that (x) results in
noncompliance by the Consolidated Group with any applicable Environmental Law or
(y) could reasonably be anticipated to form the basis of an Environmental Claim
against the Borrower or any of its Subsidiaries or any Real Estate;

(iii) any condition or occurrence on any Real Estate that could reasonably be
anticipated to cause such Real Estate to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Real Estate under any
Environmental Law; and

(iv) the taking of any removal or remedial action in response to the actual or
alleged presence of any Hazardous Material on any Real Estate;

All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower’s response thereto; and

(n) such other information respecting the condition or operations, financial or
otherwise, of the Consolidated Group as the Administrative Agent, or the
required Lenders through the Administrative Agent, may from time to time
reasonably request in writing.

Section 7.1.2 Preservation of Corporate Existence, etc. The Borrower will, and
will cause Guarantor and each of their respective Subsidiaries to:

(a) preserve and maintain in full force and effect its corporate, limited
liability company or partnership existence, as the case may be, under the laws
of its state or jurisdiction of incorporation or organization (provided that the
Borrower, Guarantor and their respective Subsidiaries may consummate any
transaction permitted under Section 7.2.7), except, in the case of any such
Subsidiary, to the extent that the failure to do so, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect; and

(b) preserve and maintain in full force and effect its good standing under the
laws of its state or jurisdiction of incorporation or organization and all
material governmental and other rights, privileges, qualification, permits,
licenses, intellectual property and franchises necessary in the normal conduct
of its business except in each case to the extent that the failure to do so,
either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

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Section 7.1.3 Intentionally Omitted.

Section 7.1.4 Payment of Taxes. The Borrower will, and will cause Guarantor and
each of their respective Subsidiaries to, pay and discharge all material taxes,
assessments and governmental charges or levies upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
material penalties attach thereto; provided, however, that neither the Borrower,
Guarantor nor any of their respective Subsidiaries shall be required hereunder
to pay any such tax, assessment, charge, levy or claim that is being contested
in good faith if it has maintained adequate reserves (in the good faith judgment
of the management of the Borrower, Guarantor or such Subsidiary) with respect
thereto in accordance with GAAP.

Section 7.1.5 Compliance with Statutes, etc. The Borrower will, and will cause
Guarantor and each of their respective Subsidiaries to, comply, in all material
respects, with all applicable statutes, regulations, licenses and other
Requirements of Law (including Environmental Laws) having jurisdiction over it
or its business, except such as may be contested in good faith or as to which a
bona fide dispute may exist or except to the extent that the failure to so
comply, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. The Borrower will maintain in effect
and enforce policies and procedures designed to ensure compliance by the
Borrower, its Subsidiaries and their respective directors, officers, employees
and agents with Anti-Corruption Laws and applicable Sanctions.

Section 7.1.6 Insurance. The Borrower will, and will cause Guarantor and each of
their respective Subsidiaries to, at all times maintain in full force and
effect, with third party insurance companies which are financially sound and
responsible at the time the relevant coverage is placed or renewed, insurance
with respect to its properties and business (including business interruption,
terrorism insurance, earthquake in areas of high seismic activity and wind storm
insurance (but with respect to terrorism, earthquake and wind storm coverage,
only to the extent commercially reasonable or as required under Mortgage
Indebtedness) against such casualties and contingencies and of such types and in
such amounts, and with such deductibles, retentions, self-insured amounts and
reinsurance provisions, as are customarily maintained by companies engaged in
the same or similar businesses in the same general area, and including excess
liability coverage of at least $150,000,000 for the Properties and at least
$75,000,000 for corporate offices, each of which may be provided under a blanket
policy. The Borrower will, upon request of the Administrative Agent or any
Lender, furnish to Administrative Agent information presented in reasonable
detail as to the insurance maintained by the Borrower and its Subsidiaries.

Section 7.1.7 Intentionally Omitted.

Section 7.1.8 Further Assurances. Borrower will, and will cause Guarantor and
each of their respective Subsidiaries to: (a) promptly execute and deliver any
and all other and further instruments which may be reasonably requested by
Administrative Agent to cure any defect in the execution and delivery of any
Loan Document or more fully describe particular aspects of any Subsidiary
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Borrower’s agreements set forth in the Loan Documents; and (b) promptly execute,
deliver, and file all such notices, statements, and other documents and take
such other steps, including but not limited to the amendment of the Pledge
Agreement, and any financing statements prepared thereunder, as may be
reasonably necessary or advisable, or that Administrative Agent may reasonably
request, to render fully valid and enforceable under all applicable laws, the
rights, liens, and priorities of Administrative Agent, for the benefit of the
Lenders, with respect to all security from time to time furnished under this
Agreement or the Pledge Agreement or intended to be so furnished, in each case
in such form and at such times as shall be reasonably satisfactory to
Administrative Agent.

Section 7.1.9 Intentionally Omitted.

Section 7.1.10 Intercompany Indebtedness. Provided no Event of Default has
occurred and is continuing, Borrower and its Subsidiaries shall be permitted to
amend, restate, cancel and otherwise modify the terms and conditions of
intercompany Indebtedness so long as the provisions of such amendments,
restatements and other modifications are consistent with Section 7.1.11.

Section 7.1.11 Transactions with Affiliates. The Borrower will, and will cause
Guarantor and each of their respective Subsidiaries to, conduct all transactions
with any of their respective Affiliates upon terms that are substantially as
favorable to the Borrower, Guarantor or such Subsidiary as it would obtain in a
comparable arm’s-length transaction with a Person not an Affiliate of the
Borrower, Guarantor or such Subsidiary. Borrowing Base Intercompany Indebtedness
shall be permitted provided (i) the same is subordinated to this Facility and
the full repayment of the Obligations and all obligations of Guarantor and any
Subsidiary Guarantor under this Facility, provided that for purposes of this
Agreement and the other Loan Documents payments are permitted to be made on such
intercompany Indebtedness so long as no Default shall exist under this Agreement
(ii) the incurrence of such Indebtedness will not otherwise cause an Event of
Default, (iii) intercompany loans to Subsidiaries which are not wholly-owned
directly or indirectly by the Borrower or Subsidiary Guarantors are subject to
reasonable approval by Administrative Agent and (iv) such Indebtedness otherwise
complies with the terms and restrictions set forth in this Agreement; and
provided, further, that, in addition to the foregoing, in the case of
Indebtedness relating to a Borrowing Base Property or Borrowing Base Ownership
Entity, (A) the holder thereof, if a Property Owner of a Borrowing Base
Property, is (or becomes) a Subsidiary Guarantor and (B) such Indebtedness is
pledged to the Administrative Agent pursuant to a loan pledge agreement
reasonably acceptable to Borrower and Administrative Agent. The Borrowing Base
Intercompany Indebtedness set forth on Schedule III and the other intercompany
Indebtedness existing as of the Closing Date and identified in Item 7.1.11 of
the Disclosure Schedule is permitted hereunder.

Section 7.1.12 Corporate Separateness. Borrower will, and will cause Guarantor
and each of their respective Subsidiaries to, take all such action as is
necessary to keep the operations of Borrower and its Subsidiaries separate and
apart from those of Guarantor including, without limitation, ensuring that all
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corporate existence, including holding regular board of directors’ meetings and
maintenance of corporate records, are followed. All financial statements of
Guarantor and Borrower provided to creditors will, to the full extent permitted
by GAAP, clearly evidence the corporate separateness of Borrower and its
Subsidiaries from Guarantor. Finally, no such company will take any action, or
conduct its affairs in a manner which is likely to result in the corporate
existence of Borrower and/or any of its Subsidiaries on the one hand, and
Guarantor on the other, being ignored, or in the assets and liabilities of
Borrower or any of its Subsidiaries being substantively consolidated with those
of Guarantor in a bankruptcy, reorganization, or other insolvency proceeding.

Section 7.1.13 End of Fiscal Year. The Borrower will, for financial reporting
purposes, cause each of its Domestic Subsidiaries’ Fiscal Years to end on
December 31 of each year (the “Fiscal Year End”); provided, however, that the
Borrower may, upon written notice to the Administrative Agent, change the
definition of Fiscal Year End set forth above to any other date reasonably
acceptable to the Administrative Agent, in which case the Borrower and the
Administrative Agent, will and are hereby authorized by the Lenders to, make any
adjustments to this Agreement that are necessary in order to reflect such change
in financial reporting.

Section 7.1.14 Interest Rate Protection Agreements. At least fifty percent
(50%) of the outstanding principal amount of all Indebtedness for borrowed money
of the Consolidated Group (excluding the Aggregate Outstanding Balance) shall be
(a) subject to a fixed interest rate, (b) Contingent Hedged Indebtedness or
(c) hedged pursuant to an Interest Rate Protection Agreement that is:
(i) acceptable to the lender or lenders providing such Indebtedness, if such
lenders or lenders required such Interest Rate Protection Agreement with respect
to such Indebtedness, (ii) acceptable to Moody’s Investors Service, Inc.,
Standard & Poor’s Rating Group, a division of McGraw Hill, Inc., a New York
corporation, or Fitch Ratings, Inc., if such ratings agency required such
Interest Rate Protection Agreement with respect to rating such Indebtedness, or
(iii) reasonably acceptable to Administrative Agent, in all other cases.

Section 7.1.15 Intentionally Omitted.

Section 7.1.16 Guarantor. Guarantor will at all times (i) qualify and maintain
its status as a self-directed and self-administered REIT, (ii) remain a publicly
traded company with common stock listed on any major national or regional stock
exchange, (iii) conduct substantially all of its business and hold substantially
all of its assets through the Borrower and operate its business at all times so
as to satisfy all requirements necessary to qualify as a real estate investment
trust under Sections 856 through 860 of the Code, and (iv) maintain adequate
records so as to comply with all record-keeping requirements relating to the
qualification of Guarantor as a real estate investment trust as required by the
Code and applicable regulations of the Department of Treasury promulgated
thereunder and will properly prepare and timely file with the U.S. Internal
Revenue Service all returns and reports required thereby. Notwithstanding the
provisions of Section 7.2.6, subject to the reasonable approval of
Administrative Agent, which shall be provided within five (5) Business Days
after Administrative Agent’s receipt of a written request therefor from
Borrower, Guarantor shall be permitted to issue a reverse stock split with
respect to its Capital Stock in order to comply with the covenant set forth in
clause (ii) of the previous sentence.

 

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Section 7.1.17 Maintenance, Repairs, and Alterations. Except to the extent the
failure to do so could not reasonably be expected to materially adversely affect
a Borrowing Base Property or have a Material Adverse Effect:

(a) Borrower will cause each of the Consolidated Group Properties to be
operated, maintained, and managed in a professional manner at all times in all
material respects as an upscale, upper-upscale or luxury hotel project under the
names shown on Schedule I (as supplemented from time to time to reflect changes
reasonably approved by Administrative Agent) and in a manner consistent with the
way it is operated, maintained, and managed as of the Closing Date with respect
to any Consolidated Group Property owned or leased by Borrower on the Closing
Date (including all marketing, advertising, promotional, and reservation
programs available as of the Closing Date with respect to any such Consolidated
Group Property). Borrower will keep in effect (or cause to be kept in effect) at
all times all permits, licenses, and contractual arrangements as may be
necessary to meet the standard of operation described in the foregoing sentence
or as may be required by the law. Upon the request of the Administrative Agent,
the Borrower will deliver to Administrative Agent true, correct, and complete
copies of all permits and licenses necessary for the ownership and operation of
the Consolidated Group Properties, issued in the name of the applicable
Consolidated Group Property and consistent with any Legal Requirements.

(b) Borrower will not commit or permit any waste or deterioration of or to any
Consolidated Group Property.

(c) Borrower will act prudently and in accordance with customary industry
standards in managing and operating the Consolidated Group Properties. Borrower
will keep the Consolidated Group Properties and all of its other assets which
are reasonably necessary to the conduct of its business in good working order
and condition, normal wear and tear excepted.

(d) The Borrower will, and will cause Guarantor and each of their respective
Subsidiaries to pay and discharge all lawful material claims that, if unpaid,
could reasonably be expected to become a material Lien upon any properties of
the Borrower, Guarantor or any of their respective Subsidiaries; provided,
however, that neither the Borrower, Guarantor nor any of their respective
Subsidiaries shall be required hereunder to pay any such claim that is being
contested in good faith if it has maintained adequate reserves (in the good
faith judgment of the management of the Borrower, Guarantor or such Subsidiary)
with respect thereto in accordance with GAAP.

Section 7.1.18 Access; Annual Meetings with Lenders.

(a) Access. The Borrower shall, at any reasonable time and from time to time
upon reasonable advance notice, permit the Administrative Agent or any of the
Lenders, or any agents or representatives thereof to, under the guidance of
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Borrower (unless such officers are not made available for such purpose upon
reasonable advance notice), (i) examine and make copies (at the expense of
Borrower) of and abstracts from the records and books of account of the
Consolidated Group, (ii) visit the properties of the Consolidated Group,
(iii) discuss the affairs, finances and accounts of the Consolidated Group with
any of their respective officers or directors, and (iv) communicate directly
with the Borrower’s independent certified public accountants.

(b) Annual Meetings with Lenders. At the request of the Administrative Agent or
the Required Lenders, the Borrower shall, at least once during each Fiscal Year
(other than during the Fiscal Year in effect on the Closing Date) of the
Borrower, hold a meeting (at a mutually agreeable location and time) with all of
the Lenders at which meeting the financial results of the previous Fiscal Year
and the financial condition of the Consolidated Group and the budgets presented
for the current Fiscal Year of the Consolidated Group shall be reviewed, with
each Lender bearing its own travel, lodging, food and other costs associated
with attending any such meeting.

Section 7.1.19 Keeping of Books. The Borrower shall keep, and shall cause
Guarantor and each of their respective Subsidiaries to keep, proper books of
record and account, in which proper entries shall be made of all financial
transactions and the assets and business of the Borrower, Guarantor and each
respective Subsidiary.

Section 7.1.20 Management Letters. Promptly after the Borrower’s receipt
thereof, a copy of any “management letter” received by the Borrower, Guarantor
or any of their respective Subsidiaries from its certified public accountants
and management’s responses, if any, thereto shall be delivered to Administrative
Agent.

Section 7.1.21 Intentionally Omitted.

Section 7.1.22 Borrowing Base Properties.

(a) Each Borrowing Base Property shall at all times satisfy the following
criteria: (i) Borrower or a wholly-owned Subsidiary of the Borrower holds good
title (by fee or pursuant to a Qualified Ground Lease) to such Property, free
and clear of all Liens (except for Permitted Borrowing Base Liens); (ii) such
Property is leased to an Operating Lessee; (iii) such Property is designated a
full-service property (in accordance with industry standard, as reasonably
determined by Administrative Agent); (iv) such Property shall at all times be an
upper-upscale, luxury or better quality hotel, as designated by Smith Travel
Research (or a similar successor company designated by Administrative Agent);
(v) such Property is operated under a nationally recognized brand (or with
respect to a foreign Property, an internationally recognized brand) by an
Approved Manager; (vi) such Property is fully operating, open to the public and
not under development or redevelopment (except for routine, ordinary course
renovation, maintenance and repair that does not result in the closure of more
than twenty-five percent (25%) of the rooms at such hotel); provided, however,
that temporary closure due to force majeure events, not to exceed fifteen
(15) Business Days, as well as ordinary course seasonal closures, shall be
permitted; (vii) such Property is not subject to or encumbered by any
Indebtedness other than Permitted Borrowing Base Debt; (viii) such

 

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Property is free of material structural defects or material environmental issues
and not subject to any material condemnation proceedings; (ix) neither such
Property nor the Property Owner thereof is encumbered with Permitted Borrowing
Base Debt or any other Material Agreement that by its terms precludes the grant
of the Collateral, the exercise by or on behalf of the Secured Creditors of
remedies with respect to the Collateral or in any way impairs the validity or
the enforceability of the Security Documents; and (x) the Property Owner of such
Property is Borrower or a Subsidiary Guarantor.

(b) (i) The Borrowing Base must at all times include a minimum of at least five
(5) Borrowing Base Properties; (ii) no Borrowing Base Property and no Capital
Stock in any Borrowing Base Ownership Entity shall at any time be subject to or
encumbered by (A) any Indebtedness other than Permitted Borrowing Base Debt, or
(B) any Lien other than a Permitted Borrowing Base Lien; and (iii) each
Borrowing Base Property shall be located in the United States, provided that one
(1) Borrowing Base Property may be located in Canada. Notwithstanding the
foregoing subclause (b)(i), Borrower shall be entitled to reduce the Borrowing
Base to a minimum of four (4) Borrowing Base Properties, provided that the
calculation of the Available Commitment shall be modified as provided in the
definition thereof.

(c) Borrower may propose to include additional Properties (whether New
Acquisitions or former Development Properties, or Properties that were once
Borrowing Base Properties but ceased to qualify as such) by sending a written
proposal for inclusion to Administrative Agent. Administrative Agent may
reasonably request any diligence materials and documentation it deems necessary
to evaluate such Property, including, without limitation, certifications,
appraisals, UCC, title, lien and judgment searches, and title documentation,
management or franchise agreements and other material agreements. Administrative
Agent will make such request and materials available to the Lenders. The
inclusion of any Property (other than the Initial Borrowing Base Properties) as
a Borrowing Base Property shall be subject to (i) delivery of the foregoing
diligence materials, and (ii) Borrower’s certification and Administrative
Agent’s reasonable approval that such Property meets the criteria set forth in
clause (a) above and the inclusion thereof complies with clause (b) above.
Administrative Agent shall be given at least ten (10) Business Days to evaluate
any diligence materials and Borrower’s certification.

(d) As a further condition to the inclusion of a Property as a Borrowing Base
Property, (i) Borrower, Guarantor or any Subsidiary that directly owns the
Capital Stock of a Subsidiary that directly or indirectly owns or leases such
Property shall execute and deliver to the Administrative Agent a supplement to
the Pledge Agreement for the purposes of becoming a pledgor thereunder with
respect to the Capital Stock of such Borrowing Base Ownership Entity (provided
such Subsidiary is not already a party to the Pledge Agreement) and shall,
pursuant to (and to the extent required by) the Pledge Agreement, pledge to the
Administrative Agent all of the outstanding shares of Capital Stock of such
Subsidiary and deliver undated stock powers for such certificates, executed in
blank (or, if any such shares of capital stock are uncertificated, confirmation
and evidence reasonably satisfactory to the Administrative Agent that the
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Administrative Agent, for the benefit of the Lenders, in accordance with Article
8 of the UCC or any other similar law which may be applicable) and (ii) any
Subsidiary that directly owns the Capital Stock of a Subsidiary that directly or
indirectly owns or leases such Property shall, unless already a party to the
Subsidiary Guaranty, execute a Joinder to become party to the Subsidiary
Guaranty, substantially in the form attached as Exhibit H-2 hereto.

(e) Borrower shall promptly, after any Responsible Officer of the Borrower
obtains knowledge thereof, notify Administrative Agent of: (i) any material
structural defects or Environmental Occurrence affecting a Borrowing Base
Property or (ii) the occurrence of any casualty event affecting a Borrowing Base
Property, or (iii) any other event or occurrence which would cause a Borrowing
Base Property to cease to satisfy each of the conditions and requirements set
forth in clause (a) above. In such event, the affected Borrowing Base Property
will immediately, as of the occurrence, cease to qualify as a Borrowing Base
Property hereunder, except to the extent provided in the following sentence. In
the event that structural defects, Environmental Occurrence or casualty result
in the temporary closure (for repair, restoration or remediation) of less than
25% of the rooms in such hotel and provided that the Borrower or the applicable
Property Owner has given reasonable security to the Administrative Agent to
insure that the repair, restoration or remediation thereof will be promptly and
diligently resolved in a good and workman-like manner within no more than sixty
(60) days from occurrence, then such Property will not cease to qualify as a
Borrowing Base Property for so long as such conditions remain satisfied and
provided that such issues are finally repaired or resolved within sixty
(60) days.

(f) Borrower may elect, on no less than fifteen (15) days prior written notice
(a “Property Release Notice”) to Administrative Agent, to remove a Borrowing
Base Property from the Borrowing Base, whether as a result of an intended
Disposition or otherwise, provided that:

(i) The Property Release Notice sets forth the Business Day (the “Release Date”)
on which Borrower desires that Administrative Agent release the Property from
the Borrowing Base Property and, if applicable, whether Borrower elects to
terminate the Pledge and Subsidiary Guaranty with respect to the Borrowing Base
Ownership Entities that hold interests in such Property, to the extent
applicable with respect thereto;

(ii) Borrower shall submit to Administrative Agent not less than ten (10) days
prior to the Release Date a release of Liens (and related Loan Documents) for
the applicable Borrowing Base Ownership Entity (for execution by Administrative
Agent) in a form appropriate in the applicable state and otherwise satisfactory
to Administrative Agent in its reasonable discretion (collectively, “Release
Instruments”) for each applicable Borrowing Base Ownership Entity together with
an Officer’s Certificate certifying that (A) the Release Instruments are in
compliance with all Legal Requirements, (B) the release to be effected will not
violate the terms of this Agreement, (C) the release to be effected will not
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Liens, security interests and other rights of Administrative Agent and Lenders
under the Subsidiary Guaranty and Pledge with respect to Borrowing Base
Ownership Entities not being released (or as to the Borrowing Base Properties
subject to Loan Documents not being released) and (D) the condition described in
paragraph (iii) below is satisfied in connection with such Borrowing Base
Property Release (together with calculations and supporting documentation
demonstrating the same in reasonable detail);

(iii) After giving effect to such Borrowing Base Property Release, the Aggregate
Outstanding Balance shall not exceed the Available Commitment calculated on a
pro forma basis;

(iv) No monetary Default or Event of Default shall have occurred and then be
continuing as of the Release Date, unless all outstanding monetary Defaults and
Events of Default are cured as a result of the Borrowing Base Property Release;

(v) After giving effect to such Borrowing Base Property Release, no Event of
Default shall occur as a result of the Borrowing Base Property Release.

(g) In the event that a Property becomes a Released Borrowing Base Property
pursuant to clauses (e) or (f) above, then:

(i) Borrower shall deliver to Administrative Agent an updated Compliance
Certificate reflecting the fact that such Property is no longer in the Borrowing
Base and shall make the mandatory prepayments required under Section 3.2.1(b),
if any;

(ii) Administrative Agent shall execute such reasonable documents as Borrower
shall prepare and request in order to release the applicable Borrowing Base
Ownership Entities from the Subsidiary Guaranty and Pledge (but not with respect
to any remaining Borrowing Base Property in which such Borrowing Base Ownership
Entities may have an interest); and

(iii) Borrower shall pay any and all reasonable out-of-pocket costs and expenses
incurred in connection with the foregoing, including, without limitation,
Administrative Agent’s reasonable attorneys’ fees and disbursements.

Section 7.2 Negative Covenants. The Borrower agrees with the Administrative
Agent, the Issuer and each Lender that, until all Commitments have terminated,
all Letters of Credit have terminated or expired and all Obligations have been
paid and performed in full, the Borrower will comply with the covenants set
forth in this Section 7.2.

Section 7.2.1 Changes in Business. Borrower will not, and will not permit
Guarantor or any of their respective Subsidiaries to, engage in any significant
business or activities in any industries or business segments, other than the
business and activities

 

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conducted by Borrower, Guarantor and their respective Subsidiaries (taken as a
whole) on the Closing Date (i.e., the acquisition, ownership and operation of
hotels and interests therein), and other businesses and activities related or
incidental thereto.

Section 7.2.2 Indebtedness. The Borrower will not, and will not permit Guarantor
or any of their respective Subsidiaries to, create, incur, assume or suffer to
exist or otherwise become or be liable in respect of any Indebtedness, other
than, without duplication, the following:

(a) Mortgage Indebtedness and Mezzanine Indebtedness encumbering Properties
other than Borrowing Base Properties, including customary recourse guaranties
provided in connection therewith;

(b) Unsecured Indebtedness incurred in connection with Permitted Construction
Indebtedness, subject to compliance with the covenants set forth in
Section 7.2.9, not to exceed Fifty Million Dollars ($50,000,000) in aggregate
principal amount at any time;

(c) Permitted Borrowing Base Debt;

(d) Indebtedness incurred by Borrower, Guarantor and their respective
Subsidiaries in respect of (i) Credit Hedging Agreements and other Hedging
Agreements entered into in the ordinary course and not for speculative purposes,
(ii) purchase money indebtedness, capital lease obligations or other
indebtedness for FF&E incurred in the ordinary course of business (but, in
either case, not with respect to Property acquisitions or in any event recourse
to Borrower or Guarantor), (iii) hotel management agreement fees and obligations
incurred in the ordinary course of business, and (iv) other trade payables,
letter of credit reimbursement obligations or guaranties (excluding guarantees
of indebtedness for borrowed money or letter of credit reimbursement obligations
relating to indebtedness for borrowed money) incurred in the ordinary course of
business, subject to compliance with the covenants set forth in Section 7.2.4;

(e) All Obligations hereunder, including pursuant to the Guaranty and Subsidiary
Guaranty;

(f) Indebtedness secured by any Liens permitted pursuant to Section 7.2.3;

(g) Indebtedness existing as of the Closing Date and identified in Item 7.1.11
of the Disclosure Schedule;

(h) Unsecured Indebtedness of Borrower or Guarantor not otherwise permitted
under the foregoing clauses (a)-(g), subject to compliance with the covenants
set forth in Section 7.2.9, not to exceed $250,000,000 in aggregate principal
amount at any time; and

(i) Intercompany Indebtedness issued in accordance with Section 7.1.11.

 

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Section 7.2.3 Liens. The Borrower and Guarantor will not, and will not permit
any of their Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its property, revenues or assets (real or personal, tangible or
intangible), whether now owned or hereafter acquired or sell any such property
or assets subject to an understanding or agreement, contingent or otherwise, to
repurchase or leaseback such property or assets (including sales or accounts
receivable with recourse to such Borrower, Guarantor or any of their respective
Subsidiaries), or assign any right to receive income or permit the filing of any
financing statement under the UCC or any other similar notice of Lien under any
similar recording or notice statute, except, with respect to Borrowing Base
Properties, Permitted Borrowing Base Liens and with respect to all Properties
other than Borrowing Base Properties, Permitted Borrowing Base Liens and the
following:

(a) Liens securing payment of the Obligations granted pursuant to any Loan
Document or Liens securing Credit Hedging Agreements;

(b) Liens securing Permitted Construction Indebtedness;

(c) Liens securing Mortgage Indebtedness or Mezzanine Indebtedness;

(d) Liens securing Indebtedness of the type permitted and described in clause
(c) or (d) of Section 7.2.2;

(e) Liens on cash or Cash Equivalents or deposit accounts holding cash or Cash
Equivalents securing Hedging Agreements or letter of credit reimbursement
obligations permitted under Section 7.2.2(d) or Liens securing FF&E purchase
money indebtedness or capital lease obligations permitted under
Section 7.2.2(d);

(f) inchoate Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or to
the extent payment is not required pursuant to Section 7.1.4;

(g) Liens of carriers, warehousemen, mechanics, materialmen and landlords and
other similar Liens imposed by law incurred in the ordinary course of business,
in each case so long as such Liens could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect;

(h) Liens (other than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business in connection with workmen’s compensation,
unemployment insurance or other forms of governmental insurance or benefits, or
to secure performance of tenders, statutory and regulatory obligations, bids,
leases and contracts or other similar obligations (other than for borrowed
money) entered into in the ordinary course of business or to secure obligations
on surety bonds or performance or return-of-money bonds;

(i) Liens consisting of judgment or judicial attachment liens in circumstances
not constituting an Event of Default under Section 8.1.6;

 

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(j) easements, rights-of-way, municipal and zoning ordinances or similar
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not securing Indebtedness and not interfering in any material
respect with the ordinary conduct of the business of the Borrower or its
Subsidiaries;

(k) Leases for space entered into in the ordinary course of business affecting
any Property (to tenants as tenants only, without purchase rights or options);
and

(l) Liens arising solely by virtue of any statutory or common law provision
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, provided that such deposit account is not a cash collateral
account.

Section 7.2.4 Financial Covenants. The Borrower will not permit to occur any of
the events set forth below:

(a) Minimum Total Fixed Charge Coverage Ratio.

(i) From the Closing Date through the end of calendar year 2014, Borrower will
not permit the Total Fixed Charge Coverage Ratio, as of the end of any Fiscal
Quarter, to be less than 1.3:1.0;

(ii) From January 1, 2015 through the end of calendar year 2015, Borrower will
not permit the Total Fixed Charge Coverage Ratio, as of the end of any Fiscal
Quarter, to be less than 1.4:1.0;

(iii) From January 1, 2016 until the Initial Maturity Date, Borrower will not
permit the Total Fixed Charge Coverage Ratio, as of the end of any Fiscal
Quarter, to be less than 1.5:1.0; and

(iv) During the Extension Term, Borrower will not permit the Total Fixed Charge
Coverage Ratio, as of the end of any Fiscal Quarter, to be less than 1.5:1.0.

(b) Prior to the Initial Maturity Date, Borrower will not permit the Total
Leverage Ratio to be greater than .60 to 1.0; provided, however, that in
conjunction with a Specified Acquisition, Borrower may, on one occasion only and
only prior to the Initial Maturity Date, by written notice to the Administrative
Agent, elect to increase the Total Leverage Ratio to .65 to 1.0 for up to the
first three (3) Fiscal Quarters ending on or after the date of such Specified
Acquisition, but excluding any Fiscal Quarter ending after the Initial Maturity
Date. During the Extension Term, Borrower will not permit the Total Leverage
Ratio to be greater than .60 to 1.0.

(c) Borrower will not permit, as of any date, Consolidated Tangible Net Worth to
be less than an amount equal to the sum of (i) $1,100,731,127 (i.e.,
seventy-five percent (75%) of the Consolidated Tangible Net Worth as of
3/31/2014) plus (ii) seventy-five percent (75%) of the net proceeds to Guarantor
of any new issuances of

 

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common Capital Stock, but excluding therefrom (x) the proceeds of any common
Capital Stock of Guarantor or Borrower used in a transaction or a series of
transactions to redeem all or any portion of an outstanding issue of Capital
Stock (including payment in connection therewith of any accrued Dividends in
accordance herewith) or (y) Capital Stock of Guarantor or Borrower issued to
discharge Indebtedness.

(d) Construction Cost. The Borrower will not permit Construction Costs of the
Consolidated Group (including, in the case of Unconsolidated Subsidiaries, the
greater of (i) Borrower’s Share of such Construction Cost and (ii) the amount
(without duplication) of such Construction Cost for which the member of the
Consolidated Group is liable) at any time to exceed ten percent (10%) of the
aggregate Gross Asset Value in respect of all of the Properties.

(e) Minority Joint Ventures. The Borrower will not permit its Share of the
aggregate Net Asset Value of Properties held in Unconsolidated Subsidiaries at
any time to exceed twenty-five percent (25%) of the aggregate Gross Asset Value
in respect of all of the Properties.

(f) Construction Costs and Minority Joint Ventures. The Borrower will not permit
the sum of the Construction Costs described in clause (d) above and the
Borrower’s Share of the aggregate Net Asset Value of Properties held in
Unconsolidated Subsidiaries to exceed, at any time, thirty-five percent (35%) of
the aggregate Gross Asset Value in respect of all of the Properties.

Section 7.2.5 Investments. The Borrower will not, and will not permit Guarantor
or any of their respective Subsidiaries to, make, incur, assume or suffer to
exist any Investment in any other Person except:

(a) Investments existing as of the Closing Date and identified in Item 7.2.5(a)
of the Disclosure Schedule, provided that any additional Investments made with
respect thereto shall be permitted only if permitted under the other provisions
of this Section 7.2.5;

(b) Investments in Cash Equivalents;

(c) without duplication, Investments to the extent permitted as Indebtedness
pursuant to Section 7.2.2;

(d) without duplication, Capital Expenditures;

(e) without duplication, Investments permitted by Section 7.2.6;

(f) acquisitions of Properties or the Capital Stock of a Person that owns a
Property, provided that the financial covenants in Section 7.2.4 are complied
with;

(g) Investments constituting (i) accounts receivable arising, (ii) trade debt
granted, or (iii) deposits made in connection with the purchase price of goods
or services, in each case in the ordinary course of business;

 

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(h) loans to Subsidiaries permitted pursuant to Section 7.1.11;

(i) loans and advances to employees of the Guarantor, the Borrower or any
Subsidiary in the ordinary course of business, including in connection with a
management incentive plan, not to exceed $5,000,000.00 in the aggregate;

(j) Investments in the Capital Stock of any Subsidiary; and

(k) Investments in Unconsolidated Subsidiaries unless the Borrower’s Share of
the Net Asset Value of Properties held in all Unconsolidated Subsidiaries is
equal to or greater than twenty-five percent (25%) of the aggregate Gross Asset
Value of all the Properties.

Section 7.2.6 Restricted Payments, etc.

(a) Borrower will not, nor will Borrower permit Guarantor or any of Borrower’s
or Guarantor’s respective Subsidiaries to, authorize, declare or pay any
Dividends, except in the following circumstances:

(i) any Subsidiary of Borrower may authorize, declare and pay Dividends to
Borrower or to any Subsidiary of Borrower;

(ii) Guarantor and Borrower shall be permitted to authorize, declare and pay
Dividends so long as (A) no Event of Default exists at the time of the
respective authorization, declaration or payment or would exist immediately
after giving effect thereto, and (B) such Dividends, when aggregated with all
Dividends paid during the current Fiscal Quarter and the preceding three
consecutive Fiscal Quarters, do not exceed the greater of (x) ninety-five
percent (95%) of Funds From Operations (excluding any Share Repurchase not
prohibited by Section 7.2.6(b)) and (y) the minimum amount necessary for
Guarantor to maintain its status a real estate investment trust under sections
856 through 860 of the Code and eliminate any U.S. federal income tax liability
under sections 857, 858 and 4981 of the Code;

(iii) provided no Event of Default has occurred and is continuing or would
result therefrom, Guarantor and Borrower shall be permitted to pay Dividends to
holders of preferred Capital Stock that accrued with respect to the most recent
Fiscal Quarter (a “Current Preferred Dividend”); and

(iv) For the avoidance of doubt, nothing in this Agreement shall be interpreted
as prohibiting Dividends from Subsidiaries to holders of Capital Stock in Joint
Ventures.

(b) Borrower and Guarantor shall not redeem, retire, repurchase or engage in any
other acquisition or similar transaction, of any class of Borrower’s or
Guarantor’s outstanding Capital Stock (each, a “Share Repurchase”) unless (i) no
Event of Default has occurred and is continuing or would result therefrom and
(ii) with respect

 

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to common Capital Stock, the Total Fixed Charge Coverage Ratio exceeds 1.35:1.0
for the prior Fiscal Quarter. The foregoing restriction shall not be deemed to
apply to (i) a reverse stock split pursuant to the terms of Section 7.1.16 or
(ii) a transaction or series of transactions in which an outstanding issue of
the Capital Stock of Guarantor or Borrower is replaced, redeemed, or exchanged
with a new issue of Capital Stock or the proceeds thereof, as applicable (or in
each case portions thereof).

(c) No Dividend in cash or in kind may be paid or made by Borrower or Guarantor
under this Section 7.2.6 at any time that an Event of Default shall have
occurred and be continuing or would result from any such Dividend or other
payment; provided, however, that notwithstanding the restrictions of
Section 7.2.6(a) or the first part of this sentence, for so long as Guarantor
qualifies, or has taken all other actions necessary to qualify, as a “real
estate investment trust” under the Code during any Fiscal Year of Guarantor,
Borrower may authorize, declare and pay quarterly cash Dividends (which may be
based on estimates) to Guarantor when and to the extent necessary for Guarantor
to distribute, and Guarantor may so distribute, cash Dividends to its
shareholders generally in an aggregate amount not to exceed the minimum amount
necessary for Guarantor to maintain its tax status as a real estate investment
trust, unless Borrower receives notice from Administrative Agent of any monetary
Event of Default or other material Event of Default.

(d) For avoidance of doubt, a Dividend paid or satisfied with the issuance of
Capital Stock shall not be deemed to be a Dividend “in kind.”

Section 7.2.7 Consolidations and Mergers; Dispositions. The Borrower will not,
and will not suffer or permit Guarantor or any of their respective Subsidiaries
to, merge, consolidate, reorganize or otherwise combine or liquidate with or
into, whether in one transaction or in a series of transactions to or in favor
of, any Person except for (i) transactions that occur between wholly-owned
Subsidiaries (provided that if such transaction involves a Subsidiary Guarantor,
the Subsidiary Guarantor is the surviving entity), (ii) transactions where the
Borrower is the surviving entity and there is no change in the type of business
conducted (i.e., from that of a hotel owner and operator) and no other Change of
Control or Default results from such transaction, (iii) transactions otherwise
permitted hereunder including in connection with a permitted Disposition or
Investment, or (iv) transactions otherwise approved in advance by Administrative
Agent or the Required Lenders. The Borrower will not, and will not permit
Guarantor and any of their respective Subsidiaries to enter into or consummate
any Disposition (other than any Disposition resulting from a casualty or
condemnation, a Disposition by any Subsidiary to any wholly-owned Subsidiary of
Borrower or to Borrower or otherwise approved in advance by the Required
Lenders) if (A) an Event of Default then exists; or (B) the Disposition would
result in (1) proceeds of less than seventy-five percent (75%) cash or Cash
Equivalents or (2) Capital Stock in a Subsidiary or Joint Venture that would
otherwise not be permitted under this Agreement; or (C) the Disposition is not
on a bona fide arms-length basis; or (D) the Disposition would, on an actual or
pro forma basis, cause an Event of Default or the breach of the financial
covenants set forth in Section 7.2.4.

 

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Section 7.2.8 Limitation on Certain Restrictions on Subsidiaries. The Borrower
will not, and will not permit Guarantor or any of their respective Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective, any encumbrance or restriction on the ability of any such
Subsidiary to (x) pay Dividends or make any other distributions on its Capital
Stock or any other interest or participation in its profits owned by the
Borrower, Guarantor or any of their Subsidiaries, or pay any Indebtedness owed
to the Borrower, Guarantor or any of their respective Subsidiaries, (y) make
loans or advances to the Borrower, Guarantor or any of their respective
Subsidiaries or (z) transfer any of its properties or assets to the Borrower,
Guarantor or any of their respective Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Loan Documents, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of the
Borrower, Guarantor or any of their respective Subsidiaries, (iv) customary
provisions restricting assignment of any licensing agreement or other contract
entered into by the Borrower, Guarantor or any of their respective Subsidiaries
in the ordinary course of business, and (v) restrictions on the transfer of any
assets subject to or restrictions on the making of distributions imposed in
connection with a Lien permitted by Sections 7.2.3(b), (c) or (d).

Section 7.2.9 Covenant Restrictions. No Recourse Indebtedness of the Borrower or
Guarantor shall contain any covenant or restriction which is more restrictive
than any covenant or restriction contained in this Agreement or any other Loan
Documents. Without limiting the rights and remedies of the Lenders with respect
to any breach of the foregoing covenant, any such more restrictive covenant or
restriction shall be deemed incorporated herein, mutatis mutandis, and
applicable to the Facility.

Section 7.2.10 Organizational Documents. Neither the Guarantor nor the Borrower
shall amend, modify or otherwise change any of the terms or provisions in any of
its respective Organizational Documents as in effect on the Closing Date, except
amendments to effect changes that could not be reasonably expected to have
Material Adverse Effect; provided, however, in no event shall the Organizational
Documents of Borrower be amended in any manner to reduce or otherwise diminish
the management rights and powers of the managing member without the consent of
the Administrative Agent.

Section 7.2.11 Borrowing Base Entity Organizational Documents. Borrower shall
not, and shall not permit any Borrowing Base Entity to, amend or modify any of
its Organizational Documents without Administrative Agent’s consent, other than
to reflect any change in capital accounts, contributions, distributions or
allocations or to make other changes that do not have a Material Adverse Effect.

Section 7.2.12 Partition. Borrower shall not, and shall not permit any Borrowing
Base Entity to, partition any Borrowing Base Property.

Section 7.2.13 Transfer Assets. Borrower shall not, and shall not permit any
Borrowing Base Entity to, Transfer any personal property unless (i) such
Transfer is in the ordinary course of business, (ii) such personal property is
replaced with property of

 

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reasonably equivalent value, (iii) such Transfer is required pursuant to the
terms of the applicable Management Agreement, or (iv) such Transfer is permitted
by another provision of this Agreement.

Section 7.2.14 Use of Proceeds. The Borrower will not request any Borrowing or
Letter of Credit, and the Borrower shall not use, and shall ensure that its
Subsidiaries and its or their respective directors, officers, employees and
agents shall not use, the proceeds of any Borrowing or Letter of Credit (A) in
furtherance of an offer, payment, promise to pay, or authorization of the
payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing
or facilitating any activities, business or transaction of or with any
Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would
result in the violation of any Sanctions applicable to any party hereto.

Section 7.2.15 Manager.

(a) With respect to each Borrowing Base Property, Borrower shall not, and shall
not permit any Borrowing Base Entity to, without the prior written consent of
Administrative Agent, which consent shall not be unreasonably withheld or
delayed, (i) materially modify, change, supplement, alter or amend any
Management Agreement or waive or release any of its right and remedies under a
Management Agreement that would have a Material Adverse Effect or would
otherwise modify, supplement or alter the provisions relating to casualty,
condemnation or the disposition of insurance proceeds or (ii) replace the
Manager with any Person other than an Approved Manager.

(b) In the event that Borrower or any Borrowing Base Entity desires to retain a
new Manager, then (i) such new Manager shall be an Approved Manager, and
(ii) the Management Agreement with such Approved Manager shall either be
(x) certified by Borrower to be on terms that in the aggregate (i.e., taken as a
whole) are no less favorable to the Borrowing Base Entity than customary and
market terms or (y) approved by the Required Lenders, such approval not to be
unreasonably withheld or delayed.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.1 Events of Default. Each of the following events or occurrences
described in this Section 8.1 shall constitute an “Event of Default.”

Section 8.1.1 Non-Payment of Obligations. The Borrower shall default in the
payment or prepayment when due of:

(a) any principal or interest of any Loan; or

(b) any fee described in Article III or of any other amount payable hereunder or
under any other Loan Document and such default shall continue unremedied for a
period of five (5) Business Days.

 

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Section 8.1.2 Breach of Warranty. Any representation or warranty of the Borrower
made or deemed to be made hereunder or in any other Loan Document executed by it
or any other writing or certificate furnished by or on behalf of the Borrower to
the Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article
V), is or shall be incorrect, false or misleading when made or deemed to have
been made in any material respect.

Section 8.1.3 Non-Performance of Certain Covenants and Obligations. Borrower or
any Borrowing Base Ownership Entity shall (a) default in the due performance and
observance of any of its obligations under Section 7.1.1(f), Section 7.1.2 (but
only to the extent arising from the failure of Guarantor or Borrower to preserve
and keep in full force and effect its existence), Section 7.1.16,
Section 7.1.22(b), or Section 7.2 hereof or (b) default in the due performance
and observance of any of its obligations under Section 7.1.1(g), (k) or (m),
Section 7.1.6, Section 7.1.14, or Section 7.1.22(c) hereof and such default
shall continue unremedied for a period of ten (10) days (provided, however,
solely in the case of a default under Section 7.1.6 hereof, Administrative Agent
may, in its sole discretion, extend such ten (10) day period, but in no event by
more than twenty (20) days).

Section 8.1.4 Non-Performance of Other Covenants and Obligations. The Borrower
or any Borrowing Base Ownership Entity shall default in the due performance and
observance of any other agreement contained herein or in any other Loan Document
executed by it, and such default shall continue unremedied for a period of
thirty (30) days after written notice thereof shall have been given to the
Borrower by the Administrative Agent or the Required Lenders; provided, however,
that if such default is susceptible of cure but cannot reasonably be cured
within such thirty (30) day period and the Borrower shall have commenced to cure
such default within such thirty (30) day period and is working in good faith to
cure the same, such thirty (30) day period shall be extended for up to an
additional thirty (30) days.

Section 8.1.5 Default on Other Indebtedness. A default shall occur in the
payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Recourse Indebtedness (other than Indebtedness
described in Section 8.1.1 or Indebtedness with respect to Foreign Non-Borrowing
Base Property Subsidiaries) of the Consolidated Group having a principal amount,
individually or in the aggregate, in excess of $25,000,000, or a default shall
occur in the performance or observance of any obligation or condition, or any
other event shall occur or condition shall exist, in either case, with respect
to such Recourse Indebtedness (subject to any applicable grace period) if the
effect of such default or other event or condition is to accelerate the maturity
of any such Recourse Indebtedness or cause such Recourse Indebtedness to become
due and payable or to require such Recourse Indebtedness to be prepaid,
redeemed, purchased or defeased, or to cause an offer to purchase or defease
such Recourse Indebtedness to be required to be made, prior to its expressed
maturity; provided, however, that payments required pursuant to the terms of an
instrument or agreement otherwise permitted hereunder, that are not the result
of a default in the performance or observance of any obligation or condition,
shall not be deemed a default under this Section 8.1.5.

 

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Section 8.1.6 Judgments. Any judgment, order, decree or arbitration award for
the payment of money in excess of $5,000,000 (to the extent not fully covered by
a solvent third party insurance company (less any applicable deductible) and as
to which the insurer has not disputed in writing its responsibility to cover
such judgment, order, decree or arbitration award) shall be rendered against
Borrower, Guarantor or any of their respective Subsidiaries (excluding Foreign
Non-Borrowing Base Property Subsidiaries and any judgment, order, decree or
arbitration award arising out of Non-Recourse Indebtedness, other than against
Borrower or Guarantor) and the same shall not have been satisfied or vacated or
discharged or stayed or bonded pending appeal within sixty (60) days after the
entry thereof.

Section 8.1.7 ERISA. An ERISA Event shall occur with respect to a Pension Plan
or Multiemployer Plan.

Section 8.1.8 Change of Control. Any Change of Control shall occur.

Section 8.1.9 Bankruptcy, Insolvency, etc. The Borrower, Guarantor, or any of
their respective Subsidiaries (except for (i) Foreign Non-Borrowing Base
Property Subsidiaries or Subsidiaries that are not Property Owners and which own
in the aggregate less than $25,000,000 of assets and (ii) obligors with respect
to Non-Recourse Indebtedness, other than Borrower or Guarantor) shall:

(a) become insolvent or generally fail to pay, or admit in writing its inability
or unwillingness generally to pay, debts as they become due;

(b) apply for, consent to, or acquiesce in, the appointment of a trustee,
receiver, sequestrator or other custodian for any substantial part of the
property of any thereof, or make a general assignment for the benefit of
creditors;

(c) in the absence of such application, consent or acquiescence, permit or
suffer to exist the appointment of a trustee, receiver, sequestrator or other
custodian for a substantial part of the property of any thereof, and such
trustee, receiver, sequestrator or other custodian shall not be discharged
within sixty (60) days;

(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect thereof, and, if any such case or proceeding is not
commenced by the Borrower or any such Subsidiary, such case or proceeding shall
be consented to or acquiesced in by the Borrower or any such Subsidiary, as the
case may be, or shall result in the entry of an order for relief or shall remain
for sixty (60) days undismissed; or

(e) take any corporate action authorizing, or in furtherance of, any of the
foregoing.

Section 8.1.10 Impairment of Security, etc. The Pledge Agreement or the
Guaranty, in whole or in material part, or any Lien granted under the Pledge
Agreement shall (except in accordance with its terms and except as a result of
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the Administrative Agent or any Lender) terminate, cease to be effective or
cease to be the legally valid, binding and enforceable obligation of any party
thereto; the Borrower, any Guarantor or any other party shall, directly or
indirectly, deny or disaffirm in writing such effectiveness, validity, binding
nature or enforceability; or, except as permitted under any Loan Document, any
Lien securing any Obligation shall, in whole or in part, cease to be a perfected
first priority Lien.

Section 8.1.11 Intentionally Omitted.

Section 8.1.12 Intentionally Omitted.

Section 8.1.13 Termination of Agreements. Any Material Agreement shall be
terminated pursuant to the terms thereof and shall not be replaced with a new
corresponding Material Agreement or other arrangement reasonably satisfactory to
the Administrative Agent within sixty (60) days.

Section 8.1.14 REIT Status. Guarantor shall for any reason, whether or not
within the control of the Borrower, cease to maintain its status as REIT.

Section 8.1.15 Intentionally Omitted.

Section 8.1.16 Enforceabilty. If this Agreement or any other Loan Document shall
terminate or shall cease to be in full force and effect or shall cease to be a
legally valid, binding and enforceable obligation of Borrower or Guarantor.

Section 8.1.17 Contest. If Borrower or any Guarantor contests in any manner the
validity or enforceability of any Loan Document or provision thereof or denies
that it has any or further liability or obligation under any Loan Document or
provision thereof, or purports to revoke, terminate or rescind any Loan Document
or provision thereof.

Section 8.1.18 Management Agreement. If the Management Agreement at any
Borrowing Base Property is terminated and an Approved Manager is not appointed
as a replacement manager pursuant to the provisions of Section 7.2.15 within
sixty (60) days after such termination.

Section 8.1.19 Easements. Except as expressly permitted pursuant to the Loan
Documents, if Borrower or any other Person grants any easement, covenant or
restriction (other than the Permitted Borrowing Base Liens) over a Borrowing
Base Property or if Borrower or any Borrowing Base Entity shall default beyond
the expiration of any applicable cure period under any existing easement,
covenant or restriction which affects a Borrowing Base Property, the default of
which shall have a Material Adverse Effect.

Section 8.1.20 Ground Leases. If (A) a Property subject to a Ground Lease is a
Borrowing Base Property and (B) there shall occur any default by the applicable
Property Owner, as lessee under a Ground Lease, in the observance or performance
of any term, covenant or condition of a Ground Lease on the part of such
Property Owner to be observed or performed, and said default (i) would permit
the Fee Owner to terminate such Ground Lease and (ii) is not cured or such
Borrowing Base Property is not released pursuant to the provisions of
Section 7.1.22 prior to the expiration of any applicable grace or cure period
therein provided.

 

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Section 8.2 Action if Bankruptcy. If any Event of Default described in clauses
(a) through (e) of Section 8.1.9 shall occur with respect to the Borrower, the
Commitments (if not theretofore terminated) shall automatically terminate and
the outstanding principal amount of all outstanding Loans and all other
Obligations (including Reimbursement Obligations) shall automatically be and
become immediately due and payable, without notice or demand and the Borrower
shall automatically and immediately be obligated to deposit with the
Administrative Agent cash collateral in an amount equal to all Letter of Credit
Outstandings.

Section 8.3 Action if Other Event of Default. If any Event of Default (other
than any Event of Default described in clauses (a) through (e) of Section 8.1.9
with respect to the Borrower) shall occur for any reason, whether voluntary or
involuntary, and be continuing, Administrative Agent, upon the direction or with
the consent of the Required Lenders, shall take such action that Administrative
Agent deems advisable to protect and enforce the rights of the Lenders against
Borrower, Guarantor and the Collateral, including, without limitation, (i) by
written notice to the Borrower declare all of the outstanding principal amount
of the Loans and other Obligations (including Reimbursement Obligations) to be
due and payable and/or the Revolving Loan Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of the Loans and
other Obligations shall be and become immediately due and payable, without
further notice, demand or presentment, and the Commitments shall terminate and
Borrower shall automatically and immediately be obligated to deposit with
Administrative Agent cash collateral in an amount equal to all Letter of Credit
Outstandings and (ii) enforcing or availing itself of any or all rights or
remedies as set forth in the Loan Documents against Borrower, Guarantor and the
Collateral, including, without limitation, all rights or remedies available at
law or in equity.

Unless waived in writing by Administrative Agent, and subject in all events to
the express provisions of each Loan Document, upon the occurrence and during the
continuance of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Administrative Agent against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Administrative Agent at any time and from time to time, whether or not all or
any of the Indebtedness shall be declared due and payable, and whether or not
Administrative Agent shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Loan
Documents with respect to the Collateral. Any such actions taken by
Administrative Agent shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Administrative Agent may determine in its sole discretion, to the
fullest extent permitted by law, without impairing or otherwise affecting the
other rights and remedies of Administrative Agent permitted by law, equity or
contract or as set forth herein or in the other Loan Documents. Without limiting
the generality of the foregoing, Borrower agrees that if an Event of Default is
continuing (i) neither Administrative Agent nor the Lenders shall be subject to
any one action or election of remedies law or rule and (ii) all liens and other
rights, remedies or privileges provided to Administrative Agent and the Lenders
shall remain in full force and effect until Administrative Agent and the Lenders
have exhausted all remedies with respect to the Collateral and the Guaranty or
the Indebtedness has been paid in full.

 

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With respect to Borrower, Guarantor and the Collateral, nothing contained herein
or in any other Loan Document shall be construed as requiring Administrative
Agent or the Lenders to resort to the Collateral for the satisfaction of any of
the Indebtedness, and Administrative Agent may seek satisfaction out of the
Collateral or any part thereof, in its absolute discretion in respect of the
Indebtedness. In addition, Administrative Agent shall have the right from time
to time to partially foreclose this Agreement and the Pledge Agreement in any
manner and for any amounts secured by this Agreement or the Pledge Agreement
then due and payable as determined by Administrative Agent in its sole
discretion, including, without limitation, the following circumstances: (i) in
the event Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled payments of principal or interest, Administrative Agent
may foreclose this Agreement to recover such delinquent payments, or (ii) in the
event Administrative Agent elects to accelerate less than the entire outstanding
principal balance of the Loans, Administrative Agent may foreclose this
Agreement to recover so much of the principal balance of the Loans as
Administrative Agent may accelerate and such other sums secured by this
Agreement as Administrative Agent may elect. Notwithstanding one or more partial
foreclosures, the Collateral shall remain subject to this Agreement to secure
payment of sums secured by this Agreement and not previously recovered.

Section 8.4 Actions in Respect of Letters of Credit.

(a) If, at any time and from time to time, any Letter of Credit shall have been
issued hereunder and an Event of Default shall have occurred and be continuing,
then, upon the occurrence and during the continuation thereof, the
Administrative Agent, after consultation with the Lenders, may, and upon the
demand of the Required Lenders shall, whether in addition to the taking by the
Administrative Agent of any of the actions described in this Article or
otherwise, make a demand upon the Borrower to, and forthwith upon such demand
(but in any event within ten (10) days after such demand) the Borrower shall,
pay to the Administrative Agent, on behalf of the Lenders, in same day funds at
the Administrative Agent’s office designated in such demand, for deposit in a
special cash collateral account (the “Letter of Credit Collateral Account”) to
be maintained in the name of the Administrative Agent (on behalf of the Lenders)
and under its sole dominion and control at such place as shall be designated by
the Administrative Agent, an amount equal to the amount of the Letter of Credit
Outstandings (taking into account any amounts then on deposit in the Letter of
Credit Collateral Account) under the Letters of Credit. Interest shall accrue on
the Letter of Credit Collateral Account at a rate equal to the rate on overnight
funds.

(b) The Borrower hereby pledges, assigns and grants to the Administrative Agent,
as administrative agent for its benefit and the ratable benefit of the Lenders a
lien on and a security interest in, the following collateral (the “Letter of
Credit Collateral”):

(i) the Letter of Credit Collateral Account, all cash deposited therein and all
certificates and instruments, if any, from time to time representing or
evidencing the Letter of Credit Collateral Account;

 

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(ii) all notes, certificates of deposit and other instruments from time to time
hereafter delivered to or otherwise possessed by the Administrative Agent for or
on behalf of the Borrower in substitution for or in respect of any or all of the
then existing Letter of Credit Collateral;

(iii) all interest, dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the then existing Letter of Credit Collateral; and

(iv) to the extent not covered by the above clauses, all proceeds of any or all
of the foregoing Letter of Credit Collateral.

The lien and security interest granted hereby secures the payment of all
obligations of the Borrower now or hereafter existing hereunder and under any
other Loan Document.

(c) The Borrower hereby authorizes the Administrative Agent for the ratable
benefit of the Lenders to apply, from time to time after funds are deposited in
the Letter of Credit Collateral Account, funds then held in the Letter of Credit
Collateral Account to the payment of any amounts, in such order as the
Administrative Agent may elect, as shall have become due and payable by the
Borrower to the Lenders in respect of the Letters of Credit.

(d) Neither the Borrower nor any Person claiming or acting on behalf of or
through the Borrower shall have any right to withdraw any of the funds held in
the Letter of Credit Collateral Account, except as provided in Section 8.4(h) or
Section 2.6.7 hereof.

(e) The Borrower agrees that it will not (i) sell or otherwise dispose of any
interest in the Letter of Credit Collateral or (ii) create or permit to exist
any lien, security interest or other charge or encumbrance upon or with respect
to any of the Letter of Credit Collateral, except for the security interest
created by this Section 8.4.

(f) If any Event of Default shall have occurred and be continuing:

(i) The Administrative Agent may, in its sole discretion, without notice to the
Borrower except as required by law and at any time from time to time, charge,
set off or otherwise apply all or any part of any unpaid Obligations then due
and payable, in such order as the Administrative Agent shall elect against the
Letter of Credit Collateral Account or any part thereof. The rights of the
Administrative Agent under this Section 8.4 are in addition to any rights and
remedies which any Lender may have; and

 

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(ii) The Administrative Agent may also exercise, in its sole discretion, in
respect of the Letter of Credit Collateral Account, in addition to the other
rights and remedies provided herein or otherwise available to it, all the rights
and remedies of a secured party upon default under the Uniform Commercial Code
in effect in the State of New York at that time.

(g) The Administrative Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Letter of Credit Collateral if the Letter
of Credit Collateral is accorded treatment substantially equal to that which the
Administrative Agent accords its own property, it being understood that,
assuming such treatment, the Administrative Agent shall not have any
responsibility or liability with respect thereto.

(h) At such time as all Events of Default have been cured or waived in writing,
all amounts remaining in the Letter of Credit Collateral Account shall be
promptly returned to the Borrower. Absent such cure or written waiver, any
surplus of the funds held in the Letter of Credit Collateral Account and
remaining after payment in full of all of the Obligations (including without
limitation all Letter of Credit Outstandings) hereunder and under any other Loan
Document after the termination or expiration of all of the Commitments shall be
paid to the Borrower or to whomsoever may be lawfully entitled to receive such
surplus.

ARTICLE IX

THE AGENTS

Section 9.1 Appointment.

(a) Each Lender hereby irrevocably designates and appoints DBNY as the
Administrative Agent to act as specified herein and in the other Loan Documents.
Each Lender hereby irrevocably authorizes, and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to authorize, the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement, the other Loan Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of the Administrative Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Administrative Agent may
perform any of its respective duties hereunder or under the other Loan Documents
by or through its officers, directors, agents, servicers, employees or
affiliates.

(b) Each Lender hereby irrevocably appoints the Issuer to act on behalf of such
Lenders with respect to any Letters of Credit issued by the Issuer and the
documents associated therewith until such time and except for so long as the
Administrative Agent may agree at the request of the Required Lenders to act for
such Issuer with respect thereto; provided, however, that the Issuer shall have
all of the benefits and immunities (i) provided to the Administrative Agent in
this Article IX with respect to any acts taken or omissions suffered by the
Issuer in connection with Letters of Credit issued by it or proposed to be
issued by it pertaining to the Letters of Credit as fully as if the term
“Administrative Agent,” as used in this Article IX, included the Issuer with
respect to such acts or omissions and (ii) as additionally provided in this
Agreement with respect to the Issuer.

 

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Section 9.2 Hedging Counterparty Intercreditor Agreements. At the request of
Borrower, the Administrative Agent on behalf of the Lenders will enter into a
Hedging Counterparty Intercreditor Agreement in order to permit the sharing of
Collateral on a pari pasu basis among the Lenders and the Pari-Pasu Hedging
Counterparties, provided that such Hedging Counterparty Intercreditor Agreement:

(i) limits the maximum aggregate pro rata share in Collateral to which the
Pari-Pasu Hedging Counterparties could be entitled to Ten Million Dollars
($10,000,000) in principal amount, including with respect to any interests,
liabilities or Net Termination Values under the Pari-Pasu Hedging Agreements,
whether or not actually in excess of Ten Million Dollars ($10,000,000);

(ii) requires the Pari-Pasu Hedging Counterparties to in all events standstill
and forebear with respect to any actions relating to the Collateral;

(iii) provides for reasonable acknowledgment by each Pari-Pasu Hedging
Counterparty that it has no rights or obligations with respect to the Facility
or Collateral, other than the sharing arrangements expressly provided in the
intercreditor agreement;

(iv) requires as a condition to the sharing of such Collateral that such
Pari-Pasu Hedging Counterparty bear its pro rata share of all expenses incurred
by the Administrative Agent and Secured Creditors in connection with the
ownership, operation, maintenance, marketing and sale of the Collateral;

(v) relates to a Hedging Agreement that has been pledged by Borrower (and/or
Guarantor, as applicable), pursuant to documents in form and substance
reasonably acceptable to the Administrative Agent, as additional Collateral for
the Facility; and

(vi) is otherwise on terms and conditions and in form and substance, including
with respect to indemnification of the Administrative Agent and the Lenders,
reasonably acceptable to the Administrative Agent and the Required Lenders.

Section 9.3 Nature of Duties. The Administrative Agent shall not have any duties
or responsibilities except those expressly set forth in this Agreement and in
the other Loan Documents. Neither the Administrative Agent nor any of its
officers, directors, agents, employees or affiliates shall be liable to any
Person for any action taken or omitted by it or them hereunder or under any
other Loan Document or in connection herewith or therewith, unless caused by its
or their gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final and non-appealable decision); provided that
Administrative

 

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Agent shall not be responsible for negligence or misconduct of any agents,
servicers or attorneys in-fact selected by it with reasonable care. The duties
of the Administrative Agent shall be mechanical and administrative in nature;
the Administrative Agent shall not have by reason of this Agreement or any other
Loan Document a fiduciary relationship in respect of any Lender or the holder of
any Note; and nothing in this Agreement or in any other Loan Document, expressed
or implied, is intended to or shall be so construed as to impose upon the
Administrative Agent any obligations in respect of this Agreement or any other
Loan Document except as expressly set forth herein or therein.

Section 9.4 Non-Reliance on the Administrative Agent. Independently and without
reliance upon the Administrative Agent, each Lender and the holder of each Note,
to the extent it deems appropriate, has made and shall continue to make (i) its
own independent investigation of the financial condition and affairs of the
Borrowing Base Properties, the Borrower, Guarantor and their respective
Subsidiaries in connection with the making and the continuance of the Credit
Extensions and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of the Borrower, Guarantor and
their respective Subsidiaries and, except as expressly provided in this
Agreement, the Administrative Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Lender or the holder
of any Note with any credit or other information with respect thereto, whether
coming into its possession before the making of any Credit Extension or at any
time or times thereafter. The Administrative Agent shall not be responsible to
any Lender or the holder of any Note for any recitals, statements, information,
representations or warranties herein, in any other Loan Document or in any
document, certificate or other writing delivered in connection herewith or
therewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Loan Document or the financial condition of the Borrower,
Guarantor or any of their respective Subsidiaries or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Loan Document, or the
financial condition of the Borrower, Guarantor or any of their respective
Subsidiaries or the existence or possible existence of any Default or Event of
Default.

Section 9.5 Certain Rights of the Administrative Agent. If the Administrative
Agent requests instructions from the Required Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Loan Document, the Administrative Agent shall be entitled to refrain from such
act or taking such action unless and until the Administrative Agent shall have
received written instructions from the Required Lenders; and the Administrative
Agent shall not incur liability to any Lender by reason of so refraining.
Without limiting the foregoing, neither any Lender nor the holder of any Note
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of the
Required Lenders, or such greater number of Lenders as may be expressly required
under Section 10.1.

Section 9.6 Reliance. The Administrative Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, email message, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
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be the proper Person, and, with respect to all legal matters pertaining to this
Agreement and any other Loan Document and its duties hereunder and thereunder,
upon advice of counsel selected by the Administrative Agent.

Section 9.7 Indemnification. To the extent the Administrative Agent (or any
affiliate thereof) is not reimbursed and indemnified by the Borrower, the
Lenders will reimburse and indemnify the Administrative Agent (and any affiliate
thereof) in proportion to their respective “percentage” as used in determining
the Required Lenders for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Administrative Agent (or any affiliate thereof) in
performing its duties hereunder or under any other Loan Document or in any way
relating to or arising out of this Agreement or any other Loan Document;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent’s (or
such affiliate’s) gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and non-appealable decision).

Section 9.8 Administrative Agent in its Individual Capacity. With respect to its
obligation to make Loans, or issue or participate in Letters of Credit, under
this Agreement, the Administrative Agent shall have the rights and powers
specified herein for a “Lender” and may exercise the same rights and powers as
though it were not performing the duties specified herein; and the terms
“Lender,” “Required Lenders,” or any similar terms shall, unless the context
clearly indicates otherwise, include the Administrative Agent in its respective
individual capacities. The Administrative Agent and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of banking,
investment banking, trust or other business with, or provide debt financing,
equity capital or other services (including financial advisory services) to any
member of the Consolidated Group or any Affiliate of any member of the
Consolidated Group (or any Person engaged in a similar business with any member
of the Consolidated Group or any Affiliate thereof) as if they were not
performing the duties specified herein, and may accept fees and other
consideration from any member of the Consolidated Group or any Affiliate of any
member of the Consolidated Group for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.

Section 9.9 Holders. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with the Administrative Agent. Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee, assignee or endorsee, as the case may be,
of such Note or of any Note or Notes issued in exchange therefor.

Section 9.10 Resignation by the Administrative Agent.

(a) The Administrative Agent may resign from the performance of all its
respective functions and duties hereunder and/or under the other Loan Documents
at any time by giving thirty (30) days prior written notice to the Lenders and,
unless an

 

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Event of Default then exists with respect to the Borrower, the Borrower. Any
such resignation by the Administrative Agent hereunder shall also constitute its
resignation as the Issuer, in which case the resigning Administrative Agent
(x) shall not be required to issue any further Letters of Credit and (y) shall
maintain all of its rights as the Issuer with respect to any Letters of Credit
issued by it prior to the date of such resignation. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below in this Section 9.10 or as otherwise provided below in
this Section 9.10.

(b) Upon any such notice of resignation by the Administrative Agent, the
Required Lenders shall appoint a successor Administrative Agent and Issuer
hereunder and who shall be either an Affiliate of the Administrative Agent or a
commercial bank or trust company reasonably acceptable to the Borrower, which
acceptance shall not be unreasonably withheld or delayed (provided that the
Borrower’s approval or acceptance shall not be required if an Event of Default
then exists).

(c) If a successor Administrative Agent shall not have been so appointed within
such thirty (30) day period, the Administrative Agent, with the consent of the
Borrower (which consent shall not be unreasonably withheld or delayed, provided
that the Borrower’s consent shall not be required if an Event of Default then
exists), shall then appoint a successor Administrative Agent who shall serve as
Administrative Agent and Issuer hereunder and until such time, if any, as the
Required Lenders appoint a successor Administrative Agent as provided above.

(d) If no successor Administrative Agent has been appointed pursuant to clause
(b) or (c) above in this Section 9.10 by the 35th Business Day after the date
such notice of resignation was given by the Administrative Agent, the
Administrative Agent’s resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of the Administrative Agent
hereunder and/or under any other Loan Document until such time, if any, as the
Required Lenders appoint a successor Administrative Agent as provided above.

(e) Upon a resignation of the Administrative Agent pursuant to this
Section 9.10, the Administrative Agent shall remain indemnified to the extent
provided in this Agreement and the other Loan Documents and the provisions of
this Article IX shall continue in effect for the benefit of the Administrative
Agent for all of its actions and inactions while serving as the Administrative
Agent.

Section 9.11 Lead Arrangers; Joint Bookrunners; Syndication Agents. No Lead
Arranger, Joint Bookrunner or Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.

 

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ARTICLE X

MISCELLANEOUS PROVISIONS

Section 10.1 Waivers, Amendments, etc.

(a) Neither this Agreement nor any other Loan Document nor any terms hereof or
thereof may be changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the respective parties
thereto and the Required Lenders, provided that no such change, waiver,
discharge or termination shall, without the consent of each Lender (other than a
Defaulting Lender) with Obligations being directly affected thereby, (i) extend
the final scheduled maturity of any Revolving Loan or Note or extend the Stated
Expiry Date of any Letter of Credit beyond the Maturity Date, or reduce the rate
or extend the time of payment of interest (except in connection with a waiver of
applicability of any post-default increase in interest rates) or fees thereon or
reduce the principal amount thereof (except to the extent repaid in cash) or
extend the time for payment thereof (it being understood that any amendment or
modification to the financial definitions in this Agreement shall not constitute
a reduction in any rate of interest or fees for purposes of this clause (i), so
long as the primary purpose of the respective amendments or modifications to the
financial definitions was not to reduce the interest or fees payable hereunder),
(ii) amend, modify or waive any provision of this Section 10.1, (iii) reduce the
percentage specified in the definition of Required Lenders, (iv) consent to the
assignment or transfer by Borrower of any of its rights and obligations under
this Agreement, (v) release Guarantor from the Guaranty, or (vi) release any
Subsidiary Guarantor from the Subsidiary Guaranty or release all or any material
portion of the Collateral, except, in each case, as provided in Section 7.1.22
or in connection with a Disposition or refinancing that is otherwise permitted
pursuant to the terms of this Agreement; provided, further, that, in addition to
the consent of the Required Lenders required above, no such change, waiver,
discharge or termination shall (A) increase the Revolving Loan Commitments of
any Lender over the amount thereof then in effect without the consent of such
Lender (it being understood that waivers or modifications of conditions
precedent, covenants, Defaults or Events of Default or of a mandatory reduction
in the Revolving Loan Commitment Amount shall not constitute an increase of the
Revolving Loan Commitment of any Lender, and that an increase in the available
portion of any Revolving Loan Commitment of any Lender shall not constitute an
increase of the Revolving Loan Commitment of such Lender), (B) without the
consent of the Issuer, amend, modify or waive any provision of Sections 2.1.2,
2.1.4, or 2.6, or alter its rights or obligations with respect to Letters of
Credit or (C) without the consent of the Non-Defaulting Lenders having or
holding at least sixty-seven percent (67%) of the sum (without duplication) of
the aggregate outstanding principal amount of the Revolving Loans, the aggregate
amount of the Letter of Credit Outstandings and the unfunded amount of the
Revolving Loan Commitment Amount, taken as a whole, amend, modify or waive the
proviso set forth in the definition of “Available Commitment.”

(b) If, in connection with any proposed change, waiver, discharge or termination
to any of the provisions of this Agreement as contemplated by clauses (i)
through (vi), inclusive, of the first proviso to Section 10.1(a), the consent of
the Required Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, then the Borrower shall have
the right, so long as all non-consenting Lenders whose individual consent is
required are treated as described below, to replace each such non-consenting
Lender or Lenders with one or more Replacement Lenders pursuant to Section 4.4
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Replacement Lender consents to the proposed change, waiver, discharge or
termination; provided, further, that in any event the Borrower shall not have
the right to replace a Lender solely as a result of the exercise of such
Lender’s rights (and the withholding of any required consent by such Lender)
pursuant to the second proviso to Section 10.1(a).

(c) No failure or delay on the part of the Administrative Agent, the Issuer or
any Lender in exercising any power, privilege or right under this Agreement or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, privilege or right preclude any
other or further exercise thereof or the exercise of any other power, privilege
or right. No notice to or demand on the Borrower in any case shall entitle it to
any notice or demand in similar or other circumstances. No waiver or approval by
the Administrative Agent, the Issuer or any Lender under this Agreement or any
other Loan Document shall, except as may be otherwise stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or approval thereafter
to be granted hereunder. The rights, powers and remedies herein or in any other
Loan Document expressly provided are cumulative and not exclusive of any rights,
powers or remedies which the Administrative Agent, the Issuer or any Lender
would otherwise have.

Section 10.2 Notices. All notices and other communications provided to any party
hereto under this Agreement or under any other Loan Document shall be in writing
or by facsimile and addressed, delivered or transmitted to such party at its
address or facsimile number set forth below its signature hereto, in the case of
the Borrower or the Administrative Agent, or set forth below its name in Annex I
hereto or in a Lender Assignment Agreement, in the case of any Lender (including
in its separate capacity as the Issuer), or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
the confirmation of transmission thereof is received by the transmitter.

Section 10.3 Payment of Costs and Expenses; Indemnification. The Borrower hereby
agrees: (i) whether or not the transactions herein contemplated are consummated,
to pay all reasonable out-of-pocket costs and expenses of the Administrative
Agent and the Lead Arranger (including, without limitation, the reasonable fees
and disbursements of Skadden, Arps, Slate, Meagher & Flom LLP and the
Administrative Agent’s other counsel and consultants) in connection with the
preparation, execution and delivery of this Agreement and the other Loan
Documents and the documents and instruments referred to herein and therein and
any amendment, waiver or consent relating hereto or thereto, of the
Administrative Agent or the Lead Arrangers in connection with their syndication
efforts and administrative functions with respect to this Agreement and, after
the occurrence of an Event of Default, each of the Administrative Agent, the
Lenders and the Issuer in connection with the enforcement of this Agreement and
the other Loan Documents and the documents and instruments referred to herein
and therein or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy proceedings (including, in each case
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counsel and consultants for the Administrative Agent and, after the occurrence
of an Event of Default, all costs and expenses of Acceptable Appraisals, if
commissioned by the Administrative Agent in its discretion or at the request of
the Required Lenders and fees and disbursements of counsel for each of the
Administrative Agent, the Lenders and the Issuer; provided further that the
appraisers shall be selected by the Administrative Agent in its sole
discretion); and (ii) to pay and hold the Administrative Agent, each of the
Lenders and the Issuer harmless from and against any and all present and future
stamp, excise and other similar documentary taxes with respect to the foregoing
matters and save the Administrative Agent, each of the Lenders and the Issuer
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to the
Administrative Agent, each of the Lenders and the Issuer) to pay such taxes.
Borrower shall further pay, indemnify, and hold each Lender, each Lead Arranger,
the Swingline Lender, the Issuing Lender, the Administrative Agent and their
Affiliates and each of their respective officers, directors, employees, agents,
advisors and controlling persons (each, an “Indemnitee”) harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the syndication, execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including any of the foregoing relating
to the use of proceeds of the Loans and the reasonable fees and expenses of one
primary counsel, one local counsel in each applicable jurisdiction and, in the
case of an actual or perceived conflict of interest where the Indemnitee
affected by such conflict informs Borrower of such conflict and thereafter,
after receipt of Borrower’s consent (which consent shall not be unreasonably
withheld, conditioned or delayed), retains its own counsel, of another firm of
counsel (and local counsel, if applicable) for such affected Indemnitee in
connection with claims, actions or proceedings by any Indemnitee against any
Loan Party under any Loan Document (all the foregoing, collectively, the
“Indemnified Liabilities”), provided, that the Borrower shall have no obligation
hereunder to any Indemnitee with respect to Indemnified Liabilities to the
extent such Indemnified Liabilities (i) are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnitee or (ii) arise out of any
dispute brought solely by an Indemnitee against another Indemnitee, do not arise
out of or relate to any request, act or omission by the Borrower, any other Loan
Party or any of their respective Subsidiaries or Affiliates and do not involve
the Administrative Agent, in its capacity as administrative agent, or any Lead
Arranger, in its capacity as a lead arranger. Without limiting the foregoing,
and to the extent permitted by applicable law, the Borrower agrees not to assert
and to cause its Subsidiaries not to assert, and hereby waives and agrees to
cause its Subsidiaries to waive, all rights for contribution or any other rights
of recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, that any of
them might have by statute or otherwise against any Indemnitee. All amounts due
under this Section 10.3 shall be payable not later than 10 days after written
demand therefor. No Indemnitee shall have any liability for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby or thereby, any
Loan or Letter of Credit or the use of the proceeds thereof or the syndication
of the Facility, nor any liability for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
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other Loan Documents or the transactions contemplated hereby or thereby. The
agreements in this Section 10.3 shall survive the termination of this Agreement
and the repayment of the Loans and all other amounts payable hereunder.

Section 10.4 Survival and Recourse Nature of Obligations. The obligations of the
Borrower under Sections 4.3, 4.4, 4.5, 4.6 and 10.3, and the obligations of the
Lenders under Section 9.7 and Section 10.9.2, shall in each case survive any
assignment from one Lender to another (in the case of Section 10.3 or
Section 10.9.2) and any termination of this Agreement, the payment in full of
all the Obligations and the termination of all the Revolving Loan Commitments.
In addition, all provisions herein and in any other Loan Document (other than
Section 3.3.3 hereof) relating to outstanding Letters of Credit and Excess Cash
Collateral shall survive termination of this Agreement until all outstanding
Letters of Credit have been drawn in full or terminated and all Excess Cash
Collateral has been returned to the Borrower if required pursuant to
Section 2.6.7 or Section 8.4. The representations and warranties made by
Borrower, Guarantor, and each Subsidiary Guarantor, in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document. Borrower, pursuant to this
Agreement, and Guarantor and each Subsidiary Guarantor, pursuant to the Guaranty
and the Subsidiary Guaranty, as applicable, agrees that they shall be personally
liable (whether by suit, deficiency judgment or otherwise) and there shall be
full recourse to the Borrower, Guarantor and each Subsidiary Guarantor, for the
full payment and performance of the Obligations; provided that the amount of
liability of any Subsidiary Guarantor shall not exceed the fair market value of
its assets less any liabilities (it being the intention of the parties that no
Subsidiary Guarantor shall become insolvent as a result of its obligations
hereunder and under the other Loan Documents). It is understood and agreed that
each of Borrower, Guarantor and each Subsidiary Guarantor shall remain liable
with respect to their Obligations to the extent of any deficiency between the
amount of the proceeds of the Collateral pledged to Lender under the Pledge
Agreement and the aggregate amount of such Obligations.

Section 10.5 Headings. The various headings of this Agreement and of each other
Loan Document are inserted for convenience only and shall not affect the meaning
or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.

Section 10.6 Execution in Counterparts, Effectiveness, etc. This Agreement may
be executed by the parties hereto in several counterparts, each of which shall
be an original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower, the Administrative Agent and each of the
Lenders (or notice thereof satisfactory to the Administrative Agent) shall have
been received by the Administrative Agent and notice thereof shall have been
given by the Administrative Agent to the Borrower and each Lender.

Section 10.7 Governing Law; Entire Agreement. THIS AGREEMENT (INCLUDING
PROVISIONS WITH RESPECT TO INTEREST, LOAN CHARGES AND COMMITMENT FEES) SHALL
EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). This Agreement, the Notes
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Documents constitute the entire understanding among the parties hereto with
respect to the subject matter hereof and thereof and supersede any prior
agreements, written or oral, with respect thereto.

Section 10.8 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that:

(a) the Borrower may not assign or transfer its rights or obligations hereunder
or under any of the other Loan Documents without the prior written consent of
the Administrative Agent and all of the Lenders; and

(b) the rights of sale, assignment and transfer of the Lenders are subject to
Section 10.9.

Section 10.9 Sale and Transfer of Loans and Notes; Participations in Loans and
Notes. Any Lender may assign, or sell participations in, its Loans, Letter of
Credit Outstandings and Commitments to one or more other Persons in accordance
with this Section 10.9.

Section 10.9.1 Assignments.

(a) Upon prior notice to the Borrower, and the Administrative Agent, any Lender
may at any time assign and delegate to one or more Eligible Assignees with the
consent of the Borrower, the Administrative Agent and the Issuer (which consents
of the Borrower and the Issuer shall not be required (x) if the Eligible
Assignee is a Lender or an Affiliate of a Lender, or (y) in the case of the
Borrower, if a Specified Default or an Event of Default exists, and each of
which consents shall not be unreasonably withheld or delayed if such consents
are in fact required), all or any fraction of such Lender’s total Loans, Letter
of Credit Outstandings and Commitments; provided, however, that (x) the
assigning Lender must assign a pro rata portion of each of its Revolving Loan
Commitments, Revolving Loans and interest in Letter of Credit Outstandings,
(y) no Lender may assign a Commitment of less than $5,000,000 or, unless such
Lender has assigned the entirety of its Commitment, retain a Commitment of less
than $5,000,000 and (z) no Lender may assign, delegate or pledge all or any
fraction of such Lender’s total Loans, Letter of Credit Outstandings and
Commitments to the Borrower or any Affiliate of the Borrower. The Borrower and
the Administrative Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned and
delegated to an Eligible Assignee until:

(i) notice of such assignment and delegation, together with (A) payment
instructions, (B) the Internal Revenue Service Forms or other statements
contemplated or required to be delivered pursuant to Section 4.6, if applicable,
(C) addresses and related information with respect to such Eligible Assignee,
shall have been delivered to the Borrower and the Administrative Agent by such
Lender and such Eligible Assignee and (D) the Administrative Agent has made the
appropriate entries in the Register;

 

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(ii) such Eligible Assignee shall have executed and delivered to the Borrower
and the Administrative Agent a Lender Assignment Agreement, accepted by the
Administrative Agent; and

(iii) the processing fees described below shall have been paid.

From and after the date that the Administrative Agent accepts such Lender
Assignment Agreement, (x) the Eligible Assignee thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Eligible Assignee
in connection with the Lender Assignment Agreement, shall have the rights and
obligations of assignor Lender hereunder and under the other Loan Documents, and
(y) the assignor Lender, to the extent that rights and obligations hereunder
have been assigned and delegated by it in connection with the Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Accrued interest on that part of the Loans assigned, if any, and
accrued fees, shall be paid as provided in the Lender Assignment Agreement.
Accrued interest and accrued fees shall be paid at the same time or times
provided in this Agreement. Unless such Eligible Assignee is an Affiliate of the
assignor Lender, such assignor Lender or such Eligible Assignee must also pay a
processing fee in the amount of $3,500 to the Administrative Agent upon delivery
of any Lender Assignment Agreement. Any attempted assignment and delegation not
made in accordance with this Section 10.9.1 shall be null and void.

(b) Nothing in this Agreement shall prevent or prohibit Lender from pledging its
Loans and Notes hereunder to a Federal Reserve Bank in support of borrowings
made by Lender from such Federal Reserve Bank and, with prior notification to
the Administrative Agent (but without the consent of the Administrative Agent or
the Borrower), any Lender which is a fund may pledge all or any portion of its
Loans and Notes to its trustee or to a collateral agent providing credit or
credit support to Lender in support of its obligations to such trustee, such
collateral agent or a holder of such obligations, as the case may be. No pledge
pursuant to this clause (b) shall release the transferor Lender from any of its
obligations hereunder.

(c) The Administrative Agent, on behalf of the Borrower, shall maintain at the
address of the Administrative Agent specified below its signature hereto (or at
such other address as may be designated by the Administrative Agent from time to
time in accordance with Section 10.2) a copy of each Lender Assignment Agreement
delivered to it and a register (the “Register”) for the recordation of the names
and addresses of the Lenders and the Commitment of and principal amount of the
Loans owing to each Lender from time to time. The entries in the Register shall
be conclusive and binding, in the absence of clearly demonstrable error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of a Loan or other obligation
hereunder as the owner thereof for all purposes of this Agreement and the other
Loan Documents, notwithstanding any notice to the contrary. Any assignment of
any Loan or other obligation hereunder shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.

 

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Section 10.9.2 Participations. Any Lender may at any time sell to one or more
commercial lenders, financial institutions or other Persons (each of such
commercial lenders, financial institutions or other Persons being herein called
a “Participant”) participating interests in any of the Loans, Letter of Credit
Outstandings, Commitments, or other interests of such Lender hereunder
(including loan derivatives and similar swap arrangements based on such Lender’s
interests hereunder); provided, however, that:

(a) no participation contemplated in this Section 10.9.2 shall relieve Lender
from its Commitments or its other obligations hereunder or under any other Loan
Document;

(b) Lender shall remain solely responsible for the performance of its
Commitments and such other obligations;

(c) the Borrower and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and under each of the other Loan Documents;

(d) no Participant, unless such Participant is an Affiliate of Lender or is
itself a Lender shall be entitled to require such Lender to take or refrain from
taking any action hereunder or under any other Loan Document, except that such
Lender may agree with any Participant that such Lender will not, without such
Participant’s consent, to the extent requiring the consent of such Lender, take
any action of the type described in clauses (i) through (vi) of the first
proviso of Section 10.1;

(e) the Borrower shall not be required to pay any amount under this Agreement
that is greater than the amount which it would have been required to pay had no
participating interest been sold; and

(f) no Lender may sell participating interests in any of the Loans, Letter of
Credit Outstandings, Commitments, or other interests of such Lender hereunder to
the Borrower or any Affiliate of the Borrower.

In the case of any such participation, the Participant shall not have any rights
under this Agreement or any of the other Loan Documents (the Participant’s
rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by the Borrower hereunder shall be
determined and paid as if such Lender had not sold such participation. Any
Lender that sells a participating interest in any Loan, Revolving Loan
Commitment or other interest to a Participant under this Section 10.9.2, shall
indemnify and hold harmless the Borrower and the Administrative Agent from and
against any taxes, penalties, interest or other costs or losses (including
reasonable attorneys’ fees and expenses) incurred or payable by the Borrower or
the Administrative Agent as a result of the failure of the Borrower or the
Administrative Agent to comply with its obligations to deduct or withhold any
Taxes from any payments made pursuant to this Agreement to such Lender or the
Administrative Agent, as the case may be, which Taxes would not have been
incurred or payable if such Participant had delivered a valid Form W-9 to the
Borrower or if such Participant had been a Non-U.S. Lender

 

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that was entitled to deliver to the Borrower, the Administrative Agent or such
Lender, and did in fact so deliver, a duly completed and valid Form W-8ECI or
W-8BEN (with respect to a complete exemption under an income tax treaty (or
applicable successor form) entitling such Participant to receive payments under
this Agreement without deduction or withholding of any United States federal
taxes).

Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Borrower, maintain a register on which it enters
the name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
the Loan Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(including the identity of any Participant or any information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other
obligations under any Loan Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Treasury Regulations
Section 5f.103-1(c). The entries in the Participant Register shall be conclusive
absent manifest error, and such Lender shall treat each Person whose name is
recorded in the Participant Register as the owner of such participation for all
purposes of this Agreement notwithstanding any notice to the contrary. For the
avoidance of doubt, the Administrative Agent (in its capacity as Administrative
Agent) shall have no responsibility for maintaining a Participant Register.

Section 10.10 Intentionally Omitted.

Section 10.11 Confidentiality. Administrative Agent, Issuer and each Lender
agrees to maintain, in accordance with its customary procedures for handling
confidential information, the confidentiality of all information provided to it
by or on behalf of the Borrower, the Guarantor, any Subsidiary or any
Unconsolidated Subsidiary or by the Administrative Agent on the Borrower’s, the
Guarantor’s or such Subsidiary’s or Unconsolidated Subsidiary’s behalf, under
this Agreement or any other Loan Document (“Confidential Information”), and
neither it nor any of its Affiliates shall use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents or in connection with other business now or hereafter existing or
contemplated with the Borrower or any Subsidiary or Unconsolidated Subsidiary,
except to the extent such information (i) was or becomes generally available to
the public other than as a result of disclosure by the Administrative Agent,
Issuer or the Lender or (ii) was or becomes available on a non-confidential
basis from a source other than the Borrower, provided that such source is not
bound by a confidentiality agreement with the Borrower, Guarantor or any
Subsidiary or Unconsolidated Subsidiary known to the Lender; provided, however,
that Lender may disclose such information (A) at the request or pursuant to any
requirement of any Governmental Authority to which the Lender is subject or in
connection with an examination of such Lender by any such Governmental
Authority; (B) pursuant to subpoena or other court process; (C) when required to
do so in accordance with the provisions of any applicable Requirement of Law;
(D) to the extent reasonably required in connection with any litigation or
proceeding to which the Administrative Agent, any Lender or their respective
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document;
(F) to such Lender’s independent auditors and other professional advisors who
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confidential pursuant to this Section 10.11; (G) to any Participant or Eligible
Assignee in respect of such Lender’s rights and obligations hereunder, actual or
potential, provided that such Person shall have agreed in writing to keep such
information confidential to the same extent required of the Lenders hereunder
with the Borrower being a third party beneficiary of such agreement; (H) to its
Affiliates who have been advised that such information is confidential pursuant
to this Section 10.11; or (I) to any direct or indirect contractual counterparty
to swap agreements or such contractual counterparty’s professional advisor,
provided that such Person shall have agreed in writing to keep such information
confidential to the same extent required of the Lenders hereunder with the
Borrower being a third party beneficiary of such agreement. Unless prohibited by
applicable law or court order, each Lender and the Administrative Agent shall
notify the Borrower of any request by any Governmental Authority (other than any
request in connection with an examination of the financial condition of such
Lender) for disclosure of Confidential Information prior to such disclosure;
provided, further, that in no event shall the Administrative Agent or any Lender
be obligated to return any materials furnished by the Borrower, Guarantor or any
of their respective Subsidiaries. This Section shall supersede any
confidentiality letter or agreement with respect to the Borrower, the Guarantor
or the Transaction entered into prior to the Closing Date.

Section 10.12 Tax Advice. None of the Lenders nor the Administrative Agent
provides accounting, tax or legal advice. Notwithstanding anything provided
herein, and any express or implied claims of exclusivity or proprietary rights,
the Borrower each Lender and the Administrative Agent hereby agree and
acknowledge that the Borrower each Lender and Administrative Agent (and each of
their employees, representatives or other agents) are authorized to disclose to
any and all Persons, beginning immediately upon commencement of their
discussions and without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated by this Agreement, and all materials
of any kind (including opinions or other tax analyses) that are provided by the
Borrower, any Lender or the Administrative Agent to the other relating to such
tax treatment and tax structure except to the extent that such disclosure is
subject to restrictions reasonably necessary to comply with securities laws. In
this regard, the Borrower, each Lender and the Administrative Agent acknowledge
and agree that disclosure of the tax treatment and tax structure of the
transactions contemplated by this Agreement has not been and is not limited in
any way by an express or implied understanding or agreement, whether oral or
written, and whether or not such understanding or agreement is legally binding,
except to the extent that such disclosure is subject to restrictions reasonably
necessary to comply with securities laws. For purposes of this authorization,
“tax treatment” means the purported or claimed U.S. Federal income tax treatment
of the transaction, and “tax structure” means any fact that may be relevant to
understanding the purported or claimed U.S. Federal income tax treatment of the
transaction. This Section 10.12 is intended to reflect the understanding of the
Borrower, any Lender or the Administrative Agent that no Transaction
contemplated by this Agreement has been offered under “Conditions of
Confidentiality” as that phrase is used in Treasury Regulation 9 §
1.6011-4(b)(3)(i) and 301.6111-2(c)(i), and shall be interpreted in a manner
consistent therewith. Nothing herein is intended to imply that any of the
Borrower, each Lender and the Administrative Agent has made or provided to, or
for the benefit of, the other any oral or written statement as to any potential
tax consequences that are related to, or may result from, the Transactions
contemplated by this Agreement.

 

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Section 10.13 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS,
THE ISSUER OR THE BORROWER IN CONNECTION HEREWITH OR THEREWITH SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE
COUNTY OF NEW YORK OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE PARTIES HEREBY EXPRESSLY AND
IRREVOCABLY SUBMIT TO THE PERSONAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK LOCATED IN THE COUNTY OF NEW YORK OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION,
SUBJECT TO THE BORROWER’S RIGHT TO CONTEST SUCH JUDGMENT BY MOTION OR APPEAL ON
ANY GROUNDS NOT EXPRESSLY WAIVED IN THIS SECTION 10.13. THE BORROWER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR
NOTICES SPECIFIED IN SECTION 10.2. EACH OF THE BORROWER, ADMINISTRATIVE AGENT,
LENDER AND ISSUER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO ANY OTHER JURISDICTION TO WHICH IT MAY BE
ENTITLED BY VIRTUE OF BEING DOMICILED IN SUCH JURISDICTION OR OTHERWISE, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.

Section 10.14 Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, THE LENDERS, THE
ISSUER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO
THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR

 

119

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

ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUER OR THE BORROWER
IN CONNECTION HEREWITH OR THEREWITH. THE BORROWER ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS, THE LENDERS, AND THE
ISSUER ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.

[Signatures Appear on Following Page]

 

120

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

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

 

BORROWER:

STRATEGIC HOTEL FUNDING, L.L.C.,

a Delaware limited liability company

By:  

/s/ Jonathan P. Stanner

Name:   Jonathan P. Stanner Title:   Vice President, Capital Markets,  
Acquisitions & Treasurer

Address:   200 W. Madison   Suite 1700   Chicago, IL 60606 Telephone No.:
Facsimile No.:

Attention:   Chief Financial Officer and   General Counsel With a copy to:
Address:   Perkins Coie LLP   131 S. Dearborn Street   Suite 1700   Chicago, IL
60603

Telephone No.:   (312) 324-8650 Facsimile No.:   (312) 324-9650 Attention:  
Bruce A. Bonjour, Esq.

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

ADMINISTRATIVE AGENT AND LENDER:

Revolving Loan Commitment: $35,000,000

 

DEUTSCHE BANK AG NEW YORK BRANCH By:  

/s/ James Rolison

Name:   James Rolison Title:   Managing Director By:  

/s/ James F. Griffith

Name:   James F. Griffith Title:   Managing Director

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

LENDERS:

Revolving Loan Commitment: $35,000,000

 

JPMORGAN CHASE BANK By:  

/s/ Marc Costantino

Name:   Marc Costantino Title:   Executive Director

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $30,000,000

 

BANK OF AMERICA, N.A. By:  

/s/ Steven P. Renwick

Name:   Steven P. Renwick Title:   Senior Vice President

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $30,000,000

 

BMO HARRIS BANK N.A. By:  

/s/ Aaron Lanski

Name:   Aaron Lanski Title:   Managing Director

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $30,000,000

 

CAPITAL ONE BANK NATIONAL ASSOCIATION   By:  

/s/ Ashish Tandon

  Name:   Ashish Tandon   Title:   Vice President

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $30,000,000

 

SUMITOMO MITSUI BANKING CORPORATION By:  

/s/ William G. Carl

Name:   William G. Carl Title:   Executive Officer

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $30,000,000

 

WELLS FARGO BANK, NATIONAL ASSOCIATION By:  

/s/ Anand J. Jobanputra

Name:   Anand J. Jobanputra Title:   Vice President   Hospitality Finance Group
  Wells Fargo Bank, N.A.

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $20,000,000

 

MIDFIRST BANK By:  

/s/ Tom L. Gray

Name:   Tom L. Gray Title:   Vice President

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $20,000,000

 

PNC BANK, NATIONAL ASSOCIATION By:  

/s/ Beth K. Morgan

Name:   Beth K. Morgan Title:   Vice President

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $20,000,000

 

RAYMOND JAMES BANK, N.A. By:  

/s/ James M. Armstrong

Name:   James M. Armstrong Title:   Senior Vice President

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

Revolving Loan Commitment: $20,000,000

 

THE PRIVATEBANK AND TRUST COMPANY By:  

/s/ Katie Whitty

Name:   Katie Whitty Title:   Managing Director

Signature Page to Strategic Hotel Funding, L.L.C.

Revolving Credit Agreement, April 2014

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

ANNEX I

Lender Information

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

Annex 1

LENDER INFORMATION

 

1. DEUTSCHE BANK AG NEW YORK BRANCH, as Joint Lead Arranger and Administrative
Agent

Credit Contact

 

Candice King

Vice President

60 Wall Street, 10th Floor

New York, NY 10005

212-250-3389 (T)

212-797-4496 (F)

Candice.king@db.com

    

Operations Contact

 

Sara Pelton

5022 Gate Parkway, Suite 100

Jacksonville, FL 32256

904-520-5449 (T)

904-746-4860 (F)

Na.agancyservicing@db.com

  

Revolving Loan

Commitment

$35,000,000

Fed Wire Instructions

 

Deutsche Bank AG New York Branch

New York, New York

    

Daily Operations Contact

 

United States:

Loan Operations

904-520-5449 (T)

904-746-4860 (F)

Na.agencyservicing@db.com

  

2. JPMORGAN CHASE BANK, N.A, as Joint Lead Arranger and Syndication

Agent

Primary Credit Contact

 

Anna Kostenko

JPMorgan Chase Bank, N.A.

383 Madison Avenue, Floor 24

New York, NY 10179

212-622-4162 (T)

212-270-2157 (F)

anna.kostenko@jpmorgan.com

    

Primary Operations Contact

 

Vijay Murthy

JPMorgan Chase Bank, N.A.

JPM-Bangalore Loan Operations

Prestige Tech Park, Floor 4

Sarjapur Outer Ring Rd, Vathur Hobi

Bangalore, India 560 087

00-91-80-6676-0775 (T)

201-244-3885 (F)

na_cpg@jpmorgan.com

  

Revolving Loan

Commitment

$35,000,000

Fed Wire Instructions

 

JPMorgan Chase Bank, N.A.

ABA# 021000021

       

 

Annex 1 - 1

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

3. BANK OF AMERICA, N.A, as Co-Documentation Agent

Closing Contact

 

Keith Sandman

Fulfillment Closer

101 N Tryon Street

Charlotte, NC 28255

980-387-2036 (T)

704-409-0127 (F)

Keith.j.sandman@baml.com

    

Operations Contact

 

Pallavi Malik

Customer Service Rep

415-436-3685 Ext 66483 (T)

312-453-4308 (F)

pallavi.malik@bankofamerica.com

  

Revolving Loan

Commitment

$30,000,000

Fed Wire Instructions

 

Bank of America, N.A.

Account Name: Bilateral Clearing

New York, NY

        4. BMO HARRIS BANK N.A., as Co-Documentation Agent

Primary Credit Contact

 

Gwendolyn Gatz

Vice President

115 S. LaSalle St.

35W

Chicago, IL 60603

312-461-2238 (T)

312-461-2968 (F)

gwendolyn.gatz@bmo.com

    

Secondary Credit Contact

 

Aaron Lanski

Managing Director

115 S. LaSalle St.

35W

Chicago, IL 60603

312-461-6364 (T)

312-461-2968 (F)

aaron.lanski@bmo.com

  

Revolving Loan

Commitment

$30,000,000

Fed Wire Instructions

 

BMO Harris Bank N.A.

111 W. Monroe Street

Chicago, IL 60603

    

Operations Contact

 

Blanca Velez

Sr. Servicing Coordinator

115 S. LaSalle St.

17W

Chicago, IL 60603

312-461-3775 (T)

312-293-5283 (F)

blanca.velez@bmo.com

  

 

Annex 1 - 2

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

5. CAPITAL ONE BANK NATIONAL ASSOCIATION, as Co-Documentation Agent

Credit Contact

 

Ashish Tandon

Vice President

1680 Capital One Drive 10th FL

McLean, VA 22102

703-720-6736 (T)

703-720-2030 (F)

ashish.tandon@capitalone.com

    

Operations Contact

 

Jill Wilbert

Sr. Ops Coordinator

6200 Chevy Chase Dr

Laurel, MD 20707

301-953-6174 (T)

855267-0849 (F)

CLSsyndicationmember@capitalone.com

  

Revolving Loan

Commitment

$30,000,000

Fed Wire Instructions

 

Capital One, N.A.

        6. SUMITOMO MITSUI BANKING CORPORATION, as Co-Documentation Agent

Primary Credit Contact

 

John Corrigan

277 Park Avenue

New York, NY 10172

212-224-4735 (T)

212-224-5190 (F)

jcorrigan@smbclf.com

    

Secondary Credit Contact

 

Grace Wong

277 Park Avenue

New York, NY 10172

212-224-4229 (T)

212-224-4887 (F)

gwong@smbclf.com

  

Revolving Loan

Commitment

$30,000,000

Fed Wire Instructions

 

Citibank, NA, New York

ABA# 021000089

    

Operations Contact

 

Arlene Hebron

277 Park Avenue

New York, NY 10172

212-224-4380 (T)

212-224-4391 (F)

Arlene_A_Hebron@smbcgroup.com

  

 

Annex 1 - 3

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

7. WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking

association, as Co-Documentation Agent

Credit Contact

 

Anand J. Jobanputra

Vice President

301 South College Street

4th FL/MAC: D1053-04R

Charlotte, NC 28202

704-383-4013 (T)

704-383-2544 (F)

anand.jobanputra@wellsfargo.com

    

Operations Contact

 

Anne F. Hutchinson

Loan Servicing Specialist

1 West 4th Street

3rd FL/MAC: D4000-030

Winston-Salem, NC 27101

336-747-8116 (T)

866-588-0565 (F)

ann.f.hutchinson@wellsfargo.com

  

Revolving Loan

Commitment

$30,000,000

Fed Wire Instructions

 

Wells Fargo Bank, NA

One West Fourth Street, 3rd Floor

Winston-Salem, NC 27101

        8. MIDFIRST BANK        

Credit Contact

 

Todd Wright

First Vice President

501 NW Grand Blvd

Oklahoma City, OK 73118

405-767-7108 (T)

405-767-5478 (F)

Todd.Wright@MidFirst.com

    

Operations Contact

 

Sheryl Etheridge

Executive Assistant

501 NW Grand Blvd

Oklahoma City, OK 73118

405-767-7150 (T)

405-767-5466 (F)

SyndicatedLoans@MidFirst.com

  

Revolving Loan

Commitment

$20,000,000

Fed Wire Instructions

 

MidFirst Bank

501 NW Grand Blvd

Oklahoma City, OK 73118

       

 

Annex 1 - 4

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

9. PNC BANK, NATIONAL ASSOCIATION

Credit Contact

 

Elizabeth Richards

Asst. Vice President

10851 Mastin, Suite 700

Overland Park, KS 66210

913-253-9494 (T)

913-253-9813 (F)

Elizabeth.richards@pnc.com

    

Operations Contact

 

Xenia King

Loan Administrator

535 South Main Street

Plymouth, MI 48170

734-459-5821 (T)

866-641-9690 (F)

Xenia.king@pnc.com

  

Revolving Loan

Commitment

$20,000,000

Fed Wire Instructions

 

PNC Bank, N.A.

Pittsburgh, PA

        10. RAYMOND JAMES BANK, N.A.

Credit Contact

 

James Armstrong

Senior Vice President

710 Carillon Parkway

St. Petersburg, FL 33716

727-567-7919 (T)

866-205-1396 (F)

james.armstrong@raymondjames.com

    

Operations Contact

 

Loan Ops/CML

 

710 Carillon Parkway

St. Petersburg, FL 33716

727-567-1815; 727-567-1922 (T)

866-597-4002 (F)

RJBank-

LoanOpsCorp@raymondjames.com

  

Revolving Loan

Commitment

$20,000,000

Fed Wire Instructions

Federal Home Loan Bank of Atlanta

1475 Peachtree Street NE

Atlanta, GA 30309

       

 

Annex 1 - 5

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

11. THE PRIVATEBANK AND TRUST COMPANY, an Illinois chartered bank

Credit Contact

 

The PrivateBank and Trust Company

Katie Whitty

Managing Director

120 S LaSalle Street

Chicago, IL 60603

312-564-1283 (T)

312-291- 2173 (F)

kwhitty@theprivatebank.com

    

Operations Contact—Primary

 

The PrivateBank and Trust Company

Martin Cattan

Syndication Analyst

120 S. LaSalle Street

Chicago, IL 60603

(312) 564-1333 (T)

(312) 564-1794 (F)

mcattan@theprivatebank.com

partsynops@theprivatebank.com

  

Revolving Loan

Commitment

$20,000,000

Letter of Credit Contact

 

Martin Cattan

Syndication Analyst

(312) 564-1333 (T)

(312) 564-1794 (F)

partsynops@theprivatebank.com

    

Operations Contact—Secondary

 

Israel Balaguer

Loan Operations Officer

(312) 564-1777 (T)

(312) 564-1794 (F)

ibalaguer@theprivatebank.com

partsynops@theprivatebank.com

  

Fed Wire Instructions

The PrivateBank and Trust Company

120 S. LaSalle Street

Chicago, IL 60603

       

 

Annex 1 - 6

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

Schedule I

Properties

 

1. Hyatt Regency La Jolla at Aventine, La Jolla, CA

2. Loews Santa Monica Beach Hotel, Santa Monica, CA

3. Marriott Lincolnshire Resort, Lincolnshire, IL

4. Ritz-Carlton Half Moon Bay, Half Moon Bay, CA

5. InterContinental, Chicago, IL

6. InterContinental, Miami, FL

7. Fairmont Chicago, Chicago IL

8. Four Seasons Hotel Silicon Valley, Palo Alto, CA

9. Four Seasons Resort Jackson Hole, Jackson Hole, WY

10. Hotel Del Coronado, San Diego, CA

11. The Westin St. Francis, San Francisco, CA

12. Four Seasons Hotel, District of Columbia

13. Ritz-Carlton, Laguna Niguel, CA

14. Marriott Hamburg, Hamburg, Germany

15. Fairmont Scottsdale Princess, Scottsdale, AZ

 

I - 1

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

Schedule II

Approved Managers and Brands

Fairmont Hotels

Four Seasons Ltd.

Hilton Hotels Corporation

Hyatt Hotel Corporation

InterContinental Hotel Group

Loews Hotel

Mandarin Oriental

Marriott International

The Peninsula Group

Shangri-La

Starwood Hotels & Resorts

Windsor Hospitality

Montage Hotels & Resorts

Elysian Hotels & Resorts

Taj Hotels

Jumeirah Group

KSL Resorts

Raffles

LXR

Highgate

London

 

II - 1

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

Schedule III

Borrowing Base Intercompany Indebtedness

None.

 

III - 1

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

Schedule IV

Disclosure Schedule

 

ITEM NUMBER   DISCLOSURE (IF APPLICABLE)

Item 6.5(c)

 

 

None

 

Item 6.8  

1.      SHC DTRS, Inc.

2.      SHC New Orleans LLC

3.      SHC Aventine II, L.L.C.

4.      New Aventine, L.L.C.

5.      SHC Lincolnshire LLC

6.      SHCI Santa Monica Beach Hotel, L.L.C.

7.      SHC Santa Monica Beach Hotel III, L.L.C.

8.      New Santa Monica Beach Hotel, L.L.C.

9.      Ocean Front Walk Infill, L.L.C.

10.    DTRS Lincolnshire, L.L.C.

11.    DTRS Santa Monica, L.L.C.

12.    SHC Holdings L.L.C.

13.    SHC Asset Management, L.L.C.

14.    SHC Residence Club, L.L.C.

15.    SHC Residence Club II, L.L.C.

16.    SHC Residence Club S. de R.L. de C.V.

17.    SHC Europe, L.L.C.

18.    SHR Prague Praha, L.L.C.

19.    DTRS Columbus Drive, LLC

20.    DTRS Half Moon Bay, LLC

21.    DTRS Michigan Avenue/Chopin Plaza LP

22.    DTRS Michigan Avenue/Chopin Plaza Sub, LLC

23.    DTRS Michigan Avenue/Chopin Plaza, LLC

24.    Intercontinental Florida Limited Partnership

25.    SHC Chopin Plaza Holdings, LLC

26.    SHC Chopin Plaza Mezzanine I, LLC

27.    SHC Chopin Plaza Mezzanine II, LLC

 

IV - 1

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

   

28.    SHC Chopin Plaza, LLC

29.    SHC Columbus Drive, LLC

30.    SHC Half Moon Bay Mezzanine, LLC

31.    SHC Half Moon Bay, LLC

32.    SHC Michigan Avenue, LLC

33.    SHC Property Acquisition, L.L.C.

34.    SHC del LP, LLC

35.    SHC del GP, LLC

36.    SHC del Coronado, LLC

37.    DTRS North Beach del Coronado, LLC

38.    SHC Washington, LLC

39.    DTRS Washington, LLC

40.    SHC St. Francis, L.L.C.

41.    SHR St. Francis, L.L.C.

42.    DTRS St. Francis, L.L.C.

43.    SHC Laguna, L.L.C.

44.    SHC Laguna Niguel I, L.L.C.

45.    DTRS Laguna, L.L.C.

46.    SHR Grosvenor Square LLC

47.    SHR Grosvenor Square S.a.r.l.

48.    Lomar Holding UK Ltd

49.    Lomar Hotel Company Limited

50.    Santa Barbara US LP

51.    SBA Villas, LLC

52.    Bohus Verwaltung BV

53.    DTRS Intercontinental Miami, LLC

54.    Banian Finance, S.a.r.l.

55.    SHR Retail, L.L.C.

56.    SHR Finance, L.L.C.

57.    DTRS Spa Columbus Drive, LLC

58.    SHC Chopin Plaza Holdings Sub, LLC

59.    SHC Michigan Avenue Mezzanine, LLC

60.    New DTRS Michigan Avenue, LLC

61.    New Aventine Mezzanine I, Inc.

62.    New Aventine Mezzanine, LLC

63.    New DTRS LaJolla, LLC

64.    SHC Residences Nayarit, S de RL de CV

 

IV - 2

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

   

65.    SHC Hotel Nayarit, S de RL de CV

66.    HdC DC Corporation (maintained by KSL)

67.    HdC Mezz 5 GP, LLC

68.    HdC Mezz 5 Partners, LP

69.    HdC Mezz 4 GP, LLC

70.    HdC Mezz 4 Partners LP

71.    HdC North Beach Development LLLP

72.    FMT Scottsdale Holdings, LLC

73.    FMT Scottsdale Mezzanine, LLC

74.    FMT Scottsdale Owner, LLC

75.    SHR FPH Holdings, LLC

76.    SHR FPH Mezzanine, LLC

77.    SHR FPH, LLC

78.    DTRS Jackson Hole, LLC

79.    DTRS Palo Alto, LLC

80.    SHR Advisory, LLC

81.    LSAC 2017, LLC

82.    SHR Jackson Hole, LLC

83.    SHR Palo Alto, LLC

84.    SHR FPH Investor, LLC

85.    SHR Scottsdale Investor, LLC

86.    SHC Mexico Holdings, L.L.C.

87.    SHC Mexico Lender, LLC

88.    SHR Class B, LLC

89.    SHR Del Partners, LP

90.    SHR Prague Holding, LLC

91.    SHR Advisory II, LLC

Item 7.1.11  

1.      $60 million loan made by Strategic Hotel Funding, L.L.C. to SHCI Santa
Monica Beach Hotel, L.L.C. evidenced by a Promissory Note, dated March 4, 1998

2.      $128 million loan made by Strategic Hotel Funding, L.L.C. to SHC
Washington, L.L.C.

3.      $20 million loan made by HDC DC Corporation to Strategic Hotel Funding,
L.L.C. evidenced by a Promissory Note, dated February 22, 2011

4.      €1,318,780 loan from Strategic Hotel Funding, L.L.C. to Bohus Verwaltung
BV

 

IV - 3

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

Item 7.2.5(a)  

1.      31% interest in Resort Club Punta Mita S. de R.L. de C.V. (which is
developing and selling time shares)

2.      Ocean Front Walk Infill, L.L.C. owns an additional parcel of land
located adjacent to the Loews Santa Monica

3.      FMT Scottsdale Owner, L.L.C. owns a 10-acre parcel adjacent to the
Fairmont Scottsdale Princess

4.      50% interest in SHC Hotel Nayarit, S de RL de CV and SHC Residences
Nayarit, S de RL de CV, which owns land at Lot H-5, a 60-acre parcel near Resort
Punta Mita

 

IV - 4

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

Schedule V

Intentionally Omitted

 

V - 1

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

Schedule VI

Management Agreements

Ritz Carlton Half Moon Bay

 

  1. Operating Agreement, dated October 8, 1998, between Vestar-Athens/YCP II
Half Moon Bay, L.L.C. and The Ritz-Carlton Hotel Company, L.L.C.

  2. Letter dated October 8, 1998 re: Operating Agreement.

  3. Letter dated October 8, 1998 regarding the Golf Access and Play Agreement
between Vestar-Athens/YCP II Half Moon Bay, L.L.C. and The Ritz-Carlton Hotel
Company, L.L.C.

  4. Letter dated October 8, 1998 regarding Financing and other items between
Vestar-Athens/YCP II Half Moon Bay, L.L.C. and The Ritz-Carlton Hotel Company,
L.L.C.

  5. Letter dated November 1998 regarding Accounts and Accounting between
Vestar-Athens/YCP II Half Moon Bay, L.L.C. and The Ritz-Carlton Hotel Company,
L.L.C.

  6. Letter dated November 20, 1998 regarding Operating Accounts and Accounting
between Vestar-Athens/YCP II Half Moon Bay, L.L.C. and The Ritz-Carlton Hotel
Company, L.L.C.

  7. Letter dated January 6, 1999 re: changes to names of entities.

  8. Amendment to Operating Agreement, dated August 24, 2004, between SHC Half
Moon Bay, LLC and The Ritz-Carlton Hotel Company, L.L.C.

  9. Assignment and Assumption of Leases, Contracts, Licenses and Permits, dated
August 24, 2004 from SHC Half Moon Bay, LLC to DTRS Half Moon Bay, LLC.

  10. Amendment to Operating Agreement, dated May 30, 2007, between SHC Half
Moon Bay, LLC and The Ritz-Carlton Hotel Company, L.L.C.

  11. Letter dated May 30, 2007 re: a Profitability Review Process.

  12. Letter dated May 30, 2007 re: Agreed Upon Accounting Procedures.

  13. Letter dated May 30, 2007 re: a Capital Expenditure Program.

  14. Letter Agreement dated December 11, 2012 regarding Reduction of FF&E
Reserve

  15. Letter Agreement dated November 14, 2013 regarding Paulick Settlement

  16. Letter Agreement dated December 10, 2013 regarding (Lambson) Reduction of
Owner’s contribution to the Reserve

  17. Letter Agreement dated December 10, 2013 regarding allocation of Lambson
Settlement Costs

  18. Club Operating Agreement, dated June 1, 2001 between Vestar-Athens/YCP II
Half Moon Bay, L.L.C. and The Ritz-Carlton Hotel Company, L.L.C.

  19. Amendment to Club Operating Agreement dated May 30, 2007 by and among SHC
Half Moon Bay, LLC, DTRS Half Moon Bay, LLC and The Ritz-Carlton Hotel Company,
L.L.C.

Marriott Lincolnshire

 

  1. Management Agreement, dated as of December 31, 1983 between The Prudential
Insurance Company of America and Marriott Corporation (as amended from time to
time).

 

VII - 1

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

  2. Assignment and Assumption of Agreements dated as of June 19, 1993 between
Marriott Corporation and Marriott Hotel Services, Inc.

  3. Assignment and Assumption of Management Agreement dated as of September 30
1997 between The Prudential Insurance Company of America and Strategic Hotel
Capital Limited Partnership.

  4. Assignment and Assumption of Leases, Contracts, Licenses, Warranties and
Permits, dated as of September 10, 1999 between Strategic Hotel Capital Limited
Partnership and SHC Lincolnshire, LLC.

  5. First Amendment to Management Agreement dated January 1, 2000 between SHC
Lincolnshire, LLC and Marriott Hotel Services, Inc.

  6. Amendment to Management Agreement dated June 29, 2004 between SHC
Lincolnshire, LLC and Marriott Hotel Services, Inc.

  7. Letter Agreement dated June 29, 2004 between SHC Lincolnshire, LLC and
Marriott Hotel Services, Inc. re: Cash Flow.

  8. Assignment and Assumption of Leases, Contracts, Licenses and Permits, dated
as of June 29, 2004 between SHC Lincolnshire LLC and DTRS Lincolnshire, L.L.C.

  9. Letter Agreement, dated June 8, 2009 re: extension of term of Management
Agreement.

  10. Amendment to Management Agreement, dated December 18, 2009, between DTRS
Lincolnshire, L.L.C. and Marriott Hotel Services, Inc.

  11. Side Letter dated May 6, 2010 re: completion of interim renovations.

Ritz-Carlton Laguna Niguel

 

  1. Amended and Restated Operating Agreement dated January 1, 2000 between SHC
Laguna Niguel I LLC and The Ritz-Carlton Hotel Company, L.L.C.

  2. Amendment to Amended and Restated Operating Agreement dated June 29, 2004
between SHC Laguna Niguel I LLC and The Ritz-Carlton Hotel Company, L.L.C.

  3. Letter dated October 27, 2004 re: MVCI notification to SHC Laguna Niguel I
L.L.C.

  4. Letter dated October 27, 2004 re: MVCI notification to The Ritz-Carlton,
Laguna Niguel.

  5. Letter Agreement dated August 12, 2005 re: Terrance Restaurant Project.

  6. Assignment and Assumption of Management Agreement dated as of July 7, 2006
between SHC Laguna Niguel I LLC, DTRS Laguna, L.L.C. and joined for limited
purposes SHC Laguna Niguel Mezzanine LLC.

  7. Owner Agreement dated July 7, 2006 between SHC Laguna Niguel I LLC, DTRS
Laguna, L.L.C., and The Ritz-Carlton Hotel Company, L.L.C.

  8. Amendment to Amended and Restated Operating Agreement dated May 30, 2007
between SHC Laguna Niguel I LLC, DTRS Laguna, L.L.C., and The Ritz-Carlton Hotel
Company, L.L.C.

  9. Letter dated May 30, 2007 re: Profitability Review Process.

  10. Letter dated May 30, 2007 re: Agreed Upon Accounting Procedures.

  11. Letter dated May 30, 2007 re: Capital Expenditure Program.

  12. Letter dated August 27, 2007 re: Change of Notice Address.

  13. Amendment to Amended and Restated Operating Agreement, dated December 18,
2009, between SHC Laguna Niguel I LLC and The Ritz-Carlton Hotel Company, L.L.C.

 

VII - 2

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

  14. Letter dated December 11, 2012 re: Room Renovation Funding

Four Seasons Jackson Hole

 

  1. Hotel License Agreement dated August 27, 2002

  2. Hotel Management Agreement dated August 27, 2002

  3. Letter Agreement dated August 27, 2002 re Operator’s right to employ food
and beverage director

  4. First Amendment to Hotel Management Agreement dated February 14, 2006

  5. Association Summary dated September, 2007

  6. Assignment and Assumption of Management Agreement dated March 11, 2011

  7. Second Amendment to Hotel Management Agreement dated March 11, 2011

  8. Letter Agreement dated March 11, 2011 re Owner’s rights and obligations to
fund deposits into the Capital Reserve upon written request of Operator

  9. Indemnity Agreement dated March 11, 2011

  10. Landlord, Tenant and Manager Non-Disturbance and Attornment Agreement
dated March 11, 2011

  11. Estoppel Certificate dated March 11, 2011

  12. Amendment to Hotel Management Agreement and Hotel License Agreement dated
September 12, 2012

  13. Letter Agreement dated December 6, 2012 regarding the Owner’s obligation
to Fund Capital for FF&E

Four Seasons Silicon Valley

 

  1. Hotel License Agreement dated December 17, 2002

  2. Hotel Management Agreement dated December 17, 2002

  3. First Amendment to Hotel License Agreement dated May 10, 2004

  4. First Amendment to Hotel Management Agreement dated May 10, 2004

  5. Assignment and Assumption of Management Agreement dated March 11, 2011

  6. Second Amendment to Hotel Management Agreement dated March 11, 2011

  7. Letter Agreement dated March 11, 2011 re Owner’s rights and obligations to
fund deposits into the Capital Reserve upon written request of Operator

  8. Indemnity Agreement dated March 11, 2011

  9. Landlord, Tenant and Manager Non-Disturbance and Attornment Agreement dated
March 11, 2011

  10. Estoppel Certificate dated March 11, 2011

 

 

VII - 3

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

Schedule VII

Contingent Hedged Indebtedness

None.

 

XI - 1

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

Exhibit A

Form of Revolving Note

REVOLVING NOTE

 

$[            ]   [                    ], 20[    ]

FOR VALUE RECEIVED, the undersigned, STRATEGIC HOTEL FUNDING, L.L.C., a Delaware
limited liability company (the “Borrower”), promises to pay to the order of
[                    ] (the “Lender”) on the Maturity Date (as defined in the
Credit Agreement referred to below) the principal sum of
[                            ] ($[            ]) or, if less, the aggregate
unpaid principal amount of all Revolving Loans (as defined in the Credit
Agreement) made by the Lender pursuant to that certain Credit Agreement, dated
as of April [    ], 2014, among the Borrower, the various financial institutions
as are or may become parties thereto (including the Lender), and Deutsche Bank
AG New York Branch, as Administrative Agent (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”). Unless otherwise
defined herein or the context otherwise requires, capitalized terms used herein
shall have the meanings provided in the Credit Agreement.

The Borrower also promises to pay interest on the unpaid principal amount hereof
from time to time outstanding from the date hereof until maturity (whether by
acceleration or otherwise) and, after maturity, until paid at the rates per
annum and on the dates specified in the Credit Agreement.

Payments of both principal and interest are to be made in lawful money of the
United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.

This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable.

All parties hereto, whether as makers, endorsers, or otherwise, severally waive
presentment for payment, demand, protest and notice of dishonor.

 

A - 1

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

THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

 

STRATEGIC HOTEL FUNDING, L.L.C., a Delaware limited liability company By:  

 

Name:   Title:  

 

A - 2

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

REVOLVING LOANS AND PRINCIPAL PAYMENTS

 

Date      Amount of Revolving
Loan Made      Interest Period
(If Applicable)      Amount of
Principal
Repaid      Unpaid Principal
Balance      Total      Notation
Made By      Base
Rate      LIBO
Rate           Base
Rate      LIBO
Rate      Base
Rate      LIBO
Rate                                                                           
                                                                     

 

A - 3

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

Exhibit B-1

Form of Borrowing Request

BORROWING REQUEST

Deutsche Bank AG New York Branch,

acting as Administrative Agent

for the Lenders referred to below

[                    ]

[            ]

[                             ]

Attention: [            ]

STRATEGIC HOTEL FUNDING, L.L.C.

Ladies and Gentlemen:

This Borrowing Request is delivered to you pursuant to Section 2.3 of the Credit
Agreement, dated as of April [    ], 2014, among STRATEGIC HOTEL FUNDING,
L.L.C., a Delaware limited liability company (the “Borrower”), the various
financial institutions as are or may become parties thereto, and Deutsche Bank
AG New York Branch, as Administrative Agent (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”). Unless otherwise
defined herein, capitalized terms used in this Borrowing Request shall have the
meanings set forth in the Credit Agreement.

The Borrower hereby requests that a Revolving Loan be made in the aggregate
principal amount of $                    on                     , 201     as a
[LIBO Rate Loan having an Interest Period of             months] [Base Rate
Loan].

The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the Credit
Agreement, each of the delivery of this Borrowing Request and the acceptance by
the Borrower of the proceeds of the Loans requested hereby constitute a
representation and warranty by the Borrower that, on the date of such Loans, and
before and after giving effect thereto and to the application of the proceeds
therefrom, the conditions set forth in clauses (a) and (b) of Section 5.2.1 of
the Credit Agreement have been satisfied.

The Borrower hereby certifies that (a) attached hereto as Exhibit A is a true,
correct and complete copy of the calculation of the Aggregate Commitment and the
Available Commitment, (b) each Borrowing Base Property included in such
calculations continues to satisfy all of the criteria and requirements for a
Borrowing Base Property under the Credit Agreement, (c) no single Borrowing Base
Property contributes more than 35% of the aggregate Gross Asset Value of all
Borrowing Base Properties [OR ELSE SPECIFY such that the otherwise existing
aggregate Gross Asset Value of all Borrowing Base Properties shall be deemed
reduced by the amount in excess of 35% attributable to each such single
Borrowing Base Property] and (d) the aggregate Gross Asset Value of all
Borrowing Base Properties yields an amount that is at least 75% of the Aggregate
Commitment.

 

B-1 - 1

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

The Borrower agrees that if prior to the time of the Borrowing requested hereby
any matter certified to herein by it will not be true and correct at such time
as if then made, it will immediately so notify the Administrative Agent. Except
to the extent, if any, that prior to the time of the Borrowing requested hereby
the Administrative Agent shall receive written notice to the contrary from the
Borrower, each matter certified to herein shall be deemed once again to he
certified as true and correct at the date of such Borrowing as if then made.

 

B-1 - 2

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

Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:

 

Amount to be    Person to be Paid   

Name, Address, etc.

of Transferrer Lender

Transferred

   Name    Account No.   

$            

                  Attention:            

$            

                  Attention:            

Balance of such proceeds

   [Borrower]                      Attention:            

 

B-1 - 3

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

The Borrower has caused this Borrowing Request to be executed and delivered, and
the certification and warranties contained herein to be made, by its duly
Authorized Officer this     day of                     , 201    .

 

STRATEGIC HOTEL FUNDING, L.L.C., a Delaware limited liability company By  

 

Name:   [                    ] Title:   [                    ]

 

B-1 - 4

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

EXHIBIT A

Calculations

 

B-1 - 5

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

Exhibit B-2

Form of Issuance Request

ISSUANCE REQUEST

Deutsche Bank AG New York Branch,

acting as Administrative Agent

for the Lenders referred to below

[                    ]

[                    ]

Attention: [                    ]

STRATEGIC HOTEL FUNDING, L.L.C.

Ladies and Gentlemen:

This Issuance Request is delivered to you pursuant to Section 2.6 of the Credit
Agreement, dated as of April     , 2014, among STRATEGIC HOTEL FUNDING, L.L.C, a
Delaware limited liability company (the “Borrower”), the various financial
institutions as are or may become parties thereto, and Deutsche Bank AG New York
Branch, as Administrative Agent (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”). Unless otherwise defined herein or
the context otherwise requires, capitalized terms used herein have the meanings
provided in the Credit Agreement.

The Borrower hereby requests that on                  , 201     (the “Date of
Issuance”) the Lender issue a standby Letter of Credit on                  ,
201     in the initial Stated Amount of $            with a Stated Expiry Date
(as defined therein) of [                 , 201    ] [extend the Stated Expiry
Date (as defined under Irrevocable Standby Letter of Credit No.     , issued on
                 , 201    , in the initial Stated Amount of $        ) to a
revised Stated Expiry Date (as defined therein) of                  , 201    ].

The beneficiary of the requested Letter of Credit will be**
                    , and such Letter of Credit will be in support of***
                    .

The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the Credit
Agreement, each of the delivery of this Issuance Request and the**** [issuance]
[extension] of the Letter of Credit requested hereby constitutes a
representation and warranty by the Borrower that, on such date of [issuance]
[extension], the conditions set forth in clauses (a) and (b) of Section 5.2.1 of
the Credit Agreement have been satisfied.

 

 

** Insert name and address of beneficiary.

*** Insert description of supported Indebtedness or other obligations and name
of agreement to which it relates.

**** Complete as appropriate.

 

B-2 - 1

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

The Borrower hereby certifies that (a) attached hereto as Exhibit A is a true,
correct and complete copy of the calculation of the Aggregate Commitment and the
Available Commitment and (b) each Borrowing Base Property included in such
calculations continues to satisfy all of the criteria and requirements for a
Borrowing Base Property under the Credit Agreement.

The Borrower agrees that if, prior to the time of the [issuance] [extension] of
the Letter of Credit requested hereby, any matter certified to herein by it will
not be true and correct at such time as if then made, it will immediately so
notify the Administrative Agent. Except to the extent, if any, that prior to the
time of the issuance or extension requested hereby the Administrative Agent and
the Issuer shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed to be certified at the date of such
issuance or extension.

[Signature on following page]

 

B-2 - 2

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

IN WITNESS WHEREOF, the Borrower has caused this request to be executed and
delivered by its duly Authorized Officer this             day of             ,
201    .

 

STRATEGIC HOTEL FUNDING, L.L.C., a Delaware limited liability company By:  

 

Name:   Title:  

 

B-2 - 3

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

EXHIBIT A

Calculations

 

B-2 - 4

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

Exhibit C

Form of Continuation/Conversion Notice

CONTINUATION/CONVERSION NOTICE

Deutsche Bank AG New York Branch,

acting as Administrative Agent

for the Lenders referred to below

[                    ]

[                    ]

Attention: [                    ]

STRATEGIC HOTEL FUNDING, L.L.C.

Ladies and Gentlemen:

This Continuation/Conversion Notice is delivered to you pursuant to Section 2.4
of the Credit Agreement, dated as of April     , 2014, among STRATEGIC HOTEL
FUNDING, L.L.C, a Delaware limited liability company (the “Borrower”), the
various financial institutions as are or may become parties thereto, and
Deutsche Bank AG New York Branch, as Administrative Agent (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”).
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.

The Borrower hereby requests that on                  , 201    ,

1. $            of the presently outstanding principal amount of the Revolving
Loans originally made on                  ,             ,

2. and being presently maintained as *[Base Rate Loans] [LIBO Rate Loans],

3. be [converted into] [continued as],

4. **[LIBO Rate Loans having an Interest Period of             months] [Base
Rate Loans].

 

 

* Select appropriate interest rate option.

** Insert appropriate interest rate option.

 

C - 1

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

The Borrower hereby:

(a) certifies and warrants that no Event of Default has occurred and is
continuing; and

(b) agrees that if prior to the time of such continuation or conversion any
matter certified to herein by it will not be true and correct at such time as if
then made, it will immediately so notify the Administrative Agent.

Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Administrative Agent shall receive written
notice to the contrary from the Borrower, each matter certified to herein shall
be deemed to be certified at the date of such continuation or conversion as if
then made.

The Borrower has caused this Continuation/Conversion Notice to be executed and
delivered, and the certification and warranties contained herein to be made, by
its Authorized Officer this     day of             , 201    .

 

STRATEGIC HOTEL FUNDING, L.L.C., a

Delaware limited liability company

By  

 

Name:   Title:  

 

C - 2

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

Exhibit D

Form of Closing Date Certificate

CLOSING DATE CERTIFICATE

STRATEGIC HOTEL FUNDING, L.L.C.

This certificate dated April [    ], 2014 is delivered pursuant to
Section 5.1.18 of the Credit Agreement, dated as of the date hereof, by and
among STRATEGIC HOTEL FUNDING, L.L.C., a Delaware limited liability company (the
“Borrower”), the various financial institutions as are or may become parties
thereto and Deutsche Bank AG New York Branch, as Administrative Agent (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”). Unless otherwise defined herein or the context otherwise requires,
capitalized terms used herein shall have the meanings provided in the Credit
Agreement.

The undersigned hereby certifies, represents and warrants that, as of the date
hereof:

 

1. Warranties, No Default, etc. The statements made in Article VI of the Credit
Agreement are true and correct in all material respects with the same effect as
if then made (unless stated to relate solely to an earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date), and no Default has occurred and is
continuing.

 

2. No Material Adverse Effect. No Material Adverse Effect has occurred prior to
the date hereof.

 

3. Material Agreements. A true and complete copy of each Material Agreement of
the Borrower and Guarantor is attached hereto as Annex I, none of which have
been modified, amended or supplemented since the date hereof.

 

D - 1

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

IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed
and delivered, and the certification, representations and warranties contained
herein to be made, by its duly Authorized Officer as of the date first above
written.

 

STRATEGIC HOTEL FUNDING, L.L.C., a Delaware limited liability company By:  

 

Name:   Title:  

 

D - 2

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

MATERIAL AGREEMENTS

None.

 

D - 3

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

Exhibit E

Form of Borrowing Base and Compliance Certificate

COMPLIANCE CERTIFICATE

I, the undersigned, the [                    ] of Strategic Hotel Funding,
L.L.C., a limited liability company existing under the laws of the State of
Delaware (the “Borrower”), do hereby certify this April [    ], 2014 that:

 

1. This Certificate is furnished to the Lenders pursuant to Section 5.1.8 of the
Credit Agreement, dated as of April [    ], 2014, among the Borrower, the
various financial institutions as are or may become parties thereto and Deutsche
Bank AG New York Branch, as Administrative Agent (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”). Unless otherwise
defined herein, capitalized terms used in this Certificate shall have the
meanings set forth in the Credit Agreement.

 

2. For purposes of this Certificate, I have performed the following procedures:

(a) I have reviewed the financial statements used to provide evidence of pro
forma financial covenant compliance; and

(b) I have knowledge and have reviewed to my satisfaction the Loan Documents and
all the other respective documents relating thereto, and the respective
schedules and exhibits thereto.

 

3. Based on and subject to the foregoing, I hereby certify on behalf of the
Borrower that, after giving effect to the Credit Agreement, it is my opinion
that each of:

(a) the Total Fixed Charge Coverage Ratio as of the end of the Fiscal Quarter
ended [Month] [Day], 20[    ] is not less than             :1.0 [OR the Total
Fixed Charge Coverage Ratio at the end of the immediately preceding Fiscal
Quarter, was greater than 1.75:1.0];;

(b) the Total Leverage Ratio is less than             to 1.0;

(c) the Consolidated Tangible Net Worth is greater than an amount equal to the
sum of (i) $1,100,731,127 (i.e., seventy-five percent (75%) of the Consolidated
Tangible Net Worth as of 3/31/2014) plus (ii) seventy-five percent (75%) of the
net proceeds to Guarantor of any new issuances of common Capital Stock, but
excluding therefrom (x) the proceeds of any common Capital Stock of Guarantor or
Borrower used in a transaction or a series of transactions to redeem all or any
portion of an outstanding issue of Capital Stock (including payment in
connection therewith of any accrued Dividends in accordance herewith) or
(y) Capital Stock of Guarantor or Borrower issued to discharge Indebtedness;

(d) the Construction Costs of the Consolidated Group do not exceed ten percent
(10%) of the aggregate Gross Asset Value in respect of all of the Properties;

 

E - 1

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

(e) Borrower’s Share of the aggregate Net Asset Value of Properties held in
Unconsolidated Subsidiaries does not exceed 25% of the aggregate Gross Asset
Value in respect of all of the Properties; and

(f) the sum of the Construction Costs described in Section 7.2.4(d) of the
Credit Agreement and the Borrower’s Share of the aggregate Net Asset Value of
Properties held in Unconsolidated Subsidiaries does not exceed 35% of the
aggregate Gross Asset Value in respect of all Properties.

 

4. I hereby certify that (a) attached hereto as Annex 1 is a true, correct and
complete copy of the calculation of the Aggregate Commitment and the Available
Commitment, (b) each Borrowing Base Property included in such calculations
continues to satisfy all of the criteria and requirements for a Borrowing Base
Property under the Credit Agreement, and (c) there are currently [x] Borrowing
Base Properties in the Borrowing Base.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

E - 2

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

Annex 1

 

E - 3

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

Exhibit F

Form of Lender Assignment Agreement

LENDER ASSIGNMENT AGREEMENT1

This Lender Assignment Agreement (this “Assignment”) is dated as of the
Effective Date set forth below and is entered into by and between the Assignor
identified in item 1 below (the “Assignor”) and [the] [each] Assignee identified
in item [2] [3] below ([the] [each an] “Assignee”). [It is understood and agreed
that the rights and obligations of such Assignee hereunder are several and not
joint]. Capitalized terms used herein but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by [the] [each]
Assignee. The Standard Terms and Conditions set forth in Annex 1 hereto (the
“Standard Terms and Conditions”) are hereby agreed to and incorporated herein by
reference and made a part of this Assignment as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to [the] [each] Assignee, and [the] [each] Assignee hereby irrevocably purchases
and assumes from the Assignor, subject to and in accordance with the Standard
Terms and Conditions and the Credit Agreement, as of the Effective Date inserted
by the Administrative Agent as contemplated below, the interest in and to all of
the Assignor’s rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor’s outstanding
rights and obligations under its Revolving Loan Commitment (including with
respect to any outstanding Revolving Loans and Letters of Credit) (the “Assigned
Interest”). [Such] [Each] sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment, without
representation or warranty by the Assignor.

 

1.    Assignor:                                              [2.    Assignee:   
                                         ]2 [2.][3.]    Credit Agreement:   
Credit Agreement, dated as of April [    ], 2014, among Strategic Hotel Funding,
L.L.C., the various financial institutions as are or may become parties thereto,
and Deutsche Bank AG New York Branch, as Administrative Agent (such Credit
Agreement, as in effect on the date of this Assignment, being herein called the
“Credit Agreement”)

 

 

1  This form of Lender Assignment Agreement should be used by Lenders for an
assignment to a single Assignee or to funds managed by the same or related
investment managers.

2  Item 2 should list the Assignee if the Form is used for a single Assignee. In
the case of an assignment to funds managed by the same or related investment
managers, the Assignees should be listed in the table under bracketed item 3.

 

F - 1

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

[3. Assigned Interest:3

 

     Aggregate Amount of all
Revolving Loan
Commitments (or, if
terminated, aggregate
outstanding principal amount
of Revolving Loans for all
Lenders and total Letter of
Credit Outstandings)      Amount of Revolving
Loan Commitment (or, if
terminated, aggregate
outstanding principal
amount of Revolving
Loans and Percentage of
Letter of Credit
Outstandings) Assigned      Percentage of Assigned
Revolving Loan
Commitment (or, if
terminated, aggregate
outstanding principal
amount of Revolving
Loans and Percentage of
Letter of Credit
Outstandings)4  

[Name of Assignee]

   $                    $                               % 

[Name of Assignee]

   $                    $                               %] 

 

 

3  Insert this chart if this Form is being used for assignment to funds managed
by the same or related investment managers.

4  Set forth, to at least 9 decimals, as a percentage of the Revolving Loan
Commitments (or Revolving Loans, as the case may be) of all Lenders thereunder.

 

F - 2

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

[4. Assigned Interest:5

 

Aggregate Amount of

all Revolving Loan

Commitments (or, if

terminated, aggregate

outstanding principal

amount of Revolving

Loans for all Lenders

and total Letter of

Credit Outstandings)

   Amount of Revolving
Loan Commitment
(or, if terminated,
aggregate outstanding
principal amount of
Revolving Loans and
Percentage of Letter
of Credit
Outstandings)
Assigned      Percentage of
Assigned Revolving
Loan Commitment
(or, if terminated,
aggregate
outstanding
principal amount of
Revolving Loans
and Percentage of
Letter of Credit
Outstandings)6  

$            

   $                       %] 

 

Effective Date:                        ,             , 201    .       Payment
Instructions:   

 

        

 

        

 

         Attention:   

 

         Reference:   

 

         Address for Notices:         
Relationship Contact:                                                      

 

 

5  Insert this chart if this Form is being used by a Lender for an assignment to
a single Assignee.

6  Set forth, to at least 9 decimals, as a percentage of the Revolving Loan
Commitments (or Revolving Loans, as the case may be) of all Lenders thereunder.

 

F - 3

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

The terms set forth in this Assignment are hereby agreed to:

 

ASSIGNOR       ASSIGNEE7 [NAME OF ASSIGNOR]       [NAME OF ASSIGNEE] By:  

 

      By:  

 

Name:         Name:   Title:         Title:  

 

[Consented to and]8 Accepted:

DEUTSCHE BANK AG NEW YORK BRANCH,

       as Administrative Agent

By:  

 

Name:   Title:   By:  

 

Name:   Title:   [Consented to: STRATEGIC HOTEL FUNDING, L.L.C. By:  

 

Name:   Title:]9  

 

 

7  Add additional signature blocks, as needed, if this Form is being used by
funds managed by the same or related investment managers.

8  Insert only if assignment is being made to an Eligible Assignee that is not
an existing Lender, an Affiliate of an existing Lender or an Approved Fund.

9  Insert only if assignment is being made to an Eligible Assignee that is not
an existing Lender, an Affiliate of an existing Lender or an Approved Fund and
so long as no Specified Default or Event of Default exists.

 

F - 4

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STRATEGIC HOTEL FUNDING, L.L.C.

CREDIT AGREEMENT

STANDARD TERMS AND CONDITIONS

FOR

LENDER ASSIGNMENT AGREEMENT

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby;
and (b) assumes no responsibility with respect to (i) any statements, warranties
or representations made in or in connection with any Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Loan Document or any other instrument or
document delivered pursuant thereto, other than this Assignment, or any
collateral thereunder, (iii) the financial condition of the Borrower or any of
its Subsidiaries or Affiliates or any other Person obligated in respect of any
Loan Document or (iv) the performance or observance by the Borrower or any of
its Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Documents.

1.2 Assignee. [The] [Each] Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement, (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.1.1 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and to purchase the Assigned
Interest on the basis of which it has made such analysis and decision and
(v) attached to this Assignment is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed by
[the] [each] Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor 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 the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

F - 5

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2. Payment. From and after the Effective Date, the Administrative Agent shall
make all payment in respect to the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to [the] [each] Assignee
for amounts which have accrued from and after the Effective Date.

3. General Provisions. This Assignment shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns. This
Assignment may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature
page of this Assignment by telecopy shall be effective as delivery of a manually
executed counterpart of the Assignment. THIS ASSIGNMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

*   *   *   *

 

F - 6

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Exhibit G

Form of Pledge Agreement

[See attached]

 

G - 1

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PLEDGE AGREEMENT

among

STRATEGIC HOTEL FUNDING, L.L.C.

and

CERTAIN SUBSIDIARIES OF STRATEGIC HOTEL FUNDING, L.L.C.

collectively, as PLEDGOR

and

DEUTSCHE BANK AG NEW YORK BRANCH,

as PLEDGEE

Dated as of April [    ], 2014

 

 

 

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PLEDGE AGREEMENT

PLEDGE AGREEMENT (as amended, modified or supplemented from time to time, this
“Agreement”), dated as of April [    ], 2014, among each of the undersigned
pledgors (each, a “Pledgor” and, together with any other entity that becomes a
pledgor hereunder pursuant to Section 30 hereof, the “Pledgors”) and Deutsche
Bank AG New York Branch, as administrative agent (together with any successor
administrative agent, the “Pledgee”), for the benefit of the Secured Creditors
(as defined below). Except as otherwise defined herein, all capitalized terms
used herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.

W I T N E S S E T H :

WHEREAS, STRATEGIC HOTEL FUNDING, L.L.C. (the “Borrower”), the lenders from time
to time party thereto (the “Lenders”), and the Pledgee, as administrative agent
(together with any successor administrative agent, the “Administrative Agent”),
have entered into a Credit Agreement, dated as of April [    ], 2014 (as
amended, modified or supplemented from time to time, the “Credit Agreement”),
providing for the making of Loans to and the issuance of, and participation in,
Letters of Credit for the account of the Borrower, all as contemplated therein;

WHEREAS, pursuant to the Subsidiary Guaranty, certain Pledgors (other than the
Borrower) have jointly and severally guaranteed the payment and performance when
due of all Guaranteed Obligations as described (and defined) therein;

WHEREAS, it is a condition precedent to the making of Loans to, and the issuance
of Letters of Credit for the account of, the Borrower under the Credit Agreement
that each Pledgor shall have executed and delivered to the Pledgee this
Agreement; and

WHEREAS, each Pledgor will obtain direct and indirect material benefits from the
incurrence of Loans by the Borrower and the issuance of Letters of Credit for
the account of the Borrower under the Credit Agreement, the entering into of
Credit Hedging Agreements by the Secured Creditors and the entering into of
Pari-Pasu Hedging Agreements by the Lenders and the Pari-Pasu Hedging
Counterparties and, accordingly, desires to enter into this Agreement in order
to satisfy the conditions described in the preceding recital and to induce the
Lenders to make Loans to the Borrower and issue, and/or participate in, Letters
of Credit for the account of the Borrower and/or enter into Credit Hedging
Agreements and/or enter into Pari-Pasu Hedging Agreements;

 

1

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NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
for the benefit of the Secured Creditors and hereby covenants and agrees with
the Pledgee for the benefit of the Secured Creditors as follows:

1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor for the
benefit of the Secured Creditors to secure:

(i) the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, principal, premium, interest, reimbursement
obligations (both actual and contingent) under Revolving Loans, Swingline Loans,
Letters of Credit, Credit Hedging Agreements, Pari-Pasu Hedging Agreements,
fees, costs, and indemnities (including in each case, without limitation, all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of any Pledgor at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding) of such Pledgor to the Secured Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with, the
Credit Agreement and the other Loan Documents to which such Pledgor is a party
(including, in the case of each Pledgor that is party to the Subsidiary
Guaranty, all Guaranteed Obligations (as defined in the Subsidiary Guaranty))
and the due performance and compliance by such Pledgor with all of the terms,
conditions and agreements contained in the Credit Agreement and in such other
Loan Documents (all such obligations, liabilities and indebtedness under this
clause (i) being herein collectively called the “Credit Document Obligations”);

(ii) any and all sums advanced by the Pledgee in order to preserve the
Collateral (as hereinafter defined) or preserve its security interest in the
Collateral;

(iii) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of such Pledgor referred to in clause
(i) above, after an Event of Default shall have occurred and be continuing, the
reasonable expenses of retaking, holding, preparing for sale or lease, selling
or otherwise disposing of or realizing on the Collateral, or of any exercise by
the Pledgee of its rights hereunder, together with reasonable attorneys’ fees
and court costs; and

(iv) all amounts paid by any Secured Creditor as to which such Secured Creditor
has the right to reimbursement under Section 11 of this Agreement;

all such obligations, liabilities, sums and expenses set forth in clauses
(i) through (iv) of this Section 1 being herein collectively called the
“Obligations,” it being acknowledged and agreed that the “Obligations” shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.

2. DEFINITIONS.

(a) Reference to singular terms shall include the plural and vice versa.

(b) The following capitalized terms used herein shall have the definitions
specified below:

“Administrative Agent” shall have the meaning set forth in the recitals hereto.

 

2

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“Adverse Claim” shall have the meaning given such term in Section 8-102(a)(1) of
the UCC.

“Agreement” shall have the meaning set forth in the first paragraph hereof.

“Borrower” shall have the meaning set forth in the recitals hereto.

“Certificated Security” shall have the meaning given such term in
Section 8-102(a)(4) of the UCC.

“Class” shall have the meaning set forth in Section 22 hereof.

“Clearing Corporation” shall have the meaning given such term in
Section 8-102(a)(5) of the UCC.

“Collateral” shall have the meaning set forth in Section 3.1 hereof.

“Corporation” shall mean any corporation that is a Subsidiary of a Pledgor
listed on Annex C attached hereto or that is a Subsidiary of any Pledgor that
becomes a party to this Agreement.

“Corporate Assets” shall mean all assets, whether tangible or intangible and
whether real, personal or mixed (including, without limitation, all capital and
interest in other Corporations), at any time owned by any Corporation.

“Corporate Stock” shall mean all of the shares at any time owned by Pledgor of
the Corporations.

“Credit Agreement” shall have the meaning set forth in the recitals hereto.

“Credit Document Obligations” shall have the meaning set forth in Section 1(i)
hereof.

“Credit Hedging Agreements” shall have the meaning set forth in the Credit
Agreement.

“Equity Interest” of any Subsidiary of a Pledgor shall mean any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interest in (however designated) equity of such Subsidiary,
including, without limitation, any common stock, preferred stock, any limited or
general partnership interest and any limited liability company membership
interest.

“Event of Default” shall mean any Event of Default (or equivalent term) under,
and as defined in, the Credit Agreement and shall in any event include, without
limitation, any payment default on any of the Obligations after the expiration
of any applicable grace period.

“Indemnitees” shall have the meaning set forth in Section 11 hereof.

 

3

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“Lenders” shall have the meaning set forth in the recitals hereto.

“Limited Liability Company” shall mean any limited liability company that is a
Subsidiary of a Pledgor listed on Annex B attached hereto or that is a
Subsidiary of any Pledgor that becomes a party to this Agreement.

“Limited Liability Company Assets” shall mean all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all limited liability company capital and interest in other limited liability
companies), at any time owned by any Limited Liability Company.

“Limited Liability Company Interests” shall mean the entire limited liability
company membership interest at any time owned by any Pledgor in the Limited
Liability Companies.

“Limited Partnership” shall mean any limited partnership that is a subsidiary of
a Pledgor listed on Annex B attached hereto.

“Limited Partnership Assets” shall mean all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all limited partnership capital and interest in other limited partnerships), at
any time owned by any Limited Partnership.

“Limited Partnership Interests” shall mean the entire limited partnership
membership interest at any time owned by a Pledgor in the Limited Partnerships.

“Loan Documents” shall have the meaning set forth in the Credit Agreement.

“Location” of any Pledgor shall mean such Pledgor’s “location” as determined
pursuant to Section 9-307 of the UCC.

“Obligations” shall have the meaning set forth in Section 1 hereof.

“Organizational Documents” means all documents, instruments and other papers
constituting the entire organizational documents of any Corporation, Limited
Liability Company, or Limited Partnership and any and all amendments thereto,
including without limitation, certificates of formation, operating agreements,
certificates of incorporation and bylaws.

“Pari-Pasu Hedging Agreements” shall have the meaning set forth in the Credit
Agreement.

“Person” means any individual, partnership, joint venture, firm, corporation,
association, limited liability company, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.

“Pledgee” shall have the meaning set forth in the first paragraph hereof.

“Pledgor” shall have the meaning set forth in the first paragraph hereof.

 

4

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“Primary Obligations” shall have the meaning set forth in Section 9(b) hereof.

“Pro Rata Share” shall have the meaning set forth in Section 9(b) hereof.

“Proceeds” shall have the meaning given such term in Section 9-102(a)(64) of the
UCC and, in any event, shall also include, but not be limited to, (i) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to the
Pledgee or any Pledgor from time to time with respect to any of the Collateral,
(ii) any and all payments (in any form whatsoever) made or due and payable to
any Pledgor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any Person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.

“Registered Organization” shall mean a “registered organization” as such term is
defined in Section 9-102 (a) (70) of the UCC.

“Required Lenders” shall have the meaning set forth in the Credit Agreement.

“Secondary Obligations” shall have the meaning set forth in Section 9(b) hereof.

“Secured Creditors” shall have the meaning set forth in the Credit Agreement.

“Securities Act” shall mean the Securities Act of 1933, as amended, as in effect
from time to time.

“Securities Intermediary” shall have the meaning given such term in
Section 8-102(14) of the UCC.

“Security Entitlement” shall have the meaning given such term in
Section 8-102(a)(17) of the UCC.

“Subsidiary” shall have the meaning given such term in the Credit Agreement.

“Subsidiary Guaranty” shall have the meaning given such term in the Credit
Agreement.

“Termination Date” shall have the meaning set forth in Section 20 hereof.

“Transmitting Utility” shall mean a “transmitting utility” as such term is
defined in Section 9-102(a)(80) of the UCC.

“UCC” shall mean the Uniform Commercial Code as in effect in the State of
New York from time to time; provided that all references herein to specific
sections or subsections of the UCC are references to such sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.

 

5

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“Uncertificated Security” shall have the meaning given such term in
Section 8-102(a)(18) of the UCC.

“Voting Rights” shall have the meaning set forth in Section 5 hereof.

3. PLEDGE OF SECURITIES, ETC.

3.1 Pledge. To secure the Obligations now or hereafter owed or to be performed
by such Pledgor, each Pledgor does hereby grant, pledge and assign to the
Pledgee for the benefit of the Secured Creditors, and does hereby create a
continuing security interest in favor of the Pledgee for the benefit of the
Secured Creditors in, all of its right, title and interest in and to the
following, whether now existing or hereafter from time to time acquired
(collectively, but subject to the terms of the proviso to this Section 3.1, the
“Collateral”):

(a) all Limited Liability Company Interests and all Limited Partnership
Interests owned by such Pledgor from time to time and all of its right, title
and interest in each Limited Liability Company and each Limited Partnership to
which each such interest relates, whether now existing or hereafter acquired,
including, without limitation, to the fullest extent permitted under the terms
and provisions of the documents and agreements governing such Limited Liability
Company Interests, such Limited Partnership Interests and applicable law:

(A) all the capital thereof and its interest in all profits, losses, Limited
Liability Company Assets, Limited Partnership Assets and other distributions to
which such Pledgor shall at any time be entitled in respect of such Limited
Liability Company Interests and such Limited Partnership Interests;

(B) all other payments due or to become due to such Pledgor in respect of
Limited Liability Company Interests and Limited Partnership Interests, whether
under any limited liability company agreement, limited partnership agreement or
otherwise, whether as contractual obligations, damages, insurance proceeds or
otherwise;

(C) all of its claims, rights, powers, privileges, authority, options, security
interests, liens and remedies, if any, under any limited liability company
agreement, limited partnership agreement or operating agreement, or at law or
otherwise in respect of such Limited Liability Company Interests and such
Limited Partnership Interests;

(D) all present and future claims, if any, of such Pledgor against any such
Limited Liability Company and any such Limited Partnership for monies loaned or
advanced, for services rendered or otherwise;

(E) all of such Pledgor’s rights under any limited liability company agreement,
limited partnership agreement or operating agreement or at law to exercise and
enforce every right, power, remedy, authority, option and privilege of such
Pledgor relating to such Limited Liability Company Interests and Limited
Partnership Interests, including any power to terminate, cancel or modify any
limited liability company agreement, limited partnership agreement or operating

 

6

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agreement, to execute any instruments and to take any and all other action on
behalf of and in the name of any of such Pledgor in respect of such Limited
Liability Company Interests, such Limited Partnership Interests and any such
limited liability company and limited partnership, to make determinations, to
exercise any election (including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, amendment, waiver or approval,
together with full power and authority to demand, receive, enforce, collect or
receipt for any of the foregoing or for any Limited Liability Company Asset or
any Limited Partnership Asset, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action in connection
with any of the foregoing; and

(F) all other property hereafter delivered in substitution for or in addition to
any of the foregoing, all certificates and instruments representing or
evidencing such other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all thereof;

(b) all Corporate Stock owned by such Pledgor from time to time, all options and
warrants owned by such Pledgor from time to time to purchase such Corporate
Stock, and all of its right, title and interest in each Corporation to which
each such shares relates, whether now existing or hereafter acquired, including,
without limitation, to the fullest extent permitted under the terms and
provisions of the documents and agreements governing such Corporate Stock and
applicable law:

(A) all the capital thereof and its interest in all profits, losses, Corporate
Assets and other distributions to which such Pledgor shall at any time be
entitled in respect of such Corporate Stock;

(B) all other payments due or to become due to such Pledgor in respect of
Corporate Stock, whether under the bylaws, any Organizational Document or
otherwise, whether as contractual obligations, damages, insurance proceeds or
otherwise;

(C) all of its claims, rights, powers, privileges, authority, options, security
interests, liens and remedies, if any, under the bylaws, any Organizational
Document, or at law or otherwise in respect of such Corporate Stock;

(D) all present and future claims, if any, of such Pledgor against any such
Corporation for monies loaned or advanced, for services rendered or otherwise;

(E) all of such Pledgor’s rights under the bylaws, any Organizational Document
or at law or otherwise to exercise and enforce every right, power, remedy,
authority, option and privilege of such Pledgor relating to such Corporate
Stock, including any power to terminate, cancel or modify the bylaws, any
Organizational Document or any other Organizational Document, to execute any

 

7

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instruments and to take any and all other action on behalf of and in the name of
any of such Pledgor in respect of such Corporate Stock and any such Corporation,
to make determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent,
amendment, waiver or approval, together with full power and authority to demand,
receive, enforce, collect or receipt for any of the foregoing or for any
Corporation Asset, to enforce or execute any checks, or other instruments or
orders, to file any claims and to take any action in connection with any of the
foregoing; and

(F) all other property hereafter delivered in substitution for or in addition to
any of the foregoing, all certificates and instruments representing or
evidencing such other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all thereof;

(c) all Security Entitlements owned by such Pledgor from time to time in any and
all of the foregoing; and

(d) all Proceeds of any and all of the foregoing.

3.2 Procedures. (a) To the extent that any Pledgor at any time or from time to
time owns, acquires or obtains any right, title or interest in any Collateral,
such Collateral shall automatically (and without the taking of any action by the
respective Pledgor) be pledged pursuant to Section 3.1 of this Agreement and, in
addition thereto, the respective Pledgor shall (to the extent provided below)
take the following actions as set forth below (as promptly as practicable and,
in any event, within ten (10) days after it obtains such Collateral) for the
benefit of the Pledgee and the other Secured Creditors:

(i) with respect to a Certificated Security (other than a Certificated Security
credited on the books of a Clearing Corporation or Securities Intermediary), the
respective Pledgor shall deliver such Certificated Security to the Pledgee,
indorsed to the Pledgee or indorsed in blank;

(ii) with respect to an Uncertificated Security (other than an Uncertificated
Security credited on the books of a Clearing Corporation or Securities
Intermediary), the respective Pledgor shall cause the issuer of such
Uncertificated Security to duly authorize, execute and deliver to the Pledgee,
an agreement for the benefit of the Pledgee and the other Secured Creditors
substantially in the form of Annex D hereto (appropriately completed to the
reasonable satisfaction of the Pledgee and with such modifications, if any, as
shall be reasonably satisfactory to the Pledgee) pursuant to which such issuer
agrees to comply with any and all instructions originated by the Pledgee without
further consent by the registered owner and not to comply with instructions
regarding such Uncertificated Security originated by any other Person other than
a court of competent jurisdiction;

 

8

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(iii) with respect to a Certificated Security, Uncertificated Security,
Corporate Stock, Limited Liability Company Interest or Limited Partnership
Interest credited on the books of a Clearing Corporation or Securities
Intermediary (including a Federal Reserve Bank, Participants Trust Company or
The Depository Trust Company), the respective Pledgor shall promptly notify the
Pledgee thereof and shall promptly take all actions required (x) to comply with
the applicable rules of such Clearing Corporation or Securities Intermediary and
(y) to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 9-314(a) and (c), 9-106 and 8-106(d) of
the UCC). The Pledgor further agrees to take such actions as the Pledgee deems
reasonably necessary or desirable to effect the foregoing;

(iv) with respect to Corporate Stock, a Limited Liability Company Interest or a
Limited Partnership Interest (other than Corporate Stock, a Limited Liability
Company Interest or a Limited Partnership Interest credited on the books of a
Clearing Corporation or Securities Intermediary), (x) if such Corporate Stock,
Limited Liability Company Interest, or Limited Partnership Interest is
represented by a certificate and is a “security” for purposes of
Section 8-102(a)(15) of the UCC, the procedure set forth in Section 3.2(a)(i)
hereof, and (y) if such Corporate Stock, Limited Liability Company Interest or
Limited Partnership Interest is not represented by a certificate or is not a
“security” for purposes of the UCC, the procedure set forth in
Section 3.2(a)(ii) hereof; and

(v) with respect to cash proceeds from any of the Collateral described in
Section 3.1 hereof which are required to be paid over to (or may be received by)
the Pledgee or any of the other Secured Creditors pursuant to the terms of this
Agreement, (i) establishment by the Pledgee of a cash account in the name of
such Pledgor over which the Pledgee shall have “exclusive and absolute control”
and dominion (and no withdrawals or transfers may be made therefrom by any
Person except with the prior written consent of the Pledgee) and (ii) deposit of
such cash in such cash account.

(b) In addition to the actions required to be taken pursuant to Section 3.2(a)
hereof, each Pledgor shall take the following additional actions with respect to
the Collateral:

(i) with respect to all Collateral of such Pledgor whereby or with respect to
which the Pledgee may (and in accordance with the terms hereof is entitled to)
obtain “control” thereof within the meaning of Section 8-106 of the UCC (or
under any provision of the UCC as same may be amended or supplemented from time
to time, or under the laws of any relevant State other than the State of
New York), the respective Pledgor shall take all actions as may be reasonably
requested from time to time by the Pledgee so that “control” of such Collateral
is obtained and at all times held by the Pledgee; and

(ii) each Pledgor shall from time to time cause appropriate financing statements
(on Form UCC-1 or other appropriate form) under the Uniform Commercial Code as
in effect in the various relevant States, covering all Collateral hereunder
(with the form of such financing statements to be satisfactory to the Pledgee),
to be filed in the relevant filing offices so that at all times the Pledgee has
a security interest in all Collateral which also may be perfected by the filing
of such financing statements under the laws of the relevant States, including,
without limitation, Section 9-312(a) of the UCC.

 

9

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3.3 Subsequently Acquired Collateral. (a) If any Pledgor shall acquire (by
purchase, stock dividend or similar distribution or otherwise) any additional
Collateral at any time or from time to time after the date hereof, such
Collateral shall automatically (and without any further action being required to
be taken) be subject to the pledge and security interests created pursuant to
Section 3.1 hereof and, furthermore, the respective Pledgor will promptly
thereafter take (or cause to be taken) all action with respect to such
Collateral in accordance with the procedures set forth in Section 3.2 hereof,
and will promptly thereafter deliver to the Pledgee (in the case of any such
additional Collateral consisting of additional Equity Interests) (i) a
certificate executed by an authorized officer of such Pledgor describing such
Collateral and certifying that the same has been duly pledged in favor of the
Pledgee (for the benefit of the Secured Creditors) hereunder and (ii) such
supplements to Annexes A through D hereto as are reasonably necessary to cause
such annexes to be complete and accurate at such time.

(b) In addition, if any Pledgor shall acquire (by purchase, stock dividend or
similar distribution or otherwise) any Capital Stock of any Subsidiary whose
Capital Stock is required to be pledged to Pledgee pursuant to Section 7.1.22 of
the Credit Agreement, at any time or from time to time after the date hereof,
such Capital Stock shall automatically (and without any further action being
required to be taken) be subject to the pledge and security interests created
pursuant to Section 3.1 hereof and, furthermore, the respective Pledgor will
promptly thereafter take (or cause to be taken) all action with respect to such
Capital Stock in accordance with the procedures set forth in Section 3.2 hereof,
and will promptly thereafter deliver to the Pledgee (i) a certificate executed
by an authorized officer of such Pledgor describing such Capital Stock and
certifying that the same has been duly pledged in favor of the Pledgee (for the
benefit of the Secured Creditors) hereunder and (ii) such supplements to Annexes
A through D hereto as are reasonably necessary to cause such annexes to be
complete and accurate at such time.

3.4 Transfer Taxes. Each pledge of Collateral under Section 3.1 or Section 3.3
hereof shall be accompanied by any transfer tax stamps required in connection
with the pledge of such Collateral.

3.5 Certain Representations and Warranties Regarding the Collateral. Each
Pledgor represents and warrants that on the date hereof: (i) the exact legal
name of such Pledgor, the type of organization of such Pledgor, whether or not
such Pledgor is a Registered Organization, the jurisdiction of organization of
such Pledgor, such Pledgor’s Location, the organizational identification number
(if any) of such Pledgor, and whether or not such Pledgor is a Transmitting
Utility, is listed on Annex A hereto; (ii) the Limited Liability Company
Interests and Limited Partnership Interests held by such Pledgor consist of the
number and type of interests of the Limited Liability Companies and the Limited
Partnerships described in Annex B hereto; (iii) each such Limited Liability
Company Interest constitutes that percentage of the issued and outstanding
Equity Interest of the issuing Limited Liability Company as set forth in Annex B
hereto; (iv) each such Limited Partnership Interest constitutes that percentage
of the issued and outstanding Equity Interest of the issuing Limited Partnership
as set forth in Annex B hereto; (v) the Corporate Stock (and any warrants or
options to purchase Corporate Stock) held by such Pledgor consists of the number
and type of shares of the stock (or warrants or options to purchase any stock)
of the Corporation described in Annex C hereto; (vi) such Corporate Stock
constitutes that percentage of the issued and outstanding Equity Interest of the
issuing the

 

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Corporation as set forth in Annex C hereto; (vii) the Pledgor has complied with
the respective procedure set forth in Section 3.2(a) hereof with respect to each
item of Collateral described in Annexes B and C hereto; and (viii) on the date
hereof, such Pledgor owns no other stock, Corporate Stock, Limited Liability
Company Interests or Limited Partnership Interests that would otherwise
constitute Collateral.

4 APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the extent necessary
to enable the Pledgee to perfect its security interest in any of the Collateral
or to exercise any of its remedies hereunder, the Pledgee shall have the right
to appoint one or more sub-agents for the purpose of retaining physical
possession of the Collateral, which may be held (in the discretion of the
Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank or
in favor of the Pledgee or any nominee or nominees of the Pledgee or a sub-agent
appointed by the Pledgee.

5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have
occurred and be continuing an Event of Default, each Pledgor shall be entitled
to exercise any and all voting and other consensual rights pertaining to and
attaching to any and all of the Collateral owned by it, and to give consents,
waivers or ratifications in respect thereof; provided that, in each case, no
vote shall be cast or any consent, waiver or ratification given or any action
taken or omitted to be taken which would violate in any material respect, result
in a breach of any covenant contained in, or be inconsistent with any of the
terms of any Loan Document, or which could reasonably be expected to have a
Material Adverse Effect (collectively, the “Voting Rights”). All such rights of
each Pledgor to vote and to give consents, waivers and ratifications shall cease
in case an Event of Default has occurred, and is continuing and the Pledgee
shall have given notice to the relevant Pledgor of its intent to exercise rights
pursuant to Section 7 hereof (although no such notice shall be required if an
Event of Default described in any of clauses (a) through (e) of Section 8.1.9 of
the Credit Agreement shall have occurred and be continuing) and Section 7 hereof
shall become applicable.

6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there shall have occurred
and be continuing an Event of Default and the Pledgee shall have given notice to
the relevant Pledgor of its intent to exercise rights pursuant to Section 7
hereof (although no such notice shall be required if an Event of Default
described in any of clauses (a) through (e) of Section 8.1.9 of the Credit
Agreement shall have occurred and be continuing), all cash dividends, cash
distributions, cash Proceeds and other cash amounts payable in respect of the
Collateral shall be paid to the respective Pledgor free of liens and security
interests created hereby and by the other Loan Documents. The Pledgee shall be
entitled to receive directly, and to retain as part of the Collateral:

(i) all other or additional stock, certificates, limited liability company
interests, partnership interests, instruments or other securities or property
(including, but not limited to, cash dividends other than as set forth above)
paid or distributed by way of dividend or otherwise in respect of the
Collateral;

(ii) all other or additional stock, certificates, limited liability company
interests, partnership interests, instruments or other securities or property
(including, but not limited to, cash (although such cash may be paid directly to
the respective Pledgor so

 

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long as no Event of Default then exists) paid or distributed in respect of the
Collateral by way of stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement; and

(iii) all other or additional stock, certificates, limited liability company
interests, partnership interests, instruments or other securities or property
((including, but not limited to, cash (although such cash may be paid directly
to the respective Pledgor so long as no Event of Default then exists)) which may
be paid in respect of the Collateral by reason of any consolidation, merger,
exchange of stock, conveyance of assets, liquidation or similar corporate or
other reorganization.

All dividends, distributions or other payments which are received by any Pledgor
contrary to the provisions of this Section 6 and Section 7 hereof shall be
received in trust for the benefit of the Pledgee, shall be segregated from other
property or funds of such Pledgor and shall be forthwith paid over to the
Pledgee as Collateral in the same form as so received (with any necessary
endorsement).

7. REMEDIES IN CASE OF AN EVENT OF DEFAULT. If there shall have occurred and be
continuing an Event of Default and the Pledgee shall have given notice to the
relevant Pledgor of its intent to exercise rights pursuant to this Section 7
(although no such notice shall be required if an Event of Default described in
any of clauses (a) through (e) of Section 8.1.9 of the Credit Agreement shall
have occurred and be continuing), then and in every such case, the Pledgee shall
be entitled to exercise all of the rights, powers and remedies (whether vested
in it by this Agreement, any other Loan Document or by law) for the protection
and enforcement of its rights in respect of the Collateral, and the Pledgee
shall be entitled to exercise all the rights and remedies of a secured party
under the UCC as in effect in any relevant jurisdiction and also shall be
entitled, without limitation, to exercise the following rights, which each
Pledgor hereby agrees to be commercially reasonable:

(i) to receive all amounts payable in respect of the Collateral otherwise
payable under Section 6 hereof to the respective Pledgor;

(ii) to transfer all or any part of the Collateral into the Pledgee’s name or
the name of its nominee or nominees;

(iii) to vote all or any part of the Collateral (whether or not transferred into
the name of the Pledgee) and give all consents, waivers and ratifications in
respect of the Collateral and otherwise act with respect thereto as though it
were the outright owner thereof (each Pledgor hereby irrevocably constituting
and appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with
full power of substitution to do so);

(iv) at any time and from time to time to sell, assign and deliver, or grant
options to purchase, all or any part of the Collateral, or any interest therein,
at any public or private sale, without demand of performance, advertisement or,
notice of intention to sell or of the time or place of sale or adjournment
thereof or to redeem or otherwise (all of which are hereby waived by each
Pledgor), for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or

 

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prices and on such terms as the Pledgee in its absolute discretion may
determine, provided that at least ten (10) days’ written notice of the time and
place of any such sale shall be given to the respective Pledgor. The Pledgee
shall not be obligated to make any such sale of Collateral regardless of whether
any such notice of sale has theretofore been given. Each Pledgor hereby waives
and releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshalling the Collateral and any other
security or the Obligations or otherwise. At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of the Secured Creditors may bid for and
purchase all or any part of the Collateral so sold free from any such right or
equity of redemption. Neither the Pledgee nor any other Secured Creditor shall
be liable for failure to collect or realize upon any or all of the Collateral or
for any delay in so doing nor shall any of them be under any obligation to take
any action whatsoever with regard thereto; and

(v) to set-off any and all Collateral against any and all Obligations, and to
withdraw any and all cash or other Collateral from any and all accounts referred
to Section 3.2(a)(v) hereof and to apply such cash and other Collateral to the
payment of any and all Obligations.

8. REMEDIES, CUMULATIVE, ETC. Each and every right, power and remedy of the
Pledgee provided for in this Agreement or in any other Loan Document, or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any other Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or any other Loan Document or now or hereafter existing at law or
in equity or by statute or otherwise shall not preclude the simultaneous or
later exercise by the Pledgee or any other Secured Creditor of all such other
rights, powers or remedies, and no failure or delay on the part of the Pledgee
or any other Secured Creditor to exercise any such right, power or remedy shall
operate as a waiver thereof. No notice to or demand on any Pledgor in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Pledgee or any
other Secured Creditor to any other or further action in any circumstances
without notice or demand. The Secured Creditors agree that this Agreement may be
enforced only by the action of the Pledgee, acting upon the instructions of the
Required Lenders and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Pledgee for the benefit of the
Secured Creditors upon the terms of this Agreement.

9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee upon any
sale or other disposition of the Collateral, together with all other moneys
received by the Pledgee hereunder, shall be applied as follows:

(i) first, to the payment of all amounts owing the Pledgee of the type described
in clauses (i), (ii), (iii) and (iv) of the definition of “Obligations”
contained in Section 1 hereof;

 

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(ii) second, to the extent proceeds remain after the application pursuant to
preceding clause (i), an amount equal to the outstanding Primary Obligations
shall be paid to the Secured Creditors as provided in Section 9(e) hereof, with
each Secured Creditor receiving an amount equal to its outstanding Primary
Obligations or, if the proceeds are insufficient to pay in full all such Primary
Obligations, its Pro Rata Share of such amount remaining to be distributed;

(iii) third, to the extent proceeds remain after the application pursuant to
preceding clauses (i) and (ii), an amount equal to the outstanding Secondary
Obligations shall be paid to the Secured Creditors as provided in Section 9(e)
hereof, with each Secured Creditor receiving an amount equal to its outstanding
Secondary Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of such amount remaining to be
distributed; and

(iv) fourth, to the extent proceeds remain after the application pursuant to
preceding clauses (i) through (iii), inclusive, and following the termination of
this Agreement pursuant to Section 20(a) hereof, to the relevant Pledgor or to
whomever may be lawfully entitled to receive such surplus.

(b) For purposes of this Agreement, (x) “Pro Rata Share” shall mean, when
calculating a Secured Creditor’s portion of any distribution or amount, that
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then unpaid amount of such Secured Creditor’s Primary Obligations or
Secondary Obligations, as the case may be, and the denominator of which is the
then outstanding amount of all Primary Obligations or Secondary Obligations, as
the case may be, (y) “Primary Obligations” shall mean all principal of, premium,
if any, and interest on, all Loans, all Disbursements, all contingent
reimbursement obligations equal to the Stated Amount of all outstanding Letters
of Credit and all fees payable under the Credit Agreement, and (z) “Secondary
Obligations” shall mean all Obligations other than Primary Obligations.

(c) When payments to Secured Creditors are based upon their respective Pro Rata
Shares, the amounts received by such Secured Creditors hereunder shall be
applied (for purposes of making determinations under this Section 9 only)
(i) first, to their Primary Obligations and (ii) second, to their Secondary
Obligations. If any payment to any Secured Creditor of its Pro Rata Share of any
distribution would result in overpayment to such Secured Creditor, such excess
amount shall instead be distributed in respect of the unpaid Primary Obligations
or Secondary Obligations, as the case may be, of the other Secured Creditors,
with each Secured Creditor whose Primary Obligations or Secondary Obligations,
as the case may be, have not been paid in full to receive an amount equal to
such excess amount multiplied by a fraction the numerator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of such
Secured Creditor entitled to distribution and the denominator of which is the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of all
Secured Creditors entitled to such distribution.

(d) Each of the Secured Creditors, by their acceptance of the benefits hereof
and of the other Loan Documents, agrees and acknowledges that if the Secured
Creditors are to receive a distribution on account of undrawn amounts with
respect to Letters of Credit issued

 

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under the Credit Agreement (which shall only occur after all outstanding Loans
under the Credit Agreement and Disbursements have been paid in full), such
amounts shall be paid to the Administrative Agent under the Credit Agreement and
held by it, for the equal and ratable benefit of the Secured Creditors, as cash
security for the repayment of Obligations owing to the Secured Creditors as
such. If any amounts are held as cash security pursuant to the immediately
preceding sentence, then upon the termination of all outstanding Letters of
Credit under the Credit Agreement, and after the application of all such cash
security to the repayment of all Obligations owing to the Secured Creditors
after giving effect to the termination of all such Letters of Credit, if there
remains any excess cash, such excess cash shall be distributed by the Pledgee in
accordance with Section 9(a) hereof.

(e) All payments required to be made hereunder shall be made to the
Administrative Agent for the account of the Secured Creditors.

(f) This Agreement is made with full recourse to each Pledgor and pursuant to
and upon all the warranties, representations, covenants and agreements on the
part of such Pledgor contained herein, in the Loan Documents and otherwise in
writing in connection herewith or therewith. It is understood and agreed that
each Pledgor shall remain liable with respect to its Obligations to the extent
of any deficiency between the amount of the proceeds of the Collateral pledged
by it hereunder and the aggregate amount of such Obligations.

10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt of the Pledgee or the officer making
such sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Pledgee or such officer or be answerable in any way for the misapplication or
nonapplication thereof.

11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to indemnify and
hold harmless the Pledgee and each other Secured Creditor (in their capacity as
such) and their respective successors, assigns, employees, advisors, agents and
affiliates (individually an “Indemnitee,” and collectively, the “Indemnitees”)
from and against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse each Indemnitee for all reasonable costs and expenses, including
reasonable attorneys’ fees, in each case arising out of or resulting from this
Agreement or the exercise by any Indemnitee of any right or remedy granted to it
hereunder (but excluding any claims, demands, losses, judgments and liabilities
or expenses to the extent incurred by reason of gross negligence or willful
misconduct of such Indemnitee (as determined by a court of competent
jurisdiction in a final and non-appealable decision)). In no event shall the
Pledgee be liable, in the absence of gross negligence or willful misconduct on
its part (as determined by a court of competent jurisdiction in a final and
non-appealable decision), for any matter or thing in connection with this
Agreement other than to account for monies actually received by it in accordance
with the terms hereof. If and to the extent that the obligations of any Pledgor
under this Section 11 are unenforceable for any reason, such Pledgor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law. The indemnity obligations
of each Pledgor contained in this Section 11

 

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shall continue in full force and effect notwithstanding the full payment of all
the Notes issued under the Credit Agreement, the termination of all Letters of
Credit, and the payment of all other Obligations and notwithstanding the
discharge thereof.

12. PLEDGEE NOT AN OFFICER, LIMITED LIABILITY COMPANY MEMBER OR LIMITED PARTNER.
(a) Nothing herein shall be construed to make the Pledgee or any other Secured
Creditor liable as a member of any Limited Liability Company, as a partner of
any Limited Partnership or as an officer of any Corporation and neither the
Pledgee nor any other Secured Creditor by virtue of this Agreement or otherwise
shall have any of the duties, obligations or liabilities of a member of any
Limited Liability Company, a partner of any Limited Partnership or an officer of
any Corporation. The parties hereto expressly agree that, this Agreement shall
not be construed as creating a partnership or joint venture among the Pledgee,
any other Secured Creditor, any Pledgor and/or any other Person.

(b) The Pledgee shall have only those powers set forth herein and the Secured
Creditors shall assume none of the duties, obligations or liabilities of a
member of any Limited Liability Company, a partner of any Limited Partnership,
an officer of any Corporation or any Pledgor.

(c) The Pledgee and the other Secured Creditors shall not be obligated to
perform or discharge any obligation of any Pledgor as a result of the pledge
hereby effected.

(d) The acceptance by the Pledgee of this Agreement, with all the rights,
powers, privileges and authority so created, shall not at any time or in any
event obligate the Pledgee or any other Secured Creditor to appear in or defend
any action or proceeding relating to the Collateral to which it is not a party,
or to take any action hereunder or thereunder, or to expend any money or incur
any expenses or perform or discharge any obligation, duty or liability under the
Collateral.

13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor authorizes the
Pledgee to cause to be filed, at such Pledgor’s own expense, UCC financing
statements, continuation statements or amendments thereto and other documents,
in form reasonably acceptable to the Pledgee, in such offices as the Pledgee may
deem reasonably necessary and wherever required by law in order to perfect and
preserve the Pledgee’s security interest in the Collateral, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional conveyances, assignments, agreements and instruments as the Pledgee
may reasonably require or deem necessary to carry into effect the purposes of
this Agreement or to further assure and confirm unto the Pledgee its rights,
powers and remedies hereunder.

(b) Each Pledgor hereby appoints the Pledgee such Pledgor’s attorney-in-fact
with full authority in the place and stead of such Pledgor and in the name of
such Pledgor or otherwise, to act from time to time solely after the occurrence
and during the continuance of an Event of Default and upon notice to the
relevant Pledgor (although no such notice shall be required if an Event of
Default described in any of clauses (a) through (e) of Section 8.1.9 of the
Credit Agreement shall have occurred and be continuing), in the Pledgee’s
reasonable discretion, to take any action and to execute any instrument which
the Pledgee may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement, which appointment as attorney is coupled with an
interest.

 

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14. THE PLEDGEE. The Pledgee specifically acknowledges receipt of each
certificate described on Annex B and will hold in accordance with this Agreement
all items of the Collateral at any time received under this Agreement. It is
expressly understood and agreed by each Secured Creditor that by accepting the
benefits of this Agreement, each such Secured Creditor acknowledges and agrees
that the obligations of the Pledgee as holder of the Collateral and interests
therein and with respect to the disposition thereof, and otherwise under this
Agreement, are only those expressly set forth in this Agreement and in Article
IX of the Credit Agreement. The Pledgee shall act hereunder on the terms and
conditions set forth herein and in Article IX of the Credit Agreement.

15. TRANSFER BY THE PLEDGORS; ORGANIZATIONAL DOCUMENTS. No Pledgor will sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein except as
permitted by the respective Loan Documents. Each Pledgor covenants and agrees
that on and after the date hereof and until all of the Obligations have been
paid in full, except as otherwise permitted under the Loan Documents or
otherwise with the consent of the Administrative Agent, (i) the Organizational
Documents, in effect on the Closing Date, for the Collateral shall not be
modified, altered, supplemented or amended, (ii) no Pledgor shall assign or
transfer, in whole or in part, any interest in such Collateral, (iii) no
additional Members, stockholders, limited partners or other equity holders shall
be admitted to or have any equity interest in such Collateral, and (iv) no
Pledgor shall resign as the sole Member, stockholder, general partner or equity
holder of such Collateral.

16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. (a) Each Pledgor
represents, warrants and covenants that on the date hereof with respect to such
Pledgor’s respective portion of the Collateral that it is pledging herewith:

(i) it is the legal, beneficial and record owner of, and has good, valid and
marketable title to, all of its Collateral and that it has sufficient interest
in all of its Collateral in which a security interest is purported to be created
hereunder for such security interest to attach (subject, in each case, to no
pledge, lien, mortgage, hypothecation, security interest, charge, option,
Adverse Claim or other encumbrance whatsoever, except the liens and security
interests created by this Agreement);

(ii) it has full power, authority and legal right to pledge all the Collateral
pledged by it pursuant to this Agreement;

(iii) all of the Collateral has been duly and validly issued and acquired, is
fully paid and non-assessable and is subject to no options to purchase or
similar rights;

(iv) the Certificated Securities have been “certificated” and are “securities”
within the meaning of Article 8 of the UCC;

 

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(v) the pledge and collateral assignment and possession by the Pledgee of the
Collateral consisting of Certificated Securities pursuant to this Agreement
creates a valid and perfected first priority security interest in such
Certificated Securities, and the proceeds thereof, subject to no prior Lien or
encumbrance or to any agreement purporting to grant to any third party a Lien or
encumbrance on the property or assets of such Pledgor which would include the
Securities and the Pledgee is entitled to all the rights, priorities and
benefits afforded by the UCC or other relevant law as enacted in any relevant
jurisdiction to perfect security interests in respect of such Collateral; and

(vi) “control” (as defined in Section 8-106 of the UCC) has been obtained by the
Pledgee over all Collateral with respect to which such “control” may, as of the
date hereof, be obtained pursuant to Section 8-106 of the UCC.

(b) Each Pledgor covenants and agrees that it will use its best efforts to
defend the Pledgee’s right, title and security interest in and to the Collateral
and the proceeds thereof against the claims and demands of all Persons
whomsoever; and each Pledgor covenants and agrees that it will have like title
to and right to pledge any other property at any time hereafter pledged to the
Pledgee as Collateral hereunder and will likewise use its best efforts to defend
the right thereto and security interest therein of the Pledgee and the other
Secured Creditors.

Each Pledgor covenants and agrees that it shall promptly deliver to the Pledgee
any note or other document or instrument entered into after the date hereof
which evidences, constitutes, guarantees or secures any of the distributions or
any right to receive a distribution, which notes or other documents and
instruments shall be accompanied by such endorsements or assignments as the
Pledgee may require to transfer title to the Pledgee.

17. CHANGES TO LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED
ORGANIZATION AND/OR A TRANSMITTING UTILITY); JURISDICTION OF ORGANIZATION;
LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; CHANGES THERETO; ETC. No
Pledgor shall change its legal name, its type of organization, its status as a
Registered Organization (in the case of a Registered Organization), its status
as a Transmitting Utility or as a Person which is not a Transmitting Utility, as
the case may be, its jurisdiction of organization or, its Location, or its
organizational identification number (if any), except that any such changes
shall be permitted (so long as not in violation of the applicable requirements
of the Loan Documents and so long as same do not involve (x) a Registered
Organization ceasing to constitute same or (y) any Pledgor changing its
jurisdiction of organization or Location from the United States or a State
thereof to a jurisdiction of organization or Location, as the case may be,
outside the United States or a State thereof) if (i) it shall have given to the
Pledgee not less than fifteen (15) days’ prior written notice of each change to
the information listed on Annex A (as adjusted for any subsequent changes
thereto previously made in accordance with this sentence), and (ii) in
connection with such respective change or changes, it shall have taken all
action reasonably requested by the Pledgee to maintain the security interests of
the Pledgee in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect. In addition, to the extent that any
Pledgor does not have an organizational identification number on the date hereof
and later obtains one, such Pledgor shall promptly thereafter notify the Pledgee
of such organizational identification number and shall take all actions
reasonably satisfactory to the Pledgee to the extent necessary to maintain the
security interest of the Pledgee in the Collateral intended to be granted hereby
fully perfected and in full force and effect.

 

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18. PLEDGORS’ OBLIGATIONS ABSOLUTE, ETC. The obligations of each Pledgor under
this Agreement shall be absolute and unconditional and shall remain in full
force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by any circumstance or occurrence
whatsoever, including, without limitation: (i) any renewal, extension, amendment
or modification of or addition or supplement to or deletion from any Loan
Document or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof; (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such agreement
or instrument including, without limitation, this Agreement; (iii) any
furnishing of any additional security to the Pledgee or its assignee or any
acceptance thereof or any security by the Pledgee or its assignee; (iv) any
limitation on any party’s liability or obligations under any such instrument or
agreement or any invalidity or unenforceability, in whole or in part, of any
such instrument or agreement or any term thereof; or (v) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to any Pledgor or any Subsidiary of any Pledgor,
or any action taken with respect to this Agreement by any trustee or receiver,
or by any court, in any such proceeding, whether or not such Pledgor shall have
notice or knowledge of any of the foregoing.

19. PRIVATE SALES. If at any time when the Pledgee shall determine to exercise
its right to sell all or any part of the Collateral pursuant to Section 7
hereof, and the Collateral or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act, as then
in effect, the Pledgee may, in its sole and absolute discretion, sell such
Collateral, as the case may be, or part thereof by private sale in such manner
and under such circumstances as the Pledgee may deem necessary or advisable in
order that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Collateral or part thereof shall have been filed under such Securities Act,
(ii) may approach and negotiate with a single possible purchaser to effect such
sale, and (iii) may restrict such sale to a purchaser who will represent and
agree that such purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Collateral or part thereof.
In the event of any such sale, the Pledgee shall incur no responsibility or
liability for selling all or any part of the Collateral at a price which the
Pledgee, in its sole and absolute discretion, in good faith deems reasonable
under the circumstances, notwithstanding the possibility that a substantially
higher price might be realized if the sale were deferred until after
registration as aforesaid.

20. TERMINATION; RELEASE. (a) After the Termination Date, this Agreement and the
security interest created hereby shall automatically terminate (provided that
all indemnities set forth herein including, without limitation, in Section 11
hereof shall survive any such termination), and the Pledgee, at the request and
expense of such Pledgor, will execute and deliver to any Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
has not theretofore

 

19

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

been sold or otherwise applied or released pursuant to this Agreement, together
with any monies at the time held by the Pledgee or any of its sub-agents
hereunder and, with respect to any Collateral consisting of an Uncertificated
Security, Corporate Stock, Limited Partnership Interest or Limited Liability
Company Interest (other than an Uncertificated Security, Corporate Stock,
Limited Partnership Interest or Limited Liability Company Interest credited on
the books of a Clearing Corporation or Securities Intermediary), a termination
of the agreement relating thereto executed and delivered by the issuer of such
Uncertificated Security pursuant to Section 3.2(a)(ii) or by the respective
partnership or limited liability company pursuant to Section 3.2(a)(iv)(2). As
used in this Agreement, “Termination Date” shall mean the date upon which all
Commitments under the Credit Agreement have been terminated, no Note under the
Credit Agreement is outstanding and all Loans thereunder have been repaid in
full in accordance with the terms thereof, all Letters of Credit issued under
the Credit Agreement have been terminated, and all other Obligations then due
and payable have been paid in full in cash in accordance with the terms thereof.
In the event that any Subsidiary Guarantor is released from its Obligations
hereunder pursuant to Section 7.1.22 of the Credit Agreement, the Pledgee, at
the request and expense of such Subsidiary Guarantor, shall execute and deliver
an instrument acknowledging such Subsidiary Guarantor’s release from this
Agreement.

(b) In the event that any part of the Collateral is sold or otherwise disposed
of in connection with a sale or other disposition permitted by the Loan
Documents (other than a sale or other disposition to any Pledgor or any
Subsidiary thereof) or is otherwise released with the consent of the Required
Lenders and the proceeds of such other sale or disposition or from such release
are applied in accordance with the provisions of the Loan Documents to the
extent required to be so applied, the Pledgee, at the request and expense of the
respective Pledgor, will duly assign, transfer and deliver to such Pledgor
(without recourse and without any representation or warranty) such of the
Collateral (and releases therefore) as is then being (or has been) so sold or
released and has not theretofore been released pursuant to this Agreement.

(c) At any time that a Pledgor desires that the Pledgee assign, transfer and
deliver Collateral (and releases therefore) as provided in Section 20(a) or
(b) hereof, such Pledgor shall deliver to the Pledgee a certificate signed by an
authorized officer of such Pledgor stating that the release of the respective
Collateral is permitted pursuant to such Section 20(a) or (b).

(d) The Pledgee shall have no liability whatsoever to any other Secured Creditor
as the result of any release of Collateral by it in accordance with this
Section 20.

21. NOTICES, ETC. All notices and communications hereunder shall be in writing
and sent or delivered by mail, electronic mail, telegraph, telex, telecopy,
cable or overnight courier service and all such notices and communications
shall, when mailed, telegraphed, emailed, telexed, telecopied, or cabled or sent
by overnight courier, be effective when deposited in the mails, delivered to the
telegraph company, cable company or overnight courier, as the case may be, or
sent by telex or telecopier, except that notices and communications to the
Pledgee or any Pledgor shall not be effective until received by the Pledgee or
such Pledgor, as the case may be. All such notices and other communications
shall be in writing and addressed as follows:

 

  (a) if to any Pledgor, at:

Strategic Hotel Funding, L.L.C.

c/o Strategic Hotels & Resorts, Inc.

200 W. Madison, Suite 1700

Chicago, Illinois 60606

 

20

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

Attn: Chief Financial Officer & General Counsel

with copies to:

 

  (b) Strategic Hotel Funding, L.L.C.

c/o Strategic Hotels & Resorts, Inc.

200 W. Madison, Suite 1700

Chicago, Illinois 60606

Attn: Chief Financial Officer & General Counsel

and

Perkins Coie LLP

Suite 1700

131 South Dearborn Avenue

Chicago, Illinois 60603

Telephone No.: (312) 324-8650

Telecopier No.: (312) 324-9650

Attn: Bruce A. Bonjour

 

  (c) if to the Pledgee, at:

60 Wall Street

New York, New York 10005

Attn: James Rolison

Telephone No.: (212) 250-3352

Telecopier No.: (646) 324-7091

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Attn: Audrey L. Sokoloff

Telephone No.: (212) 735-2170

Telecopier No.: (917) 777-2170

 

21

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

(d) if to any Secured Creditor, at such address as such Secured Creditor shall
have specified in the Credit Agreement;

or at such other address or addressed to such other individual as shall have
been furnished in writing by any Person described above to the party required to
give notice hereunder.

22. WAIVER; AMENDMENT. Except as provided in Sections 20 and 30 hereof, none of
the terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by each Pledgor
directly affected thereby (it being understood that the addition or release of
any Pledgor hereunder shall not constitute a change, waiver, discharge or
termination affecting any Pledgor other than the Pledgor so added or released)
and the Pledgee (with the written consent of the Required Lenders).

23. MISCELLANEOUS. This Agreement shall and shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of and be enforceable by each of the parties hereto and their respective
successors and assigns, provided that no Pledgor may assign any of its rights or
obligations except in accordance with the terms of the other Loan Documents.

24. HEADINGS DESCRIPTIVE. The headings of the several Sections of this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.

25. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN
EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. EACH PLEDGOR HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH
PLEDGOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT IN ANY OF THE
AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH
PLEDGOR. EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
ANY SUCH PLEDGOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 21 ABOVE,
SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. EACH
PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF

 

22

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

PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT THAT
SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE PLEDGEE UNDER THIS AGREEMENT, OR ANY SECURED
CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY OTHER
JURISDICTION.

(b) EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.

(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

26. PLEDGOR’S DUTIES. It is expressly agreed, anything herein contained to the
contrary notwithstanding, that each Pledgor shall remain liable to perform all
of the obligations, if any, assumed by it with respect to the Collateral and the
issuer of Collateral and the Pledgee shall not have any obligations or
liabilities, except as expressly set forth herein, with respect to the
Collateral or the issuer of Collateral by reason of or arising out of this
Agreement, nor shall the Pledgee be required or obligated in any manner to
perform or fulfill any of the obligations of any Pledgor under or with respect
to any Collateral.

27. COUNTERPARTS. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with each Pledgor and the Pledgee.

28. SEVERABIILTY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

29. RECOURSE. This Agreement is made with full recourse to each Pledgor and
pursuant to and upon all the representations, warranties, covenants and
agreements on the part of such Pledgor contained herein and in the other Loan
Documents and otherwise in writing in connection herewith or therewith.

 

23

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

30. ADDITIONAL PLEDGORS. It is understood and agreed that any Subsidiary of the
Borrower that is required to execute a counterpart of this Agreement after the
date hereof pursuant to the Credit Agreement shall become a Pledgor hereunder by
(x) executing a counterpart hereof and delivering the same to the Pledgee,
(y) delivering supplements to Annexes A through D hereto as are necessary to
cause such annexes to be complete and accurate with respect to such additional
Pledgor on such date and (z) taking all actions as specified in this Agreement
as would have been taken by such Pledgor had it been an original party to this
Agreement, in each case with all documents required above to be delivered to the
Pledgee and with all documents and actions required above to be taken to the
reasonable satisfaction of the Pledgee.

31. LIMITED OBLIGATIONS. It is the desire and intent of each Pledgor and the
Secured Creditors that this Agreement shall be enforced against each Pledgor to
the fullest extent permissible under the laws applied in each jurisdiction in
which enforcement is sought.

32. RELEASE OF PLEDGORS. If at any time all of the Equity Interests of any
Pledgor are sold (to a Person other than the Borrower or a Subsidiary) in a
transaction permitted pursuant to the Loan Documents, such Pledgor shall be
released as a Pledgor pursuant to this Agreement without any further action
hereunder ((it being understood that the sale of all of the Equity Interests
(and all Collateral owned by such Pledgor shall be released from any liens on
the security interest granted hereunder)) in any Person that owns, directly or
indirectly, all of the Equity Interests in any Pledgor shall be deemed to be a
sale of all of the Equity Interests in such Pledgor for purposes of this
Section 32), and the Pledgee is authorized and directed to execute and deliver
such instruments of release as are reasonably satisfactory to it. If at any time
all of the Collateral of any Pledgor is sold (in a manner permitted under the
Loan Documents), such Pledgor will be released from any liens on the security
interest granted hereunder. At any time that the Borrower desires that a Pledgor
be released from this Agreement as provided in this Section 32, the Borrower
shall deliver to the Pledgee a certificate signed by an officer of the Borrower
stating that the release of such Pledgor is permitted pursuant to the terms of
the Credit Agreement and this Section 32 and including reasonable supporting
documentation with respect thereto. If requested by Pledgee (although the
Pledgee shall have no obligation to make any such request), the Borrower shall
furnish legal opinions (from counsel acceptable to the Pledgee) to the effect
set forth in the immediately preceding sentence. The Pledgee shall have no
liability whatsoever to any other Secured Creditor as a result of the release of
any Pledgor by it in accordance with, or which it believes to be in accordance
with, this Section 32.

* * * *

 

24

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

IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement to
be executed by their duly elected officers duly authorized as of the date first
above written.

 

PLEDGOR:

STRATEGIC HOTEL FUNDING, L.L.C., a Delaware

limited liability company

By:  

 

Name:   Jonathan P. Stanner Title:  
Vice President, Capital Markets, Acquisitions & Treasurer SHC DTRS, Inc., a
Delaware corporation By:  

 

Name:   Jonathan P. Stanner Title:   Vice President, Capital Markets,
Acquisitions & Treasurer

SHC HALF MOON BAY MEZZANINE LLC, a Delaware

limited liability company

By:  

 

Name:   Jonathan P. Stanner Title:   Vice President, Capital Markets,
Acquisitions & Treasurer

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

SHC LAGUNA, L.L.C., a Delaware limited liability company By:  

 

Name:   Jonathan P. Stanner Title:  
Vice President, Capital Markets, Acquisitions & Treasurer

 

Accepted and Agreed to: PLEDGEE: DEUTSCHE BANK TRUST AG NEW YORK BRANCH

By:  

 

Name:   Title:   By:  

 

Name:   Title:  

 

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

ANNEX A

to

PLEDGE AGREEMENT

ANNEX A

to

PLEDGE AGREEMENT

SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION

(AND WHETHER A REGISTERED ORGANIZATION AND/OR

A TRANSMITTING UTILITY), JURISDICTION OF ORGANIZATION,

LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS

 

Exact Legal

Name of Each

Pledgor

 

Registered

Organization?

(Yes/No)

 

Jurisdiction of
Organization

 

Pledgor’s Location
(for purposes of NY

UCC §9-307)

 

Pledgor’s

Organization

Identification

Number (or if it has

none, so indicate)

 

Transmitting

Utility?

(Yes/No)

Strategic Hotel Funding, L.L.C.

  Yes   Delaware   Delaware   2828390   No

SHC DTRS, Inc.

  Yes   Delaware   Delaware   3813595   No

SHC Half Moon Bay Mezzanine LLC

  Yes   Delaware   Delaware   3831674   No

SHC Laguna, L.L.C.

  Yes   Delaware   Delaware   4142968   No

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

ANNEX B

to

PLEDGE AGREEMENT

SCHEDULE OF LIMITED LIABILITY COMPANY INTERESTS

AND

LIMITED PARTNERSHIP INTERESTS

 

1. PLEDGOR

 

Name

of Issuing

Entity

   Type of
Interest    Certificate No.    Percentage
Owned   Certificated as
described in Sub-
clause of
Section 3.2(a)(i)
of Pledge
Agreement

1.      Strategic Hotel Funding, L.L.C.

          

SHC Lincolnshire LLC

   Membership    3    100%   Yes

SHC Half Moon Bay Mezzanine LLC

   Membership    4    100%   Yes

SHC Laguna, L.L.C.

   Membership    2    100%   Yes

SHR Jackson Hole, LLC

   Membership    1    100%   Yes

SHR Palo Alto, LLC

   Membership    1    100%   Yes

2.      SHC DTRS, Inc.

          

DTRS Lincolnshire, L.L.C.

   Membership    2    100%   Yes

DTRS Half Moon Bay, LLC

   Membership    4    100%   Yes

DTRS Laguna, L.L.C.

   Membership    2    100%   Yes

DTRS Jackson Hole, LLC

   Membership    1    100%   Yes

DTRS Palo Alto, LLC

   Membership    1    100%   Yes

3.      SHC Half Moon Bay Mezzanine LLC

          

SHC Half Moon Bay, LLC

   Membership    4    100%   Yes

4.      SHC Laguna, L.L.C.

          

SHC Laguna Niguel I LLC

   Membership    3    100%   Yes

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

ANNEX C

to

PLEDGE AGREEMENT

S SCHEDULE OF CORPORATE STOCK

1. PLEDGOR

 

Name of

Issuing

Corporation

   Type of
Shares    Number
of
Shares    Certificate No.    Percentage
Owned   Sub-clause of
Section
3.2(a)(i)
of Pledge
Agreement

1.      Strategic Hotel Funding, L.L.C.

             

SHC DTRS, Inc.

   Stock    100    1    100%   Yes

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

Annex D

to

PLEDGE AGREEMENT

Form of Agreement Regarding Uncertificated Securities, Limited Liability

Company Interests and Corporate Stock

AGREEMENT (as amended, modified or supplemented from time to time, this
“Agreement”), dated as of                     , among the undersigned pledgor
(the “Pledgor”), Deutsche Bank AG New York Branch, as lender (the “Pledgee”),
and                     , as the issuer of the [Uncertificated Securities]
[Limited Liability Company Interests] [Limited Partnership Interests] [Corporate
Stock] (defined below) (the “Issuer”).

W I T N E S S E T H :

WHEREAS, the Pledgor, certain of its affiliates and the Pledgee have entered
into a Pledge Agreement, dated as of April     , 2014 (as amended, modified or
supplemented from time to time, the “Pledge Agreement”), under which, among
other things, in order to secure the payment of the Obligations (as defined in
the Pledge Agreement), the Pledgor will pledge to the Pledgee, and grant a
security interest in favor of the Pledgee in, all of the right, title and
interest of the Pledgor in and to any and [all “uncertificated securities” (as
defined in Section 8-102(a)(18) of the Uniform Commercial Code, as adopted in
the State of New York) (“Uncertificated Securities”)] [Corporate Stock (as
defined in the Pledge Agreement)] [Limited Liability Company Interests (as
defined in the Pledge Agreement)] [Limited Partnership Interests (as defined in
the Pledge Agreement)] issued from time to time by the Issuer, whether now
existing or hereafter from time to time acquired by the Pledgor (with all of
such [Uncertificated Securities] [Corporate Stock] [Limited Liability Company
Interests] [Limited Partnership Interests] being herein collectively called the
“Issuer Pledged Interests”); and

WHEREAS, the Pledgor desires the Issuer to enter into this Agreement in order to
protect the security interest of the Pledgee under the Pledge Agreement in the
Issuer Pledged Interests, to vest in the Pledgee control of the Issuer Pledged
Interests and to provide for the rights of the parties under this Agreement;

NOW THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

1. The Pledgor hereby irrevocably authorizes and directs the Issuer, and the
Issuer hereby agrees, to comply with any and all instructions and orders
originated by the Pledgee (and its successors and assigns) regarding any and all
of the Issuer Pledged Interests without the further consent by the registered
owner (including the Pledgor), and, after receiving a notice from the Pledgee
stating that an “Event of Default” has occurred and is continuing (i) not

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

ANNEX D

Page 2

 

to comply with any instructions or orders regarding any or all of the Issuer
Pledged Interests originated by any person or entity other than the Pledgee (and
its successors and assigns) or a court of competent jurisdiction and (ii) the
Issuer will send any and all redemptions, distributions, interest or other
payments in respect of the Issuer Pledged Interests from the Issuer for the
account of the Pledgor only by wire transfers to such account as may be directed
by Pledgee.

2. The Issuer hereby certifies that (i) no notice of any security interest, lien
or other encumbrance or claim affecting the Issuer Pledged Interests (other than
the security interest of the Pledgee) has been received by it, and (ii) the
security interest of the Pledgee in the Issuer Pledged Interests has been
registered in the books and records of the Issuer.

3. The Issuer hereby represents and warrants that (i) the pledge by the Pledgor
of, and the granting by the Pledgor of a security interest in, the Issuer
Pledged Interests to the Pledgee does not violate the charter, by-laws,
partnership agreement, membership agreement or any other agreement governing the
Issuer or the Issuer Pledged Interests, and (ii) the Issuer Pledged Interests
are fully paid and nonassessable.

4. All notices, statements of accounts, reports, prospectuses, financial
statements and other communications to be sent to the Pledgor by the Issuer in
respect of the Issuer will also be sent to the Pledgee at the following address:

60 Wall Street

New York, New York 10005

Attention: James Rolison

Telephone No.: (212) 250-3352

Telecopier No.: (646) 324-7091

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Attention: Audrey L. Sokoloff

Telephone No.: (212) 735-2170

Telecopier No.: (917) 777-2170

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

ANNEX D

Page 3

 

5. Except as expressly provided otherwise in Sections 4 above, all notices shall
be sent or delivered by mail, electronic mail, telegraph, telex, telecopy, cable
or overnight courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier, except that notices and communications to the Pledgee, the
Pledgor or the Issuer shall not be effective until received by the Pledgee, the
Pledgor or the Issuer, as the case may be. All notices and other communications
shall be in writing and addressed as follows:

 

(a) if to the Pledgor, at:

Strategic Hotel Funding, L.L.C.

200 W. Madison, Suite 1700

Chicago, IL 60606

Attn: Chief Financial Officer and General Counsel

with copies to:

Strategic Hotel Funding, L.L.C.

200 W. Madison, Suite 1700

Chicago, IL 60606

Attn: Chief Financial Officer and General Counsel

and

Perkins Coie LLP

Suite 1700

131 South Dearborn Avenue

Chicago, Illinois 60603

Telephone No.: (312) 324-8650

Telecopier No.: (312) 324-9650

Attn: Bruce A. Bonjour

 

(b) if to the Pledgee, at:

60 Wall Street

New York, New York 10005

Attention: James Rolison

Telephone No.: (212) 250-3352

Telecopier No.: (646) 324-7091

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Attention: Audrey L. Sokoloff

Telephone No.: (212) 735-2170

Telecopier No.: (917) 777-2170

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

ANNEX D

Page 4

 

(c) if to the Issuer, at:

Strategic Hotel Funding, L.L.C.

200 W. Madison, Suite 1700

Chicago, IL 60606

Attn: Chief Financial Officer and General Counsel

with copies to:

Strategic Hotel Funding, L.L.C.

200 W. Madison, Suite 1700

Chicago, IL 60606

Attn: Chief Financial Officer and General Counsel

and

Perkins Coie LLP

Suite 1700

131 South Dearborn Avenue

Chicago, Illinois 60603

Telephone No.: (312) 324-8650

Telecopier No.: (312) 324-9650

Attn: Bruce A. Bonjour

or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, “Business Day” means any day other than a Saturday, Sunday, or other
day in which banks in New York are authorized to remain closed.

6. This Agreement shall be binding upon the successors and assigns of the
Pledgor and the Issuer and shall inure to the benefit of and be enforceable by
the Pledgee and its successors and assigns. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one instrument. In the event that any provision of this
Agreement shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Agreement which shall
remain binding on all parties hereto. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in the manner whatsoever
except in writing signed by the Pledgee, the Issuer and the Pledgor.

7. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to its principles of conflict of laws.

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

ANNEX D

Page 5

 

IN WITNESS WHEREOF, the Pledgor, the Pledgee and the Issuer have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.

 

[                                         ],

   as Pledgor

By  

 

Name:   Title:   DEUTSCHE BANK TRUST AG NEW YORK BRANCH, as Pledgee By  

 

Name:   Title:  

[                                         ],

   as Issuer

By  

 

Name:   Title:  

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

ANNEX D

Page 1

TABLE OF CONTENTS

 

          Page

1.      

   SECURITY FOR OBLIGATIONS    2

2.      

   DEFINITIONS    2

3.      

   PLEDGE OF SECURITIES, ETC.    6   

3.1      Pledge

   6   

3.2      Procedures

   8   

3.3      Subsequently Acquired Collateral

   10   

3.4      Transfer Taxes

   10   

3.5      Certain Representations and Warranties Regarding the Collateral

   10

4.      

   APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC.    11

5.      

   VOTING, ETC., WHILE NO EVENT OF DEFAULT    11

6.      

   DIVIDENDS AND OTHER DISTRIBUTIONS    11

7.      

   REMEDIES IN CASE OF AN EVENT OF DEFAULT    12

8.      

   REMEDIES, CUMULATIVE, ETC.    13

9.      

   APPLICATION OF PROCEEDS    14

10.    

   PURCHASERS OF COLLATERAL    15

11.    

   INDEMNITY    15

12.    

   PLEDGEE NOT AN OFFICER, LIMITED LIABILITY COMPANY MEMBER OR LIMITED PARTNER.
   16

13.    

   FURTHER ASSURANCES; POWER-OF-ATTORNEY    16

14.    

   THE PLEDGEE    17

15.    

   TRANSFER BY THE PLEDGORS; ORGANIZATIONAL DOCUMENTS    17

16.    

   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS    17

17.    

  

CHANGES TO LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED
ORGANIZATION AND/OR A TRANSMITTING UTILITY); JURISDICTION OF ORGANIZATION;
LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; CHANGES THERETO; ETC.

   18

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ANNEX D

Page 2

 

18.    

   PLEDGORS’ OBLIGATIONS ABSOLUTE, ETC.    19

19.    

   PRIVATE SALES    19

20.    

   TERMINATION; RELEASE    19

21.    

   NOTICES, ETC.    20

22.    

   WAIVER; AMENDMENT    22

23.    

   MISCELLANEOUS    22

24.    

   HEADINGS DESCRIPTIVE    22

25.    

   GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL    22

26.    

   PLEDGOR’S DUTIES    23

27.    

   COUNTERPARTS    23

28.    

   SEVERABIILTY    23

29.    

   RECOURSE    23

30.    

   ADDITIONAL PLEDGORS    24

31.    

   LIMITED OBLIGATIONS    24

32.    

   RELEASE OF PLEDGORS    24

 

ANNEX A    -    SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION, JURISDICTION OF
ORGANIZATION, LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS ANNEX B    -   
SCHEDULE OF LIMITED LIABILITY COMPANY INTERESTS AND LIMITED PARTNERSHIP
INTERESTS ANNEX C    -    SCHEDULE OF CORPORATE STOCK ANNEX D    -    FORM OF
AGREEMENT REGARDING UNCERTIFICATED SECURITIES, LIMITED LIABILITY COMPANY
INTERESTS, LIMITED PARTNERSHIP INTERESTS AND CORPORATE STOCK

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Exhibit H-1

Form of Guaranty

[See attached]

 

H-1 - 1

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GUARANTY

THIS GUARANTY, dated as of April [    ], 2014 (as amended, modified, or
supplemented from time to time, this “Guaranty”), is made by Strategic Hotels &
Resorts, Inc., a Maryland corporation (“Guarantor”) to and for the benefit of
the “Secured Creditors” (as defined herein). Except as otherwise defined herein,
terms used herein and defined in the Credit Agreement (as defined below) shall
be used herein as therein defined.

W I T N E S S E T H:

WHEREAS, Strategic Hotel Funding, L.L.C. (“Borrower”), the lenders from time to
time party thereto (“Lenders”), Deutsche Bank AG New York Branch, as
administrative agent (“Administrative Agent,” and together with the Issuer, the
Lenders and each Person (other than Borrower, Guarantor or any Subsidiary of
either) party to a Credit Hedging Agreement or a Pari-Pasu Hedging Agreement, to
the extent such party is a Lender or any affiliate thereof (even if such Lender
subsequently ceases to be a Lender under the Credit Agreement for any reason),
and their subsequent successors and assigns, the “Secured Creditors”) have
entered into a Credit Agreement, dated as of April [    ], 2014 (as amended,
modified, or supplemented from time to time, the “Credit Agreement”);

WHEREAS, Guarantor is the owner of a direct or indirect beneficial interest in
the Borrower, will obtain material direct and indirect benefits from the
extensions of credit to Borrower under the Credit Agreement and the entering
into of Credit Hedging Agreements by Secured Creditors and Pari-Pasu Hedging
Agreements by the Lenders and the Pari-Pasu Hedging Counterparties;

WHEREAS, in order to induce the Lenders to enter into the Credit Agreement and
to extend credit thereunder, and as a condition thereto, to induce the Lenders
or any of their respective Affiliates to enter into Credit Hedging Agreements
and Pari Pasu Hedging Agreements, and in recognition of the direct and indirect
benefits to be received by Guarantor from the proceeds of the Loans, the
issuance of the Letters of Credit and the entering into of Credit Hedging
Agreements and Pari-Pasu Hedging Agreements, Guarantor desires to execute this
Guaranty;

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

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
Guarantor, the receipt and sufficiency of which are hereby acknowledged,
Guarantor hereby makes the following representations and warranties to the
Secured Creditors and hereby covenants and agrees with each Secured Creditor as
follows:

 

1. Guarantor hereby absolutely irrevocably and unconditionally guarantees:

(a) to the Secured Creditors the full, prompt and unconditional payment when due
(whether at the stated maturity, by acceleration or otherwise) of (i) the
principal of and interest on the Revolving Notes issued to, the Loans made to,
any additional Revolving Loan Commitments made to, and the issuance of Letters
of Credit for the account of, Borrower under the Credit Agreement,(ii) all other
obligations (including obligations which, but for any automatic stay under
Section 362(a) of Title 11 of the United States Code, entitled “Bankruptcy”, as
amended from time to time and any successor statute or statutes (the “Bankruptcy
Code”), would become due) and liabilities owing by Borrower to the Secured
Creditors under the Credit Agreement and the Loan Documents referred to therein
(including, without limitation, indemnities, fees, and interest thereon) now
existing or hereafter incurred under, arising out of or in connection with the
Credit Agreement or any other Loan Document, and the due performance and
compliance with the terms of the Loan Documents, (iii) all obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) and liabilities of Borrower and
Guarantor, whether now in existence or hereunder arising, owing under any Credit
Hedging Agreement entered into by Borrower or Guarantor with any Lender or any
affiliate thereof (even if such Lender subsequently ceases to be a Lender under
the Credit Agreement for any reason) so long as such Lender or affiliate
participates in such Credit Hedging Agreement, and their subsequent assigns, if
any, and the due performance and compliance with all terms, conditions and
agreements contained therein and (iv) all obligations (including obligations
which, but for the automatic stay under Section 362(a) of the Bankruptcy Code,
would become due) and liabilities of Borrower, whether now in existence or
hereunder arising, owing under any Pari-Pasu Hedging Agreement entered into by
Borrower or Guarantor with any Counterparty or any affiliate thereof so long as
such Counterparty or affiliate participates in such Pari-Pasu Hedging Agreement,
and their subsequent assigns, if any, and the due performance and compliance
with all terms, conditions and agreements contained therein (all such principal,
interest, liabilities, and obligations, the “Guaranteed Obligations”).

This Guaranty shall constitute a guaranty of payment, and not of collection and
upon any failure of Borrower to pay the Guaranteed Obligations, the Secured
Creditors may, at their option, proceed directly and at once, without notice,
against Guarantor to collect and recover the full amount of the liability to pay
the Guaranteed Obligations hereunder or any portion thereof, without proceeding
against Borrower or any other Person, or foreclosing upon, selling, or otherwise
disposing of or collecting or applying against any of the collateral for the
Loans.

 

2. Additionally, Guarantor, absolutely, unconditionally and irrevocably,
guarantees the payment of any and all Guaranteed Obligations whether or not due
or payable by Borrower upon the occurrence in respect of Borrower of any of the
events specified in Section 8.1.9 of the Credit Agreement, and absolutely,
unconditionally and irrevocably promises to pay such Guaranteed Obligations to
the Secured Creditors, on demand, in lawful money of the United States.

 

2

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3. The liability of Guarantor hereunder is exclusive and independent of any
security for or other guaranty of the indebtedness of Borrower whether executed
by the Guarantor, any other guarantor, Borrower, or by any other party, and the
liability of Guarantor hereunder shall not be affected or impaired by (a) any
direction as to application of payment by Borrower or by any other party,
(b) any other continuing or other guaranty, undertaking or maximum liability of
a guarantor or of any other party as to the indebtedness of Borrower, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination, or increase, decrease, or change in personnel by
Borrower, or (e) any payment made to any Secured Creditor on the indebtedness
which any Secured Creditor repays to Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium, or other debtor relief
proceeding, and Guarantor waives any right to the deferral or modification of
its obligations hereunder by reason of any such proceeding.

 

4. The obligations of Guarantor hereunder are independent of the obligations of
any other guarantor or Borrower, and a separate action or actions may be brought
and prosecuted against Guarantor whether or not action is brought against any
other guarantor or Borrower and whether or not any other guarantor of Borrower
or Borrower be joined in any such action or actions.

 

5. Guarantor hereby waives notice of acceptance of this Guaranty and notice of
any liability to which it may apply, and waives notices of the existence,
creation, or incurring of additional Indebtedness, promptness, diligence,
presentment, demand for performance, notice of non-performance, demand of
payment, notice of intention to accelerate, notice of acceleration, protest,
notice of dishonor or nonpayment of any such liabilities, suit or taking of
other action by Administrative Agent or any other Secured Creditor against, and
any other notice to, any party liable thereon (including Guarantor or any other
guarantor of Borrower).

 

6. Any Secured Creditor may at any time and from time to time without the
consent of, or notice to, Guarantor, without incurring responsibility to the
Guarantor, without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

 

  (a) change the manner, place, or terms of payment of, and/or change or extend
the time of payment of, renew, or alter, any of the Guaranteed Obligations, any
security therefor, or any liability incurred directly or indirectly in respect
thereof, and the guaranty herein made shall apply to the Guaranteed Obligations
as so changed, extended, renewed, or altered;

 

  (b) sell, exchange, release, surrender, realize upon, or otherwise deal with
in any manner and in any order any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof, and/or any offset there against;

 

3

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  (c) exercise or refrain from exercising any rights against Borrower, any other
guarantor, or others or otherwise act or refrain from acting;

 

  (d) settle or compromise any of the Guaranteed Obligations, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or not) of
Borrower to creditors of such Borrower (other than the Secured Creditors );

 

  (e) apply any sums by whomsoever paid or howsoever realized to any liability
or liabilities of Borrower to the Secured Creditors regardless of what
liabilities of such Borrower remain unpaid;

 

  (f) consent to or waive any breach of, or any act, omission or default under,
any of the Loan Documents or any of the instruments or agreements referred to
therein, or otherwise amend, modify, or supplement any of the Loan Documents or
any of such other instruments or agreements; and/or

 

  (g) act or fail to act in any manner referred to in this Guaranty which may
deprive the Guarantor of its right to subrogation against Borrower to recover
full indemnity for any payments made pursuant to this Guaranty.

 

7. No invalidity, irregularity, or unenforceability of all or any part of the
Guaranteed Obligations or of any security therefor shall affect, impair, or be a
defense to this Guaranty, and this Guaranty shall be primary, absolute, and
unconditional notwithstanding the occurrence of any event or the existence of
any other circumstances which might constitute a legal or equitable discharge of
a surety or guarantor except payment in full of the Guaranteed Obligations.

 

8.

This Guaranty is a continuing one and all liabilities to which it applies or may
apply under the terms hereof shall be conclusively presumed to have been created
in reliance hereon. No failure or delay on the part of any Secured Creditor in
exercising any right, power, or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Secured Creditor would otherwise have. No notice to or demand on
Guarantor in any case shall entitle Guarantor to any other further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
any Secured Creditor to any other or further action in any circumstances without
notice or demand. It is not necessary for any Secured Creditor to inquire into
the capacity or powers of Borrower or

 

4

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  any of its Subsidiaries or the officers, directors, partners, or agents acting
or purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

 

9. Any Indebtedness of Borrower to Guarantor now or hereafter existing,
including, without limitation, any rights to subrogation which Guarantor may
have as a result of any payment by Guarantor under this Guaranty, together with
any interest thereon, shall be, and such Indebtedness is, hereby deferred,
postponed and subordinated to the prior payment in full of the Guaranteed
Obligations. Until payment in full of the Guaranteed Obligations, including
interest accruing on the Revolving Notes after the commencement of a proceeding
by or against Borrower under the Bankruptcy Code which interest the parties
agree shall remain a claim that is prior and superior to any claim of Guarantor
notwithstanding any contrary practice, custom or ruling in cases under the
Bankruptcy Code generally, Guarantor agrees not to accept any payment or
satisfaction of any kind of Indebtedness of Borrower to Guarantor and hereby
assigns such Indebtedness to the Administrative Agent, including the right to
file proof of claim and to vote thereon in connection with any such proceeding
under the Bankruptcy Code, including the right to vote on any plan of
reorganization.

 

10. Guarantor:

(a) hereby waives any right (except as shall be required by applicable statute
and cannot be waived) to require the Secured Creditors to: (i) proceed against
Borrower, any other guarantor of Borrower, or any other party; (ii) proceed
against or exhaust any security held from Borrower, any other guarantor of
Borrower, or any other party; or (iii) pursue any other remedy in the Secured
Creditors’ power whatsoever. Guarantor waives any defense based on or arising
out of any defense of Borrower, any other guarantor of Borrower, or any other
party other than payment in full of the Guaranteed Obligations, including,
without limitation, any defense based on or arising out of the disability of
Borrower, any other guarantor of Borrower, or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of Borrower other than
payment in full of the Guaranteed Obligations of Borrower. The Secured Creditors
may, at their election, foreclose on any security held by the Administrative
Agent or the other Secured Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Secured Creditors may have against Borrower or any other
party, or any security, without affecting or impairing in any way the liability
of Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. Guarantor waives any defense arising out of any such election by
the Administrative Agent and/or any other Secured Creditors, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of the Guarantor against Borrower, any
other guarantor of Borrower, or any other party or any security.

 

5

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(b) assumes all responsibility for being and keeping itself informed of
Borrower’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope, and extent of the risks which Guarantor assumes and incurs
hereunder, and agrees that the Secured Creditors shall have no duty to advise
Guarantor of information known to them regarding such circumstances or risks.

 

11. If and to the extent that Guarantor makes any payment to any Secured
Creditor or to any other Person pursuant to or in respect of this Guaranty, then
any claim which Guarantor may have against Borrower by reason thereof shall be
subject and subordinate to the prior payment in full of the Guaranteed
Obligations to each Secured Creditor. Prior to the transfer by Guarantor of any
note or negotiable instrument evidencing any Indebtedness of Borrower to
Guarantor, Guarantor shall mark such note or negotiable instrument with a legend
that the same is subject to this subordination.

 

12. Guarantor covenants and agrees that on and after the date hereof and until
the Commitments under the Credit Agreement have been terminated and all
Guaranteed Obligations have been paid in full, Guarantor shall take, or will
refrain from taking, as the case may be, all actions that are necessary to be
taken or not taken so that no Event of Default is caused by the actions of
Guarantor or any of its Subsidiaries.

 

13. Guarantor hereby agrees to pay, to the extent not paid by Borrower pursuant
to Section 10.3 of the Credit Agreement, all out-of-pocket costs and expenses
(including, without limitation, the reasonable fees and disbursements of
counsel) of each Secured Creditor in connection with the enforcement of this
Guaranty or the collection of the Guaranteed Obligations and in connection with
any amendment, waiver, or consent relating to this Guaranty.

 

14. This Guaranty shall be binding upon Guarantor and its successors and assigns
and shall inure to the benefit of the Secured Creditors and their successors and
assigns to the extent permitted under the Credit Agreement.

 

15. Neither this Guaranty nor any provision hereof may be changed, waived,
discharged or terminated except with the written consent of the Required Lenders
(or to the extent required by Section 10.1 of the Credit Agreement, each Lender,
as the case may be) and Guarantor affected thereby (it being understood that the
addition or release of Guarantor hereunder shall not constitute a change,
waiver, discharge or termination affecting any Guarantor other than the
Guarantor so added or released).

 

16. Guarantor acknowledges that an executed (or conformed) copy of each of the
Loan Documents has been made available to its principal executive officers and
such officers are familiar with the contents thereof.

 

6

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17. In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence and during the
continuance of an Event of Default, each Secured Creditor is hereby authorized,
at any time or from time to time, without notice to Guarantor or to any other
Person, any such notice being expressly waived, to set off and to appropriate
and apply any and all deposits (general or special) and any other indebtedness
at any time held or owing by such Secured Creditor to or for the credit or the
account of Guarantor, against and on account of the obligations and liabilities
of Guarantor to such Secured Creditor under this Guaranty, irrespective of
whether or not such Secured Creditor shall have made any demand hereunder;
provided that said obligations, liabilities, deposits, or claims, or any of
them, shall be then due and owing. Each Secured Creditor agrees to promptly
notify Guarantor after any such set off and application, provided that the
failure to give such notice shall not affect the validity of such set off and
application.

 

18. All notices, requests, demands, or other communications provided for
hereunder made in writing (including communications by facsimile transmission)
shall be deemed to have been duly given or made when delivered to the Person to
which such notice, request, demand, or other communication is required or
permitted to be given or made under this Guaranty, addressed to such party
(i) in the case of any Secured Creditor, as provided in the Credit Agreement and
(ii) in the case of Guarantor, at its address set forth in Schedule I to this
Guaranty.

 

19. Guarantor hereby agrees that if at any time all or any part of any payment
at any time received by a Secured Creditor from the Borrower under any of the
Revolving Notes or other Loan Documents or from Guarantor under or with respect
to this Guaranty is or must be rescinded or returned by such Secured Creditor
for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Borrower or Guarantor), then Guarantor’s
obligations hereunder shall, to the extent of the payment rescinded or returned,
be deemed to have continued in existence notwithstanding such previous receipt
by such Secured Creditor, and Guarantor’s obligations hereunder shall continue
to be effective or reinstated, as the case may be, as to such payment, as though
such previous payment to the Secured Creditor had never been made. In addition,
if any court of competent jurisdiction determines that the incurrence by
Guarantor of its obligations under this Guaranty or the payment by Guarantor of
its obligations hereunder is or would be voidable as a fraudulent transfer or
conveyance under Section 548 of the Bankruptcy Code, any analogous state law, or
any other law relating to debtor protection or creditors’ rights, the obligation
of Guarantor hereunder shall automatically be reduced to the maximum amount (if
any) of the obligation that Guarantor could incur or pay without such incurrence
or payment being subject to avoidance as a fraudulent transfer or conveyance.

 

20.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. GUARANTOR AGREES THAT ANY
SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO

 

7

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  THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY
SUCH SUIT BEING MADE UPON GUARANTOR IN THE MANNER AND AT THE ADDRESS SPECIFIED
FOR NOTICES IN THIS AGREEMENT. GUARANTOR HEREBY WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT
SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

(b) JURY TRIAL WAIVER. GUARANTOR AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER
IT, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT
PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF EACH GUARANTOR IN
CONNECTION HEREWITH OR THEREWITH. GUARANTOR AND ALL PERSONS CLAIMING BY, THROUGH
OR UNDER IT, ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENTS, THE LENDERS, AND THE ISSUER ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.

(c) MARSHALING. GUARANTOR WAIVES ANY RIGHT OR CLAIM OF RIGHT TO CAUSE A
MARSHALING OF BORROWER’S ASSETS OR TO CAUSE ANY SECURED CREDITOR TO PROCEED
AGAINST ANY OF THE SECURITY FOR THE LOAN BEFORE PROCEEDING UNDER THIS AGREEMENT
AGAINST BORROWER OR TO PROCEED AGAINST GUARANTOR IN ANY PARTICULAR ORDER.
GUARANTOR AGREES THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL BECOME
DUE AND PAYABLE TEN (10) DAYS AFTER DEMAND. GUARANTOR EXPRESSLY WAIVES AND
RELINQUISHES ALL RIGHTS AND REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION)
ACCORDED BY APPLICABLE LAW TO GUARANTOR.

(d) Special California Waivers. In the event that (and only in the event that)
any court of competent jurisdiction determines that the laws of the State of
California are applicable in any respect to the interpretation or enforcement of
all or any portion this Agreement then the terms and provisions of this
subsection (d) shall apply.

 

8

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  (i) To the extent permitted by law, Guarantor hereby waives and agrees not to
assert or take advantage of:

 

  (1) Any defense based upon any Lender’s election of any remedy against
Guarantor, including, without limitation, the defense to enforcement of this
Agreement (the “Gradsky” defense based upon Union Bank v. Gradsky, 265 Cal. App.
2d 40 (1968) or subsequent cases) which, absent this waiver, Guarantor would
have by virtue of an election by such Lender to conduct a non-judicial
foreclosure sale of the Property, it being understood by Guarantor that any such
non-judicial foreclosure sale will destroy, by operation of California Code of
Civil Procedure Section 580d, all rights of any party to a deficiency judgment
against the Borrower, and, as a consequence, will destroy all rights which
Guarantor would otherwise have (including, without limitation, the right of
subrogation, the right of reimbursement, and the right of contribution) to
proceed against the Borrower and to recover any such amount, and that such
Lender could be otherwise estopped from pursuing Guarantor for a deficiency
judgment after a non-judicial foreclosure sale on the theory that a obligor
should be exonerated if a lender elects a remedy that eliminates the obligor’s
subrogation, reimbursement or contribution rights;

 

  (2) Any rights under California Code of Civil Procedure Sections 580a and
726(b), which provide, among other things: that a creditor must file a complaint
for deficiency within three (3) months of a nonjudicial foreclosure sale or
judicial foreclosure sale, as applicable; that a fair market value hearing must
be held; and that the amount of the deficiency judgment shall be limited to the
amount by which the unpaid debt exceeds the fair market value of the security,
but not more than the amount by which the unpaid debt exceeds the sale price of
the security; and

 

  (3) Without limiting the generality of the foregoing or any other provision
hereof, Guarantor expressly waives any and all benefits which might otherwise be
available to Guarantor under California Civil Code Sections 2787 to 2855,
inclusive, 2899 and 3433 and California Code of Civil Procedure Sections 580a,
580b, 580d and 726, or any of such sections.

(e) Waiver Pursuant to California Civil Code Section 2856. In addition to all
the other waivers agreed to and made by Guarantor as set forth in this Guaranty,
and pursuant to the provisions of California Civil Code Section 2856, Guarantor
hereby waives all rights and defenses that Guarantor may have because the
debtor’s debt is secured directly or indirectly by real property. This means,
among other things:

 

  (i) The creditor may collect from Guarantor without first foreclosing on any
real or personal property collateral pledged by the debtor.

 

9

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  (ii) If the creditor forecloses on any collateral pledged by the debtor that
is in the form of interests in real property:

 

  (1) The amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price; and

 

  (2) The creditor may collect from Guarantor even if the creditor, by
foreclosing on the collateral, has destroyed any right Guarantor may have to
collect from the debtor.

This is an unconditional and irrevocable waiver of any rights and defenses
Guarantor may have because the debtor’s debt is secured directly or indirectly
by real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Sections 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.

Guarantor further hereby waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed Guarantor’s rights of subrogation and reimbursement
against the principal by the operation of Section 580d of the California Code of
Civil Procedure or otherwise.

 

21. The Secured Creditors agree that this Guaranty may be enforced only by the
action of Administrative Agent acting upon the instructions of the Required
Lenders and until the Credit Agreement is terminated, no other Secured Creditor
shall have any right individually to seek to enforce or to enforce this
Guaranty, it being understood and agreed that such rights and remedies may be
exercised by Administrative Agent for the benefit of the Secured Creditors upon
the terms of this Guaranty.

 

22. This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.

 

23. THIS GUARANTY AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

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24. Except with respect to Section 19 hereof, upon repayment in full of the
Guaranteed Obligations, this Guaranty shall automatically terminate and cease to
be of any further force or effect.

[Remainder of page intentionally left blank. Signature pages follow.]

 

11

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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed and
delivered as of the date first above written.

 

STRATEGIC HOTELS & RESORTS, INC., a Maryland corporation By:  

 

Name:   Jonathan P. Stanner Title:  
Vice President, Capital Markets, Acquisitions & Treasurer

 

12

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Accepted and Agreed to: DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative
Agent for the Lenders By:  

 

Name:   Title:   By:  

 

Name:   Title:  

 

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SCHEDULE I

NOTICE

c/o Strategic Hotels & Resorts, Inc.

200 W. Madison, Suite 1700

Chicago Illinois 60606

Attention: Treasurer and

General Counsel

 

1

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Exhibit H-2

Form of Subsidiary Guaranty and Joinder

[See attached]

 

H-2 - 1

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SUBSIDIARY GUARANTY

THIS SUBSIDIARY GUARANTY, dated as of April [    ], 2014 (as amended, modified,
or supplemented from time to time, this “Guaranty”), is made by each of the
undersigned (each, a “Guarantor” and together with any other entity that becomes
a party hereto pursuant to Section 23 hereof, collectively, the “Guarantors”) to
and for the benefit of the “Secured Creditors” (as defined herein). Except as
otherwise defined herein, terms used herein and defined in the Credit Agreement
(as defined below) shall be used herein as therein defined.

W I T N E S S E T H:

WHEREAS, Strategic Hotel Funding, L.L.C. (“Borrower”), the lenders from time to
time party thereto (“Lenders”) and Deutsche Bank AG New York Branch, as
administrative agent (“Administrative Agent”, and together with the Issuer, the
Lenders and each Person (other than Borrower, Strategic Hotels & Resorts, Inc.
or any Subsidiary of either) party to a Credit Hedging Agreement or a Pari-Pasu
Hedging Agreement, to the extent such party is a Lender or any affiliate
thereof, and their subsequent successors and assigns, the “Secured Creditors”)
have entered into a Credit Agreement, dated as of April [__], 2014 (as amended,
modified, or supplemented from time to time, the “Credit Agreement”);

WHEREAS, each Guarantor is a Subsidiary of Borrower;

WHEREAS, it is a condition to the extensions of credit under the Credit
Agreement that each Guarantor shall have executed and delivered this Guaranty;
and

WHEREAS, each Guarantor will obtain material direct and indirect benefits from
the extensions of credit to Borrower under the Credit Agreement and the entering
into of Credit Hedging Agreements by the Secured Creditors and Pari-Pasu Hedging
Agreements by the Lenders and the Pari-Pasu Hedging Counterparties and,
accordingly, desires to execute this Guaranty in order to satisfy the conditions
described in the preceding paragraph;

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
each Guarantor, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor hereby makes the following representations and warranties to the
Secured Creditors and hereby covenants and agrees with each Secured Creditor as
follows:

 

1. Each Guarantor hereby absolutely, irrevocably and unconditionally, and
jointly and severally, guarantees:

(a) to the Secured Creditors the full, prompt and unconditional payment when due
(whether at the stated maturity, by acceleration or otherwise) of (i) the
principal of and interest on the Revolving Notes issued to, the Loans made to,
any additional Revolving Loan Commitments made to, and the issuance of Letters
of Credit for the account of, Borrower under the Credit Agreement, (ii) all
other obligations (including obligations

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which, but for any automatic stay under Section 362(a)of Title 11 of the United
States Code, entitled “Bankruptcy”, as amended from time to time and any
successor statute or statutes (the “Bankruptcy Code”), would become due) and
liabilities owing by Borrower to the Secured Creditors under the Credit
Agreement and the Loan Documents referred to therein (including, without
limitation, indemnities, fees, and interest thereon) now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement or any
other Loan Document, and the due performance and compliance with the terms of
the Loan Documents, (iii) all obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities of Borrower, whether now in existence or hereunder arising,
owing under any Credit Hedging Agreement entered into by Borrower or Strategic
Hotels & Resorts, Inc. with any Lender or any affiliate thereof so long as such
Lender or affiliate participates in such Credit Hedging Agreement, and their
subsequent assigns, if any, and the due performance and compliance with all
terms, conditions and agreements contained therein and (iv) all obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) and liabilities of Borrower, whether now
in existence or hereunder arising, owing under any Pari-Pasu Hedging Agreement
entered into by Borrower or Strategic Hotels & Resorts, Inc. with any
Counterparty or any affiliate thereof so long as such Counterparty or affiliate
participates in such Pari-Pasu Hedging Agreement, and their subsequent assigns,
if any, and the due performance and compliance with all terms, conditions and
agreements contained therein (all such principal, interest, liabilities, and
obligations, the “Guaranteed Obligations”).

This Guaranty shall constitute a guaranty of payment, and not of collection and
upon any failure of Borrower to pay the Guaranteed Obligations, the Secured
Creditors may, at their option, proceed directly and at once, without notice,
against Guarantor to collect and recover the full amount of the liability to pay
the Guaranteed Obligations hereunder or any portion thereof, without proceeding
against Borrower or any other Person, or foreclosing upon, selling, or otherwise
disposing of or collecting or applying against any of the collateral for the
Loans.

 

2. Additionally, each Guarantor jointly and severally, unconditionally and
irrevocably, guarantees the payment of any and all Guaranteed Obligations
whether or not due or payable by Borrower upon the occurrence in respect of
Borrower of any of the events specified in Section 8.1.9 of the Credit
Agreement, and unconditionally and irrevocably, jointly and severally, promises
to pay such Guaranteed Obligations to the Secured Creditors, on demand, in
lawful money of the United States.

 

3.

The liability of each Guarantor hereunder is exclusive and independent of any
security for or other guaranty of the indebtedness of Borrower whether executed
by such Guarantor, any other Guarantor, any other guarantor, Borrower, or by any
other party, and the liability of each Guarantor hereunder shall not be affected
or impaired by (a) any direction as to application of payment by Borrower or by
any other party, (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any

 

2

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  other party as to the indebtedness of Borrower, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any dissolution,
termination, or increase, decrease, or change in personnel by Borrower, or
(e) any payment made to any Secured Creditor on the indebtedness which any
Secured Creditor repays to Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium, or other debtor relief proceeding, and
each Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.

 

4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor or Borrower, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor, any other
guarantor or Borrower and whether or not any other Guarantor, any other
guarantor of Borrower or Borrower be joined in any such action or actions.

 

5. Each Guarantor hereby waives notice of acceptance of this Guaranty and notice
of any liability to which it may apply, and waives notices of the existence,
creation, or incurring of additional Indebtedness, promptness, diligence,
presentment, demand for performance, notice of non-performance, demand of
payment, notice of intention to accelerate, notice of acceleration, protest,
notice of dishonor or nonpayment of any such liabilities, suit or taking of
other action by Administrative Agent or any other Secured Creditor against, and
any other notice to, any party liable thereon (including such Guarantor or any
other guarantor of Borrower).

 

6. Any Secured Creditor may at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

(a) change the manner, place, or terms of payment of, and/or change or extend
the time of payment of, renew, or alter, any of the Guaranteed Obligations, any
security therefor, or any liability incurred directly or indirectly in respect
thereof, and the guaranty herein made shall apply to the Guaranteed Obligations
as so changed, extended, renewed, or altered;

(b) sell, exchange, release, surrender, realize upon, or otherwise deal with in
any manner and in any order any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof, and/or any offset there against;

(c) exercise or refrain from exercising any rights against Borrower, any other
guarantor, or others or otherwise act or refrain from acting;

 

3

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(d) settle or compromise any of the Guaranteed Obligations, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or not) of
Borrower to creditors of such Borrower (other than the Secured Creditors);

(e) apply any sums by whomsoever paid or howsoever realized to any liability or
liabilities of Borrower to the Secured Creditors regardless of what liabilities
of such Borrower remain unpaid;

(f) consent to or waive any breach of, or any act, omission or default under,
any of the Loan Documents or any of the instruments or agreements referred to
therein, or otherwise amend, modify, or supplement any of the Loan Documents or
any of such other instruments or agreements; and/or

(g) act or fail to act in any manner referred to in this Guaranty which may
deprive such Guarantor of its right to subrogation against Borrower to recover
full indemnity for any payments made pursuant to this Guaranty.

 

7. No invalidity, irregularity, or unenforceability of all or any part of the
Guaranteed Obligations or of any security therefor shall affect, impair, or be a
defense to this Guaranty, and this Guaranty shall be primary, absolute, and
unconditional notwithstanding the occurrence of any event or the existence of
any other circumstances which might constitute a legal or equitable discharge of
a surety or guarantor except payment in full of the Guaranteed Obligations.

 

8. This Guaranty is a continuing one and all liabilities to which it applies or
may apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon. No failure or delay on the part of any Secured
Creditor in exercising any right, power, or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power,
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Secured Creditor would otherwise have. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Secured Creditor to any other or further action in any circumstances
without notice or demand. It is not necessary for any Secured Creditor to
inquire into the capacity or powers of Borrower or any of its Subsidiaries or
the officers, directors, partners, or agents acting or purporting to act on its
behalf, and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.

 

4

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9. Any Indebtedness of Borrower to Guarantor, excluding Indebtedness arising in
the ordinary course of business in connection with a centralized cash management
system used by Borrower and some or all of its Affiliates, now or hereafter
existing, including, without limitation, any rights to subrogation which
Guarantor may have as a result of any payment by Guarantor under this Guaranty,
together with any interest thereon, shall be, and such Indebtedness is, hereby
deferred, postponed and subordinated to the prior payment in full of the
Guaranteed Obligations. Until payment in full of the Guaranteed Obligations,
including interest accruing on the Revolving Notes after the commencement of a
proceeding by or against Borrower under the Bankruptcy Code which interest the
parties agree shall remain a claim that is prior and superior to any claim of
Guarantor notwithstanding any contrary practice, custom or ruling in cases under
the Bankruptcy Code generally, Guarantor agrees not to accept any payment or
satisfaction of any kind of Indebtedness of Borrower to Guarantor (other than
the Indebtedness excluded in the preceding sentence) and hereby assigns such
Indebtedness to the Administrative Agent, including the right to file proof of
claim and to vote thereon in connection with any such proceeding under the
Bankruptcy Code, including the right to vote on any plan of reorganization.

 

10. Each Guarantor:

(a) hereby waives any right (except as shall be required by applicable statute
and cannot be waived) to require the Secured Creditors to: (i) proceed against
Borrower, any other Guarantor, any other guarantor of Borrower, or any other
party; (ii) proceed against or exhaust any security held from Borrower, any
other Guarantor, any other guarantor of Borrower, or any other party; or
(iii) pursue any other remedy in the Secured Creditors’ power whatsoever.
Guarantor waives any defense based on or arising out of any defense of Borrower,
any other Guarantor, any other guarantor of Borrower, or any other party other
than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of Borrower,
any other Guarantor, any other guarantor of Borrower, or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of Borrower other than
payment in full of the Guaranteed Obligations of Borrower. The Secured Creditors
may, at their election, foreclose on any security held by the Administrative
Agent or the other Secured Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Secured Creditors may have against Borrower or any other
party, or any security, without affecting or impairing in any way the liability
of any Guarantor hereunder except to the extent the Guaranteed Obligations have
been paid in full. Each Guarantor waives any defense arising out of any such
election by the Administrative Agent and/or any other Secured Creditors, even
though such election operates to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of such Guarantor against Borrower, any
other Guarantor, any other guarantor of Borrower, or any other party or any
security.

(b) assumes all responsibility for being and keeping itself informed of
Borrower’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope, and extent of the risks which

 

5

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any Guarantor assumes and incurs hereunder, and agrees that the Secured
Creditors shall have no duty to advise such Guarantor of information known to
them regarding such circumstances or risks.

 

11. If and to the extent that any Guarantor makes any payment to any Secured
Creditor or to any other Person pursuant to or in respect of this Guaranty, then
any claim which such Guarantor may have against Borrower by reason thereof shall
be subject and subordinate to the prior payment in full of the Guaranteed
Obligations to each Secured Creditor. Prior to the transfer by any Guarantor of
any note or negotiable instrument evidencing any Indebtedness of Borrower to
such Guarantor, such Guarantor shall mark such note or negotiable instrument
with a legend that the same is subject to this subordination.

 

12. Each Guarantor covenants and agrees that on and after the date hereof and
until the Commitments under the Credit Agreement have been terminated and all
Guaranteed Obligations have been paid in full, such Guarantor shall take, or
will refrain from taking, as the case may be, all actions that are necessary to
be taken or not taken so that no Event of Default is caused by the actions of
such Guarantor or any of its Subsidiaries.

 

13. Each Guarantor covenants and agrees that on and after the date hereof and
until the Commitments under the Credit Agreement have been terminated and all
Guaranteed Obligations have been paid in full, except as otherwise permitted
under the Loan Documents or otherwise with the consent of the Administrative
Agent, (i) its Organizational Documents, in effect on the Closing Date, shall
not be modified, altered, supplemented or amended, (ii) none of the Members,
stockholders, or other equity holders of such Guarantors shall assign or
transfer, in whole or in part, any interest in such Guarantor, (iii) no
additional Members, stockholders or any other equity holders shall be admitted
to or have any equity interest in such Guarantor, and (iv) no Member,
stockholder or other equity holder of such Guarantor shall resign.

 

14. Each Guarantor hereby jointly and severally agrees to pay, to the extent not
paid by Borrower pursuant to Section 10.3 of the Credit Agreement, all
out-of-pocket costs and expenses (including, without limitation, the reasonable
fees and disbursements of counsel) of each Secured Creditor in connection with
the enforcement of this Guaranty or the collection of the Guaranteed Obligations
and in connection with any amendment, waiver, or consent relating to this
Guaranty.

 

15. This Guaranty shall be binding upon each Guarantor and its successors and
assigns and shall inure to the benefit of the Secured Creditors and their
successors and assigns to the extent permitted under the Credit Agreement.

 

16.

Neither this Guaranty nor any provision hereof may be changed, waived,
discharged or terminated except with the written consent of the Required Lenders
(or to the extent required by Section 10.1 of the Credit Agreement, each Lender,
as the case may be) and each Guarantor affected thereby (it being understood
that the addition or release of any

 

6

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  Guarantor hereunder shall not constitute a change, waiver, discharge or
termination affecting any Guarantor other than the Guarantor so added or
released). In the event that any Subsidiary Guarantor is released from the
Guaranteed Obligations hereunder pursuant to Section 7.1.22 of the Credit
Agreement, the Administrative Agent, at the request and expense of such
Subsidiary Guarantor, shall execute and deliver an instrument acknowledging such
Subsidiary Guarantor’s release from this Guaranty.

 

17. Each Guarantor acknowledges that an executed (or conformed) copy of each of
the Loan Documents has been made available to its principal executive officers
and such officers are familiar with the contents thereof.

 

18. In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence and during the
continuance of an Event of Default, each Secured Creditor is hereby authorized,
at any time or from time to time, without notice to any Guarantor or to any
other Person, any such notice being expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Secured Creditor to or for the
credit or the account of any Guarantor, against and on account of the
obligations and liabilities of such Guarantor to such Secured Creditor under
this Guaranty, irrespective of whether or not such Secured Creditor shall have
made any demand hereunder; provided that said obligations, liabilities,
deposits, or claims, or any of them, shall be then due and owing. Each Secured
Creditor agrees to promptly notify the relevant Guarantor after any such set off
and application, provided that the failure to give such notice shall not affect
the validity of such set off and application.

 

19. All notices, requests, demands, or other communications provided for
hereunder made in writing (including communications by facsimile transmission)
shall be deemed to have been duly given or made when delivered to the Person to
which such notice, request, demand, or other communication is required or
permitted to be given or made under this Guaranty, addressed to such party
(i) in the case of any Secured Creditor, as provided in the Credit Agreement and
(ii) in the case of each Guarantor, at its address set forth in Schedule I to
this Guaranty.

 

20.

Each Guarantor hereby agrees that if at any time all or any part of any payment
at any time received by a Secured Creditor from the Borrower under any of the
Revolving Notes or other Loan Documents or from any Guarantor under or with
respect to this Guaranty is or must be rescinded or returned by such Secured
Creditor for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Borrower or any such Guarantor),
then each Guarantor’s obligations hereunder shall, to the extent of the payment
rescinded or returned, be deemed to have continued in existence notwithstanding
such previous receipt by such Secured Creditor, and each Guarantor’s obligations
hereunder shall continue to be effective or reinstated, as the case may be, as
to such payment, as though such previous payment to the Secured Creditor had
never been made. In addition, if any court of competent jurisdiction determines
that

 

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the incurrence by any Guarantor of its obligations under this Guaranty or the
payment by a Guarantor of its obligations hereunder is or would be voidable as a
fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code, any
analogous state law, or any other law relating to debtor protection or
creditors’ rights, the obligation of that Guarantor hereunder shall
automatically be reduced to the maximum amount (if any) of the obligation that
the Guarantor could incur or pay without such incurrence or payment being
subject to avoidance as a fraudulent transfer or conveyance. Each Guarantor’s
obligations hereunder shall not exceed its tangible net worth.

 

21. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND HEREBY IRREVOCABLY AND
EXPRESSLY WAIVE ANY OTHER JURISDICTION TO WHICH THEY MAY BE ENTITLED TO BY
VIRTUE OF THEIR PRESENT OR FUTURE DOMICILE OR OTHERWISE.

(b) JURY TRIAL WAIVER. EACH GUARANTOR AND ALL PERSONS CLAIMING BY, THROUGH OR
UNDER IT, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST
EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF EACH GUARANTOR IN
CONNECTION HEREWITH OR THEREWITH. EACH GUARANTOR AND ALL PERSONS CLAIMING BY,
THROUGH OR UNDER IT, ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE AGENTS, THE LENDERS, AND THE ISSUER ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.

(c) MARSHALING. EACH GUARANTOR WAIVES ANY RIGHT OR CLAIM OF RIGHT TO CAUSE A
MARSHALING OF BORROWER’S ASSETS OR TO CAUSE ANY SECURED CREDITOR TO PROCEED
AGAINST ANY OF THE SECURITY FOR THE LOAN BEFORE PROCEEDING UNDER THIS AGREEMENT
AGAINST BORROWER OR TO PROCEED AGAINST GUARANTOR IN ANY PARTICULAR ORDER. EACH
GUARANTOR AGREES THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL BECOME
DUE AND PAYABLE TEN (10) DAYS AFTER DEMAND. EACH GUARANTOR EXPRESSLY WAIVES AND
RELINQUISHES ALL RIGHTS AND REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION)
ACCORDED BY APPLICABLE LAW TO SUCH GUARANTOR.

 

8

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(d) Special California Waivers. In the event that (and only in the event that)
any court of competent jurisdiction determines that the laws of the State of
California are applicable in any respect to the interpretation or enforcement of
all or any portion this Agreement then the terms and provisions of this
subsection (d) shall apply.

 

  (i) To the extent permitted by law, each Guarantor hereby waives and agrees
not to assert or take advantage of:

 

  (1) Any defense based upon any Lender’s election of any remedy against a
Guarantor, including, without limitation, the defense to enforcement of this
Agreement (the “Gradsky” defense based upon Union Bank v. Gradsky, 265 Cal. App.
2d 40 (1968) or subsequent cases) which, absent this waiver, Guarantors would
have by virtue of an election by any Lender to conduct a non-judicial
foreclosure sale of the Property, it being understood by each Guarantor that any
such non-judicial foreclosure sale will destroy, by operation of California Code
of Civil Procedure Section 580d, all rights of any party to a deficiency
judgment against the Borrower, and, as a consequence, will destroy all rights
which Guarantors would otherwise have (including, without limitation, the right
of subrogation, the right of reimbursement, and the right of contribution) to
proceed against the Borrower and to recover any such amount, and that a Lender
could be otherwise estopped from pursuing Guarantors for a deficiency judgment
after a non-judicial foreclosure sale on the theory that a obligor should be
exonerated if a lender elects a remedy that eliminates the obligor’s
subrogation, reimbursement or contribution rights;

 

  (2) Any rights under California Code of Civil Procedure Sections 580a and
726(b), which provide, among other things: that a creditor must file a complaint
for deficiency within three (3) months of a nonjudicial foreclosure sale or
judicial foreclosure sale, as applicable; that a fair market value hearing must
be held; and that the amount of the deficiency judgment shall be limited to the
amount by which the unpaid debt exceeds the fair market value of the security,
but not more than the amount by which the unpaid debt exceeds the sale price of
the security; and

 

  (3)

Without limiting the generality of the foregoing or any other provision hereof,
Guarantors expressly waive any and all benefits which might otherwise be
available to Guarantors under California

 

9

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  Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433 and California Code
of Civil Procedure Sections 580a, 580b, 580d and 726, or any of such sections.

(e) Waiver Pursuant to California Civil Code Section 2856. In addition to all
the other waivers agreed to and made by Guarantors as set forth in this
Guaranty, and pursuant to the provisions of California Civil Code Section 2856,
each Guarantor hereby waives all rights and defenses that such Guarantor may
have because the debtor’s debt is secured directly or indirectly by real
property. This means, among other things:

 

  (i) The creditor may collect from Guarantors without first foreclosing on any
real or personal property collateral pledged by the debtor.

 

  (ii) If the creditor forecloses on any collateral pledged by the debtor that
is in the form of interests in real property:

 

  (1) The amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price; and

 

  (2) The creditor may collect from Guarantors even if the creditor, by
foreclosing on the collateral, has destroyed any right Guarantors may have to
collect from the debtor.

This is an unconditional and irrevocable waiver of any rights and defenses
Guarantors may have because the debtor’s debt is secured directly or indirectly
by real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Sections 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.

Each Guarantor further hereby waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of remedies,
such as a non-judicial foreclosure with respect to security for a guaranteed
obligation, has destroyed such Guarantor’s rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
California Code of Civil Procedure or otherwise.

 

22. The Secured Creditors agree that this Guaranty may be enforced only by the
action of Administrative Agent acting upon the instructions of the Required
Lenders and until the Credit Agreement is terminated, no other Secured Creditor
shall have any right individually to seek to enforce or to enforce this
Guaranty, it being understood and agreed that such rights and remedies may be
exercised by Administrative Agent for the benefit of the Secured Creditors upon
the terms of this Guaranty.

 

23. This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.

 

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24. It is understood and agreed that any Subsidiary of Borrower that is required
to execute a counterpart of this Guaranty after the date hereof pursuant to the
Credit Agreement shall become a Guarantor hereunder by executing a counterpart
hereof and delivering the same to Administrative Agent.

 

25. THIS GUARANTY AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

26. Except with respect to Section 19 hereof, upon repayment in full of the
Guaranteed Obligations, this Guaranty shall automatically terminate and cease to
be of any further force or effect.

[Remainder of page intentionally left blank. Signature pages follow.]

 

11

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and
delivered as of the date first above written.

 

SHC DTRS, INC., a Delaware corporation     SHC HALF MOON BAY MEZZANINE LLC,    
  a Delaware limited liability company By:  

 

    By:  

 

Name:   Jonathan P. Stanner     Name:   Jonathan P. Stanner Title:   Vice
President, Capital Markets,     Title:   Vice President, Capital Markets,  
Acquisitions & Treasurer       Acquisitions & Treasurer SHC HALF MOON BAY, LLC,
a Delaware     DTRS HALF MOON BAY, LLC, a Delaware limited liability company    
limited liability company By:  

 

    By:  

 

Name:   Jonathan P. Stanner     Name:   Jonathan P. Stanner Title:   Vice
President, Capital Markets,     Title:   Vice President, Capital Markets,  
Acquisitions & Treasurer       Acquisitions & Treasurer SHC LAGUNA, L.L.C., a
Delaware limited     DTRS LAGUNA, L.L.C., a Delaware limited liability company  
  liability company By:  

 

    By:  

 

Name:   Jonathan P. Stanner     Name:   Jonathan P. Stanner Title:   Vice
President, Capital Markets,     Title:   Vice President, Capital Markets,  
Acquisitions & Treasurer       Acquisitions & Treasurer

 

12

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SHC LAGUNA NIGUEL I, LLC, a Delaware     DTRS LINCOLNSHIRE, LLC, a Delaware
limited liability company     limited liability company By:  

 

    By:  

 

Name:   Jonathan P. Stanner     Name:   Jonathan P. Stanner Title:   Vice
President, Capital Markets,     Title:   Vice President, Capital Markets,  
Acquisitions & Treasurer       Acquisitions & Treasurer DTRS JACKSON HOLE, LLC,
a Delaware     SHC LINCOLNSHIRE LLC a Delaware limited limited liability company
    liability company By:  

 

    By:  

 

Name:   Jonathan P. Stanner     Name:   Jonathan P. Stanner Title:   Vice
President, Capital Markets,     Title:   Vice President, Capital Markets,  
Acquisitions & Treasurer       Acquisitions & Treasurer SHR JACKSON HOLE, LLC, a
Delaware     DTRS PALO ALTO, LLC, a Delaware limited limited liability company  
  liability company By:  

 

    By:  

 

Name:   Jonathan P. Stanner     Name:   Jonathan P. Stanner Title:   Vice
President, Capital Markets,     Title:   Vice President, Capital Markets,  
Acquisitions & Treasurer       Acquisitions & Treasurer

 

13

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SHR PALO ALTO, LLC, a Delaware limited

liability company

By:  

 

Name:   Jonathan P. Stanner Title:   Vice President, Capital Markets,
Acquisitions & Treasurer

 

14

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Accepted and Agreed to:

 

DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent for the Lenders By:  

 

Name:  

 

Title:  

 

By:  

 

Name:  

 

Title:  

 

 

15

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SCHEDULE I

NOTICE

c/o Strategic Hotels & Resorts, L.L.C.

200 W. Madison, Suite 1700

Chicago, Illinois 60606

Attention: Treasurer and

General Counsel

 

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Exhibit I

Form of Solvency Certificate

OFFICER’S COVENANT COMPLIANCE AND SOLVENCY CERTIFICATE

I, the undersigned, the [            ] of Strategic Hotel Funding, L.L.C., a
limited liability company existing under the laws of the State of Delaware (the
“Borrower”), do hereby certify this April [    ], 2014 that:

 

1. This Certificate is furnished to the Lenders pursuant to Section 5.1.8 and
Section 5.1.19 of the Credit Agreement, dated as of April [    ], 2014, among
the Borrower, the various financial institutions as are or may become parties
thereto and Deutsche Bank AG New York Branch, as Administrative Agent (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”). Unless otherwise defined herein, capitalized terms used in this
Certificate shall have the meanings set forth in the Credit Agreement.

 

2. For purposes of this Certificate, I have performed the following procedures:

(a) I have reviewed the financial statements used to provide evidence of pro
forma financial covenant compliance; and

(b) I have knowledge and have reviewed to my satisfaction the Loan Documents and
all the other respective documents relating thereto, and the respective
schedules and exhibits thereto.

 

3. Based on and subject to the foregoing, I hereby certify on behalf of the
Borrower that, after giving effect to the Credit Agreement, it is my opinion
that each of:

(a) the Total Fixed Charge Coverage Ratio as of the end of the Fiscal Quarter
ended [Month] [Day], 20[    ] is not less than      :1.0;

(b) the Total Leverage Ratio is less than      to 1.0;

(c) the Consolidated Tangible Net Worth is greater than an amount equal to the
sum of (i) $1,100,731,127 (i.e., seventy-five percent (75%) of the Consolidated
Tangible Net Worth as of 3/31/2014) plus (ii) seventy-five percent (75%) of the
net proceeds to Guarantor of any new issuances of common Capital Stock, but
excluding therefrom (x) the proceeds of any common Capital Stock of Guarantor or
Borrower used in a transaction or a series of transactions to redeem all or any
portion of an outstanding issue of Capital Stock (including payment in
connection therewith of any accrued Dividends in accordance herewith) or
(y) Capital Stock of Guarantor or Borrower issued to discharge Indebtedness;

 

I - 1

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(d) the Construction Costs of the Consolidated Group do not exceed ten percent
(10%) of the aggregate Gross Asset Value in respect of all of the Properties;

(e) Borrower’s Share of the aggregate Net Asset Value of Properties held in
Unconsolidated Subsidiaries does not exceed 25% of the aggregate Gross Asset
Value in respect of all of the Properties;

(f) the sum of the Construction Costs described in Section 7.2.4(d) of the
Credit Agreement and the Borrower’s Share of the aggregate Net Asset Value of
Properties held in Unconsolidated Subsidiaries does not exceed 35% of the
aggregate Gross Asset Value in respect of all Properties;

(g) Guarantor has no liabilities other than the amounts currently outstanding
under the Credit Agreement and those liabilities reflected in the financial
statements of Guarantor previously delivered to the Administrative Agent (as
such liabilities have been reduced in the ordinary course or paid off with the
proceeds of the Loan), and liabilities incurred in the ordinary course and not
materially different than the ones reflected on the most recent of such
financial statements; and

(h) Borrower has no liabilities other than the amounts currently outstanding
under the Credit Agreement and those liabilities reflected in the financial
statements of Borrower previously delivered to the Administrative Agent (as such
liabilities have been reduced in the ordinary course or paid off with the
proceeds of the Loan), and liabilities incurred in the ordinary course and not
materially different than the ones reflected on the most recent of such
financial statements, and as disclosed in Schedule IV to the Credit Agreement.

 

4. Each of Borrower and Guarantor (taken as a whole), after the consummation of
the transactions contemplated by the Credit Agreement, is a going concern and
does not lack sufficient capital for its needs and currently anticipated needs,
without substantial unplanned disposition of assets outside the ordinary course
of business, restructuring of debt, externally forced revisions of its
operations or other similar actions.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

I - 2

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IN WITNESS WHEREOF, I have hereto set my hand as of the date first above
written.

 

STRATEGIC HOTEL FUNDING, L.L.C., a Delaware limited liability company   By:  

 

  Name:     Title:  

 

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