Exhibit 10.1

 

EXECUTION VERSION

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

 

CREDIT AGREEMENT

 

Dated as of July 8, 2005

 

by and among

 

DIAMONDROCK HOSPITALITY LIMITED PARTNERSHIP,

as Borrower,

 

DIAMONDROCK HOSPITALITY COMPANY,

as Parent,

 

each of

WACHOVIA CAPITAL MARKETS, LLC,

CITIGROUP GLOBAL MARKETS, INC.

and

BANC OF AMERICA SECURITIES LLC,

as Tri-Lead Arrangers

 

and

 

as Tri-Bookrunners,

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

 

each of

CITICORP NORTH AMERICA, INC.

and

BANK OF AMERICA, N.A.,

as Syndication Agents,

 

and

 

THE FINANCIAL INSTITUTIONS INITIALLY SIGNATORY HERETO

AND THEIR ASSIGNEES PURSUANT TO SECTION 13.5.,

as Lenders

 

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

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

TABLE OF CONTENTS

 

Article I. Definitions    1

Section 1.1.

   Definitions    1

Section 1.2.

   General; References to Times    25

Section 1.3.

   Financial Attributes of Non-Wholly Owned Subsidiaries    25 Article II.
Credit Facility    26

Section 2.1.

   Revolving Loans    26

Section 2.2.

   Swingline Loans    26

Section 2.3.

   Letters of Credit    28

Section 2.4.

   Rates and Payment of Interest on Loans    32

Section 2.5.

   Number of Interest Periods    33

Section 2.6.

   Repayment of Loans    33

Section 2.7.

   Prepayments    33

Section 2.8.

   Continuation    34

Section 2.9.

   Conversion    35

Section 2.10.

   Notes    35

Section 2.11.

   Voluntary Reductions of the Commitment    36

Section 2.12.

   Extension of Termination Date    36

Section 2.13.

   Expiration or Maturity Date of Letters of Credit Past Termination Date    36

Section 2.14.

   Amount Limitations    36

Section 2.15.

   Increase of Commitments    37 Article III. Payments, Fees and Other General
Provisions    37

Section 3.1.

   Payments    37

Section 3.2.

   Pro Rata Treatment    38

Section 3.3.

   Sharing of Payments, Etc.    39

Section 3.4.

   Several Obligations    39

Section 3.5.

   Minimum Amounts    39

Section 3.6.

   Fees    40

Section 3.7.

   Computations    41

Section 3.8.

   Usury    41

Section 3.9.

   Agreement Regarding Interest and Charges    41

Section 3.10.

   Statements of Account    41

Section 3.11.

   Defaulting Lenders    42

Section 3.12.

   Taxes    43 Article IV. Collateral Properties    45

Section 4.1.

   Eligibility of Properties    45

Section 4.2.

   Conditions Precedent to a Property Becoming a Collateral Property    46

Section 4.3.

   Release of Collateral Properties    48

Section 4.4.

   Frequency of Calculations of Borrowing Base    49

Section 4.5.

   Frequency of Appraisals    50

Section 4.6.

   Additional Appraisals Required under Applicable Law    51

 

- i -

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

Article V. Yield Protection, Etc.    51

Section 5.1.

   Additional Costs; Capital Adequacy    51

Section 5.2.

   Suspension of LIBOR Loans    52

Section 5.3.

   Illegality    53

Section 5.4.

   Compensation    53

Section 5.5.

   Treatment of Affected Loans    54

Section 5.6.

   Change of Lending Office    54

Section 5.7.

   Assumptions Concerning Funding of LIBOR Loans    54

Section 5.8.

   Affected Lenders    55 Article VI. Conditions Precedent    55

Section 6.1.

   Initial Conditions Precedent    55

Section 6.2.

   Conditions Precedent to All Loans and Letters of Credit    58 Article VII.
Representations and Warranties    59

Section 7.1.

   Representations and Warranties    59

Section 7.2.

   Survival of Representations and Warranties, Etc.    64 Article VIII.
Affirmative Covenants    65

Section 8.1.

   Preservation of Existence and Similar Matters    65

Section 8.2.

   Compliance with Applicable Law and Material Contracts    65

Section 8.3.

   Maintenance of Property    65

Section 8.4.

   Conduct of Business    66

Section 8.5.

   Insurance    66

Section 8.6.

   Payment of Taxes and Claims    66

Section 8.7.

   Visits and Inspections    66

Section 8.8.

   Use of Proceeds; Letters of Credit    67

Section 8.9.

   Environmental Matters    67

Section 8.10.

   Books and Records    68

Section 8.11.

   Further Assurances    68

Section 8.12.

   REIT Status    68

Section 8.13.

   Exchange Listing    68

Section 8.14.

   New Subsidiaries/Guarantors/Pledges    68

Section 8.15.

   Release of Guarantors and Pledges    69

Section 8.16.

   Acquisition of Vail Parking Deck    70 Article IX. Information    70

Section 9.1.

   Quarterly Financial Statements    70

Section 9.2.

   Year-End Statements    71

Section 9.3.

   Compliance Certificate    71

Section 9.4.

   Other Information    71 Article X. Negative Covenants    74

Section 10.1.

   Financial Covenants    74

Section 10.2.

   Restricted Payments    75

 

- ii -

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

Section 10.3.

   Indebtedness    76

Section 10.4.

   Investments Generally    76

Section 10.5.

   Liens; Negative Pledges; Other Matters    77

Section 10.6.

   Merger, Consolidation, Sales of Assets and Other Arrangements    78

Section 10.7.

   Fiscal Year    79

Section 10.8.

   Modifications to Material Contracts    79

Section 10.9.

   Modifications of Organizational Documents    79

Section 10.10.

   Transactions with Affiliates    79

Section 10.11.

   ERISA Exemptions    79 Article XI. Default    80

Section 11.1.

   Events of Default    80

Section 11.2.

   Remedies Upon Event of Default    83

Section 11.3.

   Remedies Upon Default    84

Section 11.4.

   Allocation of Proceeds    84

Section 11.5.

   Collateral Account    85

Section 11.6.

   Performance by Agent    86

Section 11.7.

   Rights Cumulative    86 Article XII. The Agent    87

Section 12.1.

   Authorization and Action    87

Section 12.2.

   Agent’s Reliance, Etc.    87

Section 12.3.

   Notice of Defaults    88

Section 12.4.

   Wachovia as Lender    88

Section 12.5.

   Approvals of Lenders    89

Section 12.6.

   Lender Credit Decision, Etc.    89

Section 12.7.

   Collateral Matters    90

Section 12.8.

   Indemnification of Agent    91

Section 12.9.

   Successor Agent    91

Section 12.10.

   Titled Agents    92 Article XIII. Miscellaneous    92

Section 13.1.

   Notices    92

Section 13.2.

   Expenses    93

Section 13.3.

   Setoff    94

Section 13.4.

   Litigation; Jurisdiction; Other Matters; Waivers    94

Section 13.5.

   Successors and Assigns    95

Section 13.6.

   Amendments    98

Section 13.7.

   Nonliability of Agent and Lenders    99

Section 13.8.

   Confidentiality    100

Section 13.9.

   Indemnification    100

Section 13.10.

   Termination; Survival    102

Section 13.11.

   Severability of Provisions    103

Section 13.12.

   GOVERNING LAW    103

Section 13.13.

   Patriot Act    103

Section 13.14.

   Counterparts    103

 

- iii -

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

Section 13.15.

   Obligations with Respect to Loan Parties    103

Section 13.16.

   Limitation of Liability    104

Section 13.17.

   Entire Agreement    104

Section 13.18.

   Construction    104

 

SCHEDULE 1.1(A)

   List of Loan Parties

SCHEDULE 1.1(B)

   List of Pledgors

SCHEDULE 4.1.

   Collateral Properties

SCHEDULE 7.1.(b)

   Ownership Structure

SCHEDULE 7.1.(f)

   Title to Properties; Liens

SCHEDULE 7.1.(g)

   Indebtedness and Guaranties

SCHEDULE 7.1.(h)

   Material Contracts

SCHEDULE 7.1.(i)

   Litigation

EXHIBIT A

   Form of Assignment and Acceptance Agreement

EXHIBIT B

   Form of Assignment of Leases and Rents

EXHIBIT C

   Form of Environmental Indemnity Agreement

EXHIBIT D

   Form of Guaranty

EXHIBIT E

   Form of Notice of Borrowing

EXHIBIT F

   Form of Notice of Continuation

EXHIBIT G

   Form of Notice of Conversion

EXHIBIT H

   Form of Notice of Swingline Borrowing

EXHIBIT I

   Form of Property Management Contract Assignment

EXHIBIT J

   Form of Security Deed

EXHIBIT K

   Form of Swingline Note

EXHIBIT L

   Form of Revolving Note

EXHIBIT M

   Form of Opinion of Counsel

EXHIBIT N

   Form of Compliance Certificate

EXHIBIT O

   Form of Pledge Agreement

EXHIBIT P

   Form of Assignment of Contracts, Documents and Rights

EXHIBIT Q

   Form of Assignment of Franchise Agreement

 

- iv -

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

THIS CREDIT AGREEMENT (this “Agreement”) dated as of July 8, 2005 by and among
DIAMONDROCK HOSPITALITY LIMITED PARTNERSHIP, a limited partnership formed under
the laws of the State of Delaware (the “Borrower”), DIAMONDROCK HOSPITALITY
COMPANY, a corporation formed under the laws of the State of Maryland (the
“Parent”), each of the financial institutions initially a signatory hereto
together with their assignees pursuant to Section 13.5.(d), WACHOVIA BANK,
NATIONAL ASSOCIATION, as Agent, WACHOVIA CAPITAL MARKETS, LLC, CITIGROUP GLOBAL
MARKETS INC. and BANC OF AMERICA SECURITIES LLC, as Tri-Lead Arrangers (each a
“Tri-Lead Arranger”) and as Tri-Bookrunners (each a “Tri-Bookrunner”), and each
of CITICORP NORTH AMERICA, INC. and BANK OF AMERICA, N.A., as Syndication Agents
(each a “Syndication Agent”).

 

WHEREAS, the Agent and the Lenders desire to make available to the Borrower a
revolving credit facility in the initial amount of $75,000,000, which will
include a $25,000,000 letter of credit subfacility and a $20,000,000 swingline
subfacility, on the terms and conditions contained herein.

 

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

 

ARTICLE I. DEFINITIONS

 

Section 1.1. Definitions.

 

In addition to terms defined elsewhere herein, the following terms shall have
the following meanings for the purposes of this Agreement:

 

“Accession Agreement” means an Accession Agreement substantially in the form of
Annex I to the Guaranty.

 

“Additional Costs” has the meaning given that term in Section 5.1.

 

“Adjusted EBITDA” means, for any given period, (a) the EBITDA of the Parent and
its Subsidiaries determined on a consolidated basis for such period, minus (b)
FF&E Reserves for such period.

 

“Adjusted LIBOR” means, with respect to each Interest Period for any LIBOR Loan,
the rate obtained by dividing (a) LIBOR for such Interest Period by (b) a
percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all
reserves, if any, required to be maintained with respect to Eurocurrency funding
(currently referred to as “Eurocurrency liabilities”) as specified in Regulation
D of the Board of Governors of the Federal Reserve System (or against any other
category of liabilities which includes deposits by reference to which the
interest rate on LIBOR Loans is determined or any applicable category of
extensions of credit or other assets which includes loans by an office of any
Lender outside of the United States of America to residents of the United States
of America). Any change in such maximum rate shall result in a change in
Adjusted LIBOR on the date on which such change in such maximum rate becomes
effective.

 

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

“Affiliate” means any Person (other than the Agent or any Lender): (a) directly
or indirectly controlling, controlled by, or under common control with, the
Borrower; (b) directly or indirectly owning or holding ten percent (10.0%) or
more of any Equity Interest in the Borrower; or (c) ten percent (10.0%) or more
of whose voting stock or other Equity Interest is directly or indirectly owned
or held by the Borrower. For purposes of this definition, “control” (including
with correlative meanings, the terms “controlling”, “controlled by” and “under
common control with”) means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or by contract or otherwise.
The Affiliates of a Person shall include any officer or director of such Person.
In no event shall the Agent or any Lender be deemed to be an Affiliate of the
Borrower.

 

“Agent” means Wachovia Bank, National Association, as contractual representative
for the Lenders under the terms of this Agreement.

 

“Agreement Date” means the date as of which this Agreement is dated.

 

“Applicable Law” means all applicable provisions of constitutions, statutes,
rules, regulations and orders of all governmental bodies and all orders and
decrees of all courts, tribunals and arbitrators.

 

“Applicable Margin” means the percentage rate set forth below corresponding to
the ratio of Total Indebtedness to Total Asset Value as determined in accordance
with Section 10.1. in effect at such time:

 

Level

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

  

Leverage Ratio

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

   Applicable Margin
for LIBOR Loans

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

    Applicable Margin
for Base Rate Loans

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

  1    Less than 0.65 to 1.00    1.45 %   0.75 % 2    Greater than or equal to
0.65 to 1.00 but less than 0.70 to 1.00    1.75 %   1.00 % 3    Greater than or
equal to 0.70 to 1.00    2.00 %   1.25 %

 

The Applicable Margin shall be determined by the Agent from time to time, based
on the ratio of Total Indebtedness to Total Asset Value as set forth in the
Compliance Certificate most recently delivered by the Borrower pursuant to
Section 9.3. Any adjustment to the Applicable Margin shall be effective (i) in
the case of a Compliance Certificate delivered in connection with quarterly
financial statements of the Borrower delivered pursuant to Section 9.3., as of
the date 45 days following the end of the last day of the applicable fiscal
period covered by such Compliance Certificate, (ii) in the case of a Compliance
Certificate delivered in connection with annual financial statements of the
Parent delivered pursuant to Section 9.3., as of the date 120 days following the
end of the last day of the applicable fiscal period covered by such Compliance
Certificate, and (iii) in the case of any other Compliance Certificate, as of
the date 5 Business Days following the Agent’s request for such Compliance
Certificate. Notwithstanding the foregoing, for the period from the Effective
Date through but excluding the date on which the Agent first determines the
Applicable Margin as set forth above, the Applicable Margin shall be

 

- 2 -

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

determined based on Level 1. Thereafter, the Applicable Margin shall be adjusted
from time to time as set forth above. If the Borrower shall fail to deliver a
compliance certificate within the time period required under Section 9.3., the
Applicable Margin shall be determined based on Level 3 until the Borrower
delivers the required Compliance Certificate, in which case the Applicable
Margin shall be determined as provided above effective as of the date of
delivery of such Compliance Certificate.

 

“Appraisal” means, in respect of any Property, an M.A.I. appraisal commissioned
by and addressed to the Agent (acceptable to the Agent as to form, substance and
appraisal date), prepared by a professional appraiser acceptable to the Agent,
having at least the minimum qualifications required under Applicable Law
governing the Agent and the Lenders, including FIRREA, and determining the “as
is” market value of such Property as between a willing buyer and a willing
seller.

 

“Appraised Value” means, with respect to any Property, the “as is” market value
of such Property as reflected in the then most recent Appraisal of such Property
as the same may have been reasonably adjusted by the Agent based upon its
internal review of such Appraisal which is based on criteria and factors then
generally used and considered by the Agent in determining the value of similar
properties, which review shall be conducted prior to acceptance of such
Appraisal by the Agent.

 

“Approved Fund” means any Person (other than a natural Person) (a) that 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) that 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 Interest Reserve” means an interest reserve established by the
Borrower and satisfactory to the Agent and the Requisite Lenders in their sole
and absolute discretion for a Development Property.

 

“Arranger” means Wachovia Capital Markets, LLC.

 

“Assignee” has the meaning given that term in Section 13.5.(d).

 

“Assignment and Acceptance Agreement” means an Assignment and Acceptance
Agreement among a Lender, an Assignee and the Agent, substantially in the form
of Exhibit A.

 

“Assignment of Contracts, Documents and Rights” means an Assignment of
Contracts, Documents and Rights executed by a Loan Party in favor of the Agent
for the benefit of the Lenders, substantially in the form of Exhibit P or
otherwise in form and substance satisfactory to the Agent.

 

“Assignment of Franchise Agreement” means an Assignment of Franchise Agreement
executed by a Loan Party in favor of the Agent for the benefit of the Lenders,
substantially in the form of Exhibit Q or otherwise in form and substance
satisfactory to the Agent.

 

- 3 -

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

“Assignment of Leases and Rents” means an Assignment of Leases and Rents
executed by a Loan Party in favor of the Agent for the benefit of the Lenders,
substantially in the form of Exhibit B or otherwise in form and substance
satisfactory to the Agent.

 

“Base Rate” means the per annum rate of interest equal to the greater of (a) the
Prime Rate or (b) the Federal Funds Rate plus one-half of one percent (0.5%).
Any change in the Base Rate resulting from a change in the Prime Rate or the
Federal Funds Rate shall become effective as of 12:01 a.m. on the Business Day
on which each such change occurs. The Base Rate is a reference rate used by the
Lender acting as the Agent in determining interest rates on certain loans and is
not intended to be the lowest rate of interest charged by the Lender acting as
the Agent or any other Lender on any extension of credit to any debtor.

 

“Base Rate Loan” means a Revolving Loan bearing interest at a rate based on the
Base Rate.

 

“Benefit Arrangement” means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.

 

“Borrower” has the meaning set forth in the introductory paragraph hereof.

 

“Borrowing Base” means an amount equal to 65% of the sum of the Collateral
Property Values of the Collateral Properties. Notwithstanding the foregoing, a
Collateral Property shall be excluded from calculations of the Borrowing Base if
(a) at any time such Property shall cease to be an Eligible Property, (b) the
Agent shall cease to hold a valid and perfected first priority Lien in such
Collateral Property, or (c) there shall have occurred and be continuing an event
of default (beyond applicable notice and cure periods) under the Security Deed,
Assignment of Leases and Rents or other Security Document relating to such
Collateral Property. The Borrowing Base shall equal $0 if at any time there are
fewer than 2 Collateral Properties.

 

“Borrowing Base Certificate” means a report certified by the chief financial
officer of the Borrower, setting forth the calculations required to establish
the Borrowing Base for all Collateral Properties as of a specified date, all in
form and detail satisfactory to the Agent.

 

“Business Day” means (a) any day other than a Saturday, Sunday or other day on
which banks in Charlotte, North Carolina or New York, New York are authorized or
required to close and (b) with reference to a LIBOR Loan, any such day that is
also a day on which dealings in Dollar deposits are carried out in the London
interbank market.

 

“Capitalized Lease Obligation” means an obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP. The amount of a Capitalized Lease Obligation is the capitalized amount of
such obligation as would be required to be reflected on a balance sheet of the
applicable Person prepared in accordance with GAAP as of the applicable date.

 

- 4 -

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

“Cash Equivalents” means: (a) securities issued, guaranteed or insured by the
United States of America or any of its agencies with maturities of not more than
one year from the date acquired; (b) certificates of deposit with maturities of
not more than one year from the date acquired issued by a United States federal
or state chartered commercial bank of recognized standing, or a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development, or a political
subdivision of any such country, acting through a branch or agency, which bank
has capital and unimpaired surplus in excess of $500,000,000 and which bank or
its holding company has a short-term commercial paper rating of at least A-2 or
the equivalent by S&P or at least P-2 or the equivalent by Moody’s; (c) reverse
repurchase agreements with terms of not more than seven days from the date
acquired, for securities of the type described in clause (a) above and entered
into only with commercial banks having the qualifications described in clause
(b) above; (d) commercial paper issued by any Person incorporated under the laws
of the United States of America or any State thereof and rated at least A-2 or
the equivalent thereof by S&P or at least P-2 or the equivalent thereof by
Moody’s, in each case with maturities of not more than one year from the date
acquired; and (e) investments in money market funds registered under the
Investment Company Act of 1940, which have net assets of at least $500,000,000
and at least 85% of whose assets consist of securities and other obligations of
the type described in clauses (a) through (d) above.

 

“Collateral” means any real or personal property directly or indirectly securing
any of the Obligations or any other obligation of a Person under or in respect
of any Loan Document to which it is a party, and includes, without limitation,
all “Collateral” under and as defined in any Security Deed, all “Contract
Documents” as defined in any Assignment of Contracts, Documents and Rights, any
“Management Agreement” as defined in any Property Management Contract
Assignment, any “Franchise Agreement” as defined in any Assignment of Franchise
Agreement, all “Leases and Rents” as defined in any Assignment of Leases and
Rents, all “Collateral” under and as defined in the Pledge Agreement and all
other property subject to a Lien created by a Security Document.

 

“Collateral Account” means a special deposit account established by the Agent
pursuant to Section 11.5. and under its sole dominion and control.

 

“Collateral Property” means a Property which the Agent and the Requisite Lenders
have agreed to include in calculations of the Borrowing Base pursuant to Section
4.1. and for which each of the conditions set forth in Section 4.2. have been
satisfied.

 

“Collateral Property Value” means, with respect to a Collateral Property, an
amount equal to the lesser of (a) the Appraised Value of such Collateral
Property and (b) the sum of (x) the cost of such Collateral Property, plus (y)
the acquisition capital budget set at the time such Collateral Property was
acquired by the applicable Loan Party but only to the extent funds in the amount
of such budget have been deposited with the Agent, the franchisor of the
applicable hotel brand or another third party acceptable to the Agent.

 

“Commitment” means, as to each Lender (other than the Swingline Lender), such
Lender’s obligation (a) to make Revolving Loans pursuant to Section 2.1., (b) to
issue (in the

 

- 5 -

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

case of the Lender then acting as Agent) or participate in (in the case of the
other Lenders) Letters of Credit pursuant to Section 2.3.(a) and 2.3.(i),
respectively, (but in the case of the Lender acting as the Agent excluding the
aggregate amount of participations in the Letters of Credit held by the other
Lenders), and (c) to participate in Swingline Loans pursuant to Section 2.3.(e),
in each case, in an amount up to, but not exceeding, the amount set forth for
such Lender on its signature page hereto as such Lender’s “Commitment Amount” or
as set forth in the applicable Assignment and Acceptance Agreement, as the same
may be reduced from time to time pursuant to Section 2.11. or as appropriate to
reflect any assignments to or by such Lender effected in accordance with Section
13.5.

 

“Commitment Percentage” means, as to each Lender, the ratio, expressed as a
percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate
amount of the Commitments of all Lenders; provided, however, that if at the time
of determination the Commitments have terminated or been reduced to zero, the
“Commitment Percentage” of each Lender shall be the Commitment Percentage of
such Lender in effect immediately prior to such termination or reduction.

 

“Compliance Certificate” has the meaning given that term in Section 9.3.

 

“Continue”, “Continuation” and “Continued” each refers to the continuation of a
LIBOR Loan from one Interest Period to another Interest Period pursuant to
Section 2.8.

 

“Convert”, “Conversion” and “Converted” each refers to the conversion of a
Revolving Loan of one Type into a Revolving Loan of another Type pursuant to
Section 2.9.

 

“Credit Event” means any of the following: (a) the making (or deemed making) of
any Loan, (b) the Conversion of a Loan and (c) the issuance of a Letter of
Credit.

 

“Default” means any of the events specified in Section 11.1., whether or not
there has been satisfied any requirement for the giving of notice, the lapse of
time, or both.

 

“Defaulting Lender” has the meaning given that term in Section 3.11.

 

“Derivatives Contract” means 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. Not in limitation of the
foregoing, the term “Derivatives Contract” includes any and all transactions of
any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any

 

- 6 -

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

other master agreement, including any such obligations or liabilities under any
such master agreement.

 

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

 

“Development Property” means, as of any date of determination, any Property on
which the existing building or other improvements are undergoing renovation and
redevelopment that will either (a) disrupt the occupancy of at least 15% of the
rentable rooms of such Property or (b) temporarily reduce the Net Operating
Income attributable to such Property by more than 15% as compared to the
immediately preceding comparable prior period. A Property shall cease to be a
Development Property once all improvements related to the renovation or
redevelopment of such Property have been substantially completed.

 

“Dollars” or “$” means the lawful currency of the United States of America.

 

“Domestic Subsidiary” means any Subsidiary that is incorporated or organized
under the laws of any state of the United States or the District of Columbia.

 

“EBITDA” means, with respect to a Person for any period (without duplication):
(a) net income (loss) of such Person for such period determined on a
consolidated basis (before minority interests), exclusive of the following (but
only to the extent included in determination of such net income (loss)): (i)
depreciation and amortization expense; (ii) Interest Expense; (iii) income tax
expense; (iv) extraordinary or non-recurring gains and losses; and (v) other
non-cash charges (other than non-cash charges that constitute an accrual of a
reserve for future cash payments) plus (b) such Person’s pro rata share of
EBITDA of its Unconsolidated Affiliates. EBITDA shall be adjusted to remove any
impact from (x) non-cash amortization of stock grants to members of the Parent’s
management, (y) straight line rent leveling adjustments required under GAAP and
(z) amortization of intangibles pursuant to Statement of Financial Accounting
Standards number 141.

 

“Effective Date” means the later of: (a) the Agreement Date; and (b) the date on
which all of the conditions precedent set forth in Section 6.1. shall have been
fulfilled or waived in writing by the Requisite Lenders.

 

“Eligible Assignee” means any Person who is: (i) currently a Lender or an
affiliate of a Lender; (ii) an Approved Fund; (iii) a commercial bank, trust,
trust company, insurance company, investment bank or pension fund organized
under the laws of the United States of America, or any state thereof, and having
total assets in excess of $5,000,000,000; (iv) a savings

 

- 7 -

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

and loan association or savings bank organized under the laws of the United
States of America, or any state thereof, and having a tangible net worth of at
least $500,000,000; or (v) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $10,000,000,000, provided that such bank is acting through a
branch or agency located in the United States of America. Notwithstanding the
foregoing, during any period in which an Event of Default exists under
subsections (a), (f) or (g) of Section 11.1., the term “Eligible Assignee” shall
mean any Person that is not an individual.

 

“Eligible Property” means a Property which satisfies all of the following
requirements: (a) such Property (i) is a Development Property or (ii) is a full
service, select service or extended stay lodging Property; (b) such Property is
currently open for business to the public and has been continuously operating
for the immediately preceding twelve month period; (c) such Property is branded
by a nationally recognized hotel company; (d) such Property is located in a
State of the United States of America, in the District of Columbia or in any
territories of the United States of America; (e) the Property is owned in fee
simple, or, with the consent of the Agent, leased under a Ground Lease entirely
by, the Borrower or a Subsidiary; (f) neither such Property, nor any interest of
the Borrower or any Subsidiary therein, is subject to any Lien (other than
Permitted Liens (but not Liens of the types described in clauses (f), (g) and
(i) of the definition of Permitted Liens)) or a Negative Pledge; (g) if such
Property is owned or leased by a Subsidiary (i) none of the Borrower’s direct or
indirect ownership interest in such Subsidiary is subject to any Lien (other
than Permitted Liens (but not Liens of the types described in clauses (f), (g)
and (i) of the definition of Permitted Liens)) or to a Negative Pledge; and (ii)
the Borrower directly, or indirectly through a Subsidiary, has the right to take
the following actions without the need to obtain the consent of any Person: (x)
to sell, transfer or otherwise dispose of such Property and (y) to create a Lien
on such Property as security for Indebtedness of the Borrower or such
Subsidiary, as applicable; (h) such Property is either managed by (i) the
Borrower or any of its Subsidiaries or (ii) a nationally recognized third-party
property management company or any of its affiliates approved by the Agent and
Requisite Lenders; provided, that Marriott International, Inc. and its
affiliates and Vail Resorts, Inc. and its affiliates shall be approved
third-party property management companies hereunder and (i) such Property is
free of all structural defects or title defects, environmental conditions or
other adverse matters except for defects, deficiencies, conditions or other
matters individually or collectively which are not material to the profitable
operation of such Property.

 

“Environmental Indemnity Agreement” means an Environmental Indemnity Agreement
executed by a Loan Party in favor of the Agent and the Lenders and substantially
in the form of Exhibit C.

 

“Environmental Laws” means any Applicable Law relating to environmental
protection or the manufacture, storage, remediation, disposal or clean-up of
Hazardous Materials including, without limitation, the following: Clean Air Act,
42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. § 1251
et seq.; Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; National Environmental
Policy Act, 42 U.S.C. § 4321 et seq.; regulations of the Environmental
Protection

 

- 8 -

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

Agency and any applicable rule of common law and any judicial interpretation
thereof relating primarily to the environment or Hazardous Materials.

 

“Equity Interest” means, with respect to any Person, any share of capital stock
of (or other ownership or profit interests in) such Person, any warrant, option
or other right for the purchase or other acquisition from such Person of any
share of capital stock of (or other ownership or profit interests in) such
Person, any security convertible into or exchangeable for any share of capital
stock of (or other ownership or profit interests in) such Person or warrant,
right or option for the purchase or other acquisition from such Person of such
shares (or such other interests), and any other ownership or profit interest in
such Person (including, without limitation, partnership, member or trust
interests therein), whether voting or nonvoting, and whether or not such share,
warrant, option, right or other interest is authorized or otherwise existing on
any date of determination.

 

“Equity Issuance” means any issuance by a Person of any Equity Interest in such
Person and shall in any event include the issuance of any Equity Interest upon
the conversion or exchange of any security constituting Indebtedness that is
convertible or exchangeable, or is being converted or exchanged, for Equity
Interests.

 

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

 

“ERISA Group” means the Borrower, any Subsidiary and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower or any Subsidiary, are
treated as a single employer under Section 414 of the Internal Revenue Code.

 

“Event of Default” means any of the events specified in Section 11.1., provided
that any requirement for notice or lapse of time or any other condition has been
satisfied.

 

“Excluded Subsidiary” means any Subsidiary as to which both of the following
apply (a) such Subsidiary holds title to, or beneficially owns, assets which are
or are intended to become collateral for any Secured Indebtedness of such
Subsidiary, or is a beneficial owner of a Subsidiary holding title to or
beneficially owning such assets (but having no material assets other than such
beneficial ownership interests); and (b) which (i) is, or is expected to be,
prohibited from Guarantying the Indebtedness of any other Person pursuant to any
document, instrument or agreement evidencing such Secured Indebtedness or (ii)
is prohibited from Guarantying the Indebtedness of any other Person pursuant a
provision of such Subsidiary’s organizational documents which provision was
included in such Subsidiary’s organizational documents as a condition to the
extension of such Secured Indebtedness.

 

“Fair Market Value” means, with respect to (a) a security listed on a national
securities exchange or the NASDAQ National Market, the price of such security as
reported on such exchange by any widely recognized reporting method customarily
relied upon by financial institutions and (b) with respect to any other
property, the price which could be negotiated in an arm’s-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
which is under pressure or compulsion to complete the transaction.

 

- 9 -

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

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward to
the nearest 1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided
that (a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Agent by
federal funds dealers selected by the Agent on such day on such transaction as
determined by the Agent.

 

“Fees” means the fees and commissions provided for or referred to in Section
3.6. and any other fees payable by the Borrower hereunder or under any other
Loan Document.

 

“FF&E Reserves” means, for any period and with respect to a Property, an amount
equal to 4.0% of total gross revenues for such Property for such period. If the
term FF&E Reserves is used without reference to a specific Property, then the
amount shall be determined on an aggregate basis with respect to all Properties
of the Parent and its Subsidiaries and a proportionate share of all Properties
of all Unconsolidated Affiliates.

 

“FIRREA” means the Financial Institution Recovery, Reform and Enforcement Act of
1989, as amended.

 

“Fixed Charges” means, for any period, the sum of (a) Interest Expense of the
Parent and its Subsidiaries determined on a consolidated basis for such period,
(b) all regularly scheduled principal payments made with respect to Indebtedness
of the Parent and its Subsidiaries during such period, other than any balloon,
bullet or similar principal payment which repays such Indebtedness in full, and
(c) all Preferred Dividends paid during such period on Preferred Equity
Interests not owned by the Parent or any of its Subsidiaries. The Parent’s pro
rata share of the Fixed Charges of Unconsolidated Affiliates of the Parent shall
be included in determinations of Fixed Charges.

 

“Floating Rate Indebtedness” means all Indebtedness of a Person which bears
interest at a variable rate during the scheduled life of such Indebtedness and
for which such Person has not obtained interest rate swap agreements, interest
rate “cap” or “collar” agreements or other similar Derivatives Contracts which
effectively cause such variable rates to be equivalent to fixed rates or subject
to maximum interest rates which, in each case, are reasonably acceptable to the
Agent.

 

“Foreign Subsidiary” means a Subsidiary that is not a Domestic Subsidiary.

 

“Funds Available For Distribution” means, for any period, the Funds From
Operations of the Parent and its Subsidiaries determined on a consolidated basis
for such period, less the sum of the following items for such period (to the
extent not already deducted in calculating Funds From Operations): (i) FF&E
Reserves, (ii) all regularly scheduled principal payments

 

- 10 -

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

made to third parties with respect to Indebtedness of the Parent and its
Subsidiaries (including such payments in respect of any Indebtedness of
Unconsolidated Affiliates), other than any balloon, bullet or similar principal
payment which repays such Indebtedness in full and (iii) income taxes, if any,
to the extent not already deducted in the determination of net income, in each
case determined on a consolidated basis for the Borrower and its Subsidiaries in
accordance with GAAP. Funds Available For Distribution shall be adjusted to
remove any impact from (a) non-cash amortization of stock grants to members of
the Parent’s management, (b) straight line rent leveling adjustments required
under GAAP, (c) amortization of intangibles pursuant to Statement of Financial
Accounting Standards number 141 and (d) other non-cash charges (other than
non-cash charges that constitute an accrual of a reserve for future cash
payments).

 

“Funds From Operations” means, with respect to a Person and for a given period,
(a) net income (loss) of such Person determined on a consolidated basis for such
period minus (or plus) (b) gains (or losses) from debt restructuring and sales
of property during such period plus (c) depreciation with respect to such
Person’s real estate assets and amortization of such Person for such period, all
after adjustment for unconsolidated partnerships and joint ventures. Adjustments
for Unconsolidated Affiliates will be calculated to reflect funds from
operations on the same basis.

 

“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination.

 

“Governmental Approvals” means all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.

 

“Governmental Authority” means any national, state or local government (whether
domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau, commission, board, department or other entity
(including, without limitation, the Federal Deposit Insurance Corporation, the
Comptroller of the Currency or the Federal Reserve Board, any central bank or
any comparable authority) or any arbitrator with authority to bind a party at
law.

 

“Ground Lease” means a ground lease containing the following terms and
conditions: (a) a remaining term (exclusive of any unexercised extension
options) of 25 years or more from the Agreement Date; (b) the right of the
lessee to mortgage and encumber its interest in the leased property without the
consent of the lessor, or, if consent is required, such consent has been
obtained; (c) the obligation of the lessor to give the holder of any mortgage
Lien on such leased property written notice of any defaults on the part of the
lessee and agreement of such lessor that such lease will not be terminated until
such holder has had a reasonable opportunity to cure or complete foreclosures,
and fails to do so; (d) reasonable transferability of the lessee’s interest
under such lease, including ability to sublease; and (e) such other rights
customarily required by

 

- 11 -

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

mortgagees making a loan secured by the interest of the holder of the leasehold
estate demised pursuant to a ground lease.

 

“Guarantor” means any Person that is a party to the Guaranty as a “Guarantor”
and in any event shall include each Material Subsidiary (other than Excluded
Subsidiaries and Foreign Subsidiaries).

 

“Guaranty”, “Guaranteed”, “Guarantying” or to “Guarantee” as applied to any
obligation means and includes: (a) a guaranty (other than by endorsement of
negotiable instruments for collection or deposit in the ordinary course of
business), directly or indirectly, in any manner, of any part or all of such
obligation, or (b) an agreement, direct or indirect, contingent or otherwise,
and whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation whether by: (i) the
purchase of securities or obligations, (ii) the purchase, sale or lease (as
lessee or lessor) of property or the purchase or sale of services primarily for
the purpose of enabling the obligor with respect to such obligation to make any
payment or performance (or payment of damages in the event of nonperformance) of
or on account of any part or all of such obligation, or to assure the owner of
such obligation against loss, (iii) the supplying of funds to or in any other
manner investing in the obligor with respect to such obligation, (iv) repayment
of amounts drawn down by beneficiaries of letters of credit (including Letters
of Credit), or (v) the supplying of funds to or investing in a Person on account
of all or any part of such Person’s obligation under a Guaranty of any
obligation or indemnifying or holding harmless, in any way, such Person against
any part or all of such obligation. As the context requires, “Guaranty” shall
also mean the Guaranty to which the Guarantors are parties substantially in the
form of Exhibit D.

 

“Hazardous Materials” means all or any of the following: (a) substances that are
defined or listed in, or otherwise classified pursuant to, any applicable
Environmental Laws as “hazardous substances”, “hazardous materials”, “hazardous
wastes”, “toxic substances” or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, “TCLP” toxicity
or “EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural
gas, natural gas liquids or synthetic gas and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; (d) asbestos in any form; (e) toxic
mold; and (f) electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million.

 

“Implied Debt Service” means, for any period, an amount equal to the annual
principal and interest payment sufficient to amortize in full during a 25-year
period the aggregate principal balance of Loans and the amount of all Letter of
Credit Liabilities outstanding during such period calculated using an interest
rate equal to the greater of (i) the yield on a 10 year United States Treasury
Note at such time as determined by the Agent plus 1.75% or (ii) 7.00%.

 

“Indebtedness” means, with respect to a Person, at the time of computation
thereof, all of the following (without duplication): (a) all obligations of such
Person in respect of money

 

- 12 -

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

borrowed (other than trade debt incurred in the ordinary course of business
which is not more than 180 days past due); (b) all obligations of such Person,
whether or not for money borrowed (i) represented by notes payable, or drafts
accepted, in each case representing extensions of credit, (ii) evidenced by
bonds, debentures, notes or similar instruments, or (iii) constituting purchase
money indebtedness, conditional sales contracts, title retention debt
instruments or other similar instruments, upon which interest charges are
customarily paid or that are issued or assumed as full or partial payment for
property or services rendered; (c) Capitalized Lease Obligations of such Person;
(d) all reimbursement obligations of such Person under any letters of credit or
acceptances (whether or not the same have been presented for payment); (e) all
Off-Balance Sheet Obligations of such Person; (f) all obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in respect of
any Mandatorily Redeemable Stock issued by such Person or any other Person,
valued at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends; (g) all obligations of such Person in respect
of any purchase obligation, repurchase obligation, takeout commitment or forward
equity commitment, in each case evidenced by a binding agreement (excluding any
such obligation to the extent the obligation can be satisfied by the issuance of
Equity Interests (other than Mandatorily Redeemable Stock)); (h) net obligations
under any Derivatives Contract not entered into as a hedge against existing
Indebtedness, in an amount equal to the Derivatives Termination Value thereof;
(i) all Indebtedness of other Persons which such Person has Guaranteed or is
otherwise recourse to such Person (except for guaranties of customary exceptions
for fraud, misapplication of funds, environmental indemnities and other similar
exceptions to recourse liability (but not exceptions relating to bankruptcy,
insolvency, receivership or other similar events)); (j) all Indebtedness of
another Person secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
or assets owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness or other payment obligation;
and (k) such Person’s pro rata share of the Indebtedness of any Unconsolidated
Affiliate of such Person. Indebtedness of any Person shall include Indebtedness
of any partnership or joint venture in which such Person is a general partner or
joint venturer to the extent of such Person’s pro rata share of the ownership of
such partnership or joint venture (except if such Indebtedness, or portion
thereof, is recourse (other than in respect of exceptions referred to in the
definition of Nonrecourse Indebtedness) to such Person, in which case the
greater of such Person’s pro rata portion of such Indebtedness or the amount of
such recourse portion of the Indebtedness, shall be included as Indebtedness of
such Person). All Loans and Letter of Credit Liabilities shall constitute
Indebtedness of the Borrower.

 

“Intellectual Property” has the meaning given that term in Section 7.1.(t).

 

“Interest Expense” means, for any period, without duplication, (a) total
interest expense of the Parent and its Subsidiaries, including capitalized
interest not funded under a construction loan interest reserve account,
determined on a consolidated basis for such period, plus (b) the Parent’s pro
rata share of Interest Expense of Unconsolidated Affiliates for such period.

 

“Interest Period” means with respect to any LIBOR Loan, each period commencing
on the date such LIBOR Loan is made or the last day of the next preceding
Interest Period for such Loan and ending 1, 2, 3 or 6 months thereafter, as the
Borrower may select in a Notice of

 

- 13 -

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

Borrowing, Notice of Continuation or Notice of Conversion, as the case may be,
except that each Interest Period that commences on the last Business Day of a
calendar month shall end on the last Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (i) if any Interest Period would
otherwise end after the Termination Date, such Interest Period shall end on the
Termination Date; and (ii) each Interest Period that would otherwise end on a
day which is not a Business Day shall end on the immediately following Business
Day (or, if such immediately following Business Day falls in the next calendar
month, on the immediately preceding Business Day).

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

 

“Investment” means, with respect to any Person, any acquisition or investment
(whether or not of a controlling interest) by such Person, by means of any of
the following: (a) the purchase or other acquisition of any Equity Interest in
another Person, (b) a loan, advance or extension of credit to, capital
contribution to, Guaranty of Indebtedness of, or purchase or other acquisition
of any Indebtedness of, another Person, including any partnership or joint
venture interest in such other Person, or (c) the purchase or other acquisition
(in one transaction or a series of transactions) of assets of another Person
that constitute the business or a division or operating unit of another Person.
Any binding commitment to make an Investment in any other Person, as well as any
option of another Person to require an Investment in such Person, shall
constitute an Investment. Except as expressly provided otherwise, for purposes
of determining compliance with any covenant contained in a Loan Document, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.

 

“L/C Commitment Amount” equals $25,000,000.

 

“Lender” means each financial institution from time to time party hereto as a
“Lender” and as the context requires, includes the Swingline Lender.

 

“Lending Office” means, for each Lender and for each Type of Loan, the office of
such Lender specified as such on its signature page hereto or in the applicable
Assignment and Acceptance Agreement, or such other office of such Lender of
which such Lender may notify the Agent in writing from time to time.

 

“Letter of Credit” has the meaning given that term in Section 2.3.(a).

 

“Letter of Credit Documents” means, with respect to any Letter of Credit,
collectively, any application therefor, any certificate or other document
presented in connection with a drawing under such Letter of Credit and any other
agreement, instrument or other document governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations.

 

“Letter of Credit Liabilities” means, without duplication, at any time and in
respect of any Letter of Credit, the sum of (a) the Stated Amount of such Letter
of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement
Obligations of the Borrower at such

 

- 14 -

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

time due and payable in respect of all drawings made under such Letter of
Credit. For purposes of this Agreement, a Lender (other than the Lender acting
as the Agent) shall be deemed to hold a Letter of Credit Liability in an amount
equal to its participation interest in the related Letter of Credit under
Section 2.3.(i), and the Lender acting as the Agent shall be deemed to hold a
Letter of Credit Liability in an amount equal to its retained interest in the
related Letter of Credit after giving effect to the acquisition by the Lenders
other than the Lender acting as the Agent of their participation interests under
such Section.

 

“Level” has the meaning given that term in the definition of the term
“Applicable Margin.”

 

“LIBOR” means, for any LIBOR Loan for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not available, the term
“LIBOR” shall mean, for any LIBOR Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on the Reuters Screen LIBO Page as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
the Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean
of all such rates. If for any reason none of the foregoing rates is available,
LIBOR shall be, for any Interest Period, the rate per annum reasonably
determined by the Agent as the rate of interest at which Dollar deposits in the
approximate amount of the LIBOR Loan comprising part of such borrowing would be
offered by the Agent to major banks in the London interbank Eurodollar market at
their request at or about 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period.

 

“LIBOR Loan” means a Revolving Loan bearing interest at a rate based on LIBOR.

 

“Lien” as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, assignment
of leases and rents, pledge, lien, charge or lease constituting a Capitalized
Lease Obligation, conditional sale or other title retention agreement, or other
security title or encumbrance of any kind in respect of any property of such
Person, or upon the income, rents or profits therefrom; (b) any arrangement,
express or implied, under which any property of such Person is transferred,
sequestered or otherwise identified for the purpose of subjecting the same to
the payment of Indebtedness or performance of any other obligation in priority
to the payment of the general, unsecured creditors of such Person; (c) the
filing of any financing statement under the Uniform Commercial Code or its
equivalent in any jurisdiction, other than any precautionary filing not
otherwise constituting or giving rise to a Lien, including a financing statement
filed (i) in respect of a lease not constituting a Capitalized Lease Obligation
pursuant to Section 9-505 (or a successor provision) of the Uniform Commercial
Code or its equivalent as in effect in an applicable jurisdiction or (ii) in
connection with a sale or other disposition of accounts or other assets not
prohibited by this

 

- 15 -

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

Agreement in a transaction not otherwise constituting or giving rise to a Lien;
and (d) any agreement by such Person to grant, give or otherwise convey any of
the foregoing.

 

“Loan” means a Revolving Loan or a Swingline Loan.

 

“Loan Document” means this Agreement, each Note, each Letter of Credit Document,
the Guaranty, each Security Document and each other document or instrument now
or hereafter executed and delivered by a Loan Party in connection with, pursuant
to or relating to this Agreement.

 

“Loan Party” means the Borrower, the Parent and each other Guarantor. Schedule
1.1.(A) sets forth the Loan Parties in addition to the Borrower and the Parent
as of the Agreement Date.

 

“Mandatorily Redeemable Stock” means, with respect to any Person, any Equity
Interest of such Person which by the terms of such Equity Interest (or by the
terms of any security into which it is convertible or for which it is
exchangeable or exercisable), upon the happening of any event or otherwise (a)
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise (other than an Equity Interest to the extent redeemable in exchange
for common stock or other equivalent common Equity Interests), (b) is
convertible into or exchangeable or exercisable for Indebtedness or Mandatorily
Redeemable Stock, or (c) is redeemable at the option of the holder thereof, in
whole or in part (other than an Equity Interest which is redeemable solely in
exchange for common stock or other equivalent common Equity Interests), in each
case on or prior to the date on which all Revolving Loans are scheduled to be
due and payable in full.

 

“Marketable Securities” means (a) bank deposits and certificates of deposit from
a bank rated Baa1 or BBB+ or better by a Rating Agency; (b) government
obligations; and (c) commercial paper rated A1 or P1 by a Rating Agency.

 

“Material Adverse Effect” means a materially adverse effect on (a) the business,
assets, liabilities, financial condition or results of operations of the Parent
and its Subsidiaries, or the Borrower and its Subsidiaries, in each case, taken
as a whole, (b) the ability of the Borrower or any other Loan Party to perform
its obligations under any Loan Document to which it is a party, (c) the validity
or enforceability of any of the material provisions of the Loan Documents, or
(d) the material rights and remedies of the Lenders and the Agent under any of
the Loan Documents.

 

“Material Contract” means any contract or other arrangement (other than Loan
Documents), whether written or oral, to which the Parent, the Borrower, or any
other Subsidiary is a party as to which the breach, nonperformance, cancellation
or failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.

 

“Material Subsidiary” means any Subsidiary to which more than 5% of Total Asset
Value is attributable on an individual basis.

 

- 16 -

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

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

 

“Mortgage” means a mortgage, deed of trust, deed to secure debt or similar
security instrument made by a Person owning an interest in real property
granting a Lien on such interest in real property as security for the payment of
Indebtedness of such Person or another Person.

 

“Mortgage Receivable” means a promissory note secured by a Mortgage of which the
Parent, the Borrower or another Subsidiary is the holder and retains the rights
of collection of all payments thereunder.

 

“Multiemployer Plan” means at any time a multiemployer plan within the meaning
of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then
making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions, including for these purposes any
Person which ceased to be a member of the ERISA Group during such five year
period.

 

“Negative Pledge” means, with respect to a given asset, any provision of a
document, instrument or agreement (other than any Loan Document) which prohibits
or purports to prohibit the creation or assumption of any Lien on such asset as
security for Indebtedness of the Person owning such asset or any other Person;
provided, however, that an agreement that conditions a Person’s ability to
encumber its assets upon the maintenance of one or more specified ratios that
limit such Person’s ability to encumber its assets but that do not generally
prohibit the encumbrance of its assets, or the encumbrance of specific assets,
shall not constitute a Negative Pledge.

 

“Net Operating Income” or “NOI” means, for any Property and for a given period,
the sum of the following (without duplication and determined on a consistent
basis with prior periods): (a) gross revenues received in the ordinary course
from such Property minus (b) all expenses paid (excluding interest but including
an appropriate accrual for property taxes and insurance) related to the
ownership, operation or maintenance of such Property, including but not limited
to property taxes, assessments and the like, insurance, utilities, payroll
costs, maintenance, repair and landscaping expenses, marketing expenses, and
general and administrative expenses (including an appropriate allocation for
legal, accounting, advertising, marketing and other expenses incurred in
connection with such Property, but specifically excluding general overhead
expenses of the Borrower or any Subsidiary and any property management fees)
minus (c) the FF&E Reserves for such Property as of the end of such period minus
(d) the greater of (i) the actual property management fee paid during such
period and (ii) an imputed management fee in the amount of three percent (3.0%)
of the gross revenues for such Property for such period.

 

“Net Proceeds” means with respect to any Equity Issuance by a Person, the
aggregate amount of all cash and the Fair Market Value of all other property
(other than securities of such Person being converted or exchanged in connection
with such Equity Issuance) received by such Person in respect of such Equity
Issuance net of investment banking fees, legal fees, accountants’ fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection with such Equity Issuance.

 

- 17 -

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

“Nonrecourse Indebtedness” means, with respect to a Person, (a) Indebtedness for
borrowed money in respect of which recourse for payment (except for customary
exceptions for fraud, misapplication of funds, environmental indemnities, and
other similar exceptions to recourse liability (but not exceptions relating to
bankruptcy, insolvency, receivership or other similar events)) is contractually
limited to specific assets of such Person encumbered by a Lien securing such
Indebtedness or (b) if such Person is a Single Asset Entity, any Indebtedness
for borrowed money of such Person.

 

“Note” means a Revolving Note or a Swingline Note.

 

“Notice of Borrowing” means a notice in the form of Exhibit E to be delivered to
the Agent pursuant to Section 2.1.(b) evidencing the Borrower’s request for a
borrowing of Revolving Loans.

 

“Notice of Continuation” means a notice in the form of Exhibit F to be delivered
to the Agent pursuant to Section 2.8. evidencing the Borrower’s request for the
Continuation of a LIBOR Loan.

 

“Notice of Conversion” means a notice in the form of Exhibit G to be delivered
to the Agent pursuant to Section 2.9. evidencing the Borrower’s request for the
Conversion of a Loan from one Type to another Type.

 

“Notice of Swingline Borrowing” means a notice in the form of Exhibit H to be
delivered to the Agent pursuant to Section 2.2. evidencing the Borrower’s
request for a borrowing of Swingline Loans.

 

“Obligations” means, individually and collectively: (a) the aggregate principal
balance of, and all accrued and unpaid interest on, all Loans; (b) all
Reimbursement Obligations and all other Letter of Credit Liabilities; and (c)
all other indebtedness, liabilities, obligations, covenants and duties of the
Borrower and the other Loan Parties owing to the Agent or any Lender of every
kind, nature and description, under or in respect of this Agreement or any of
the other Loan Documents, including, without limitation, the Fees and
indemnification obligations, whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any promissory note.

 

“OFAC” means U.S. Department of the Treasury’s Office of Foreign Assets Control
and any successor Governmental Authority.

 

“Off-Balance Sheet Obligations” means liabilities and obligations of the Parent,
any Subsidiary or any other Person in respect of “off-balance sheet
arrangements” (as defined in the SEC Off-Balance Sheet Rules) which the Parent
would be required to disclose in the “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” section of the Parent’s report on
Form 10-Q or Form 10-K (or their equivalents) which the Parent is required to
file with the Securities and Exchange Commission (or any Governmental Authority
substituted therefor). As used in this definition, the term “SEC Off-Balance
Sheet Rules” means

 

- 18 -

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

the Disclosure in Management’s Discussion and Analysis About Off-Balance Sheet
Arrangements, Securities Act Release No. 33-8182, 68 Fed. Reg. 5982 (Feb. 5,
2003) (codified at 17 CFR pts. 228, 229 and 249).

 

“Parent” has the meaning given such term in the introductory paragraph hereof.

 

“Participant” has the meaning given that term in Section 13.5.(c).

 

“PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.

 

“Permitted Liens” means, as to any Person: (a) Liens securing taxes, assessments
and other charges or levies imposed by any Governmental Authority (excluding any
Lien imposed pursuant to any of the provisions of ERISA or pursuant to any
Environmental Laws) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, which are not at the time required to be paid
or discharged under Section 8.6.; (b) Liens consisting of deposits or pledges
made, in the ordinary course of business, in connection with, or to secure
payment of, obligations under workers’ compensation, unemployment insurance or
similar Applicable Laws; (c) Liens consisting of encumbrances in the nature of
zoning restrictions, easements, and rights or restrictions of record on the use
of real property, which do not materially detract from the value of such
property or impair the intended use thereof in the business of such Person; (d)
the rights of tenants under leases or subleases not interfering with the
ordinary conduct of business of such Person; (e) Liens in favor of the Agent for
the benefit of the Lenders; (f) Liens in favor of the Borrower or a Guarantor
securing obligations owing by a Subsidiary to the Borrower or a Guarantor; (g)
Liens in existence as of the Agreement Date and set forth in Part II of Schedule
7.1.(f); (h) in the case of any Collateral encumbered by a Security Document,
other Liens expressly permitted by such Security Document; (i) Liens arising out
of judgments or awards in respect of the Parent or any of its Subsidiaries not
constituting an Event of Default under Section 11.1.(i); (j) Liens with respect
to which a title insurance company acceptable to the Agent has insured the Agent
and the Lenders against pursuant to an ALTA 1992 Form mortgagee’s Policy of
Title Insurance or other form acceptable to the Agent in favor of the Agent for
the benefit of the Lenders; and (k) any interest or title of a lessor under any
lease of equipment (not constituting a fixture) entered into by the Borrower or
any Subsidiary in the ordinary course of its business and covering only the
assets so leased.

 

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.

 

“Plan” means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (a) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (b) has at any time within the
preceding five years been maintained, or contributed to, by any Person which was
at such time a member of the ERISA Group for employees of any Person which was
at such time a member of the ERISA Group.

 

- 19 -

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

“Pledge Agreement” means the Pledge Agreement to which the Pledgors are parties
substantially in the form of Exhibit O.

 

“Pledgor” means, initially, each of the Persons set forth on Schedule 1.1.(B),
together with any other Person that becomes a “Pledgor” under the Pledge
Agreement.

 

“Post-Default Rate” means, in respect of any principal of any Loan or any other
Obligation that is not paid when due (whether at stated maturity, by
acceleration, by mandatory prepayment or otherwise), a rate per annum equal to
the Base Rate as in effect from time to time plus the Applicable Margin for Base
Rate Loans plus two percent (2.0%).

 

“Preferred Dividends” means, for any period and without duplication, all
Restricted Payments paid during such period on Preferred Equity Interests issued
by the Parent or a Subsidiary. Preferred Dividends shall not include dividends
or distributions (a) paid or payable solely in Equity Interests (other than
Mandatorily Redeemable Stock) payable to holders of such class of Equity
Interests, (b) paid or payable to the Parent or a Subsidiary, or (c)
constituting or resulting in the redemption of Preferred Equity Interests, other
than scheduled redemptions not constituting balloon, bullet or similar
redemptions in full.

 

“Preferred Equity Interests” means, with respect to any Person, Equity Interests
in such Person which are entitled to preference or priority over any other
Equity Interest in such Person in respect of the payment of dividends or
distribution of assets upon liquidation or both.

 

“Prime Rate” means the rate of interest per annum announced publicly by the
Lender then acting as the Agent as its prime rate from time to time. The Prime
Rate is not necessarily the best or the lowest rate of interest offered by the
Lender acting as the Agent or any other Lender.

 

“Principal Office” means the office of the Agent located at One Wachovia Center,
Charlotte, North Carolina, or such other office of the Agent as the Agent may
designate from time to time.

 

“Property” means any parcel of real property owned or leased (in whole or in
part) or operated by the Parent, the Borrower, any other Subsidiary or any
Unconsolidated Affiliate of the Parent and which is located in a state of the
United States of America or the District of Columbia.

 

“Property Management Agreement” means, collectively, all agreements entered into
by a Loan Party pursuant to which such Loan Party engages a Person to advise it
with respect to the management of a Collateral Property.

 

“Property Management Contract Assignment” means a Property Management Contract
Assignment executed by a Loan Party in favor of the Agent for the benefit of the
Lenders substantially in the form of Exhibit I or otherwise in form and
substance reasonably

 

- 20 -

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

satisfactory to the Agent. Such document may, at the Agent’s election,
constitute a subordination of Property Management Agreement, rather than an
assignment thereof.

 

“Qualified REIT Subsidiary” shall have the meaning given to such term in the
Internal Revenue Code.

 

“Register” has the meaning given that term in Section 13.5.(e).

 

“Regulatory Change” means, with respect to any Lender, any change effective
after the Agreement Date in Applicable Law (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks, including such Lender, of or under any Applicable
Law (whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy.

 

“Reimbursement Obligation” means the absolute, unconditional and irrevocable
obligation of the Borrower to reimburse the Agent for any drawing honored by the
Agent under a Letter of Credit.

 

“REIT” means a Person qualifying for treatment as a “real estate investment
trust” under the Internal Revenue Code.

 

“Requisite Lenders” means, as of any date, Lenders having greater than 50% of
the aggregate amount of the Commitments (not held by Defaulting Lenders who are
not entitled to vote), or, if the Commitments have been terminated or reduced to
zero, Lenders holding greater than 50% of the principal amount of the aggregate
outstanding Loans and Letter of Credit Liabilities (not held by Defaulting
Lenders who are not entitled to vote); provided, that in connection with
amendments, approvals, waivers and consents under Article IV (and any related
defined terms contained therein and the defined term “Approved Interest
Reserve”), at any time in which there are only three or fewer Lenders,
“Requisite Lenders” shall mean all Lenders. Commitments, Revolving Loans and
Letter of Credit Liabilities held by Defaulting Lenders shall be disregarded
when determining the Requisite Lenders.

 

“Responsible Officer” means with respect to the Parent, the Borrower or any
Subsidiary, the chief executive officer, the chief financial officer or any
other senior executive officer of the Parent, the Borrower or such Subsidiary.

 

“Restricted Payment” means: (a) any dividend or other distribution, direct or
indirect, on account of any Equity Interest of the Parent, the Borrower or any
Subsidiary now or hereafter outstanding, except a dividend payable solely in
Equity Interests; (b) any redemption, conversion, exchange, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any Equity Interest of the Parent, the Borrower or any Subsidiary
now or hereafter outstanding; and (c) any payment made to retire, or to obtain
the surrender of,

 

- 21 -

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

any outstanding warrants, options or other rights to acquire any Equity
Interests of the Parent, the Borrower or any Subsidiary now or hereafter
outstanding.

 

“Revolving Loan” means a loan made by a Lender to the Borrower pursuant to
Section 2.1.(a).

 

“Revolving Note” has the meaning given that term in Section 2.10.(a).

 

“Sanctioned Entity” means (a) an agency of the government of, (b) an
organization directly or indirectly controlled by, or (c) a Person resident in,
in each case, a country that is subject to a sanctions program identified on the
list maintained by the OFAC and published from time to time, as such program may
be applicable to such agency, organization or Person.

 

“Sanctioned Person” means a Person named on the list of Specially Designated
Nationals or Blocked Persons maintained by the OFAC as published from time to
time.

 

“Secured Indebtedness” means, with respect to any Person, (a) all Indebtedness
of such Person that is secured in any manner by any Lien on any Property plus
(b) such Person’s pro rata share of the Secured Indebtedness of any of such
Person’s Unconsolidated Affiliates.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
together with all rules and regulations issued thereunder.

 

“Security Deed” means a deed to secure debt, deed of trust or other mortgage
executed by a Loan Party in favor of the Agent and substantially in the form of
Exhibit J or otherwise in form and substance reasonably satisfactory to the
Agent.

 

“Security Document” means any Security Deed, any Assignment of Contracts,
Documents and Rights, and Assignment of Franchise Agreement, any Assignment of
Leases and Rents, any Property Management Contract Assignments, the Pledge
Agreement and any other security agreement, financing statement, or other
document, instrument or agreement creating, evidencing or perfecting the Agent’s
Liens in any of the Collateral.

 

“Significant Subsidiary” means any Subsidiary to which more than $10,000,000 of
Total Asset Value is attributable.

 

“Single Asset Entity” means a Person (other than an individual) that (a) only
owns a single Property; (b) is engaged only in the business of owning,
developing and/or leasing such Property; and (c) receives substantially all of
its gross revenues from such Property. In addition, if the assets of a Person
consist solely of (i) Equity Interests in one other Single Asset Entity and (ii)
cash and other assets of nominal value incidental to such Person’s ownership of
the other Single Asset Entity, such Person shall also be deemed to be a Single
Asset Entity for purposes of this Agreement.

 

“Solvent” means, when used with respect to any Person, that (a) the fair value
and the fair salable value of its assets (excluding any Indebtedness due from
any affiliate of such Person)

 

- 22 -

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

are each in excess of the fair valuation of its total liabilities (including all
contingent liabilities computed at the amount which, in light of all the facts
and circumstances existing at such time, represents the amount that could
reasonably be expected to become an actual and matured liability); (b) such
Person is able to pay its debts or other obligations in the ordinary course as
they mature; and (c) such Person has capital not unreasonably small to carry on
its business and all business in which it proposes to be engaged.

 

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc.

 

“Stated Amount” means the amount available to be drawn by a beneficiary under a
Letter of Credit from time to time, as such amount may be increased or reduced
from time to time in accordance with the terms of such Letter of Credit.

 

“Subsidiary” means, for any Person, any corporation, partnership or other entity
of which at least a majority of the Equity Interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors or other
individuals performing similar functions of such corporation, partnership or
other entity (without regard to the occurrence of any contingency) is at the
time owned or controlled by such Person or one or more Subsidiaries of such
Person or by such Person and one or more Subsidiaries of such Person, and shall
include all Persons the accounts of which are consolidated with those of such
Person pursuant to GAAP.

 

“Swingline Commitment” means the Swingline Lender’s obligation to make Swingline
Loans pursuant to Section 2.2. in an amount up to, but not exceeding,
$20,000,000, as such amount may be reduced from time to time in accordance with
the terms hereof.

 

“Swingline Lender” means Wachovia Bank, National Association.

 

“Swingline Loan” means a loan made by the Swingline Lender to the Borrower
pursuant to Section 2.2.(a).

 

“Swingline Note” means the promissory note of the Borrower payable to the order
of the Swingline Lender in a principal amount equal to the amount of the
Swingline Commitment as originally in effect and otherwise duly completed,
substantially in the form of Exhibit K.

 

“Taxable REIT Subsidiary” means any corporation (other than a REIT) in which the
Parent directly or indirectly owns stock and the Parent and such corporation
have jointly elected that such corporation be treated as a taxable REIT
subsidiary of the Parent under and pursuant to Section 856 of the Internal
Revenue Code.

 

“Taxes” has the meaning given that term in Section 3.12.

 

“Termination Date” means July 8, 2008, or such later date to which the
Termination Date may be extended pursuant to Section 2.12.

 

- 23 -

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

“Tie-In Jurisdiction” means a jurisdiction in which a “tie-in” endorsement may
be obtained for a title insurance policy covering property located in such
jurisdiction which endorsement effectively ties coverage to other title
insurance policies covering properties located in other jurisdictions.

 

“Titled Agents” means each Tri-Lead Arranger, Tri-Bookrunner and Syndication
Agent.

 

“Total Asset Value” means the sum of all of the following of the Borrower and
its Subsidiaries on a consolidated basis determined in accordance with GAAP
applied on a consistent basis: (a) cash, Cash Equivalents and Marketable
Securities, plus (b) with respect to each Property owned by the Borrower or any
Subsidiary (other than Unimproved Land), the Appraised Value of such Property,
as updated on an annual basis and reasonably approved by the Agent pursuant to
Section 4.5., plus (c) with respect to any Property (other than Unimproved Land)
acquired during the most recent fiscal quarter where the Appraised Value is not
available for such Property, the book value of such Property, plus (d) the book
value of Unimproved Land, Mortgage Receivables and other promissory notes, plus
(e) the Borrower’s pro rata share of the preceding items for its Unconsolidated
Affiliates (excluding assets of the type described in the immediately preceding
clause (a)). Notwithstanding the foregoing, for purposes of determining Total
Asset Value, the amount, if any, by which the value of Marketable Securities
included under the immediately preceding clause (a) would account for more than
2.5% of Total Asset Value shall be excluded.

 

“Total Indebtedness” means all Indebtedness of the Parent, the Borrower and all
other Subsidiaries of the Parent determined on a consolidated basis.

 

“Type” with respect to any Revolving Loan, refers to whether such Loan is a
LIBOR Loan or Base Rate Loan.

 

“Unconsolidated Affiliate” means, with respect to any Person, any other Person
in whom such Person holds an Investment, which Investment is accounted for in
the financial statements of such Person on an equity basis of accounting and
whose financial results would not be consolidated under GAAP with the financial
results of such Person on the consolidated financial statements of such Person.

 

“Unfunded Liabilities” means, with respect to any Plan at any time, the amount
(if any) by which (a) the value of all benefit liabilities under such Plan,
determined on a plan termination basis using the assumptions prescribed by the
PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market value of
all Plan assets allocable to such liabilities under Title IV of ERISA (excluding
any accrued but unpaid contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the ERISA Group to the PBGC or any other
Person under Title IV of ERISA.

 

“Unimproved Land” means land on which no development (other than improvements
that are not material and are temporary in nature) has occurred and for which no
development is scheduled in the following 12 months.

 

- 24 -

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

“Wachovia” means Wachovia Bank, National Association.

 

“Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which
all of the equity securities or other ownership interests (other than, in the
case of a corporation, directors’ qualifying shares) are at the time directly or
indirectly owned or controlled by such Person or one or more other Subsidiaries
of such Person or by such Person and one or more other Subsidiaries of such
Person.

 

Section 1.2. General; References to Times.

 

Unless otherwise indicated, all accounting terms, ratios and measurements shall
be interpreted or determined in accordance with GAAP; provided that, if at any
time any change in GAAP would affect the computation of any financial ratio or
requirement set forth in any Loan Document, such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein and
the Borrower shall provide to the Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.
References in this Agreement to “Sections”, “Articles”, “Exhibits” and
“Schedules” are to sections, articles, exhibits and schedules herein and hereto
unless otherwise indicated. References in this Agreement to any document,
instrument or agreement (a) shall include all exhibits, schedules and other
attachments thereto, (b) shall include all documents, instruments or agreements
issued or executed in replacement thereof, to the extent permitted hereby and
(c) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, supplemented, restated or otherwise modified as
of the date of this Agreement and from time to time thereafter to the extent not
prohibited hereby and in effect at any given time. A reference to a Person shall
include its successors and permitted assigns. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter.
Unless explicitly set forth to the contrary, a reference to “Subsidiary” means a
Subsidiary of the Parent or a Subsidiary of such Subsidiary and a reference to
an “Affiliate” means a reference to an Affiliate of the Parent. Titles and
captions of Articles, Sections, subsections and clauses in this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement. Unless otherwise indicated, all references to time are references to
Charlotte, North Carolina time.

 

Section 1.3. Financial Attributes of Non-Wholly Owned Subsidiaries.

 

When determining compliance by the Borrower or the Parent with any financial
covenant contained in any of the Loan Documents, only the pro rata share of the
Borrower or the Parent, as applicable, of the financial attributes of a
Subsidiary that is not a Wholly Owned Subsidiary shall be included.

 

- 25 -

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

ARTICLE II. CREDIT FACILITY

 

Section 2.1. Revolving Loans.

 

(a) Generally. Subject to the terms and conditions hereof, during the period
from the Effective Date to but excluding the Termination Date, each Lender
severally and not jointly agrees to make Revolving Loans to the Borrower in an
aggregate principal amount at any one time outstanding up to, but not exceeding,
the lesser of (a) the amount of such Lender’s Commitment and (b) such Lender’s
Commitment Percentage of the Borrowing Base. Subject to the terms and conditions
of this Agreement, during the period from the Effective Date to but excluding
the Termination Date, the Borrower may borrow, repay and reborrow Revolving
Loans hereunder.

 

(b) Requesting Revolving Loans. The Borrower shall give the Agent notice
pursuant to a Notice of Borrowing or telephonic notice of each borrowing of
Revolving Loans. Each Notice of Borrowing shall be delivered to the Agent before
11:00 a.m. (i) in the case of LIBOR Loans, on the date three Business Days prior
to the proposed date of such borrowing and (ii) in the case of Base Rate Loans,
on the date one Business Day prior to the proposed date of such borrowing. Any
such telephonic notice shall include all information to be specified in a
written Notice of Borrowing and shall be promptly confirmed in writing by the
Borrower pursuant to a Notice of Borrowing sent to the Agent by telecopy on the
same day of the giving of such telephonic notice. The Agent will transmit by
telecopy the Notice of Borrowing (or the information contained in such Notice of
Borrowing) to each Lender promptly upon receipt by the Agent. Each Notice of
Borrowing or telephonic notice of each borrowing shall be irrevocable once given
and binding on the Borrower.

 

(c) Disbursements of Revolving Loan Proceeds. No later than 1:00 p.m. on the
date specified in the Notice of Borrowing, each Lender will make available for
the account of its applicable Lending Office to the Agent at the Principal
Office, in immediately available funds, the proceeds of the Revolving Loan to be
made by such Lender. With respect to Revolving Loans to be made after the
Effective Date, unless the Agent shall have been notified by any Lender prior to
the specified date of borrowing that such Lender does not intend to make
available to the Agent the Revolving Loan to be made by such Lender on such
date, the Agent may assume that such Lender will make the proceeds of such
Revolving Loan available to the Agent on the date of the requested borrowing as
set forth in the Notice of Borrowing and the Agent may (but shall not be
obligated to), in reliance upon such assumption, make available to the Borrower
the amount of such Revolving Loan to be provided by such Lender. Subject to
satisfaction of the applicable conditions set forth in Article VI. for such
borrowing, the Agent will make the proceeds of such borrowing available to the
Borrower no later than 2:00 p.m. on the date and at the account specified by the
Borrower in such Notice of Borrowing.

 

Section 2.2. Swingline Loans.

 

(a) Swingline Loans. Subject to the terms and conditions hereof, during the
period from the Effective Date to but excluding the Termination Date, the
Swingline Lender agrees to make Swingline Loans to the Borrower in an aggregate
principal amount at any one time outstanding up to, but not exceeding, the
amount of the Swingline Commitment. If at any time

 

- 26 -

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

the aggregate principal amount of the Swingline Loans outstanding at such time
exceeds the Swingline Commitment in effect at such time, the Borrower shall
immediately pay the Agent for the account of the Swingline Lender the amount of
such excess. Subject to the terms and conditions of this Agreement, the Borrower
may borrow, repay and reborrow Swingline Loans hereunder.

 

(b) Procedure for Borrowing Swingline Loans. The Borrower shall give the Agent
and the Swingline Lender notice pursuant to a Notice of Swingline Borrowing or
telephonic notice of each borrowing of a Swingline Loan. Each Notice of
Swingline Borrowing shall be delivered to the Swingline Lender no later than
3:00 p.m. on the proposed date of such borrowing. Any such notice given
telephonically shall include all information to be specified in a written Notice
of Swingline Borrowing and shall be promptly confirmed in writing by the
Borrower pursuant to a Notice of Swingline Borrowing sent to the Swingline
Lender by telecopy on the same day of the giving of such telephonic notice. On
the date of the requested Swingline Loan and subject to satisfaction of the
applicable conditions set forth in Article VI. for such borrowing, the Swingline
Lender will make the proceeds of such Swingline Loan available to the Borrower
in Dollars, in immediately available funds, at the account specified by the
Borrower in the Notice of Swingline Borrowing not later than 4:00 p.m. on such
date.

 

(c) Interest. Swingline Loans shall bear interest at a per annum rate equal to
the Base Rate plus the Applicable Margin for Base Rate Loans. Interest payable
on Swingline Loans is solely for the account of the Swingline Lender. All
accrued and unpaid interest on Swingline Loans shall be payable on the dates and
in the manner provided in Section 2.4. with respect to interest on Base Rate
Loans (except as the Swingline Lender and the Borrower may otherwise agree in
writing in connection with any particular Swingline Loan).

 

(d) Swingline Loan Amounts, Etc. Each Swingline Loan shall be in the minimum
amount of $500,000 and integral multiples of $100,000 or such other minimum
amounts agreed to by the Swingline Lender and the Borrower. Any voluntary
prepayment of a Swingline Loan must be in integral multiples of $100,000 or the
aggregate principal amount of all outstanding Swingline Loans (or such other
minimum amounts upon which the Swingline Lender and the Borrower may agree) and
in connection with any such prepayment, the Borrower must give the Swingline
Lender prior written notice thereof no later than 10:00 a.m. on the date of such
prepayment. The Swingline Loans shall, in addition to this Agreement, be
evidenced by the Swingline Note.

 

(e) Repayment and Participations of Swingline Loans. The Borrower agrees to
repay each Swingline Loan on demand therefor by the Swingline Lender and in any
event, within 5 Business Days after the date such Swingline Loan was made;
provided, that the proceeds of a Swingline Loan shall not be used to repay any
other Swingline Loans. Notwithstanding the foregoing, the Borrower shall repay
the entire outstanding principal amount of, and all accrued but unpaid interest
on, the Swingline Loans on the Termination Date (or such earlier date as the
Swingline Lender and the Borrower may agree in writing). In lieu of demanding
repayment of any outstanding Swingline Loan from the Borrower, the Swingline
Lender may, on behalf of the Borrower (which hereby irrevocably directs the
Swingline Lender to act on its behalf for such purpose), request a borrowing of
Base Rate Loans from the Lenders in an amount equal to the

 

- 27 -

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

principal balance of such Swingline Loan. The amount limitations of Section
3.5.(a) shall not apply to any borrowing of Base Rate Loans made pursuant to
this subsection. The Swingline Lender shall give notice to the Agent of any such
borrowing of Base Rate Loans not later than 12:00 noon on the proposed date of
such borrowing and the Agent shall give prompt notice of such borrowing to the
Lenders. No later than 2:00 p.m. on such date, each Lender will make available
to the Agent at the Principal Office for the account of Swingline Lender, in
immediately available funds, the proceeds of the Base Rate Loan to be made by
such Lender. The Agent shall pay the proceeds of such Base Rate Loans to the
Swingline Lender, which shall apply such proceeds to repay such Swingline Loan.
At the time each Swingline Loan is made, each Lender shall automatically (and
without any further notice or action) be deemed to have purchased from the
Swingline Lender, without recourse or warranty, an undivided interest and
participation to the extent of such Lender’s Commitment Percentage in such
Swingline Loan. If the Lenders are prohibited from making Loans required to be
made under this subsection for any reason, including without limitation, the
occurrence of any Default or Event of Default described in Section 11.1.(f) or
11.1.(g), upon notice from the Agent or the Swingline Lender, each Lender
severally agrees to pay to the Agent for the account of the Swingline Lender in
respect of such participation the amount of such Lender’s Commitment Percentage
of each outstanding Swingline Loan. If such amount is not in fact made available
to the Agent by any Lender, the Swingline Lender shall be entitled to recover
such amount on demand from such Lender, together with accrued interest thereon
for each day from the date of demand thereof, at the Federal Funds Rate. If such
Lender does not pay such amount forthwith upon demand therefor by the Agent or
the Swingline Lender, and until such time as such Lender makes the required
payment, the Swingline Lender shall be deemed to continue to have outstanding
Swingline Loans in the amount of such unpaid participation obligation for all
purposes of the Loan Documents (other than those provisions requiring the other
Lenders to purchase a participation therein). Further, such Lender shall be
deemed to have assigned any and all payments made of principal and interest on
its Loans, and any other amounts due to it hereunder, to the Swingline Lender to
fund Swingline Loans in the amount of the participation in Swingline Loans that
such Lender failed to purchase pursuant to this Section until such amount has
been purchased (as a result of such assignment or otherwise). A Lender’s
obligation to make payments in respect of a participation in a Swingline Loan
shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, (i) any claim of setoff,
counterclaim, recoupment, defense or other right which such Lender or any other
Person may have or claim against the Agent, the Swingline Lender or any other
Person whatsoever, (ii) the occurrence or continuation of a Default or Event of
Default (including, without limitation, any of the Defaults or Events of Default
described in Sections 11.1.(f) or 11.1.(g)) or the termination of any Lender’s
Revolving Commitment, (iii) the existence (or alleged existence) of an event or
condition which has had or could have a Material Adverse Effect, (iv) any breach
of any Loan Document by the Agent, any Lender or the Borrower or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.

 

Section 2.3. Letters of Credit.

 

(a) Letters of Credit. Subject to the terms and conditions of this Agreement,
the Agent, on behalf of the Lenders, agrees to issue for the account of the
Borrower during the period from and including the Effective Date to, but
excluding, the date 30 days prior to the Termination Date one or more letters of
credit (each a “Letter of Credit”) up to a maximum

 

- 28 -

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

aggregate Stated Amount at any one time outstanding not to exceed the L/C
Commitment Amount.

 

(b) Terms of Letters of Credit. At the time of issuance, the amount, form, terms
and conditions of each Letter of Credit, and of any drafts or acceptances
thereunder, shall be subject to approval by the Agent and the Borrower.
Notwithstanding the foregoing, in no event may the expiration date of any Letter
of Credit extend beyond the earlier of (i) the date one year from its date of
issuance or (ii) the Termination Date; provided, however, a Letter of Credit may
contain a provision providing for the automatic extension of the expiration date
in the absence of a notice of non-renewal from the Agent but in no event shall
any such provision permit the extension of the expiration date of such Letter of
Credit beyond the Termination Date.

 

(c) Requests for Issuance of Letters of Credit. The Borrower shall give the
Agent written notice (or telephonic notice promptly confirmed in writing) at
least 5 Business Days prior to the requested date of issuance of a Letter of
Credit, such notice to describe in reasonable detail the proposed terms of such
Letter of Credit and the nature of the transactions or obligations proposed to
be supported by such Letter of Credit, and in any event shall set forth with
respect to such Letter of Credit the proposed (i) Stated Amount, (ii) the
beneficiary, and (iii) the expiration date. The Borrower shall also execute and
deliver such customary letter of credit application forms as requested from time
to time by the Agent. Provided the Borrower has given the notice prescribed by
the first sentence of this subsection and subject to the other terms and
conditions of this Agreement, including the satisfaction of any applicable
conditions precedent set forth in Article VI., the Agent shall issue the
requested Letter of Credit on the requested date of issuance for the benefit of
the stipulated beneficiary. Upon the written request of the Borrower, the Agent
shall deliver to the Borrower a copy of each issued Letter of Credit within a
reasonable time after the date of issuance thereof. To the extent any term of a
Letter of Credit Document is inconsistent with a term of any Loan Document, the
term of such Loan Document shall control.

 

(d) Reimbursement Obligations. Upon receipt by the Agent from the beneficiary of
a Letter of Credit of any demand for payment under such Letter of Credit, the
Agent shall promptly notify the Borrower of the amount to be paid by the Agent
as a result of such demand and the date on which payment is to be made by the
Agent to such beneficiary in respect of such demand; provided, however, the
Agent’s failure to give, or delay in giving, such notice shall not discharge the
Borrower in any respect from the applicable Reimbursement Obligation. The
Borrower hereby unconditionally and irrevocably agrees to pay and reimburse the
Agent for the amount of each demand for payment under such Letter of Credit on
or prior to the date on which payment is to be made by the Agent to the
beneficiary thereunder, without presentment, demand, protest or other
formalities of any kind (other than notice as provided in this subsection). Upon
receipt by the Agent of any payment in respect of any Reimbursement Obligation,
the Agent shall promptly pay to each Lender that has acquired a participation
therein under the second sentence of Section 2.3.(i) such Lender’s Commitment
Percentage of such payment.

 

(e) Manner of Reimbursement. Upon its receipt of a notice referred to in the
immediately preceding subsection (d), the Borrower shall advise the Agent
whether or not the Borrower intends to borrow hereunder to finance its
obligation to reimburse the Agent for the amount of the related demand for
payment and, if it does, the Borrower shall submit a timely

 

- 29 -

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

request for such borrowing as provided in the applicable provisions of this
Agreement. If the Borrower fails to so advise the Agent, or if the Borrower
fails to reimburse the Agent for a demand for payment under a Letter of Credit
by the date of such payment, then (i) if the applicable conditions contained in
Article VI. would permit the making of Revolving Loans, the Borrower shall be
deemed to have requested a borrowing of Revolving Loans (which shall be Base
Rate Loans) in an amount equal to the unpaid Reimbursement Obligation and the
Agent shall give each Lender prompt notice of the amount of the Revolving Loan
to be made available to the Agent not later than 1:00 p.m. and (ii) if such
conditions would not permit the making of Revolving Loans, the provisions of
subsection (j) of this Section shall apply. The limitations of Section 3.5.(a)
shall not apply to any borrowing of Base Rate Loans under this subsection.

 

(f) Effect of Letters of Credit on Commitments. Upon the issuance by the Agent
of any Letter of Credit and until such Letter of Credit shall have expired or
been terminated, the Commitment of each Lender shall be deemed to be utilized
for all purposes of this Agreement in an amount equal to the product of (i) such
Lender’s Commitment Percentage and (ii) the sum of (A) the Stated Amount of such
Letter of Credit plus (B) any related Reimbursement Obligations then
outstanding.

 

(g) Agent’s Duties Regarding Letters of Credit; Unconditional Nature of
Reimbursement Obligations. In examining documents presented in connection with
drawings under Letters of Credit and making payments under such Letters of
Credit against such documents, the Agent shall only be required to use the same
standard of care as it uses in connection with examining documents presented in
connection with drawings under letters of credit in which it has not sold
participations and making payments under such letters of credit. The Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, neither the Agent nor any of
the Lenders shall be responsible for (i) the form, validity, sufficiency,
accuracy, genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
any Letter of Credit even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit, or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to draw upon
such Letter of Credit; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telex, telecopy or
otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit, or of
the proceeds thereof; (vii) the misapplication by the beneficiary of any Letter
of Credit, or the proceeds of any drawing under any Letter of Credit; or (viii)
any consequences arising from causes beyond the control of the Agent or the
Lenders. None of the above shall affect, impair or prevent the vesting of any of
the Agent’s rights or powers hereunder. Any action taken or omitted to be taken
by the Agent under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct (as determined
by a court of competent jurisdiction in a final, non-appealable judgment), shall
not create against the Agent or any Lender any liability to the Borrower or any

 

- 30 -

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

Lender. In this regard, the obligation of the Borrower to reimburse the Agent
for any drawing made under any Letter of Credit shall be absolute, unconditional
and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement and any other applicable Letter of Credit Document under all
circumstances whatsoever, including without limitation, the following
circumstances: (A) any lack of validity or enforceability of any Letter of
Credit Document or any term or provisions therein; (B) any amendment or waiver
of or any consent to departure from all or any of the Letter of Credit
Documents; (C) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against the Agent, any Lender, any beneficiary
of a Letter of Credit or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or in the Letter of Credit
Documents or any unrelated transaction; (D) any breach of contract or dispute
between the Borrower, the Agent, any Lender or any other Person; (E) any demand,
statement or any other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein or made in connection therewith being untrue or inaccurate in any
respect whatsoever; (F) any non-application or misapplication by the beneficiary
of a Letter of Credit of the proceeds of any drawing under such Letter of
Credit; (G) payment by the Agent under any Letter of Credit against presentation
of a draft or certificate which does not strictly comply with the terms of such
Letter of Credit; and (H) any other act, omission to act, delay or circumstance
whatsoever that might, but for the provisions of this Section, constitute a
legal or equitable defense to or discharge of the Borrower’s Reimbursement
Obligations. Notwithstanding anything to the contrary contained in this Section
or Section 13.9., but not in limitation of the Borrower’s unconditional
obligation to reimburse the Agent for any drawing made under a Letter of Credit
as provided in this Section, the Borrower shall have no obligation to indemnify
the Agent or any Lender in respect of any liability incurred by the Agent or a
Lender arising solely out of the gross negligence or willful misconduct of the
Agent or a Lender in respect of a Letter of Credit as determined by a court of
competent jurisdiction in a final, non-appealable judgment. Except as otherwise
provided in this Section, nothing in this Section shall affect any rights the
Borrower may have with respect to the gross negligence or willful misconduct of
the Agent or any Lender with respect to any Letter of Credit.

 

(h) Amendments, Etc. The issuance by the Agent of any amendment, supplement or
other modification to any Letter of Credit shall be subject to the same
conditions applicable under this Agreement to the issuance of new Letters of
Credit (including, without limitation, that the request therefor be made through
the Agent), and no such amendment, supplement or other modification shall be
issued unless either (i) the respective Letter of Credit affected thereby would
have complied with such conditions had it originally been issued hereunder in
such amended, supplemented or modified form or (ii) the Requisite Lenders shall
have consented thereto. In connection with any such amendment, supplement or
other modification, the Borrower shall pay the Fees, if any, payable under the
last sentence of Section 3.6.(b).

 

(i) Lenders’ Participation in Letters of Credit. Immediately upon the issuance
by the Agent of any Letter of Credit each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Agent, without
recourse or warranty, an undivided interest and participation to the extent of
such Lender’s Commitment Percentage of the liability of the Agent with respect
to such Letter of Credit, and each Lender thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as surety,
and

 

- 31 -

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

shall be unconditionally obligated to the Agent to pay and discharge when due,
such Lender’s Commitment Percentage of the Agent’s liability under such Letter
of Credit. In addition, upon the making of each payment by a Lender to the Agent
in respect of any Letter of Credit pursuant to the immediately following
subsection (j), such Lender shall, automatically and without any further action
on the part of the Agent or such Lender, acquire (i) a participation in an
amount equal to such payment in the Reimbursement Obligation owing to the Agent
by the Borrower in respect of such Letter of Credit and (ii) a participation in
a percentage equal to such Lender’s Commitment Percentage in any interest or
other amounts payable by the Borrower in respect of such Reimbursement
Obligation (other than the Fees payable to the Agent pursuant to the third and
last sentences of Section 3.6.(b)).

 

(j) Payment Obligation of Lenders. Each Lender severally agrees to pay to the
Agent on demand in immediately available funds in Dollars the amount of such
Lender’s Commitment Percentage of each drawing paid by the Agent under each
Letter of Credit to the extent such amount is not reimbursed by the Borrower
pursuant to Section 2.3.(d); provided, however, that in respect of any drawing
under any Letter of Credit, the maximum amount that any Lender shall be required
to fund, whether as a Revolving Loan or as a participation, shall not exceed
such Lender’s Commitment Percentage of such drawing. If the notice referenced in
the second sentence of Section 2.3.(e) is received by a Lender not later than
11:00 a.m., then such Lender shall make such payment available to the Agent not
later than 2:00 p.m. on the date of demand therefor; otherwise, such payment
shall be made available to the Agent not later than 1:00 p.m. on the next
succeeding Business Day. Each such Lender’s obligation to make such payments to
the Agent under this subsection, and the Agent’s right to receive the same,
shall be absolute, irrevocable and unconditional and shall not be affected in
any way by any circumstance whatsoever, including without limitation, (i) the
failure of any other Lender to make its payment under this subsection, (ii) the
financial condition of the Borrower or any other Loan Party, (iii) the existence
of any Default or Event of Default, including any Event of Default described in
Section 11.1.(f) or 11.1.(g) or (iv) the termination of the Commitments. Each
such payment to the Agent shall be made without any offset, abatement,
withholding or deduction whatsoever.

 

(k) Information to Lenders. The Agent shall periodically deliver to the Lenders
information setting forth the Stated Amount of all outstanding Letters of
Credit. Other than as set forth in this subsection, the Agent shall have no duty
to notify the Lenders regarding the issuance or other matters regarding Letters
of Credit issued hereunder. The failure of the Agent to perform its requirements
under this subsection shall not relieve any Lender from its obligations under
Section 2.3.(j).

 

Section 2.4. Rates and Payment of Interest on Loans.

 

(a) Rates. The Borrower promises to pay to the Agent for the account of each
Lender interest on the unpaid principal amount of each Loan made by such Lender
for the period from and including the date of the making of such Loan to but
excluding the date such Loan shall be paid in full, at the following per annum
rates:

 

(i) during such periods as such Loan is a Base Rate Loan, at the Base Rate (as
in effect from time to time) plus the Applicable Margin; and

 

- 32 -

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

(ii) during such periods as such Loan is a LIBOR Loan, at Adjusted LIBOR for
such Loan for the Interest Period therefor plus the Applicable Margin.

 

Notwithstanding the foregoing, overdue principal, Reimbursement Obligations and
(to the extent permitted by Applicable Law) interest on the Loans and all other
overdue amounts payable hereunder or under any of the other Loan Documents shall
bear interest at a rate per annum equal to the Post-Default Rate until such
amount shall be paid in full.

 

(b) Payment of Interest. Accrued and unpaid interest on each Loan shall be
payable (i) in the case of a Base Rate Loan, monthly in arrears on the first day
of each calendar month, (ii) in the case of a LIBOR Loan, in arrears on the last
day of each Interest Period therefor, and, if such Interest Period is longer
than three months, at three-month intervals following the first day of such
Interest Period, and (iii) in the case of any Loan, in arrears upon the payment,
prepayment or Continuation thereof or the Conversion of such Loan to a Loan of
another Type (but only on the principal amount so paid, prepaid, Continued or
Converted). Interest payable at the Post-Default Rate shall be payable from time
to time on demand. Promptly after the determination of any interest rate
provided for herein or any change therein, the Agent shall give notice thereof
to the Lenders to which such interest is payable and to the Borrower. All
determinations by the Agent of an interest rate hereunder shall be conclusive
and binding on the Lenders and the Borrower for all purposes, absent manifest
error.

 

Section 2.5. Number of Interest Periods.

 

There may be no more than 5 different Interest Periods for LIBOR Loans
outstanding at the same time.

 

Section 2.6. Repayment of Loans.

 

The Borrower shall repay the entire outstanding principal amount of, and all
accrued but unpaid interest on, the Revolving Loans on the Termination Date.

 

Section 2.7. Prepayments.

 

(a) Optional. Subject to Section 5.4., the Borrower may prepay any Loan at any
time without premium or penalty. The Borrower shall give the Agent at least one
Business Day’s prior written notice of the prepayment of any Revolving Loan.

 

(b) Mandatory.

 

(i) Outstandings In Excess of Commitments. If at any time the aggregate
principal amount of all outstanding Revolving Loans, together with the aggregate
amount of all Letter of Credit Liabilities and the aggregate principal amount of
all outstanding Swingline Loans, exceeds the aggregate amount of the Commitments
in effect at such time, the Borrower shall immediately pay to the Agent for the
accounts of the Lenders the amount of such excess; and

 

- 33 -

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

(ii) Outstandings in Excess of Borrowing Base. If at any time the aggregate
outstanding principal balance of Loans, together with the aggregate amount of
all Letter of Credit Liabilities, exceeds the Borrowing Base, then the Borrower
shall within 5 days of the Agent’s demand, either (A) repay a portion of the
Loans sufficient to eliminate such excess or (B) identify to the Agent one or
more Properties the Collateral Property Values of which if included in the
calculation of the Borrowing Base would be sufficient to eliminate such excess
and within 15 days of identifying such Property or Properties, as the case may
be, deliver to the Agent all items required to be delivered pursuant to Section
4.2.; provided, however, no such Property shall be included in calculations of
the Borrowing Base unless approved of by the Requisite Lenders. If such excess
is not eliminated within 5 days of such notice from the Agent in the case of the
preceding clause (A) or 15 days of such notice from the Agent in the case of the
preceding clause (B), then the entire outstanding principal balance of all
Loans, together with an amount equal to the aggregate principal amount of all
Letter of Credit Liabilities, shall be immediately due and payable in full. All
payments under this Section shall be applied to pay all amounts of principal
outstanding on the Loans and any Reimbursement Obligations pro rata in
accordance with Section 3.2. and if any Letters of Credit are outstanding at
such time the remainder, if any, shall be deposited into the Collateral Account
for application to any Reimbursement Obligations. If the Borrower is required to
pay any outstanding LIBOR Loans by reason of this Section prior to the end of
the applicable Interest Period therefor, the Borrower shall pay all amounts due
under Section 5.4.

 

Section 2.8. Continuation.

 

So long as no Default or Event of Default shall exist, the Borrower may on any
Business Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan
or any portion thereof as a LIBOR Loan by selecting a new Interest Period for
such LIBOR Loan. Each new Interest Period selected under this Section shall
commence on the last day of the immediately preceding Interest Period. Each
selection of a new Interest Period shall be made by the Borrower giving to the
Agent a Notice of Continuation not later than 11:00 a.m. on the third Business
Day prior to the date of any such Continuation. Such notice by the Borrower of a
Continuation shall be by telephone or telecopy, confirmed immediately in writing
if by telephone, in the form of a Notice of Continuation, specifying (a) the
proposed date of such Continuation, (b) the LIBOR Loans and portions thereof
subject to such Continuation and (c) the duration of the selected Interest
Period, all of which shall be specified in such manner as is necessary to comply
with all limitations on Loans outstanding hereunder. Each Notice of Continuation
shall be irrevocable by and binding on the Borrower once given. Promptly after
receipt of a Notice of Continuation, the Agent shall notify each Lender by
telecopy, or other similar form of transmission, of the proposed Continuation.
If the Borrower shall fail to select in a timely manner a new Interest Period
for any LIBOR Loan in accordance with this Section, or if a Default or Event of
Default shall exist, such Loan will automatically, on the last day of the
current Interest Period therefor, Convert into a Base Rate Loan notwithstanding
the first sentence of Section 2.9. or the Borrower’s failure to comply with any
of the terms of such Section.

 

- 34 -

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

Section 2.9. Conversion.

 

The Borrower may on any Business Day, upon the Borrower’s giving of a Notice of
Conversion to the Agent, Convert all or a portion of a Loan of one Type into a
Loan of another Type; provided, however, a Base Rate Loan may not be Converted
to a LIBOR Loan if a Default or Event of Default shall exist. Any Conversion of
a LIBOR Loan into a Base Rate Loan shall be made on, and only on, the last day
of an Interest Period for such LIBOR Loan and, upon Conversion of a Base Rate
Loan into a LIBOR Loan, the Borrower shall pay accrued interest to the date of
Conversion on the principal amount so Converted. Each such Notice of Conversion
shall be given not later than 11:00 a.m. on the Business Day prior to the date
of any proposed Conversion into Base Rate Loans and on the third Business Day
prior to the date of any proposed Conversion into LIBOR Loans. Promptly after
receipt of a Notice of Conversion, the Agent shall notify each Lender by
telecopy, or other similar form of transmission, of the proposed Conversion.
Subject to the restrictions specified above, each Notice of Conversion shall be
by telephone (confirmed immediately in writing) or telecopy in the form of a
Notice of Conversion specifying (a) the requested date of such Conversion, (b)
the Type of Loan to be Converted, (c) the portion of such Type of Loan to be
Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if
such Conversion is into a LIBOR Loan, the requested duration of the Interest
Period of such Loan. Each Notice of Conversion shall be irrevocable by and
binding on the Borrower once given.

 

Section 2.10. Notes.

 

(a) Revolving Note. The Revolving Loans made by each Lender shall, in addition
to this Agreement, also be evidenced by a promissory note of the Borrower
substantially in the form of Exhibit L (each a “Revolving Note”), payable to the
order of such Lender in a principal amount equal to the amount of its Commitment
as originally in effect and otherwise duly completed.

 

(b) Records. The date, amount, interest rate, Type and duration of Interest
Periods (if applicable) of each Loan made by each Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by such
Lender on its books and such entries shall be binding on the Borrower, absent
manifest error; provided, however, that the failure of a Lender to make any such
record shall not affect the obligations of the Borrower under any of the Loan
Documents.

 

(c) Lost, Stolen, Destroyed or Mutilated Notes. Upon receipt by the Borrower of
(i) written notice from a Lender that a Note of such Lender has been lost,
stolen, destroyed or mutilated, and (ii) (A) in the case of loss, theft or
destruction, an unsecured agreement of indemnity from such Lender in form
reasonably satisfactory to the Borrower, or (B) in the case of mutilation, upon
surrender and cancellation of such Note, the Borrower shall at its own expense
execute and deliver to such Lender a new Note dated the date of such lost,
stolen, destroyed or mutilated Note.

 

- 35 -

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

Section 2.11. Voluntary Reductions of the Commitment.

 

The Borrower shall have the right to terminate or reduce the aggregate unused
amount of the Commitments (for which purpose use of the Commitments shall be
deemed to include the aggregate amount of Letter of Credit Liabilities and the
aggregate principal amount of all outstanding Swingline Loans) at any time and
from time to time without penalty or premium upon not less than 5 Business Days
prior written notice to the Agent of each such termination or reduction, which
notice shall specify the effective date thereof and the amount of any such
reduction and shall be irrevocable once given and effective only upon receipt by
the Agent; provided, however, if the Borrower seeks to reduce the aggregate
amount of the Commitments below $50,000,000, then the Commitments shall all
automatically and permanently be reduced to zero. The Agent will promptly
transmit such notice to each Lender. The Commitments, once terminated or reduced
may not be increased or reinstated.

 

Section 2.12. Extension of Termination Date.

 

The Borrower shall have the right, exercisable one time, to extend the
Termination Date by one year. The Borrower may exercise such right only by
executing and delivering to the Agent at least 45 days but not more than 120
days prior to the current Termination Date, a written request for such extension
(an “Extension Request”). The Agent shall forward to each Lender a copy of the
Extension Request delivered to the Agent promptly upon receipt thereof. Subject
to satisfaction of the following conditions, the Termination Date shall be
extended for one year: (a) immediately prior to such extension and immediately
after giving effect thereto, (i) no Default or Event of Default shall exist and
(ii) the representations and warranties made or deemed made by the Borrower and
each other Loan Party in the Loan Documents to which any of them is a party,
shall be true and correct in all material respects on and as of the date of such
extension with the same force and effect as if made on and as of such date
except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties
shall have been true and correct in all material respects on and as of such
earlier date) and except for changes in factual circumstances not prohibited
under the Loan Documents and (b) the Borrower shall have paid the Fees payable
under Section 3.6.(c).

 

Section 2.13. Expiration or Maturity Date of Letters of Credit Past Termination
Date.

 

If on the date the Commitments are terminated or reduced to zero (whether
voluntarily, by reason of the occurrence of an Event of Default or otherwise),
there are any Letters of Credit outstanding hereunder, the Borrower shall, on
such date, pay to the Agent an amount of money equal to the Stated Amount of
such Letter(s) of Credit for deposit into the Collateral Account.

 

Section 2.14. Amount Limitations.

 

Notwithstanding any other term of this Agreement or any other Loan Document, no
Lender shall be required to make a Loan, the Agent shall not be required to
issue a Letter of Credit and no reduction of the Commitments pursuant to Section
2.11. shall take effect, if immediately after the making of such Loan, the
issuance of such Letter of Credit or such reduction in the Commitments, the
aggregate principal amount of all outstanding Loans, together

 

- 36 -

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

with the aggregate amount of all Letter of Credit Liabilities, would exceed the
lesser of (a) the aggregate amount of the Commitments at such time or (b) the
Borrowing Base at such time.

 

Section 2.15. Increase of Commitments.

 

With the prior consent of the Agent, the Borrower shall have the right at any
time and from time to time from during the term of this Agreement to request up
to 4 increases in the aggregate amount of the Commitments (provided that after
giving effect to any increases in the Commitments pursuant to this Section, the
aggregate amount of the Commitments may not exceed $250,000,000) by providing
written notice to the Agent, which notice shall be irrevocable once given. Each
such increase in the Commitments must be in an aggregate minimum amount of
$25,000,000 and integral multiples of $5,000,000 in excess thereof. No Lender
shall be required to increase its Commitment and any new Lender becoming a party
to this Agreement in connection with any such requested increase must be an
Eligible Assignee. If a new Lender becomes a party to this Agreement, or if any
existing Lender agrees to increase its Commitment, such Lender shall on the date
it becomes a Lender hereunder (or increases its Commitment, in the case of an
existing Lender) (and as a condition thereto) purchase from the other Lenders
its Commitment Percentage (as determined after giving effect to the increase of
Commitments) of any outstanding Revolving Loans, by making available to the
Agent for the account of such other Lenders at the Principal Office, in same day
funds, an amount equal to the sum of (A) the portion of the outstanding
principal amount of such Revolving Loans to be purchased by such Lender plus (B)
the aggregate amount of payments previously made by the other Lenders under
Section 2.3.(j) which have not been repaid plus (C) interest accrued and unpaid
to and as of such date on such portion of the outstanding principal amount of
such Revolving Loans. The Borrower shall pay to the Lenders amounts payable, if
any, to such Lenders under Section 5.4. as a result of the prepayment of any
such Revolving Loans. No increase of the Commitments may be effected under this
Section if (x) a Default or Event of Default shall be in existence on the
effective date of such increase or (y) any representation or warranty made or
deemed made by the Borrower or any other Loan Party in any Loan Document to
which any such Loan Party is a party is not (or would not be) true or correct in
all material respects on the effective date of such increase (except for
representations or warranties which expressly relate solely to an earlier date).
In connection with any increase in the aggregate amount of the Commitments
pursuant to this subsection, (a) any Lender becoming a party hereto shall
execute such documents and agreements as the Agent may reasonably request and
(b) the Borrower shall make appropriate arrangements so that each new Lender,
and any existing Lender increasing its Commitment, receives a new or replacement
Note, as appropriate, in the amount of such Lender’s Commitment within 2
Business Days of the effectiveness of the applicable increase in the aggregate
amount of Commitments.

 

ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS

 

Section 3.1. Payments.

 

Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Agreement or
any other Loan Document shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Agent at its Principal
Office, not later than 2:00 p.m. on the date on which

 

- 37 -

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

such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
Subject to Section 11.4., the Borrower may, at the time of making each payment
under this Agreement or any Note, specify to the Agent the amounts payable by
the Borrower hereunder to which such payment is to be applied. Each payment
received by the Agent for the account of a Lender under this Agreement or any
Note shall be paid to such Lender at the applicable Lending Office of such
Lender no later than 5:00 p.m. on the date of receipt. If the Agent fails to pay
such amount to a Lender as provided in the previous sentence, the Agent shall
pay interest on such amount until paid at a rate per annum equal to the Federal
Funds Rate from time to time in effect. If the due date of any payment under
this Agreement or any other Loan Document would otherwise fall on a day which is
not a Business Day such date shall be extended to the next succeeding Business
Day and interest shall be payable for the period of such extension.

 

Section 3.2. Pro Rata Treatment.

 

Except to the extent otherwise provided herein: (a) each borrowing from the
Lenders under Section 2.1.(a), 2.2.(e) and 2.3.(e) shall be made from the
Lenders, each payment of the Fees under Section 3.6.(a), the first sentence of
Section 3.6.(b) and Section 3.6.(c) shall be made for the account of the
Lenders, and each termination or reduction of the amount of the Commitments
under Section 2.11. shall be applied to the respective Commitments of the
Lenders, pro rata according to the amounts of their respective Commitments; (b)
each payment or prepayment of principal of Revolving Loans by the Borrower shall
be made for the account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of the Revolving Loans held by them,
provided that if immediately prior to giving effect to any such payment in
respect of any Revolving Loans the outstanding principal amount of the Revolving
Loans shall not be held by the Lenders pro rata in accordance with their
respective Commitments in effect at the time such Loans were made, then such
payment shall be applied to the Revolving Loans in such manner as shall result,
as nearly as is practicable, in the outstanding principal amount of the
Revolving Loans being held by the Lenders pro rata in accordance with their
respective Commitments; (c) each payment of interest on Revolving Loans by the
Borrower shall be made for the account of the Lenders pro rata in accordance
with the amounts of interest on such Loans then due and payable to the
respective Lenders; (d) the making, Conversion and Continuation of Revolving
Loans of a particular Type (other than Conversions provided for by Section 5.5.)
shall be made pro rata among the Lenders according to the amounts of their
respective Commitments (in the case of making of Loans) or their respective
Loans (in the case of Conversions and Continuations of Loans) and the then
current Interest Period for each Lender’s portion of each Loan of such Type
shall be coterminous; (e) the Lenders’ participation in, and payment obligations
in respect of, Letters of Credit under Section 2.3., shall be pro rata in
accordance with their respective Commitments; and (f) the Lenders’ participation
in, and payment obligations in respect of, Swingline Loans under Section 2.2.,
shall be pro rata in accordance with their respective Commitments. All payments
of principal, interest, fees and other amounts in respect of the Swingline Loans
shall be for the account of the Swingline Lender only (except to the extent any
Lender shall have acquired a participating interest in any such Swingline Loan
pursuant to Section 2.2.(e), in which case such payments shall be pro rata in
accordance with such participating interests).

 

- 38 -

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

Section 3.3. Sharing of Payments, Etc.

 

If a Lender shall obtain payment of any principal of, or interest on, any Loan
made by it to the Borrower under this Agreement, or shall obtain payment on any
other Obligation owing by the Borrower or a Loan Party through the exercise of
any right of set-off, banker’s lien or counterclaim or similar right or
otherwise or through voluntary prepayments directly to a Lender or other
payments made by the Borrower to a Lender not in accordance with the terms of
this Agreement and such payment should be distributed to the Lenders pro rata in
accordance with Section 3.2. or Section 11.4., as applicable, such Lender shall
promptly purchase from the other Lenders participations in (or, if and to the
extent specified by such Lender, direct interests in) the Loans made by the
other Lenders or other Obligations owed to such other Lenders in such amounts,
and make such other adjustments from time to time as shall be equitable, to the
end that all the Lenders shall share the benefit of such payment (net of any
reasonable expenses which may be incurred by such Lender in obtaining or
preserving such benefit) pro rata in accordance with Section 3.2. or Section
11.4., as applicable. To such end, all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored. The Borrower agrees
that any Lender so purchasing a participation (or direct interest) in the Loans
or other Obligations owed to such other Lenders may exercise all rights of
set-off, banker’s lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans in the
amount of such participation. Nothing contained herein shall require any Lender
to exercise any such right or shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower.

 

Section 3.4. Several Obligations.

 

No Lender shall be responsible for the failure of any other Lender to make a
Loan or to perform any other obligation to be made or performed by such other
Lender hereunder, and the failure of any Lender to make a Loan or to perform any
other obligation to be made or performed by it hereunder shall not relieve the
obligation of any other Lender to make any Loan or to perform any other
obligation to be made or performed by such other Lender.

 

Section 3.5. Minimum Amounts.

 

(a) Borrowings and Conversions. Except as otherwise provided in Sections 2.2.(e)
and 2.3.(e), each borrowing of Base Rate Loans shall be in an aggregate minimum
amount of $500,000 and integral multiples of $100,000 in excess thereof. Each
borrowing and each Conversion of LIBOR Loans shall be in an aggregate minimum
amount of $1,000,000 and integral multiples of $100,000 in excess of that
amount.

 

(b) Prepayments. Each voluntary prepayment of Revolving Loans shall be in an
aggregate minimum amount of $100,000 and integral multiples of $100,000 in
excess thereof (or, if less, the aggregate principal amount of Revolving Loans
then outstanding).

 

(c) Reductions of Commitments. Each reduction of the Commitments under Section
2.11. shall be in an aggregate minimum amount of $10,000,000 and integral
multiples of $5,000,000 in excess thereof.

 

- 39 -

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

(d) Letters of Credit. The initial Stated Amount of each Letter of Credit shall
be at least $100,000.

 

Section 3.6. Fees.

 

(a) Unused Fee. During the period from the Effective Date to but excluding the
Termination Date, the Borrower agrees to pay to the Agent for the account of the
Lenders an unused facility fee with respect to the average daily difference
between the (i) aggregate amount of the Commitments and (ii) the aggregate
principal amount of all outstanding Loans plus the aggregate amount of all
Letter of Credit Liabilities (the “Unused Amount”). Such fee shall be computed
by multiplying the Unused Amount with respect to such quarter by 0.35% per
annum. Such fee shall be payable in arrears on the last day of each March, June,
September or December of each calendar year. Any such accrued and unpaid fee
shall also be payable on the Termination Date or any earlier date of termination
of the Commitments or reduction of the Commitments to zero.

 

(b) Letter of Credit Fees. The Borrower agrees to pay to the Agent for the
account of each Lender a letter of credit fee at a rate per annum equal to the
Applicable Margin for LIBOR Loans times the daily average Stated Amount of each
Letter of Credit for the period from and including the date of issuance of such
Letter of Credit (x) through and including the date such Letter of Credit
expires or is terminated or (y) to but excluding the date such Letter of Credit
is drawn in full. The fees provided for in the immediately preceding sentence
shall be nonrefundable and payable in arrears on (i) the last day of March,
June, September and December in each year, (ii) the Termination Date, (iii) the
date the Commitments are terminated or reduced to zero and (iv) thereafter from
time to time on demand of the Agent. In addition, the Borrower shall pay to the
Agent for its own account and not the account of any Lender, an issuance fee in
respect of each Letter of Credit equal to the greater of (i) $500 or (ii) 0.15%
per annum on the initial Stated Amount of such Letter of Credit (A) for the
period from and including the date of issuance of such Letter of Credit through
and including the expiration date of such Letter of Credit and (B) if the
expiration date of any Letter of Credit is extended (whether as a result of the
operation of an automatic extension clause or otherwise), for the period from
but excluding the previous expiration date to and including the extended
expiration date. The fees provided for in the immediately preceding sentence
shall be nonrefundable and payable upon issuance (or in the case of an extension
of the expiration date, on the previous expiration date). The Borrower shall pay
directly to the Agent from time to time on demand all commissions, charges,
costs and expenses in the amounts customarily charged by the Agent from time to
time in like circumstances with respect to the issuance of each Letter of
Credit, drawings, amendments and other transactions relating thereto.

 

(c) Extension Fee. If the Borrower exercises its right to extend the Termination
Date in accordance with Section 2.12., the Borrower agrees to pay to the Agent
for the account of each Lender a fee equal to two-tenths of one percent (0.20%)
of the amount of such Lender’s Commitment (whether or not utilized) at the time
of such extension. Such fee shall be due and payable in full on the date the
Agent receives the Extension Request pursuant to such Section.

 

- 40 -

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

(d) Administrative and Other Fees. The Borrower agrees to pay the administrative
and other fees of the Agent as may be agreed to in writing by the Borrower and
the Agent from time to time.

 

Section 3.7. Computations.

 

Unless otherwise expressly set forth herein, any accrued interest on any Loan,
any Fees or any other Obligations due hereunder shall be computed on the basis
of a year of 365 or 366 days, as applicable, and the actual number of days
elapsed; provided, however, interest on LIBOR Rate Loans shall be computed on
the basis of a year of 360 days and the actual number of day elapsed.

 

Section 3.8. Usury.

 

In no event shall the amount of interest due or payable on the Loans or other
Obligations exceed the maximum rate of interest allowed by Applicable Law and,
if any such payment is paid by the Borrower or any other Loan Party or received
by any Lender, then such excess sum shall be credited as a payment of principal,
unless the Borrower shall notify the respective Lender in writing that the
Borrower elects to have such excess sum returned to it forthwith. It is the
express intent of the parties hereto that the Borrower not pay and the Lenders
not receive, directly or indirectly, in any manner whatsoever, interest in
excess of that which may be lawfully paid by the Borrower under Applicable Law.

 

Section 3.9. Agreement Regarding Interest and Charges.

 

The parties hereto hereby agree and stipulate that the only charge imposed upon
the Borrower for the use of money in connection with this Agreement is and shall
be the interest specifically described in Section 2.4.(a)(i) and (ii) and in
Section 2.2.(c). Notwithstanding the foregoing, the parties hereto further agree
and stipulate that all agency fees, syndication fees, unused fees, closing fees,
letter of credit fees, underwriting fees, default charges, late charges, funding
or “breakage” charges, increased cost charges, attorneys’ fees and reimbursement
for costs and expenses paid by the Agent or any Lender to third parties or for
damages incurred by the Agent or any Lender, in each case in connection with the
transactions contemplated by this Agreement and the other Loan Documents, are
charges made to compensate the Agent or any such Lender for underwriting or
administrative services and costs or losses performed or incurred, and to be
performed or incurred, by the Agent and the Lenders in connection with this
Agreement and shall under no circumstances be deemed to be charges for the use
of money. All charges other than charges for the use of money shall be fully
earned and nonrefundable when due.

 

Section 3.10. Statements of Account.

 

The Agent will account to the Borrower monthly with a statement of Loans,
Letters of Credit, accrued interest and Fees, charges and payments made pursuant
to this Agreement and the other Loan Documents, and such account rendered by the
Agent shall be deemed conclusive upon Borrower absent manifest error. The
failure of the Agent to deliver such a statement of accounts shall not relieve
or discharge the Borrower from any of its obligations hereunder.

 

- 41 -

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

Section 3.11. Defaulting Lenders.

 

(a) Generally. If for any reason any Lender (a “Defaulting Lender”) shall fail
or refuse to perform any of its obligations under this Agreement or any other
Loan Document to which it is a party within the time period specified for
performance of such obligation or, if no time period is specified, if such
failure or refusal continues for a period of two Business Days after notice from
the Agent, then, in addition to the rights and remedies that may be available to
the Agent or the Borrower under this Agreement or Applicable Law, such
Defaulting Lender’s right to participate in the administration of the Loans,
this Agreement and the other Loan Documents, including without limitation, any
right to vote in respect of, to consent to or to direct any action or inaction
of the Agent or to be taken into account in the calculation of the Requisite
Lenders, shall be suspended during the pendency of such failure or refusal. If a
Lender is a Defaulting Lender because it has failed to make timely payment to
the Agent of any amount required to be paid to the Agent hereunder (without
giving effect to any notice or cure periods), in addition to other rights and
remedies which the Agent or the Borrower may have under the immediately
preceding provisions or otherwise, the Agent shall be entitled (i) to collect
interest from such Defaulting Lender on such delinquent payment for the period
from the date on which the payment was due until the date on which the payment
is made at the Federal Funds Rate, (ii) to withhold or setoff and to apply in
satisfaction of the defaulted payment and any related interest, any amounts
otherwise payable to such Defaulting Lender under this Agreement or any other
Loan Document and (iii) to bring an action or suit against such Defaulting
Lender in a court of competent jurisdiction to recover the defaulted amount and
any related interest. Any amounts received by the Agent in respect of a
Defaulting Lender’s Loans shall not be paid to such Defaulting Lender and shall
be held uninvested by the Agent and either applied against the purchase price of
such Loans under the following subsection (b) or paid to such Defaulting Lender
upon the Defaulting Lender’s curing of its default.

 

(b) Purchase or Cancellation of Defaulting Lender’s Commitment. Any Lender who
is not a Defaulting Lender shall have the right, but not the obligation, in its
sole discretion, to acquire all of a Defaulting Lender’s Commitment. Any Lender
desiring to exercise such right shall give written notice thereof to the Agent
and the Borrower no sooner than 2 Business Days and not later than 5 Business
Days after such Defaulting Lender became a Defaulting Lender. If more than one
Lender exercises such right, each such Lender shall have the right to acquire an
amount of such Defaulting Lender’s Commitment in proportion to the Commitments
of the other Lenders exercising such right. If after such 5th Business Day, the
Lenders have not elected to purchase all of the Commitment of such Defaulting
Lender, then the Borrower may, by giving written notice thereof to the Agent,
such Defaulting Lender and the other Lenders, either (i) demand that such
Defaulting Lender assign its Commitment to an Eligible Assignee subject to and
in accordance with the provisions of Section 13.5.(d) for the purchase price
provided for below or (ii) terminate the Commitment of such Defaulting Lender,
whereupon such Defaulting Lender shall no longer be a party hereto or have any
rights or obligations hereunder or under any of the other Loan Documents. The
Agent, the Lenders and the Titled Agents shall have no obligation whatsoever to
initiate any such replacement or to assist in finding an Eligible Assignee. Upon
any such purchase or assignment, the Defaulting Lender’s interest in the Loans
and its rights hereunder (but not its liability in respect thereof or under the
Loan Documents or this Agreement to the extent the same relate to the period
prior to the effective date of the

 

- 42 -

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

purchase) shall terminate on the date of purchase, and the Defaulting Lender
shall promptly execute all documents reasonably requested to surrender and
transfer such interest to the purchaser or assignee thereof, including an
appropriate Assignment and Acceptance Agreement and, notwithstanding Section
13.5.(d), shall pay to the Agent an assignment fee in the amount of $7,000. The
purchase price for the Commitment of a Defaulting Lender shall be equal to the
amount of the principal balance of the Loans outstanding and owed by the
Borrower to the Defaulting Lender. Prior to payment of such purchase price to a
Defaulting Lender, the Agent shall apply against such purchase price any amounts
retained by the Agent pursuant to the last sentence of the immediately preceding
subsection (a). The Defaulting Lender shall be entitled to receive amounts owed
to it by the Borrower under the Loan Documents which accrued prior to the date
of the default by the Defaulting Lender, to the extent the same are received by
the Agent from or on behalf of the Borrower. There shall be no recourse against
any Lender or the Agent for the payment of such sums except to the extent of the
receipt of payments from any other party or in respect of the Loans.

 

Section 3.12. Taxes.

 

(a) Taxes Generally. All payments by the Borrower of principal of, and interest
on, the Loans and all other Obligations shall be made free and clear of and
without deduction for any present or future excise, stamp or other taxes, fees,
duties, levies, imposts, charges, deductions, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding (i)
franchise taxes, (ii) any taxes imposed on or measured by any Lender’s assets,
net income, receipts or branch profits, (iii) any taxes (other than withholding
taxes) with respect to the Agent or a Lender that would not be imposed but for a
connection between the Agent or such Lender and the jurisdiction imposing such
taxes (other than a connection arising solely by virtue of the activities of the
Agent or such Lender pursuant to or in respect of this Agreement or any other
Loan Document), and (iv) any taxes, fees, duties, levies, imposts, charges,
deductions, withholdings or other charges to the extent imposed as a result of
the failure of the Agent or a Lender, as applicable, to provide and keep current
(to the extent legally able) any certificates, documents or other evidence
required to qualify for an exemption from, or reduced rate of, any such taxes
fees, duties, levies, imposts, charges, deductions, withholdings or other
charges or required by the immediately following subsection (c) to be furnished
by the Agent or such Lender, as applicable (such non-excluded items being
collectively called “Taxes”). If any withholding or deduction from any payment
to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any Applicable Law, then the Borrower will:

 

(i) pay directly to the relevant Governmental Authority the full amount required
to be so withheld or deducted;

 

(ii) promptly forward to the Agent an official receipt or other documentation
satisfactory to the Agent evidencing such payment to such Governmental
Authority; and

 

(iii) pay to the Agent for its account or the account of the applicable Lender,
as the case may be, such additional amount or amounts as is necessary to ensure
that the net amount actually received by the Agent or such Lender will equal the
full amount that the Agent or such Lender would have received had no such
withholding or deduction been required.

 

- 43 -

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

(b) Tax Indemnification. If the Borrower fails to pay any Taxes when due to the
appropriate Governmental Authority or fails to remit to the Agent, for its
account or the account of the respective Lender, as the case may be, the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental Taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.

 

(c) Tax Forms. Prior to the date that any Lender or Participant organized under
the laws of a jurisdiction outside the United States of America becomes a party
hereto, such Person shall deliver to the Borrower and the Agent such
certificates, documents or other evidence, as required by the Internal Revenue
Code or Treasury Regulations issued pursuant thereto (including Internal Revenue
Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor forms),
properly completed, currently effective and duly executed by such Lender or
Participant establishing that payments to it hereunder and under the Notes are
(i) not subject to United States Federal backup withholding tax and (ii) not
subject to United States Federal withholding tax imposed under the Internal
Revenue Code. Each such Lender or Participant shall, to the extent it may
lawfully do so, (x) deliver further copies of such forms or other appropriate
certifications on or before the date that any such forms expire or become
obsolete and after the occurrence of any event requiring a change in the most
recent form delivered to the Borrower or the Agent and (y) obtain such
extensions of the time for filing, and renew such forms and certifications
thereof, as may be reasonably requested by the Borrower or the Agent. The
Borrower shall not be required to pay any amount pursuant to the last sentence
of subsection (a) above to any Lender or Participant that is organized under the
laws of a jurisdiction outside of the United States of America or the Agent, if
it is organized under the laws of a jurisdiction outside of the United States of
America, if such Lender, Participant or the Agent, as applicable, fails to
comply with the requirements of this subsection. If any such Lender or
Participant, to the extent it may lawfully do so, fails to deliver the above
forms or other documentation, then the Agent may withhold from any payments to
be made to such Lender under any of the Loan Documents such amounts as are
required by the Internal Revenue Code. If any Governmental Authority asserts
that the Agent did not properly withhold or backup withhold, as the case may be,
any tax or other amount from payments made to or for the account of any Lender,
such Lender shall indemnify the Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Agent under this Section, and costs and expenses (including all reasonable fees
and disbursements of any law firm or other external counsel and the allocated
cost of internal legal services and all disbursements of internal counsel) of
the Agent. The obligation of the Lenders under this Section shall survive the
termination of the Commitments, repayment of all Obligations and the resignation
or replacement of the Agent.

 

- 44 -

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

ARTICLE IV. COLLATERAL PROPERTIES

 

Section 4.1. Eligibility of Properties.

 

(a) As of the Agreement Date, the Lenders have approved for inclusion in
calculations of the Borrowing Base the Properties identified on Schedule 4.1.
Upon satisfaction of the conditions set forth in Section 4.2., such Properties
shall become Collateral Properties.

 

(b) If, after the Agreement Date, the Borrower desires that the Lenders include
any additional Property in calculations of the Borrowing Base, the Borrower
shall so notify the Agent in writing. No Property will be evaluated by the
Lenders unless it is an Eligible Property, and unless and until the Borrower
delivers to the Agent the following, in form and substance satisfactory to the
Agent:

 

(i) a description of such Property, such description to include the age,
location and size of such Property;

 

(ii) an operating statement with respect to such Property for each of the two
prior fiscal years and for the current fiscal year through the fiscal quarter
most recently ending and for the current fiscal quarter, certified by a
representative of the Borrower to the best of such representative’s knowledge as
being true and correct in all material respects; provided, that with respect to
any period such Property was not owned by a Loan Party, such information shall
only be required to be delivered to the extent reasonably available to the
Borrower;

 

(iii) a pro forma operating statement or an operating budget for such Property
with respect to the current and immediately following fiscal years;

 

(iv) a budget for capital expenditures for the immediately following 12-month
period showing funding sources acceptable to the Agent;

 

(v) a “Phase I” environmental assessment of such Property not more than 12
months old prepared by an environmental engineering firm acceptable to the Agent
and upon which the Agent and the Lenders are expressly permitted to rely, and
any additional environmental studies or assessments available to the Borrower
performed with respect to such Property; and

 

(vi) such other information the Agent may reasonably request in order to
evaluate such Property.

 

(c) If, after receipt and review of the foregoing, the Agent is prepared to
proceed with acceptance of such Property as a Collateral Property, the Agent
will so notify the Borrower and each Lender within 15 Business Days after
receipt of all of the above items, and the Agent will obtain an Appraisal of
such Property in order to determine the Appraised Value thereof. After obtaining
such Appraisal, the Agent will promptly submit the foregoing documents and
information, including the Appraisal and the Appraised Value, to the Lenders,
for approval by the Requisite Lenders within 10 Business Days thereafter. Each
Lender shall notify the Agent

 

- 45 -

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

whether it approves of the designation of such Property as a Collateral Property
within 10 Business Days of receipt of all such documents and information. If a
Lender shall fail to so notify the Agent, then such Lender shall be deemed to
have approved of such Property. Upon approval of such Property by the Requisite
Lenders, and upon execution and delivery of all of the documents required to be
provided under Section 4.2., such Property shall become a Collateral Property.
With respect to any use of proceeds of the Loans to repay Indebtedness in
jurisdictions imposing a mortgage recording tax, the Lenders hereby agree to
reasonably cooperate with Borrower in taking an assignment of an existing
mortgage or otherwise to achieve any mortgage tax savings.

 

Section 4.2. Conditions Precedent to a Property Becoming a Collateral Property.

 

No Property shall become a Collateral Property until the Borrower shall have
caused to be executed and delivered to the Agent and the Lenders all documents
and instruments required to be so executed and delivered under Section 4.1., the
Requisite Lenders shall have approved of, or shall have been deemed to have
approved of, such Property as provided in such Section, and the Borrower shall
have caused to be executed and delivered to the Agent the following instruments,
documents and agreements in respect of such Property, each to be in form and
substance satisfactory to the Agent:

 

(a) a Security Deed executed by each Loan Party owning (or leasing) such
Property, the form of such Security Deed to be modified as appropriate to
conform to the Applicable Laws of the jurisdiction in which such Property is
located;

 

(b) an Assignment of Leases and Rents executed by each such Loan Party, the form
of such Assignment of Leases and Rents to be modified as appropriate to conform
to the Applicable Laws of the jurisdiction in which such Property is located;

 

(c) an Environmental Indemnity Agreement executed by each such Loan Party, and
if not the Borrower, the Borrower;

 

(d) copies of (i) all Property Management Agreements, franchise or license
agreements and all other material contracts, if any, which will relate to the
use, occupancy, operation, maintenance, enjoyment or ownership of such Property,
and (ii) if such Property is not yet owned by the Borrower or a Subsidiary, the
purchase agreement pursuant to which the Borrower or a Subsidiary is to acquire
such Property;

 

(e) a Property Management Contract Assignment executed by each such Loan Party
and the applicable property manager;

 

(f) copies of all material occupancy and operating permits, licenses, warranties
and guaranties and any other rights or benefits of such Property, relating to
the use, occupancy, operation, maintenance, enjoyment or ownership of such
Property;

 

(g) if requested by the Agent, collateral assignments of the other material
contracts, operating permits and licenses, franchise or license agreements and
any other rights or benefits of such Property, relating to the use, occupancy,
operation, maintenance, enjoyment or

 

- 46 -

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

ownership of such Property, such assignment to be evidenced by an Assignment of
Contracts, Documents and Rights and an Assignment of Franchise Agreement, in
each case, executed by each such Loan Party and each other Person party thereto;

 

(h) an inspection report prepared by an architect or engineer acceptable to the
Agent and addressed to the Agent for the benefit of the Lenders with respect to
such Property;

 

(i) an ALTA 1992 Form mortgagee’s Policy of Title Insurance (with deletion of
the creditor’s rights exclusion and deletion of the mandatory arbitration
provision) or other form acceptable to the Agent in favor of the Agent for the
benefit of the Lenders with respect to such Property, including endorsements
with respect to such items of coverage as the Agent may reasonably request (and
which endorsements are available in the applicable state), in a coverage amount
equal to no less than 100% of the Appraised Value of such Property (subject to
increase without material additional cost through the use of “tie-in”
endorsements or other provisions), issued by a title insurance company
acceptable to the Agent and with coinsurance or reinsurance (with direct access
agreements) with title insurance companies acceptable to the Agent, showing the
fee simple title (or a leasehold estate if leased under a Ground Lease) to the
land and improvements described in the applicable Security Deed as vested in the
Borrower or a Subsidiary, and insuring that the Lien granted by such Security
Deed is a valid first priority Lien against such Property, subject only to such
restrictions, encumbrances, easements and reservations as are acceptable to the
Agent and Permitted Liens (other than Liens of the types described in clauses
(f), (g) and (i) of the definition of Permitted Liens);

 

(j) copies of all documents of record reflected in Schedule B of such Policy of
Title Insurance;

 

(k) if such Property is located in a Tie-In Jurisdiction, endorsements to all
other existing title insurance policies issued to the Agent with respect to all
other Properties located in Tie-In Jurisdictions reflecting an increase in the
aggregate insured amount under the “tie-in” endorsements to an amount equal to
the Collateral Property Value of all such Properties (including the Property to
be included as a Collateral Property) but in no event in an amount in excess of
the aggregate amount of the Commitments;

 

(l) a current or currently certified survey of such Property certified to the
Agent and the Lenders by a surveyor licensed in the jurisdiction where such
Property is located to have been prepared in accordance with the then effective
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys;

 

(m) if not adequately covered by the survey certification, a certificate from a
licensed engineer or other professional satisfactory to the Agent that such
Property is not located in a Special Flood Hazard Area as defined by the Federal
Insurance Administration, or, if it is, evidence of flood insurance;

 

(n) evidence that such Property complies with applicable zoning and land use
laws or that such Property is the subject of a legal non-conforming use;

 

- 47 -

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

(o) if reasonably requested by the Agent, copies of all engineering, mechanical,
structural and maintenance studies performed with respect to such Property not
more than twelve months old;

 

(p) UCC, tax, judgment and lien search reports with respect to each such Loan
Party and such Property in all necessary or appropriate jurisdictions and under
all legal and appropriate trade names indicating that there are no Liens of
record on such Property or any of the Collateral relating thereto other than
Permitted Liens (but not Liens of the types described in clauses (f), (g) and
(i) of the definition of Permitted Liens) or Liens to be terminated prior to
such Property’s acceptance as a Collateral Property;

 

(q) an opinion of counsel admitted to practice law in the jurisdiction in which
such Property is located and acceptable to the Agent, addressed to the Agent and
each Lender covering such legal matters relating to the transactions
contemplated hereby as the Agent may reasonably request;

 

(r) an opinion of counsel qualified to render legal opinions regarding the law
of the jurisdiction in which the Borrower is formed (or if the Property is owned
by a Subsidiary, in the jurisdiction where such Subsidiary is formed) acceptable
to the Agent, addressed to the Agent and each Lender covering such legal matters
relating to the formation and existence and power of the Person executing
documents, and the due authorization, execution and delivery of the applicable
Security Documents and other documents for consummating the transactions
contemplated hereby as the Agent may reasonably request;

 

(s) if such Property is owned by, or leased to, a Subsidiary (including a
Taxable REIT Subsidiary) that is not already a Guarantor, an Accession Agreement
executed by such Subsidiary and all of the items that would have been required
to be delivered to the Agent under Section 6.1.(viii) through (xii) had such
Subsidiary been a Loan Party on the Effective Date;

 

(t) final certificates of occupancy relating to such Property, if available and
if requested by the Agent;

 

(u) a Borrowing Base Certificate calculated after giving effect to the inclusion
of such Property as a Collateral Property;

 

(v) evidence that the insurance required under the applicable Loan Document for
such Property is then in effect; and

 

(w) such other due diligence materials, instruments, documents, agreements,
financing statements, certificates, opinions and other Security Documents
consistent with the existing terms and conditions of the Loan Documents as the
Agent may reasonably request.

 

Section 4.3. Release of Collateral Properties.

 

From time to time the Borrower may request, upon not less than 10 Business Days
prior written notice to the Agent, that a Collateral Property be released from
the Liens created by the

 

- 48 -

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

Security Documents applicable thereto, which release (the “Release”) shall be
effected by the Agent if all of the following conditions are satisfied as of the
date of such Release:

 

(a) no Default or Event of Default exists or would exist immediately after
giving effect to such Release;

 

(b) the Borrower shall have delivered to the Agent all documents and instruments
reasonably requested by the Agent in connection with such Release including,
without limitation, the following:

 

(i) a quitclaim deed or other instrument to be used to effect such Release; and

 

(ii) an appropriate endorsement to the mortgagee title insurance policy in
effect with respect to the affected Collateral Property (and appropriate
corrective endorsements with respect to any other mortgagee policies of title
insurance on Collateral Properties which have tie-in clauses which are affected
by the release); and

 

(c) the Borrower shall have delivered a compliance certificate showing pro forma
compliance with the covenants set forth in Section 10.1. after giving effect to
such Release;

 

(d) the Borrower shall have delivered to the Agent a Borrowing Base Certificate
reflecting the Borrowing Base after giving effect to such Release;

 

(e) the outstanding principal balance of the Loans, together with the aggregate
principal amount of all Letter of Credit Liabilities, will not exceed the
Borrowing Base after giving effect to such Release and any prepayment to be made
and/or the acceptance of any Property pursuant to Section 4.1. which is to be
given concurrently with such Release as an additional or replacement Collateral
Property; and

 

(f) after giving effect to such Release there are at least two Collateral
Properties.

 

In connection with a Release, the Borrower shall deliver to the Agent a
certificate from the Borrower’s chief executive officer or chief financial
officer regarding the matters referred to in the immediately preceding clauses
(a) and (c). After giving effect to any request that a Collateral Property owned
by a Subsidiary cease to be included in determinations of the Borrowing Base,
the Borrower may request in writing that the Agent release, and upon receipt of
such request the Agent shall release, such Subsidiary from the Guaranty so long
as such Subsidiary does not own any other Collateral Property.

 

Section 4.4. Frequency of Calculations of Borrowing Base.

 

Initially, the Borrowing Base shall be the amount set forth as such in the
Borrowing Base Certificate delivered under Section 6.1. Thereafter, the
Borrowing Base shall be the amount set forth as such in the Borrowing Base
Certificate delivered from time to time under Section 4.2.(u), 4.3.(d) or
9.4.(h). Any increase in the Collateral Property Value of a Collateral Property
shall become effective as of the next determination of the Borrowing Base as
provided in this Section, provided that prior to such date of determination (a)
the applicable Borrowing

 

- 49 -

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

Base Certificate substantiates such increase and (b) if at such time such
Collateral Property is subject to a Security Deed, the Borrower delivers to the
Agent (i) if the Property is not located in a Tie-In Jurisdiction, an
endorsement to the title insurance policy in favor of the Agent with respect to
such Property increasing the coverage amount thereof as related to such Property
to not less than 100% of the Appraised Value for such Property and (ii) if the
Property is located in a Tie-In Jurisdiction, an endorsement to the title
insurance policy in favor of the Agent with respect to such Property increasing
the coverage amount thereof as related to such Property to not less than the
Collateral Property Value of such Property, as well as endorsements to all other
existing title insurance policies issued to the Agent with respect to all other
Properties located in Tie-In Jurisdictions reflecting an increase in the
aggregate insured amount under the “tie-in” endorsements to an amount equal to
the aggregate amount of the Collateral Property Values of all such Properties
(including the Property which experienced the increase in Collateral Property
Value) but in no event in an amount in excess of the aggregate amount of the
Commitments.

 

Section 4.5. Frequency of Appraisals.

 

(a) Collateral Properties. The Appraised Value of a Collateral Property shall be
determined or redetermined, as applicable, under each of the following
circumstances:

 

(i) In connection with the acceptance of a Property as a Collateral Property the
Agent shall determine the Appraised Value thereof as provided in Section 4.1.;
or

 

(ii) From time to time upon at least 5 Business Days written notice to the
Borrower and at the Borrower’s expense, the Agent may (and shall at the
direction of the Requisite Lenders) redetermine the Appraised Value of a
Collateral Property (based on a new Appraisal obtained by the Agent) in any of
the following circumstances:

 

(x) if necessary in order to comply with FIRREA or other Applicable Law relating
to the Agent or the Lenders pursuant to the terms of Section 4.6.; or

 

(y) if the Agent determines an Appraisal of such Property is necessary in
connection with its determination under Section 4.3. regarding the release of a
Collateral Property.

 

(iii) On each anniversary of the date of the acceptance of each Property as a
Collateral Property, the Agent shall redetermine the Appraised Value of such
Collateral Property (based on a new Appraisal obtained by the Agent), at the
Borrower’s expense; or

 

(iv) Following any “Casualty Event” under and as defined in any Security Deed or
any “Condemnation Event” under and as defined in any Security Deed.

 

(b) Other Properties. With respect to each Property included in the calculation
of Total Asset Value (and without duplication of the requirements of the
immediately preceding subsection (a)), the Agent shall redetermine the Appraised
Value of each Property each year (based on a new Appraisal of each such Property
obtained by the Agent), at the Borrower’s expense.

 

- 50 -

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

(c) Upon the Borrower’s written request for a redetermination of the Appraised
Value of a Property, the Agent shall redetermine the Appraised Value of such
Property (based on a new Appraisal of such Property obtained by the Agent), at
the Borrower’s expense.

 

Section 4.6. Additional Appraisals Required under Applicable Law.

 

If under FIRREA or any other Applicable Law, a Lender is required to obtain an
Appraisal of any Collateral Property in addition to any other Appraisal
previously obtained with respect to such Property pursuant to this Agreement,
the Agent shall have the right to cause such an Appraisal to be prepared at the
Borrower’s cost and expense. The Borrowing Base shall be redetermined as a
result of delivery of any such new Appraisal if Applicable Law requires such
redetermination, in which case the Borrowing Base shall be redetermined in the
manner required under such Applicable Law.

 

ARTICLE V. YIELD PROTECTION, ETC.

 

Section 5.1. Additional Costs; Capital Adequacy.

 

(a) Additional Costs. The Borrower shall promptly pay to the Agent for the
account of a Lender from time to time such amounts as such Lender may determine
to be necessary to compensate such Lender for any costs incurred by such Lender
that it reasonably determines are attributable to its making or maintaining of
any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any
reduction in any amount receivable by such Lender under this Agreement or any of
the other Loan Documents in respect of any of such Loans or such obligation or
the maintenance by such Lender of capital in respect of its Loans or its
Commitment (such increases in costs and reductions in amounts receivable being
herein called “Additional Costs”), to the extent resulting from any Regulatory
Change that: (i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or any of the other Loan Documents in respect of any
of such Loans or its Commitment (other than taxes, fees, duties, levies,
imposts, charges, deductions, withholdings or other charges which are excluded
from the definition of Taxes pursuant to the first sentence of Section
3.12.(a)); or (ii) imposes or modifies any reserve, special deposit or similar
requirements (other than Regulation D of the Board of Governors of the Federal
Reserve System or other reserve requirement to the extent utilized in the
determination of Adjusted LIBOR for such Loan) relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Lender, or any commitment of such Lender (including, without limitation, the
Commitment of such Lender hereunder); or (iii) has or would have the effect of
reducing the rate of return on capital of such Lender to a level below that
which such Lender could have achieved but for such Regulatory Change (taking
into consideration such Lender’s policies with respect to capital adequacy).

 

(b) Lender’s Suspension of LIBOR Loans. Without limiting the effect of the
provisions of the immediately preceding subsection (a), if, by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the interest rate on LIBOR Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender

 

- 51 -

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

that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets that it may hold, then, if such
Lender so elects by notice to the Borrower (with a copy to the Agent), the
obligation of such Lender to make or Continue, or to Convert any other Type of
Loans into, LIBOR Loans hereunder shall be suspended until such Regulatory
Change ceases to be in effect (in which case the provisions of Section 5.5.
shall apply).

 

(c) Additional Costs in Respect of Letters of Credit. Without limiting the
obligations of the Borrower under the preceding subsections of this Section (but
without duplication), if as a result of any Regulatory Change or any risk-based
capital guideline or other requirement heretofore or hereafter issued by any
Governmental Authority there shall be imposed, modified or deemed applicable any
tax, reserve, special deposit, capital adequacy or similar requirement against
or with respect to or measured by reference to Letters of Credit and the result
shall be to increase the cost to the Agent of issuing (or any Lender of
purchasing participations in) or maintaining its obligation hereunder to issue
(or purchase participations in) any Letter of Credit or reduce any amount
receivable by the Agent or any Lender hereunder in respect of any Letter of
Credit, then, upon demand by the Agent or such Lender, the Borrower shall pay
promptly, and in any event within 3 Business Days of demand, to the Agent for
its account or the account of such Lender, as applicable, from time to time as
specified by the Agent or a Lender, such additional amounts as shall be
sufficient to compensate the Agent or such Lender for such increased costs or
reductions in amount.

 

(d) Notification and Determination of Additional Costs. Each of the Agent and
each Lender agrees to notify the Borrower of any event occurring after the
Agreement Date entitling the Agent or such Lender to compensation under any of
the preceding subsections of this Section as promptly as practicable; provided,
however, the failure of the Agent or any Lender to give such notice shall not
release the Borrower from any of its obligations hereunder (and in the case of a
Lender, to the Agent); provided further that no Lender shall be entitled to
claim any additional cost, reduction in amounts, loss, tax or other additional
amount under this Article V if such Lender fails to provide such notice to the
Borrower within 180 days of the date such Lender becomes aware of the occurrence
of the event giving rise to the additional cost, reduction in amounts, loss, tax
or other additional amount. The Agent or such Lender agrees to furnish to the
Borrower (and in the case of a Lender, to the Agent) a certificate setting forth
in reasonable detail the basis and amount of each request by the Agent or such
Lender for compensation under this Section. Absent manifest error,
determinations by the Agent or any Lender of the effect of any Regulatory Change
shall be conclusive, provided that such determinations are made on a reasonable
basis and in good faith.

 

Section 5.2. Suspension of LIBOR Loans.

 

Anything herein to the contrary notwithstanding, if, on or prior to the
determination of Adjusted LIBOR for any Interest Period:

 

(a) the Agent reasonably determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining Adjusted LIBOR for such Interest
Period, or

 

- 52 -

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

(b) the Agent reasonably determines (which determination shall be conclusive)
that Adjusted LIBOR will not adequately and fairly reflect the cost to the
Lenders of making or maintaining LIBOR Loans for such Interest Period;

 

then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Loans into LIBOR Loans and the Borrower shall, on the last day of
each current Interest Period for each outstanding LIBOR Loan, either repay such
Loan or Convert such Loan into a Base Rate Loan.

 

Section 5.3. Illegality.

 

Notwithstanding any other provision of this Agreement, if any Lender shall
reasonably determine (which determination shall be conclusive and binding) that
it has become unlawful for such Lender to honor its obligation to make or
maintain LIBOR Loans hereunder, then such Lender shall promptly notify the
Borrower thereof (with a copy to the Agent) and such Lender’s obligation to make
or Continue, or to Convert Loans of any other Type into, LIBOR Loans shall be
suspended until such time as such Lender may again make and maintain LIBOR Loans
(in which case the provisions of Section 5.5. shall be applicable).

 

Section 5.4. Compensation.

 

The Borrower shall pay to the Agent for the account of each Lender, upon the
request of such Lender through the Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender) to compensate it for any
loss, cost or expense (excluding lost profits) that such Lender reasonably
determines is attributable to:

 

(a) any payment or prepayment (whether mandatory or optional) of a LIBOR Loan,
or Conversion of a LIBOR Loan, made by such Lender for any reason (including,
without limitation, acceleration) on a date other than the last day of the
Interest Period for such Loan; or

 

(b) any failure by the Borrower for any reason (including, without limitation,
the failure of any of the applicable conditions precedent specified in Article
VI. to be satisfied) to borrow a LIBOR Loan from such Lender on the requested
date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Loan or
Continue a LIBOR Loan on the requested date of such Conversion or Continuation.

 

Upon the Borrower’s request, any Lender requesting compensation under this
Section shall provide the Borrower with a statement setting forth in reasonable
detail the basis for requesting such compensation and the method for determining
the amount thereof. Absent manifest error, determinations by any Lender in any
such statement shall be conclusive, provided that such determinations are made
on a reasonable basis and in good faith.

 

- 53 -

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

Section 5.5. Treatment of Affected Loans.

 

If the obligation of any Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section
5.1.(b) or 5.3., then such Lender’s LIBOR Loans shall be automatically Converted
into Base Rate Loans on the last day(s) of the then current Interest Period(s)
for LIBOR Loans (or, in the case of a Conversion required by Section 5.1.(b) or
5.3., on such earlier date as such Lender may specify to the Borrower with a
copy to the Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Section 5.1. or 5.3. that gave rise to
such Conversion no longer exist:

 

(a) to the extent that such Lender’s LIBOR Loans have been so Converted, all
payments and prepayments of principal that would otherwise be applied to such
Lender’s LIBOR Loans shall be applied instead to its Base Rate Loans; and

 

(b) all Loans that would otherwise be made or Continued by such Lender as LIBOR
Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate
Loans of such Lender that would otherwise be Converted into LIBOR Loans shall
remain as Base Rate Loans.

 

If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 5.1. or 5.3. that gave rise to the Conversion
of such Lender’s LIBOR Loans pursuant to this Section no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist) at a
time when LIBOR Loans made by other Lenders are outstanding, then such Lender’s
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Lenders holding LIBOR Loans and by such Lender are held pro rata (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.

 

Section 5.6. Change of Lending Office.

 

Each Lender agrees that it will use reasonable efforts to designate an alternate
Lending Office with respect to any of its Loans affected by the matters or
circumstances described in Sections 3.12., 5.1. or 5.3. to reduce the liability
of the Borrower or avoid the results provided thereunder, so long as such
designation is not disadvantageous to such Lender as determined by such Lender
in its sole discretion, except that such Lender shall have no obligation to
designate a Lending Office located in the United States of America.

 

Section 5.7. Assumptions Concerning Funding of LIBOR Loans.

 

Calculation of all amounts payable to a Lender under this Article V. shall be
made as though such Lender had actually funded LIBOR Loans through the purchase
of deposits in the relevant market bearing interest at the rate applicable to
such LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having
a maturity comparable to the relevant Interest Period; provided, however, that
each Lender may fund each of its LIBOR Loans in any manner it sees fit and the
foregoing assumption shall be used only for calculation of amounts payable under
this Article V.

 

- 54 -

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

Section 5.8. Affected Lenders.

 

If (a) a Lender requests compensation pursuant to Section 3.12. or 5.1., and the
Requisite Lenders are not also doing the same, or (b) the obligation of any
Lender to make LIBOR Loans or to Continue, or to Convert Base Rate Loans into,
LIBOR Loans shall be suspended pursuant to Section 5.1.(b) or 5.3. but the
obligation of the Requisite Lenders shall not have been suspended under such
Sections, or (c) a Lender does not vote in favor of any amendment, modification
or waiver to this Agreement which, pursuant to Section 13.6., requires the vote
of all of the Lenders, and the Requisite Lenders shall have voted in favor of
such amendment, modification or waiver, or (d) at any time in which there are
only three or fewer Lenders, a Lender disapproves of the addition of a Property
as a Collateral Property and the other two Lenders have approved the addition of
such Property as a Collateral Property, or (e) at any time in which there are
more than three Lenders, a Lender twice disapproves of the addition of a
Property as a Collateral Property and in each case Lenders which together with
such Lender would constitute Requisite Lenders shall have approved the addition
of such Property (or Properties) as a Collateral Property then, so long as there
does not then exist any Default or Event of Default, the Borrower may demand
that such Lender (the “Affected Lender”), and upon such demand the Affected
Lender shall promptly, assign its Commitment to an Eligible Assignee subject to
and in accordance with the provisions of Section 13.5.(d) for a purchase price
equal to the aggregate principal balance of all Loans then owing to the Affected
Lender plus any accrued but unpaid interest thereon and accrued but unpaid fees
owing to the Affected Lender, or any other amount as may be mutually agreed upon
by such Affected Lender and Eligible Assignee. Each of the Agent and the
Affected Lender shall reasonably cooperate in effectuating the replacement of
such Affected Lender under this Section, but at no time shall the Agent, such
Affected Lender nor any other Lender nor any Titled Agent be obligated in any
way whatsoever to initiate any such replacement or to assist in finding an
Eligible Assignee. The exercise by the Borrower of its rights under this Section
shall be at the Borrower’s sole cost and expense and at no cost or expense to
the Agent, the Affected Lender or any of the other Lenders. The terms of this
Section shall not in any way limit the Borrower’s obligation to pay to any
Affected Lender compensation owing to such Affected Lender pursuant to this
Agreement (including, without limitation, pursuant to Sections 3.12., 5.1. or
5.4.) with respect to the periods up to the date of replacement.

 

ARTICLE VI. CONDITIONS PRECEDENT

 

Section 6.1. Initial Conditions Precedent.

 

The obligation of the Lenders to effect or permit the occurrence of the first
Credit Event hereunder, whether as the making of a Loan or the issuance of a
Letter of Credit, is subject to the following conditions precedent:

 

(a) The Agent shall have received each of the following, in form and substance
satisfactory to the Agent:

 

(i) counterparts of this Agreement executed by each of the parties hereto;

 

- 55 -

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

(ii) Revolving Notes executed by the Borrower, payable to each Lender and
complying with the applicable provisions of Section 2.10., and the Swingline
Note executed by the Borrower;

 

(iii) the Guaranty executed by the Parent and each Subsidiary that owns or
leases a Collateral Property as of the Effective Date and each other Subsidiary
(other than Excluded Subsidiaries) required to become a Guarantor under Section
8.14.;

 

(iv) the Pledge Agreement executed by each Pledgor existing as of the Effective
Date;

 

(v) all certificates representing any shares of Equity Interests pledged
pursuant to the Pledge Agreement, together with an undated stock power for each
such certificate executed in blank by a duly authorized officer of the Pledgor
thereof, together with an Acknowledgment and Consent, substantially in the form
of Schedule 2 to the Pledge Agreement, duly executed by any issuer of any Equity
Interest pledged pursuant to the Pledge Agreement that is not itself a party to
the Pledge Agreement;

 

(vi) each document (including, without limitation, any UCC financing statement)
required by the Security Documents or under Applicable Law or reasonably deemed
necessary or appropriate by the Agent to be filed, registered or recorded in
order to create in favor of the Agent, for the benefit of the Lenders, a
perfected first-priority Lien (other than Permitted Liens (but not Liens of the
types described in clauses (f), (g) and (i) of the definition of Permitted
Liens)) on the Collateral described therein, shall have been filed, registered
or recorded or shall have been delivered to the Agent and be in proper form for
filing, registration or recordation;

 

(vii) the results of a recent lien search in each of the jurisdictions in which
UCC financing statements or other filings or recordations should be made to
evidence or perfect security interests in Collateral being granted under the
Pledge Agreement as of the Effective Date, and such search shall reveal no Liens
of record with respect to any of such Collateral other than Permitted Liens (but
not Liens of the types described in clauses (f), (g) and (i) of the definition
of Permitted Liens) or Liens to be terminated prior to the Effective Date;

 

(viii) the articles of incorporation, articles of organization, certificate of
limited partnership or other comparable organizational instrument (if any) of
the Borrower and each other Loan Party certified as of a recent date by the
Secretary of State of the state of formation of such Loan Party;

 

(ix) a certificate of good standing or certificate of similar meaning with
respect to each Loan Party issued as of a recent date by the Secretary of State
of the state of formation of each such Loan Party and certificates of
qualification to transact business or other comparable certificates issued by
each Secretary of State (and any state department of taxation, as applicable) of
each state in which such Loan Party is required to be so

 

- 56 -

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

qualified and where the failure to be so qualified could reasonably be expected
to have a Material Adverse Effect;

 

(x) a certificate of incumbency signed by the Secretary or Assistant Secretary
(or other individual performing similar functions) of each Loan Party with
respect to each of the officers of such Loan Party authorized to execute and
deliver the Loan Documents to which such Loan Party is a party, and in the case
of the Borrower, and the officers of the Borrower then authorized to deliver
Notices of Borrowing, Notices of Swingline Borrowings, Notices of Continuation
and Notices of Conversion and to request the issuance of Letters of Credit;

 

(xi) copies certified by the Secretary or Assistant Secretary (or other
individual performing similar functions) of each Loan Party of (i) the by-laws
of such Loan Party, if a corporation, the operating agreement, if a limited
liability company, the partnership agreement, if a limited or general
partnership, or other comparable document in the case of any other form of legal
entity and (ii) all corporate, partnership, member or other necessary action
taken by such Loan Party to authorize the execution, delivery and performance of
the Loan Documents to which it is a party;

 

(xii) an opinion of counsel to the Loan Parties, addressed to the Agent, the
Lenders and the Swingline Lender, addressing the matters set forth in Exhibit M;

 

(xiii) the Fees then due and payable under Section 3.6., and any other Fees
payable to the Agent, the Titled Agents and the Lenders on or prior to the
Effective Date;

 

(xiv) a Compliance Certificate calculated as of the Effective Date (giving pro
forma effect to the financing evidenced by this Agreement and the use of the
proceeds of the Loans to be funded on the Agreement Date);

 

(xv) a Borrowing Base Certificate calculated as of the Effective Date; and

 

(xvi) such other documents, agreements and instruments as the Agent on behalf of
the Lenders may reasonably request; and

 

(b) In the good faith and reasonable judgment of the Agent and the Lenders:

 

(i) there shall not have occurred or become known to the Agent or any of the
Lenders any event, condition, situation or status since the date of the
information contained in the financial and business projections, budgets, pro
forma data and forecasts concerning the Parent, the Borrower and its other
Subsidiaries delivered to the Agent and the Lenders prior to the Agreement Date
that has had or could reasonably be expected to result in a Material Adverse
Effect;

 

(ii) no litigation, action, suit, investigation or other arbitral,
administrative or judicial proceeding shall be pending or threatened in writing
which could reasonably be expected to (1) result in a Material Adverse Effect or
(2) restrain or enjoin, impose

 

- 57 -

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

materially burdensome conditions on, or otherwise materially and adversely
affect the ability of any Loan Party to fulfill its obligations under the Loan
Documents to which it is a party; and

 

(iii) the Parent, the Borrower and its other Subsidiaries shall have received
all approvals, consents and waivers, and shall have made or given all necessary
filings and notices as shall be required to consummate the transactions
contemplated hereby without the occurrence of any default under, conflict with
or violation of (1) any Applicable Law or (2) any agreement, document or
instrument to which the Borrower or any other Loan Party is a party or by which
any of them or their respective properties is bound, except for such approvals,
consents, waivers, filings and notices the receipt, making or giving of which
would not reasonably be likely to (A) have a Material Adverse Effect, or (B)
restrain or enjoin, impose materially burdensome conditions on, or otherwise
materially and adversely affect the ability of the Borrower or any other Loan
Party to fulfill its obligations under the Loan Documents to which it is a
party.

 

Section 6.2. Conditions Precedent to All Loans and Letters of Credit.

 

The obligations of the Lenders to make any Loans, of the Agent to issue Letters
of Credit, and of the Swingline Lender to make any Swingline Loan are all
subject to the further condition precedent that: (a) no Default or Event of
Default shall exist as of the date of the making of such Loan or date of
issuance of such Letter of Credit or would exist immediately after giving effect
thereto; and (b) the representations and warranties made or deemed made by each
Loan Party in the Loan Documents to which any of them is a party, shall be true
and correct in all material respects on and as of the date of the making of such
Loan or date of issuance of such Letter of Credit with the same force and effect
as if made on and as of such date except to the extent that such representations
and warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and correct in all material
respects on and as of such earlier date) and except for changes in factual
circumstances not prohibited under the Loan Documents. Each Credit Event shall
constitute a certification by the Borrower to the effect set forth in the
preceding sentence (both as of the date of the giving of notice relating to such
Credit Event and, unless the Borrower otherwise notifies the Agent prior to the
date of such Credit Event, as of the date of the occurrence of such Credit
Event). In addition, if such Credit Event is the making of a Loan or the
issuance of a Letter of Credit, the Borrower shall be deemed to have represented
to the Agent and the Lenders at the time such Loan is made or Letter of Credit
issued that all conditions to the occurrence of such Credit Event contained in
Article VI. have been satisfied.

 

- 58 -

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

ARTICLE VII. REPRESENTATIONS AND WARRANTIES

 

Section 7.1. Representations and Warranties.

 

In order to induce the Agent and each Lender to enter into this Agreement and to
make Loans and issue Letters of Credit, the Parent and the Borrower represent
and warrant to the Agent and each Lender as follows:

 

(a) Organization; Power; Qualification. Each of the Parent, the Borrower, the
other Loan Parties and each other Subsidiary is a corporation, partnership or
other legal entity, duly organized or formed, validly existing and in good
standing under the jurisdiction of its incorporation or formation, has the power
and authority to own or lease its respective properties and to carry on its
respective business as now being and hereafter proposed to be conducted and is
duly qualified and is in good standing as a foreign corporation, partnership or
other legal entity, and authorized to do business, in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification or authorization and where the failure to be so qualified or
authorized could reasonably be expected to have, in each instance, a Material
Adverse Effect.

 

(b) Ownership Structure. As of the Agreement Date, Part I of Schedule 7.1.(b) is
a complete and correct list of all Subsidiaries of the Parent setting forth for
each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary,
(ii) each Person holding any Equity Interests in such Subsidiary, (iii) the
nature of the Equity Interests held by each such Person, (iv) the percentage of
ownership of such Subsidiary represented by such Equity Interests and (v)
whether such Subsidiary is a Material Subsidiary or a Significant Subsidiary.
Except as disclosed in such Schedule, as of the Agreement Date (i) each of the
Parent and its Subsidiaries owns, free and clear of all Liens (other than
Permitted Liens), and has the unencumbered right to vote, all outstanding Equity
Interests in each Person shown to be held by it on such Schedule, (ii) all of
the issued and outstanding capital stock of each such Person organized as a
corporation is validly issued, fully paid and nonassessable and (iii) there are
no outstanding subscriptions, options, warrants, commitments, preemptive rights
or agreements of any kind (including, without limitation, any stockholders’ or
voting trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, any
such Person. As of the Agreement Date Part II of Schedule 7.1.(b) correctly sets
forth all Unconsolidated Affiliates of the Parent, including the correct legal
name of such Person, the type of legal entity which each such Person is, and all
Equity Interests in such Person held directly or indirectly by the Parent.

 

(c) Authorization of Agreement, Etc. The Borrower has the right and power, and
has taken all necessary action to authorize it, to borrow and obtain other
extensions of credit hereunder. Each Loan Party has the right and power, and has
taken all necessary action to authorize it, to execute, deliver and perform each
of the Loan Documents to which it is a party in accordance with their respective
terms and to consummate the transactions contemplated hereby and thereby. The
Loan Documents to which any Loan Party is a party have been duly executed and
delivered by the duly authorized officers, agents and/or signatories of such
Person and each is a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its respective terms except
as the same may be limited by bankruptcy, insolvency, and other similar laws
affecting the rights of creditors generally and the availability of equitable
remedies for the enforcement of certain obligations (other than the payment of
principal) contained herein or therein and as may be limited by equitable
principles generally.

 

(d) Compliance of Loan Documents with Laws, Etc. The execution, delivery and
performance of this Agreement, the Notes and the other Loan Documents to which
any Loan Party is a party in accordance with their respective terms and the
borrowings and other

 

- 59 -

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

extensions of credit hereunder do not and will not, by the passage of time, the
giving of notice, or both: (i) require any Governmental Approval or violate any
Applicable Law (including all Environmental Laws) relating to any Loan Party;
(ii) conflict with, result in a breach of or constitute a default under the
organizational documents of any Loan Party, or any indenture, agreement or other
instrument to which any Loan Party is a party or by which it or any of its
respective properties may be bound; or (iii) result in or require the creation
or imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by any Loan Party other than those created pursuant to the
Loan Documents.

 

(e) Compliance with Law; Governmental Approvals. Each Loan Party is in
compliance with each Governmental Approval applicable to it and in compliance
with all other Applicable Laws (including without limitation, Environmental
Laws) relating to such Loan Party except for noncompliances which, and
Governmental Approvals the failure to possess which, could not, in the
aggregate, reasonably be expected to cause a Default or Event of Default or have
a Material Adverse Effect.

 

(f) Title to Properties; Liens. As of the Agreement Date, Part I of Schedule
7.1.(f) is a complete and correct listing of all of the real property owned or
leased by the Parent, the Borrower and each other Subsidiary. Each such Person
has good, marketable and legal title to, or a valid leasehold interest in, its
respective assets (other than Permitted Liens and Liens on assets of an Excluded
Subsidiary securing the Indebtedness which causes such Subsidiary to be an
Excluded Subsidiary). As of the Agreement Date, there are no Liens against any
assets of the Parent, the Borrower or any other Subsidiary except for Permitted
Liens and Liens on assets of an Excluded Subsidiary securing the Indebtedness
which causes such Subsidiary to be an Excluded Subsidiary.

 

(g) Existing Indebtedness. Schedule 7.1.(g) is, as of March 25, 2005, a complete
and correct listing of all Indebtedness of the Parent and its Subsidiaries,
including without limitation, Guarantees of the Parent and its Subsidiaries, and
indicating whether such Indebtedness is Secured Indebtedness or Unsecured
Indebtedness. Except as set forth on Schedule 7.1.(g), during the period from
such date to the Agreement Date, neither the Parent nor any Subsidiary incurred
any material Indebtedness.

 

(h) Material Contracts. Excluding Material Contracts evidencing Indebtedness
listed on Schedule 7.1.(g), if any, Schedule 7.1.(h) is, as of the Agreement
Date, a true, correct and complete listing of all Material Contracts. No event
or condition which with the giving of notice, the lapse of time, or both, would
permit any party to any such Material Contract to terminate such Material
Contract exists.

 

(i) Litigation. Except as set forth on Schedule 7.1.(i), there are no actions,
suits, investigations or proceedings pending (nor, to the knowledge of the
Parent, are there any actions, suits or proceedings threatened) against or in
any other way relating adversely to or affecting the Parent or any of its
Subsidiaries or any of their respective property in any court or before any
arbitrator of any kind or before or by any other Governmental Authority which
could reasonably be expected to have a Material Adverse Effect.

 

- 60 -

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

(j) Taxes. Subject to applicable extensions, all federal, state and other tax
returns of the Parent and its Subsidiaries required by Applicable Law to be
filed have been duly filed, and all federal, state and other taxes, assessments
and other governmental charges or levies upon the Parent and its Subsidiaries
and their respective properties, income, profits and assets which are due and
payable have been paid, except any such nonpayment which is at the time
permitted under Section 8.6. As of the Agreement Date, none of the United States
income tax returns of the Parent or any of its Subsidiaries is under audit. All
charges, accruals and reserves on the books of the Parent and each of its
Subsidiaries and each other Loan Party in respect of any taxes or other
governmental charges are in accordance with GAAP.

 

(k) Financial Statements. The Parent has furnished to each Lender copies of (i)
the audited consolidated balance sheet of the Parent and its consolidated
Subsidiaries for the fiscal year ending December 31, 2004, and the related
audited consolidated statements of operations, cash flows and shareholders’
equity for the fiscal year ending on such date, with the opinion thereon of KPMG
LLP, and (ii) the unaudited consolidated balance sheet of the Parent and its
consolidated Subsidiaries for the fiscal quarter ending March 25, 2005, and the
related unaudited consolidated statements of operations, cash flows and
shareholders’ equity of the Parent and its consolidated Subsidiaries for the
period of one fiscal quarter ending on such date. Such financial statements
(including in each case related schedules and notes) present fairly, in all
material respects and in accordance with GAAP consistently applied throughout
the periods involved, the consolidated financial position of the Parent and its
consolidated Subsidiaries as at their respective dates and the results of
operations and the cash flow for such periods (subject, as to interim
statements, to changes resulting from normal year-end audit adjustments).
Neither the Parent nor any of its Subsidiaries has on the Agreement Date any
material contingent liabilities, liabilities, liabilities for taxes, unusual or
long-term commitments or unrealized or forward anticipated losses from any
unfavorable commitments that would be required to be set forth in its financial
statements or in the notes thereto, except as referred to or reflected or
provided for in said financial statements.

 

(l) No Material Adverse Change. Since December 31, 2004, there has been no
material adverse change in the business, assets, liabilities, financial
condition or results of operations of the Parent and its Subsidiaries or the
Borrower and its Subsidiaries, in each case, taken as a whole. Each of the Loan
Parties is Solvent.

 

(m) ERISA. Each member of the ERISA Group is in compliance with its obligations
under the minimum funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each Plan,
except in each case for noncompliances which could not reasonably be expected to
have a Material Adverse Effect. As of the Agreement Date, no member of the ERISA
Group has (i) sought a waiver of the minimum funding standard under Section 412
of the Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.

 

- 61 -

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

(n) Not Plan Assets; No Prohibited Transaction. None of the assets of the
Parent, the Borrower or any Subsidiary constitutes “plan assets” within the
meaning of ERISA, the Internal Revenue Code and the respective regulations
promulgated thereunder. The execution, delivery and performance of this
Agreement and the other Loan Documents, and the borrowing and repayment of
amounts hereunder, do not and will not constitute “prohibited transactions”
under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

 

(o) Absence of Defaults. None of the Parent, the Borrower or any other
Subsidiary is in default under its articles of incorporation, bylaws,
partnership agreement or other similar organizational documents, and no event
has occurred, which has not been remedied, cured or waived, which, in any such
case: (i) constitutes a Default or an Event of Default; or (ii) constitutes, or
which with the passage of time, the giving of notice, or both, would constitute,
a default or event of default by the Parent, the Borrower or any other
Subsidiary under any agreement (other than this Agreement) or judgment, decree
or order to which the Parent, the Borrower or any other Subsidiary is a party or
by which the Parent, the Borrower or any other Subsidiary or any of their
respective properties may be bound where such default or event of default could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(p) Environmental Laws. Each of the Parent, the Borrower and its other
Subsidiaries has obtained all Governmental Approvals which are required under
Environmental Laws and is in compliance with all terms and conditions of such
Governmental Approvals which the failure to obtain or to comply with could
reasonably be expected to have a Material Adverse Effect. Except for any of the
following matters that could not be reasonably expected to have a Material
Adverse Effect, (i) neither the Parent or the Borrower is aware of, and has
received notice of, any past, present, or future events, conditions,
circumstances, activities, practices, incidents, actions, or plans which, with
respect to the Parent, the Borrower or any of its other Subsidiaries, may
interfere with or prevent compliance or continued compliance with Environmental
Laws, or may give rise to any common-law or legal liability, or otherwise form
the basis of any claim, action, demand, suit, proceeding, hearing, study, or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling or the emission,
discharge, release or threatened release into the environment, of any Hazardous
Material; and (ii) there is no civil, criminal, or administrative action, suit,
demand, claim, hearing, notice, or demand letter, notice of violation,
investigation, or proceeding pending or, to the Borrower’s knowledge after due
inquiry, threatened, against the Parent, the Borrower or any of its other
Subsidiaries relating in any way to Environmental Laws.

 

(q) Investment Company; Public Utility Holding Company. None of the Parent, the
Borrower or any other Subsidiary is (i) an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended, (ii) a “holding company” or a “subsidiary
company” of a “holding company”, or an “affiliate” of a “holding company” or of
a “subsidiary company” of a “holding company”, within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to any other
Applicable Law which purports to regulate or restrict its ability to borrow
money or to

 

- 62 -

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

consummate the transactions contemplated by this Agreement or to perform its
obligations under any Loan Document to which it is a party.

 

(r) Margin Stock. None of the Parent, the Borrower or any other Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying “margin stock” within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System.

 

(s) Affiliate Transactions. Except as permitted by Section 10.10., none of the
Parent, the Borrower or any other Subsidiary is a party to any transaction with
an Affiliate.

 

(t) Intellectual Property. Each of the Parent, the Borrower and each other
Subsidiary owns or has the right to use, under valid license agreements or
otherwise, all material patents, licenses, franchises, trademarks, trademark
rights, trade names, trade name rights, trade secrets and copyrights
(collectively, “Intellectual Property”) necessary to the conduct of its
businesses as now conducted and as contemplated by the Loan Documents, without
known conflict with any patent, license, franchise, trademark, trade secret,
trade name, copyright, or other proprietary right of any other Person. The
Parent, the Borrower and each other Subsidiary have taken all such steps as they
deem reasonably necessary to protect their respective rights under and with
respect to such Intellectual Property.

 

(u) Business. As of the Agreement Date, the Parent, the Borrower and the other
Subsidiaries are engaged in the business of developing, construction, acquiring,
owning and operating hotel properties, together with other business activities
incidental thereto.

 

(v) Broker’s Fees. No broker’s or finder’s fee, commission or similar
compensation will be payable with respect to the transactions contemplated
hereby. No other similar fees or commissions will be payable by any Loan Party
for any other services rendered to the Parent, the Borrower or any of its other
Subsidiaries ancillary to the transactions contemplated hereby.

 

(w) Accuracy and Completeness of Information. No written information, report or
other papers or data (excluding financial projections and other forward looking
statements) furnished to the Agent or any Lender by, on behalf of, or at the
direction of, the Parent, the Borrower or any other Subsidiary in connection
with or relating in any way to this Agreement, contained any untrue statement of
a fact material to the creditworthiness of the Parent, the Borrower or any other
Subsidiary or omitted to state a material fact necessary in order to make such
statements contained therein, in light of the circumstances under which they
were made, not misleading. All financial statements (including in each case all
related schedules and notes) furnished to the Agent or any Lender by, on behalf
of, or at the direction of, the Parent, the Borrower or any other Subsidiary in
connection with or relating in any way to this Agreement, present fairly, in all
material respects and in accordance with GAAP consistently applied throughout
the periods involved, the financial position of the Persons involved as at the
date thereof and the results of operations for such periods (subject, as to
interim statements, to changes resulting from normal year-end audit
adjustments). All financial projections and other forward looking statements
prepared by or on behalf of the Parent, the Borrower or any other Subsidiary
that have been or may hereafter be made available to the Agent or any Lender
were or

 

- 63 -

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

will be prepared in good faith based on reasonable assumptions but with it being
understood that such projections and statement are not a guarantee of future
performance. As of the Effective Date, no fact is known to the Parent or the
Borrower which has had, or may in the future have (so far as the Parent or the
Borrower can reasonably foresee), a Material Adverse Effect which has not been
set forth in the financial statements referred to in Section 7.1.(k) or in such
information, reports or other papers or data or otherwise disclosed in writing
to the Agent and the Lenders.

 

(x) REIT Status. For all dates after January 1, 2005, the Parent is organized
and operated in a manner such that upon its election of REIT status, it shall be
treated as a REIT for purposes of the Internal Revenue Code (beginning with the
effective date of such election) and each of its Subsidiaries that are
corporations (if any) are organized and operated in a manner such that upon such
election they will qualify as Qualified REIT Subsidiaries or Taxable REIT
Subsidiaries (beginning with the effective date of such election), except where
a Subsidiary’s failure to so qualify could not reasonably be expected to have an
adverse effect on the Parent’s qualification as a REIT. For all dates
thereafter, the Parent is qualified as a REIT and each of its Subsidiaries that
is a corporation is a Qualified REIT Subsidiary or Taxable REIT Subsidiary
(beginning with the effective date of such election), except where a
Subsidiary’s failure to so qualify could not reasonably be expected to have an
adverse effect on the Parent’s qualification as a REIT.

 

(y) Security Documents. The Pledge Agreement is effective to create in favor of
the Agent, for the benefit of the Lenders, a legal, valid and enforceable
security interest in the Collateral described therein and proceeds thereof. Such
security interest will be perfected (i) with respect to any such Collateral that
is a “security” (as such term is defined in the UCC) and is evidenced by a
certificate, when such Collateral is delivered to the Agent with duly executed
stock powers with respect thereto, (ii) with respect to any such Collateral that
is a “security” (as such term is defined in the UCC) but is not evidenced by a
certificate, when UCC financing statements in appropriate form are filed in the
appropriate filing offices in the jurisdiction of organization of the Pledgor or
when “control” (as such term is defined in the UCC) is established by the Agent
over such interests in accordance with the provision of Section 8-106 of the
UCC, or any successor provision, and (iii) with respect to any such Collateral
that is not a “security” (as such term is defined in the UCC), when UCC
financing statements in appropriate form are filed in the appropriate filing
offices in the jurisdiction of organization of the Pledgor.

 

(z) Foreign Assets Control. None of the Borrower, any Subsidiary or any
Affiliate of the Borrower: (i) is a Sanctioned Person, (ii) has more than 10% of
its assets in Sanctioned Entities, or (iii) derives more than 10% of its
operating income from investments in, or transactions with, Sanctioned Persons
or Sanctioned Entities.

 

Section 7.2. Survival of Representations and Warranties, Etc.

 

All statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Parent, the Borrower or any other
Subsidiary to the Agent or any Lender pursuant to or in connection with this
Agreement or any of the other Loan Documents (including, but not limited to, any
such statement made in or in connection with any amendment thereto or any
statement contained in any certificate, financial statement or other instrument

 

- 64 -

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

delivered by or on behalf of the Parent and the Borrower prior to the Agreement
Date and delivered to the Agent or any Lender in connection with the
underwriting or closing of the transactions contemplated hereby) shall
constitute representations and warranties made by the Parent and or the Borrower
in favor of the Agent or any of the Lenders under this Agreement. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date, the
Effective Date, the date on which any extension of the Termination Date is
effectuated pursuant to Section 2.12. and the date of the occurrence of any
Credit Event, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and correct in all material respects on and
as of such earlier date) and except for changes in factual circumstances not
prohibited under the Loan Documents. All such representations and warranties
shall survive the effectiveness of this Agreement, the execution and delivery of
the Loan Documents and the making of the Loans and the issuance of the Letters
of Credit.

 

ARTICLE VIII. AFFIRMATIVE COVENANTS

 

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if
required pursuant to Section 13.6., all of the Lenders) shall otherwise consent
in the manner provided for in Section 13.6., the Parent and the Borrower shall
comply with the following covenants:

 

Section 8.1. Preservation of Existence and Similar Matters.

 

Except as otherwise permitted under Section 10.6., the Parent and the Borrower
shall, and shall cause each Subsidiary to, preserve and maintain its respective
existence, rights, franchises, licenses and privileges in the jurisdiction of
its incorporation or formation and qualify and remain qualified and authorized
to do business in each jurisdiction in which the character of its properties or
the nature of its business requires such qualification and authorization and
where the failure to be so authorized and qualified could reasonably be expected
to have a Material Adverse Effect.

 

Section 8.2. Compliance with Applicable Law and Material Contracts.

 

The Parent and the Borrower shall, and shall cause each Subsidiary to, comply
with (a) all Applicable Laws, including the obtaining of all Governmental
Approvals, the failure with which to comply could reasonably be expected to have
a Material Adverse Effect, and (b) all terms and conditions of all Material
Contracts to which it is a party, the failure with which to comply could give
any other party thereto the right to terminate such Material Contract.

 

Section 8.3. Maintenance of Property.

 

In addition to the requirements of any of the other Loan Documents, the Parent
and the Borrower shall, and shall cause each Subsidiary to, (a) protect and
preserve all of its respective material properties, including, but not limited
to, all Intellectual Property (to the extent reasonably necessary in connection
with operations), and maintain in good repair, working order and condition all
tangible properties, ordinary wear and tear and insured casualty losses
excepted, and (b) make or cause to be made all repairs, renewals, replacements
and additions to

 

- 65 -

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

such properties necessary or appropriate in the Borrower’s good faith and
reasonable judgment so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.

 

Section 8.4. Conduct of Business.

 

The Parent and the Borrower shall, and shall cause its Subsidiaries taken as a
whole to, carry on the business as described in Section 7.1.(u).

 

Section 8.5. Insurance.

 

In addition to the requirements of any of the other Loan Documents, the Parent
and the Borrower shall, and shall cause each Subsidiary to, maintain insurance
(on a replacement cost basis) with financially sound and reputable insurance
companies (with an A.M. Best policyholders rating of at least A-IX (with respect
to liability) or A-X (with respect to property damage)) against such risks
(including, without limitation, acts of terrorism) and in such amounts as is
customarily maintained by prudent Persons engaged in similar businesses and in
similar locations or as may be required by Applicable Law, and from time to time
deliver to the Agent upon its request a detailed list, together with copies of
all policies of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby; provided, that so long as
Marriott International, Inc. or its affiliates are property managers of any
Collateral Property, insurance with respect to such Collateral Property may be
maintained under the blanket policy provided by Marriott International, Inc.

 

Section 8.6. Payment of Taxes and Claims.

 

The Parent and the Borrower shall, and shall cause each Subsidiary to, pay and
discharge before delinquent (a) all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or upon any properties
belonging to it, and (b) all lawful claims of materialmen, mechanics, carriers,
warehousemen and landlords for labor, materials, supplies and rentals which, if
unpaid, might become a Lien on any properties of such Person; provided, however,
that this Section shall not require the payment or discharge of any such tax,
assessment, charge, levy or claim (i) which is being contested in good faith by
appropriate proceedings which operate to suspend the collection thereof and for
which adequate reserves have been established on the books of the Parent, the
Borrower or such Subsidiary, as applicable, in accordance with GAAP or (ii) to
the extent covered by title insurance.

 

Section 8.7. Visits and Inspections.

 

The Parent and the Borrower shall, and shall cause each Subsidiary to, permit
representatives or agents of any Lender or the Agent, from time to time after
reasonable prior notice and in a manner that does not unreasonably disrupt the
normal business operations of the Parent, the Borrower or such Subsidiary, in
each case so long as no Event of Default shall be in existence, as often as may
be reasonably requested, but only during normal business hours, as the case may
be, to: (a) visit and inspect all properties of the Parent, the Borrower or such
Subsidiary to the extent any such right to visit or inspect is within the
control of such Person;

 

- 66 -

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

(b) inspect and make extracts from their respective books and records, including
but not limited to management letters prepared by independent accountants; and
(c) discuss with its officers and employees, and its independent accountants,
its business, properties, condition (financial or otherwise), results of
operations and performance. If requested by the Agent, the Parent and the
Borrower shall execute an authorization letter addressed to their accountants
authorizing the Agent or any Lender to discuss the financial affairs of the
Parent, the Borrower and any other Subsidiary with their accountants. The Parent
may designate a representative to accompany any Lender or Agent in connection
with such visits, inspections and discussion unless a Default or Event of
Default exists. The exercise by a Lender or the Agent of its rights under this
Section shall be at the expense of such Lender or the Agent, as applicable,
unless an Event of Default shall exist in which case such exercise shall be at
the expense of the Borrower.

 

Section 8.8. Use of Proceeds; Letters of Credit.

 

The Borrower shall use the proceeds of the Loans and the Letters of Credit for
general corporate purposes only, to include, without limitation, acquisitions,
repayment of Indebtedness, working capital, short-term bridge advances and
payment of fees and expenses related to this Agreement and the other
transactions contemplated by this Agreement and the other Loan Documents. No
part of the proceeds of any Loan or Letter of Credit will be used (a) for the
purpose of buying or carrying “margin stock” within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System or to extend credit to
others for the purpose of purchasing or carrying any such margin stock or (b) to
fund any operations in, to finance any investments or activities in, or make any
payments to, a Sanctioned Person or Sanctioned Entity.

 

Section 8.9. Environmental Matters.

 

The Parent and the Borrower shall, and shall cause all of the Subsidiaries to,
comply with all Environmental Laws the failure with which to comply could
reasonably be expected to have a Material Adverse Effect. If the Parent, the
Borrower, or any other Subsidiary shall (a) receive notice that any violation of
any Environmental Law may have been committed or is about to be committed by
such Person, (b) receive notice that any administrative or judicial complaint or
order has been filed or is about to be filed against the Parent, the Borrower or
any other Subsidiary alleging violations of any Environmental Law or requiring
any such Person to take any action in connection with the release of Hazardous
Materials or (c) receive any notice from a Governmental Authority or private
party alleging that any such Person may be liable or responsible for costs
associated with a response to or cleanup of a release of Hazardous Materials or
any damages caused thereby, and the matters referred to in such notices,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, the Borrower shall provide the Agent with a copy of
such notice promptly, and in any event within 10 Business Days, after the
receipt thereof. The Parent and the Borrower shall, and shall cause the
Subsidiaries to, take promptly all actions necessary to prevent the imposition
of any material Liens on any of their respective properties arising out of or
related to any Environmental Laws (other than a Lien (i) which is being
contested in good faith by appropriate proceedings which operate to suspend the
enforcement thereof and for which adequate reserves have been established on the
books of the Parent, the Borrower or such Subsidiary, as applicable, in
accordance with GAAP, (ii) which has been bonded-off in a manner reasonably
acceptable to the Agent or (iii) which could not reasonably be expected to have
a Material Adverse Effect).

 

- 67 -

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

Section 8.10. Books and Records.

 

The Parent and the Borrower shall, and shall cause each Subsidiary to, maintain
books and records pertaining to its respective business operations in such
detail, form and scope as is consistent with good business practice and in
accordance with GAAP.

 

Section 8.11. Further Assurances.

 

The Parent and the Borrower shall, at their cost and expense and upon request of
the Agent, execute and deliver or cause to be executed and delivered, to the
Agent such further instruments, documents and certificates consistent with the
existing terms and conditions of the Loan Documents, and do and cause to be done
such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the existing
provisions and purposes of this Agreement and the other Loan Documents.

 

Section 8.12. REIT Status.

 

The Parent shall at all times maintain its status as a REIT.

 

Section 8.13. Exchange Listing.

 

The Parent shall maintain at least one class of common Equity Interest of the
Parent having trading privileges on the New York Stock Exchange or the American
Stock Exchange or which is the subject of price quotations in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System.

 

Section 8.14. New Subsidiaries/Guarantors/Pledges.

 

(a) Requirement to Become Guarantor. Within 30 days of any Person (other than an
Excluded Subsidiary or a Foreign Subsidiary) becoming a Material Subsidiary
after the Effective Date, the Borrower shall deliver to the Agent each of the
following items, each in form and substance satisfactory to the Agent: (i) an
Accession Agreement executed by such Material Subsidiary and (ii) the items with
respect to such Material Subsidiary that would have been delivered under
Sections 6.1. (a)(viii) through (xii) if such Material Subsidiary had been one
on the Effective Date; provided, however, promptly (and in any event within 30
days) upon any Excluded Subsidiary ceasing to be subject to the restriction
which prevented it from delivering an Accession Agreement pursuant to this
Section, such Subsidiary shall comply with the provisions of this Section.

 

(b) Additional Pledges. Within 30 days of the Borrower or any Domestic
Subsidiary (other than an Excluded Subsidiary) acquiring, forming or otherwise
receiving after the Effective Date any Equity Interest in a Foreign Subsidiary
that is a Material Subsidiary, the Borrower shall cause to be delivered to the
Agent each of the following in form and substance satisfactory to the Agent: (i)
a supplement to the Pledge Agreement executed by the Borrower or such Domestic
Subsidiary, as applicable, subjecting such Equity Interests to the Lien of the
Pledge Agreement, (ii) the items that would have been delivered under Sections
6.1.(a)(v) through (vii) and (xii) if

 

- 68 -

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

such Subsidiary Equity Interests had been Collateral under the Pledge Agreement
on the Effective Date and (iii) if such Equity Interests are owned by a Domestic
Subsidiary that is not already a Guarantor, the items referred to in clauses (i)
and (ii) of the immediately preceding subsection (a). The Borrower shall send to
each Lender copies of each of the foregoing items once the Agent has received
all such items with respect to a Subsidiary. Notwithstanding the first sentence
of this subsection, the Borrower or a Domestic Subsidiary shall only be required
to subject to the Lien of the Pledge Agreement (x) 65% (or such greater
percentage that, due to a change in an Applicable Law after the Agreement Date,
(A) could not reasonably be expected to cause the undistributed earnings of such
Foreign Subsidiary as determined for United States federal income tax purposes
to be treated as a deemed dividend to such Foreign Subsidiary’s United States
parent and (B) could not reasonably be expected to cause any material adverse
tax consequences) of the issued and outstanding Equity Interest of a Foreign
Subsidiary entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) and (y) 100% of the issued and outstanding Equity Interest of a
Foreign Subsidiary not entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)).

 

Section 8.15. Release of Guarantors and Pledges.

 

(a) Release of a Guarantor. The Borrower may request in writing that the Agent
release, and upon receipt of such request the Agent shall release (subject to
the terms of the Guaranty), a Guarantor from the Guaranty so long as: (i) such
Guarantor meets, or will meet simultaneously with its release from the Guaranty,
all of the provisions of the definition of the term “Excluded Subsidiary” or has
ceased to be, or simultaneously with its release from the Guaranty will cease to
be, a Material Subsidiary or a Subsidiary; (ii) such Guarantor is not otherwise
required to be a party to the Guaranty under the immediately preceding
subsection (a); (iii) no Default or Event of Default shall then be in existence
or would occur as a result of such release, including without limitation, a
Default or Event of Default resulting from a violation of any of the covenants
contained in Section 10.1.; and (iv) the Agent shall have received such written
request at least 10 Business Days prior to the requested date of release.
Delivery by the Borrower to the Agent of any such request shall constitute a
representation by the Borrower that the matters set forth in the preceding
sentence (both as of the date of the giving of such request and as of the date
of the effectiveness of such request) are true and correct with respect to such
request. If such Guarantor owns a Collateral Property, then the release of such
Guarantor shall also be subject to and in accordance with Section 4.3. The Agent
agrees to furnish to the Borrower, at the Borrower’s request and at the
Borrower’s sole cost and expense, any release, termination, or other agreement
or document evidencing the foregoing release as may be reasonably requested by
the Borrower.

 

(b) Release of Pledge. The Borrower may request in writing that the Agent
release, and upon receipt of such request the Agent shall release the Equity
Interests of a Foreign Subsidiary from the Lien of the Pledge Agreement so long
as: (i) such Subsidiary has ceased to be, or simultaneously with the release of
its Equity Interests from the Pledge Agreement will cease to be, a Material
Subsidiary or a Subsidiary; (ii) no Default or Event of Default shall then be in
existence or would occur as a result of such release; and (iii) the Agent shall
have received such written request at least 5 Business Days prior to the
requested date of release. Delivery by the Borrower to the Agent of any such
request shall constitute a representation by the Borrower that the matters set
forth in the preceding sentence (both as of the date of the giving of such

 

- 69 -

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

request and as of the date of the effectiveness of such request) are true and
correct with respect to such request. The Agent agrees to furnish to the
Borrower, at the Borrower’s request and at the Borrower’s sole cost and expense,
any release, termination, or other agreement or document evidencing the
foregoing release as may be reasonably requested by the Borrower.

 

Section 8.16. Acquisition of Vail Parking Deck.

 

In the event that the property known as the Vail Marriot located in Vail,
Colorado (the “Vail Property”) becomes a Collateral Property pursuant to the
terms hereof, then the Security Deed for the Vail Property shall also include in
the description attached thereto the “Initial Easement”, the “Interim Easement,”
and any and all right, title and interest that Borrower, DiamondRock Vail Owner,
LLC (“Vail Property Owner”) or any other Subsidiary may have to the “New Parking
Facility”, as such terms are described in that certain Parking Easement
Agreement between The Vail Corporation and Vail Property Owner dated June 24,
2005 (the “Parking Easement”). Notwithstanding the foregoing, the Borrower, the
Agent and the Lenders acknowledge that the New Parking Facility may not be
constructed prior to the date that the Vail Property becomes a Collateral
Property and therefore, upon Vail Property Owner’s acquisition of a condominium
interest in the New Parking Facility pursuant to the terms of the Parking
Easement, Vail Property Owner shall be required to deliver a Security Deed and a
Policy of Title Insurance for such condominum interest in the forms as otherwise
required for Eligible Properties, as well as such other information as the Agent
may reasonably require, regardless of the fact that such interest in the New
Parking Facility does not otherwise qualify an Eligible Property.

 

ARTICLE IX. INFORMATION

 

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if
required pursuant to Section 13.6., all of the Lenders) shall otherwise consent
in the manner set forth in Section 13.6., the Borrower shall furnish to each
Lender (or to the Agent if so provided below) at its Lending Office:

 

Section 9.1. Quarterly Financial Statements.

 

As soon as available and in any event within 5 days after the same is required
to be filed with the Securities and Exchange Commission (but in no event later
than 50 days after the end of each of the first, second and third fiscal
quarters of the Parent), the unaudited consolidated balance sheet of the Parent
and its Subsidiaries as of the end of such period and the related unaudited
consolidated statements of income and cash flows of the Parent and its
Subsidiaries for such period, setting forth in each case in comparative form the
figures as of the end of and for the corresponding periods of the previous
fiscal year, all of which shall be certified by the chief executive officer,
chief financial officer or chief accounting officer of the Parent, in his or her
opinion, to present fairly, in accordance with GAAP and in all material
respects, the consolidated financial position of the Parent and its Subsidiaries
as at the date thereof and the results of operations for such period (subject to
normal year-end audit adjustments); provided, however, the Parent shall not be
required to deliver an item required under this Section if such item is
contained in a Form 10-Q filed by the Parent with the Securities and Exchange
Commission (or

 

- 70 -

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

any Governmental Authority substituted therefore) and is publicly available to
the Agent and the Lenders.

 

Section 9.2. Year-End Statements.

 

As soon as available and in any event within 5 days after the same is required
to be filed with the Securities and Exchange Commission (but in no event later
than 120 days after the end of each fiscal year of the Parent), the audited
consolidated balance sheet of the Parent and its Subsidiaries as at the end of
such fiscal year and the related audited consolidated statements of income,
shareholders’ equity and cash flows of the Parent and its Subsidiaries for such
fiscal year, setting forth in comparative form the figures as at the end of and
for the previous fiscal year, all of which shall be (a) certified by the chief
executive officer, chief financial officer or chief accounting officer of the
Parent, in his or her opinion, to present fairly, in accordance with GAAP, the
consolidated financial position of the Parent, the Borrower and its other
Subsidiaries as at the date thereof and the results of operations for such
period and (b) accompanied by the report thereon of independent certified public
accountants of recognized national standing acceptable to the Agent, whose
certificate shall be unqualified; provided, however, the Parent shall not be
required to deliver an item required under this Section if such item is
contained in a Form 10-K filed by the Parent with the Securities and Exchange
Commission (or any Governmental Authority substituted therefore) and is publicly
available to the Agent and the Lenders.

 

Section 9.3. Compliance Certificate.

 

At the time financial statements are furnished pursuant to Sections 9.1. and
9.2., and if the Requisite Lenders reasonably believe that an Event of Default
specified in Sections 11.1.(a), 11.1.(b) and 11.1.(f) or a Default specified in
Section 11.1.(g) may occur, then within 10 days of the Agent’s request with
respect to any other fiscal period, a certificate substantially in the form of
Exhibit N (a “Compliance Certificate”) executed by the chief financial officer
or chief accounting officer of the Parent: (a) setting forth in reasonable
detail as at the end of such quarterly accounting period, fiscal year, or other
fiscal period, as the case may be, the calculations required to establish
whether or not the Borrower was in compliance with the covenants contained in
Sections 10.1. and 10.2. and (b) stating that, to the best of his or her
knowledge, information and belief after due inquiry, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event of
Default and its nature, when it occurred, whether it is continuing and the steps
being taken by the Borrower with respect to such event, condition or failure.
Together with the delivery of each Compliance Certificate, the Borrower shall
deliver (A) a report, in form and detail reasonably satisfactory to the Agent,
setting forth a statement of Funds From Operations for the fiscal period then
ending; and (B) a list of all Persons that have become a Material Subsidiary or
a Significant Subsidiary since the date of the Compliance Certificate most
recently delivered by the Borrower hereunder.

 

Section 9.4. Other Information.

 

(a) Management Reports. Promptly upon receipt thereof, copies of all management
reports, if any, submitted to the Parent or its Board of Directors by its
independent public accountants;

 

- 71 -

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

(b) Securities Filings. Within 5 Business Days of the filing thereof, copies of
all registration statements (excluding the exhibits thereto (unless reasonably
requested by the Agent) and any registration statements on Form S-8 or its
equivalent), reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and all
other periodic reports which the Parent, the Borrower, or any other Subsidiary
shall file with the Securities and Exchange Commission (or any Governmental
Authority substituted therefor) or any national securities exchange;

 

(c) Shareholder Information. Promptly upon the mailing thereof to the
shareholders of the Parent generally, copies of all financial statements,
reports and proxy statements so mailed and promptly upon the issuance thereof
copies of all press releases issued by the Parent, the Borrower or any other
Subsidiary;

 

(d) Partnership Information. Promptly upon the mailing thereof to the partners
of the Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;

 

(e) Quarterly Operating Summaries. At the time financial statements are
furnished pursuant to Sections 9.1. and 9.2., an operating summary with respect
to each Collateral Property for the fiscal quarter most recently ended,
including without limitation, a quarterly and year-to-date statement of total
revenues, expenses, net operating income and an occupancy status report together
with a current rent roll for each such Property;

 

(f) Quarterly Property Schedules. At the time financial statements are furnished
pursuant to Sections 9.1. and 9.2., a schedule of all Properties owned or leased
by the Parent, the Borrower and each other Subsidiary of the Parent as of the
fiscal quarter most recently ended, and the applicable Net Operating Income of
each such Property, such schedule certified by the chief financial officer or
chief accounting officer of the Parent as true, correct and complete as of the
date such information is delivered;

 

(g) Development Property Updates. At the time financial statements are furnished
pursuant to Sections 9.1. and 9.2., a schedule of all Development Properties of
the Parent, the Borrower and each other Subsidiary which are under development
as of the fiscal quarter most recently ended, setting forth for each such
Property its percentage of completion, the estimated completion date, the total
amount of development funded and the status of such development against the
development budget;

 

(h) Borrowing Base Certificate. As soon as available and in any event within 45
days after the end of each fiscal quarter of the Parent, a Borrowing Base
Certificate setting forth the information to be contained therein as of the last
day of such fiscal quarter;

 

(i) Litigation. To the extent the Parent, the Borrower or any other Subsidiary
is aware of the same, prompt notice of the commencement of any proceeding or
investigation by or before any Governmental Authority and any action or
proceeding in any court or other tribunal or before any arbitrator against or in
any other way relating adversely to, or adversely affecting, the Parent, the
Borrower or any other Subsidiary or any of their respective properties, assets
or businesses which could reasonably be expected to have a Material Adverse
Effect, and prompt

 

- 72 -

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

notice of the receipt of notice that any United States income tax returns of the
Parent, the Borrower or any of its Subsidiaries are being audited;

 

(j) Change of Management or Financial Condition. Prompt notice of any change in
the senior management of the Parent or the Borrower and any change in the
business, assets, liabilities, financial condition or results of operations of
the Parent, the Borrower or any other Subsidiary which has had or could
reasonably be expected to have a Material Adverse Effect;

 

(k) Default. Notice of the occurrence of any of the following promptly upon a
Responsible Officer of the Parent obtaining knowledge thereof: (i) any Default
or Event of Default or (ii) any event which with the passage of time, the giving
of notice, or otherwise, would permit any party to a Material Contract to
terminate such Material Contract;

 

(l) Judgments. Prompt notice of any order, judgment or decree in excess of
$5,000,000 having been entered against the Parent, the Borrower or any other
Subsidiary of any of their respective properties or assets;

 

(m) Notice of Violations of Law. Prompt notice if the Parent, the Borrower or
any other Subsidiary shall receive any notification from any Governmental
Authority alleging a violation of any Applicable Law or any inquiry which, in
either case, could reasonably be expected to have a Material Adverse Effect;

 

(n) Material Contracts. Promptly upon entering into any Material Contract after
the Agreement Date (other than a Material Contract evidencing Indebtedness), a
copy to the Agent of such Material Contract unless such Material Contract is
otherwise publicly available to the Agent in a Form 10-K, 10-Q and/or 8-K (or
their equivalents) or any other periodic report which the Parent, the Borrower,
or any other Subsidiary files with the Securities and Exchange Commission;
provided, that the Borrower shall not be required to deliver to the Agent a copy
of any Material Contract that contains a confidentiality provision prohibiting
such disclosure; provided further that the Borrower shall use its commercially
reasonable efforts to obtain the other party’s consent to disclose such Material
Contract to the Agent and the Lenders;

 

(o) ERISA. If and when any member of the ERISA Group (i) gives or is required to
give notice to the PBGC of any “reportable event” (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such

 

- 73 -

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

notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement, and of which has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief executive officer or chief
financial officer of the Parent setting forth details as to such occurrence and
the action, if any, which the Parent or applicable member of the ERISA Group is
required or proposes to take;

 

(p) Patriot Act Information. From time to time and promptly upon each request,
information identifying the Borrower as a Lender may request in order to comply
with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
26, 2001);

 

(q) Material/Significant Subsidiary. Prompt notice of any Person becoming a
Material Subsidiary or a Significant Subsidiary;

 

(r) Material Asset Sales. Prompt notice of the sale, transfer or other
disposition of any assets having an undepreciated book value of at least
$20,000,000 of the Borrower, any Subsidiary or any other Loan Party to any
Person other than the Borrower, any Subsidiary or any other Loan Party;

 

(s) Annual Budget. After the end of each fiscal year and within 10 Business Days
of approval by the Board of Directors of the Parent, a consolidated operating
statement or operating budget for the following fiscal year together with an
operating statement or an operating budget for each Collateral Property for the
following fiscal year;

 

(t) Other Information. From time to time and promptly upon each request, such
data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the business, assets, liabilities, financial
condition, results of operations or business prospects of the Parent, the
Borrower or any of its other Subsidiaries as the Agent or any Lender may
reasonably request (subject to limitations imposed under confidentiality
requirements and agreements to which the Parent, Borrower or a Subsidiary is
subject).

 

ARTICLE X. NEGATIVE COVENANTS

 

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if
required pursuant to Section 13.6., all of the Lenders) shall otherwise consent
in the manner set forth in Section 13.6., the Parent and the Borrower shall
comply with the following covenants, as applicable:

 

Section 10.1. Financial Covenants.

 

The Parent shall not permit:

 

(a) Maximum Leverage Ratio. The ratio of (i) Total Indebtedness to (ii) Total
Asset Value, to exceed the levels set forth below tested at any time
corresponding to the periods below:

 

Period

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

   Maximum Total Leverage Ratio

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

Any time prior to June 30, 2006

   0.75 to 1.00

Any time from July 1, 2006 through June 30, 2007

   0.70 to 1.00

Any time from July 1, 2007 through The Termination Date

   0.65 to 1.00

 

- 74 -

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

(b) Minimum Fixed Charge Coverage Ratio. The ratio of (i) Adjusted EBITDA of the
Parent and its Subsidiaries for the fiscal quarter of the Parent most recently
ending to (ii) Fixed Charges for such period, to be less than 1.50 to 1.00 at
any time.

 

(c) Floating Rate Indebtedness. The ratio of (i) Floating Rate Indebtedness of
the Parent and its Subsidiaries determined on a consolidated basis to (ii) Total
Indebtedness, to exceed 0.5 to 1.00 at any time.

 

(d) Assets Owned by Borrower and Guarantors. The amount of Total Asset Value
attributable to assets directly owned by the Borrower and the Guarantors to be
less than 90.0% of Total Asset Value.

 

(e) Minimum Implied Debt Service Ratio. The ratio of (x) the aggregate Net
Operating Income for all Collateral Properties for the period of twelve
consecutive months most recently ended to (y) Implied Debt Service for such
period, to be less than 1.40 to 1.00. The following shall be excluded from the
calculation of Net Operating Income and Implied Debt Service: (a) Collateral
Properties that were disposed of during such period or which are excluded from
calculations of the Borrowing Base during such period and (b) Collateral
Properties that were Development Properties with an Approved Interest Reserve;
provided, however, that such Collateral Property shall only be excluded for the
period ending twelve months after such Collateral Property ceases to be a
Development Property.

 

Section 10.2. Restricted Payments.

 

The Parent shall not, and shall not permit any of its Subsidiaries to, declare
or make any Restricted Payment; provided, however, that the Parent and its
Subsidiaries may declare and make the following Restricted Payments:

 

(a) so long as no Event of Default would result therefrom, the Borrower may
declare and pay cash distributions to the Parent and other holders of
partnership interests in the Borrower with respect to the period of four fiscal
quarters most recently ending to the extent necessary for the Parent to
distribute, and the Parent may so distribute, cash distributions to its
shareholders in an aggregate amount not to exceed the greater of (i) 100% of the
Borrower’s Funds Available For Distribution for such period plus, (x) for any
period of four fiscal quarters ending on or prior to December 31, 2005, an
additional $5,000,000 and (y) for the period of four fiscal quarters ending on
March 24, 2006, an additional $2,000,000 or (ii) the amount necessary to permit
the

 

- 75 -

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

Parent to avoid payment of taxes with respect to income other than capital gains
under Section 857(b)(1) and 4981 of the Internal Revenue Code;

 

(b) so long as no Event of Default would result therefrom, the Borrower may
declare and pay cash distributions of capital gains to the Parent and other
holders of partnership interests in the Borrower to the extent necessary for the
Parent to make, and the Parent may make, cash distributions to its shareholders
of capital gains resulting from gains from certain asset sales to the extent
necessary to avoid payment of taxes on such asset sales imposed under Sections
857(b)(1) or (3) and 4981 of the Internal Revenue Code;

 

(c) a Subsidiary that is not a Wholly Owned Subsidiary may make cash
distributions to holders of Equity Interests issued by such Subsidiary;
provided, however, if an Event of Default exists, such cash distributions must
be pro rata to the holders of such Equity Interests; and

 

(d) Subsidiaries may pay Restricted Payments to the Parent, the Borrower or any
other Subsidiary.

 

Notwithstanding the foregoing, but subject to the following sentence, if an
Event of Default exists, the Borrower may only declare or make cash
distributions to the Parent and other holders of partnership interests in the
Borrower, and the Parent may only declare or make cash distributions to its
shareholders during any period of four consecutive fiscal quarters, each, in an
aggregate amount not to exceed the minimum amount necessary for the Parent to
remain in compliance with Section 8.12. If an Event of Default specified in
Section 11.1.(a), Section 11.1.(b), Section 11.1.(f) or Section 11.1.(g) shall
exist, or if as a result of the occurrence of any other Event of Default any of
the Obligations have been accelerated pursuant to Section 11.2.(a), the Parent
shall not, and shall not permit any Subsidiary to, make any Restricted Payments
to any Person other than Restricted Payments referred to in the immediately
preceding subsections (c) and (d).

 

Section 10.3. Indebtedness.

 

The Parent and the Borrower shall not, and shall not permit any Subsidiary to,
incur, assume, or otherwise become obligated in respect of any Indebtedness
after the Agreement Date if immediately prior to the assumption, incurring or
becoming obligated in respect thereof, or immediately thereafter and after
giving effect thereto, a Default or Event of Default is or would be in
existence, including without limitation, a Default or Event of Default resulting
from a violation of any of the covenants contained in Section 10.1.

 

Section 10.4. Investments Generally.

 

The Parent and the Borrower shall not, and shall not permit any Subsidiary to,
directly or indirectly, acquire, make or purchase any Investment, or permit any
Investment of such Person to be outstanding on and after the Agreement Date,
other than the following:

 

(a) Investments in Subsidiaries in existence on the Agreement Date and disclosed
on Part I of Schedule 7.1.(b);

 

- 76 -

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

(b) Investments to acquire Equity Interests of a Subsidiary or any other Person
who after giving effect to such acquisition would be a Subsidiary, so long as in
each case immediately prior to such Investment, and after giving effect thereto,
no Default or Event of Default is or would be in existence;

 

(c) Investments permitted under Section 5.1.;

 

(d) Investments in Cash Equivalents;

 

(e) intercompany Indebtedness among (i) the Parent and the Borrower and (ii) the
Borrower and its Wholly Owned Subsidiaries provided that such Indebtedness is
permitted by the terms of Section 10.3.;

 

(f) loans and advances to employees for moving, entertainment, travel and other
similar expenses in the ordinary course of business consistent with past
practices; and

 

(g) any other Investment so long as immediately prior to making such Investment,
and immediately thereafter and after giving effect thereto, no Default or Event
of Default is or would be in existence.

 

Section 10.5. Liens; Negative Pledges; Other Matters.

 

(a) The Parent and the Borrower shall not, and shall not permit any Subsidiary
to, create, assume, or incur any Lien (other than Permitted Liens and Liens on
assets of an Excluded Subsidiary securing the Indebtedness which causes such
Subsidiary to be an Excluded Subsidiary) upon any of its properties, assets,
income or profits of any character whether now owned or hereafter acquired if
immediately prior to the creation, assumption or incurring of such Lien, or
immediately thereafter, a Default or Event of Default is or would be in
existence.

 

(b) The Parent and the Borrower shall not, and shall not permit any Subsidiary
to, enter into, assume or otherwise be bound by any Negative Pledge except for a
Negative Pledge contained in any agreement (i) evidencing Indebtedness which the
Parent, the Borrower or such Subsidiary may create, incur, assume, or permit or
suffer to exist under Section 10.3.; (ii) which Indebtedness is secured by a
Lien permitted to exist; (iii) which prohibits the creation of any other Lien on
only the property securing such Indebtedness as of the date such agreement was
entered into; and (iv) relating to the sale of a Subsidiary or assets pending
such sale, provided that in any such case the Negative Pledge applies only to
the Subsidiary or the assets that are the subject of such sale.

 

(c) The Parent and the Borrower shall not, and shall not permit any Subsidiary
(other than an Excluded Subsidiary) to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary (other than an Excluded Subsidiary) to: (i) pay
dividends or make any other distribution on any of such Subsidiary’s capital
stock or other equity interests owned by the Borrower or any Subsidiary; (ii)
pay any Indebtedness owed to the Parent, the Borrower or any other Subsidiary;
(iii) make loans or advances to the Parent, the Borrower or any other
Subsidiary; or (iv) transfer any of its

 

- 77 -

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

property or assets to the Parent, the Borrower or any other Subsidiary, except
for any such encumbrances or restrictions, (A) contained in agreements relating
to the sale of a Subsidiary or assets pending such sale, or relating to
Indebtedness secured by a Lien on assets that the Borrower or such Subsidiary
may create, incur, assume, or permit or suffer to exist under Sections 10.3. and
10.5.(a), provided that in any such case the encumbrances and restrictions apply
only to the Subsidiary or the assets that are the subject of such sale or Lien,
as the case may be, (B) set forth in the organizational documents or other
agreements binding on or applicable to any Excluded Subsidiary or any Subsidiary
that is not a Wholly Owned Subsidiary (but only to the extent such encumbrance
or restriction covers any Equity Interest in such Subsidiary or the property or
assets of such Subsidiary) or (C) contained in an agreement that governs an
Investment in an Unconsolidated Affiliate (but only to the extent such
encumbrance or restriction covers any Equity Interest in such Unconsolidated
Affiliate).

 

Section 10.6. Merger, Consolidation, Sales of Assets and Other Arrangements.

 

The Parent and the Borrower shall not, and shall not permit any Subsidiary to:
(i) enter into any transaction of merger or consolidation; (ii) liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution); or (iii)
convey, sell, lease, sublease, transfer or otherwise dispose of, in one
transaction or a series of transactions, any of its business or assets, whether
now owned or hereafter acquired; provided, however, that:

 

(a) any of the actions described in the immediately preceding clauses (i)
through (iii) may be taken with respect to any Subsidiary so long as (x)
immediately prior to the taking of such action, and immediately thereafter and
after giving effect thereto, no Default or Event of Default is or would be in
existence, (y) if such action includes the sale of all Equity Interests in a
Subsidiary that is a Guarantor owned directly or indirectly by the Parent, such
Subsidiary can and will be released from the Guaranty in accordance with Section
8.15.(b), and (z) if such action includes the disposition of a Collateral
Property (regardless of whether such disposition takes the form of a direct sale
of such Collateral Property, the sale of the Equity Interests of the Subsidiary
that owns such Collateral Property or a merger of such Subsidiary), such
Collateral Property can and will be released in accordance with Section 4.3.;

 

(b) the Parent, the Borrower and the other Subsidiaries may lease and sublease
their respective assets, as lessor or sublessor (as the case may be), in the
ordinary course of their business;

 

(c) a Person may merge with a Loan Party so long as (i) the survivor of such
merger is such Loan Party or becomes a Loan Party at the time of such merger,
(ii) immediately prior to such merger, and immediately thereafter and after
giving effect thereto, (x) no Default or Event of Default is or would be in
existence and (y) the representations and warranties made or deemed made by the
Borrower and each other Loan Party in the Loan Documents to which any of them is
a party are and shall be true and correct in all material respects, except to
the extent that such representations and warranties expressly relate solely to
an earlier date (in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier date)
and except for changes in factual circumstances not prohibited under the Loan
Documents, and (iii) the Borrower shall have given the Agent at least 30-days’
prior written notice of such merger, such notice to include a certification as
to the matters described in

 

- 78 -

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

the immediately preceding clause (ii) (except that such prior notice shall not
be required in the case of the merger of a Subsidiary that does not own a
Collateral Property with and into a Loan Party but the Borrower shall give the
Lender notice of any such merger promptly following the effectiveness of such
merger); and

 

(d) the Parent, the Borrower and each other Subsidiary may sell, transfer or
dispose of assets among themselves.

 

Section 10.7. Fiscal Year.

 

The Parent shall not change its fiscal year from that in effect as of the
Agreement Date; provided, that if Marriot International, Inc. shall change its
fiscal year to a calendar fiscal year, the Parent may change its fiscal year to
a calendar fiscal year.

 

Section 10.8. Modifications to Material Contracts.

 

The Parent and the Borrower shall not, and shall not permit any Subsidiary to,
enter into any amendment or modification to any Material Contract which could
reasonably be expected to have a Material Adverse Effect.

 

Section 10.9. Modifications of Organizational Documents.

 

The Parent and the Borrower shall not, and shall not permit any Subsidiary to,
amend, supplement, restate or otherwise modify its articles or certificate of
incorporation, by-laws, operating agreement, declaration of trust, partnership
agreement or other applicable organizational document if such amendment,
supplement, restatement or other modification could reasonably be expected to
have a Material Adverse Effect.

 

Section 10.10. Transactions with Affiliates.

 

The Parent and the Borrower shall not, and shall not permit any Subsidiary to,
permit to exist or enter into, any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate (other than the Parent, the Borrower, any other Loan Party or any
Wholly Owned Subsidiary), except transactions in the ordinary course of and
pursuant to the reasonable requirements of the business of the Parent, the
Borrower or any of the other Subsidiaries and upon fair and reasonable terms
which are no less favorable to the Parent, the Borrower or such Subsidiary, as
applicable, than would be obtained in a comparable arm’s length transaction with
a Person that is not an Affiliate.

 

Section 10.11. ERISA Exemptions.

 

The Parent and the Borrower shall not, and shall not permit any Subsidiary to,
permit any of its respective assets to become or be deemed to be “plan assets”
within the meaning of ERISA, the Internal Revenue Code and the respective
regulations promulgated thereunder.

 

- 79 -

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

ARTICLE XI. DEFAULT

 

Section 11.1. Events of Default.

 

Each of the following shall constitute an Event of Default, whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected
by operation of Applicable Law or pursuant to any judgment or order of any
Governmental Authority:

 

(a) Default in Payment of Principal. The Borrower shall fail to pay when due
(whether upon demand, at maturity, by reason of acceleration or otherwise) the
principal of any of the Loans, or any Reimbursement Obligation.

 

(b) Default in Payment of Interest and Other Obligations. The Borrower shall
fail to pay when due any interest on any of the Loans or any of the other
payment Obligations owing by the Borrower under this Agreement or any other Loan
Document, or any other Loan Party shall fail to pay when due any payment
Obligation owing by such other Loan Party under any Loan Document to which it is
a party, and such failure shall continue for a period of 3 Business Days.

 

(c) Default in Performance. (i) The Borrower or the Parent shall fail to perform
or observe any term, covenant, condition or agreement contained in Section
9.4.(k) or in Article X. or (ii) any Loan Party shall fail to perform or observe
any term, covenant, condition or agreement contained in this Agreement or any
other Loan Document (other than any Security Document) to which it is a party
and not otherwise mentioned in this Section and in the case of this clause (ii)
only such failure shall continue for a period of 30 days after the earlier of
(x) the date upon which a Responsible Officer of the Parent or such Loan Party
obtains knowledge of such failure or (y) the date upon which the Parent has
received written notice of such failure from the Agent.

 

(d) Misrepresentations. Any written statement, representation or warranty made
or deemed made by or on behalf of any Loan Party under this Agreement or under
any other Loan Document (other than any Security Document), or any amendment
hereto or thereto, or in any other writing or statement at any time furnished or
made or deemed made by or on behalf of any Loan Party to the Agent or any
Lender, shall at any time prove to have been incorrect or misleading, in light
of the circumstances in which made or deemed made, in any material respect when
furnished or made or deemed made.

 

(e) Indebtedness Cross-Default; Derivatives Contracts.

 

(i) any Loan Party shall fail to pay when due and payable, within any applicable
grace or cure period, the principal of, or interest on, any Indebtedness (other
than the Loans) having an aggregate outstanding principal amount of $10,000,000
or more (or $20,000,000 or more in the case of Nonrecourse Indebtedness) (all
such Indebtedness being “Material Indebtedness”); or

 

(ii) (x) the maturity of any Material Indebtedness shall have been accelerated
in accordance with the provisions of any indenture, contract or instrument
evidencing, providing for the creation of or otherwise concerning such Material
Indebtedness or

 

- 80 -

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

(y) any Material Indebtedness shall have been required to be prepaid or
repurchased prior to the stated maturity thereof;

 

(iii) any other event shall have occurred and be continuing which permits any
holder or holders of Material Indebtedness, any trustee or agent acting on
behalf of such holder or holders or any other Person, to accelerate the maturity
of any such Material Indebtedness or require any such Material Indebtedness to
be prepaid or repurchased prior to its stated maturity; or

 

(iv) there occurs under any Derivatives Contract an Early Termination Date (as
defined in such Derivatives Contract) resulting from (A) any event of default
under such Derivatives Contract as to which any Loan Party is the Defaulting
Party (as defined in such Derivatives Contract) or (B) any Termination Event (as
so defined) under such Derivatives Contract as to which any Loan Party is an
Affected Party (as so defined) and, in either event, the Derivatives Termination
Value owed by any Loan Party as a result thereof is $10,000,000 or more.

 

(f) Voluntary Bankruptcy Proceeding. Any Loan Party or any Significant
Subsidiary shall: (i) commence a voluntary case under the Bankruptcy Code of
1978, as amended, or other federal bankruptcy laws (as now or hereafter in
effect); (ii) file a petition seeking to take advantage of any other Applicable
Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts; (iii) consent to, or fail to
contest in a timely and appropriate manner, any petition filed against it in an
involuntary case under such bankruptcy laws or other Applicable Laws or consent
to any proceeding or action described in the immediately following subsection;
(iv) apply for or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a substantial part of its
property, domestic or foreign; (v) admit in writing its inability to pay its
debts as they become due; (vi) make a general assignment for the benefit of
creditors; (vii) make a conveyance fraudulent as to creditors under any
Applicable Law; or (viii) take any corporate or partnership action for the
purpose of effecting any of the foregoing.

 

(g) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against any Loan Party or any other Significant Subsidiary in any
court of competent jurisdiction seeking: (i) relief under the Bankruptcy Code of
1978, as amended, or other federal bankruptcy laws (as now or hereafter in
effect) or under any other Applicable Laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of such Person, or of all or any substantial part of the assets,
domestic or foreign, of such Person, and such case or proceeding shall continue
undismissed or unstayed for a period of 60 consecutive calendar days, or an
order granting the remedy or other relief requested in such case or proceeding
against such Loan Party or such Significant Subsidiary (including, but not
limited to, an order for relief under such Bankruptcy Code or such other federal
bankruptcy laws) shall be entered.

 

- 81 -

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

(h) Litigation; Enforceability. Any Loan Party shall disavow, revoke or
terminate (or attempt to terminate) any Loan Document to which it is a party or
shall otherwise challenge or contest in any action, suit or proceeding in any
court or before any Governmental Authority the validity or enforceability of
this Agreement, any Note or any other Loan Document or this Agreement, any Note,
the Guaranty or any other Loan Document shall cease to be in full force and
effect (except as a result of the express terms thereof or hereof).

 

(i) Judgment. A judgment or order for the payment of money or for an injunction
shall be entered against any Loan Party or any other Subsidiary, by any court or
other tribunal and (i) such judgment or order shall continue for a period of 30
days without being paid, stayed or dismissed through appropriate appellate
proceedings and (ii) either (A) the amount of such judgment or order for which
insurance has not been acknowledged in writing by the applicable insurance
carrier (or the amount as to which the insurer has denied liability) exceeds,
individually or together with all other such outstanding judgments or orders
entered against any Loan Party or any other Subsidiary, $10,000,000 or (B) in
the case of an injunction or other non-monetary judgment, such judgment could
reasonably be expected to have a Material Adverse Effect.

 

(j) Attachment. A warrant, writ of attachment, execution or similar process
shall be issued against any property of any Loan Party or any other Subsidiary
which exceeds, individually or together with all other such warrants, writs,
executions and processes, $10,000,000 in amount in the case of a Loan Party, or
$20,000,000 in amount in the case of any other Subsidiary that is not a Loan
Party and, in each case, such warrant, writ, execution or process shall not be
discharged, vacated, stayed or bonded for a period of 30 days; provided,
however, that if a bond has been issued in favor of the claimant or other Person
obtaining such warrant, writ, execution or process, the issuer of such bond
shall execute a waiver or subordination agreement in form and substance
satisfactory to the Agent pursuant to which the issuer of such bond subordinates
its right of reimbursement, contribution or subrogation to the Obligations and
waives or subordinates any Lien it may have on the assets of any Loan Party.

 

(k) ERISA. Any member of the ERISA Group shall fail to pay when due an amount or
amounts aggregating in excess of $10,000,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Plan or Plans
having aggregate Unfunded Liabilities in excess of $10,000,000 shall be filed
under Title IV of ERISA by any member of the ERISA Group, any plan administrator
or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Plan or Plans having aggregate Unfunded Liabilities
in excess of $10,000,000; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any such Plan must be
terminated; or there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one
or more Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $10,000,000.

 

(l) Loan Documents. An Event of Default (as defined therein) shall occur under
any of the other Loan Documents (other than any Security Document).

 

- 82 -

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

(m) Change of Control/Change in Management.

 

(i) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is or
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person will be deemed to have “beneficial ownership”
of all securities that such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the then outstanding
voting stock of the Parent;

 

(ii) During any period of 12 consecutive months ending after the Agreement Date,
individuals who at the beginning of any such 12-month period constituted the
Board of Directors of the Parent (together with any new directors whose election
by such Board or whose nomination for election by the shareholders of the Parent
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 Parent then in office; or

 

(iii) The Parent or a Wholly Owned Subsidiary of the Parent shall cease to be
the sole general partner of the Borrower or shall cease to have the sole and
exclusive power to exercise all management and control over the Borrower.

 

Section 11.2. Remedies Upon Event of Default.

 

Upon the occurrence of an Event of Default the following provisions shall apply:

 

(a) Acceleration; Termination of Facilities.

 

(i) Automatic. Upon the occurrence of an Event of Default specified in Sections
11.1.(f) or 11.1.(g), (A)(i) the principal of, and all accrued interest on, the
Loans and the Notes at the time outstanding, (ii) an amount equal to the Stated
Amount of all Letters of Credit outstanding as of the date of the occurrence of
such Event of Default for deposit into the Collateral Account pursuant to
Section 11.5. and (iii) all of the other Obligations of the Borrower, including,
but not limited to, the other amounts owed to the Lenders, the Swingline Lender
and the Agent under this Agreement, the Notes or any of the other Loan Documents
shall become immediately and automatically due and payable by the Borrower
without presentment, demand, protest, or other notice of any kind, all of which
are expressly waived by the Borrower and (B) all of the Commitments, the
obligation of the Lenders to make Revolving Loans, the Swingline Commitment, the
obligation of the Swingline Lender to make Swingline Loans, and the obligation
of the Agent to issue Letters of Credit hereunder, shall all immediately and
automatically terminate.

 

(ii) Optional. If any other Event of Default shall exist, the Agent shall, at
the direction of the Requisite Lenders: (A) declare (1) the principal of, and
accrued interest

 

- 83 -

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

on, the Loans and the Notes at the time outstanding, (2) an amount equal to the
Stated Amount of all Letters of Credit outstanding as of the date of the
occurrence of such other Event of Default for deposit into the Collateral
Account pursuant to Section 11.5. and (3) all of the other Obligations,
including, but not limited to, the other amounts owed to the Lenders and the
Agent under this Agreement, the Notes or any of the other Loan Documents to be
forthwith due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are expressly waived by the Borrower and (B) terminate the Commitments and
the obligation of the Lenders to make Loans hereunder and the obligation of the
Agent to issue Letters of Credit hereunder. Further, if the Agent has exercised
any of the rights provided under the preceding sentence, the Swingline Lender
shall: (x) declare the principal of, and accrued interest on, the Swingline
Loans and the Swingline Note at the time outstanding, and all of the other
Obligations owing to the Swingline Lender, to be forthwith due and payable,
whereupon the same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly waived
by the Borrower and (y) terminate the Swingline Commitment and the obligation of
the Swingline Lender to make Swingline Loans.

 

(b) Loan Documents. The Requisite Lenders may direct the Agent to, and the Agent
if so directed shall, exercise any and all of its rights under any and all of
the other Loan Documents.

 

(c) Applicable Law. The Requisite Lenders may direct the Agent to, and the Agent
if so directed shall, exercise all other rights and remedies it may have under
any Applicable Law.

 

(d) Appointment of Receiver. To the extent permitted by Applicable Law, the
Agent and the Lenders shall be entitled to the appointment of a receiver for the
assets and properties of the Borrower and its Subsidiaries, without notice of
any kind whatsoever and without regard to the adequacy of any security for the
Obligations or the solvency of any party bound for its payment, to take
possession of all or any portion of the business operations of the Borrower and
its Subsidiaries and to exercise such power as the court shall confer upon such
receiver.

 

Section 11.3. Remedies Upon Default.

 

Upon the occurrence of a Default specified in Section 11.1.(g), the Commitments
shall immediately and automatically terminate.

 

Section 11.4. Allocation of Proceeds.

 

If an Event of Default shall exist and maturity of any of the Obligations has
been accelerated, all payments received by the Agent under any of the Loan
Documents, in respect of any principal of or interest on the Obligations or any
other amounts payable by the Borrower hereunder or thereunder, shall be applied
in the following order and priority:

 

(a) amounts due to the Agent in respect of fees and expenses due under Section
13.2.;

 

- 84 -

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

(b) amounts due to the Lenders in respect of fees and expenses due under Section
13.2., pro rata in the amount then due each Lender;

 

(c) payments of interest on Swingline Loans;

 

(d) payments of interest on all other Loans and Reimbursement Obligations, to be
applied for the ratable benefit of the Lenders;

 

(e) payments of principal of Swingline Loans;

 

(f) payments of principal of all other Loans, Reimbursement Obligations and
other Letter of Credit Liabilities, to be applied for the ratable benefit of the
Lenders; provided, however, to the extent that any amounts available for
distribution pursuant to this subsection are attributable to the issued but
undrawn amount of an outstanding Letters of Credit, such amounts shall be paid
to the Agent for deposit into the Collateral Account);

 

(g) amounts due the Agent and the Lenders pursuant to Sections 12.8. and 13.9.;

 

(h) payments of all other Obligations and other amounts due and owing by the
Borrower and the other Loan Parties under any of the Loan Documents, if any, to
be applied for the ratable benefit of the Lenders; and

 

(i) any amount remaining after application as provided above, shall be paid to
the Borrower or whomever else may be legally entitled thereto.

 

Section 11.5. Collateral Account.

 

(a) As collateral security for the prompt payment in full when due of all Letter
of Credit Liabilities and the other Obligations, the Borrower hereby pledges and
grants to the Agent, for the ratable benefit of the Agent and the Lenders as
provided herein, a security interest in all of its right, title and interest in
and to the Collateral Account and the balances from time to time in the
Collateral Account (including the investments and reinvestments therein provided
for below). The balances from time to time in the Collateral Account shall not
constitute payment of any Letter of Credit Liabilities until applied by the
Agent as provided herein. Anything in this Agreement to the contrary
notwithstanding, funds held in the Collateral Account shall be subject to
withdrawal only as provided in this Section.

 

(b) Amounts on deposit in the Collateral Account shall be invested and
reinvested by the Agent in such Cash Equivalents as the Agent shall determine in
its sole discretion. All such investments and reinvestments shall be held in the
name of and be under the sole dominion and control of the Agent for the ratable
benefit of the Lenders. The Agent shall exercise reasonable care in the custody
and preservation of any funds held in the Collateral Account and shall be deemed
to have exercised such care if such funds are accorded treatment substantially
equivalent to that which the Agent accords other funds deposited with the Agent,
it being understood that

 

- 85 -

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

the Agent shall not have any responsibility for taking any necessary steps to
preserve rights against any parties with respect to any funds held in the
Collateral Account.

 

(c) If a drawing pursuant to any Letter of Credit occurs on or prior to the
expiration date of such Letter of Credit, the Borrower and the Lenders authorize
the Agent to use the monies deposited in the Collateral Account to make payment
to the beneficiary with respect to such drawing or the payee with respect to
such presentment.

 

(d) If an Event of Default exists, the Requisite Lenders may, in their
discretion, at any time and from time to time, instruct the Agent to liquidate
any such investments and reinvestments and apply proceeds thereof to the
Obligations in accordance with Section 11.4.

 

(e) So long as no Default or Event of Default exists, and to the extent amounts
on deposit in the Collateral Account exceed the aggregate amount of the Letter
of Credit Liabilities then due and owing, the Agent shall, from time to time, at
the request of the Borrower, deliver to the Borrower within 10 Business Days
after the Agent’s receipt of such request from the Borrower, against receipt but
without any recourse, warranty or representation whatsoever, such of the
balances in the Collateral Account as exceed the aggregate amount of the Letter
of Credit Liabilities at such time.

 

(f) The Borrower shall pay to the Agent from time to time such fees as the Agent
normally charges for similar services in connection with the Agent’s
administration of the Collateral Account and investments and reinvestments of
funds therein.

 

Section 11.6. Performance by Agent.

 

If the Borrower shall fail to perform any covenant, duty or agreement contained
in any of the Loan Documents, the Agent may, after notice to the Borrower,
perform or attempt to perform such covenant, duty or agreement on behalf of the
Borrower after the expiration of any cure or grace periods set forth herein. In
such event, the Borrower shall, at the request of the Agent, promptly pay any
amount reasonably expended by the Agent in such performance or attempted
performance to the Agent, together with interest thereon at the applicable
Post-Default Rate from the date of such expenditure until paid. Notwithstanding
the foregoing, neither the Agent nor any Lender shall have any liability or
responsibility whatsoever for the performance of any obligation of the Borrower
under this Agreement or any other Loan Document.

 

Section 11.7. Rights Cumulative.

 

The rights and remedies of the Agent and the Lenders under this Agreement and
each of the other Loan Documents shall be cumulative and not exclusive of any
rights or remedies which any of them may otherwise have under Applicable Law. In
exercising their respective rights and remedies the Agent and the Lenders may be
selective and no failure or delay by the Agent or any of the Lenders in
exercising any right shall operate as a waiver of it, nor shall any single or
partial exercise of any power or right preclude its other or further exercise or
the exercise of any other power or right.

 

- 86 -

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

ARTICLE XII. THE AGENT

 

Section 12.1. Authorization and Action.

 

Each Lender hereby appoints and authorizes the Agent to take such action as
contractual representative on such Lender’s behalf and to exercise such powers
under this Agreement and the other Loan Documents as are specifically delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Not in limitation of the foregoing, each Lender
authorizes and directs the Agent to enter into the Loan Documents for the
benefit of the Lenders. Each Lender hereby agrees that, except as otherwise set
forth herein, any action taken by the Requisite Lenders in accordance with the
provisions of this Agreement or the Loan Documents, and the exercise by the
Requisite Lenders of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders. Nothing herein shall be construed to deem the
Agent a trustee or fiduciary for any Lender nor to impose on the Agent duties or
obligations other than those expressly provided for herein. At the request of a
Lender, the Agent will forward to such Lender copies or, where appropriate,
originals of the documents delivered to the Agent pursuant to this Agreement or
the other Loan Documents. The Agent will also furnish to any Lender, upon the
request of such Lender, a copy of any certificate or notice furnished to the
Agent by the Borrower, any Loan Party or any other Affiliate of the Borrower,
pursuant to this Agreement or any other Loan Document not already delivered to
such Lender pursuant to the terms of this Agreement or any such other Loan
Document. As to any matters not expressly provided for by the Loan Documents
(including, without limitation, enforcement or collection of any of the
Obligations), the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Requisite Lenders (or all of the Lenders if explicitly required under any
other provision of this Agreement), and such instructions shall be binding upon
all Lenders and all holders of any of the Obligations; provided, however, that,
notwithstanding anything in this Agreement to the contrary, the Agent shall not
be required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any other Loan Document or Applicable
Law. Not in limitation of the foregoing, the Agent shall not exercise any right
or remedy it or the Lenders may have under any Loan Document upon the occurrence
of a Default or an Event of Default unless the Requisite Lenders have so
directed the Agent to exercise such right or remedy.

 

Section 12.2. Agent’s Reliance, Etc.

 

Notwithstanding any other provisions of this Agreement or any other Loan
Documents, neither the Agent nor any of its directors, officers, agents,
employees or counsel shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement or any other Loan
Document, except for its or their own gross negligence or willful misconduct as
determined by a court of competent jurisdiction in a final, non-appealable
judgment. Without limiting the generality of the foregoing, the Agent: (a) may
treat the payee of any Note as the holder thereof until the Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to the Agent; (b) may consult with legal counsel (including
its own counsel or counsel for the Parent, the Borrower or any other Loan
Party), independent public accountants and other experts selected by it and
shall not be

 

- 87 -

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

liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender or any other Person and shall not be
responsible to any Lender or any other Person for any statements, warranties or
representations made by any Person in or in connection with this Agreement or
any other Loan Document; (d) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any of this Agreement or any other Loan Document or the satisfaction of any
conditions precedent under this Agreement or any Loan Document on the part of
the Parent, the Borrower or other Persons or inspect the property, books or
records of the Parent, the Borrower or any other Person; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document, any other instrument or document furnished pursuant thereto or
any collateral covered thereby or the perfection or priority of any Lien in
favor of the Agent on behalf of the Lenders in any such collateral; and (f)
shall incur no liability under or in respect of this Agreement or any other Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telephone or telecopy) believed by it to be genuine and
signed, sent or given by the proper party or parties. Unless set forth in
writing to the contrary, the making of its initial Loan by a Lender shall
constitute a certification by such Lender to the Agent and the other Lenders
that the conditions precedent for initial Loans set forth in Sections 6.1. and
6.2. that have not previously been waived by the Requisite Lenders have been
satisfied.

 

Section 12.3. Notice of Defaults.

 

The Agent shall not be deemed to have knowledge or notice of the occurrence of a
Default or Event of Default unless the Agent has received notice from a Lender
or the Borrower referring to this Agreement, describing with reasonable
specificity such Default or Event of Default and stating that such notice is a
“notice of default.” If any Lender (excluding the Lender which is also serving
as the Agent) becomes aware of any Default or Event of Default, it shall
promptly send to the Agent such a “notice of default.” Further, if the Agent
receives such a “notice of default”, the Agent shall give prompt notice thereof
to the Lenders.

 

Section 12.4. Wachovia as Lender.

 

Wachovia, as a Lender, shall have the same rights and powers under this
Agreement and any other Loan Document as any other Lender and may exercise the
same as though it were not the Agent; and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated, include Wachovia in each case in its
individual capacity. Wachovia and its affiliates may each accept deposits from,
maintain deposits or credit balances for, invest in, lend money to, act as
trustee under indentures of, serve as financial advisor to, and generally engage
in any kind of business with, the Parent, the Borrower, any other Loan Party or
any other affiliate thereof as if it were any other bank and without any duty to
account therefor to the other Lenders. Further, the Agent and any affiliate may
accept fees and other consideration from the Loan Parties for services in
connection with this Agreement and otherwise without having to account for the
same to the other Lenders. The Lenders acknowledge that, pursuant to such
activities, Wachovia or its affiliates may receive information regarding the
Parent, the Borrower, other Loan Parties, other Subsidiaries and other
Affiliates (including information that may be subject to confidentiality

 

- 88 -

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

obligations in favor of such Person) and acknowledge that the Agent shall be
under no obligation to provide such information to them.

 

Section 12.5. Approvals of Lenders.

 

All communications from the Agent to any Lender requesting such Lender’s
determination, consent, approval or disapproval (a) shall be given in the form
of a written notice to such Lender, (b) shall be accompanied by a description of
the matter or issue as to which such determination, approval, consent or
disapproval is requested, or shall advise such Lender where information, if any,
regarding such matter or issue may be inspected, or shall otherwise describe the
matter or issue to be resolved, (c) shall include, if reasonably requested by
such Lender and to the extent not previously provided to such Lender, written
materials and, as appropriate, a brief summary of all oral information provided
to the Agent by the Parent or the Borrower in respect of the matter or issue to
be resolved, and (d) shall include the Agent’s recommended course of action or
determination in respect thereof. Each Lender shall reply promptly, but in any
event within 10 Business Days (or such lesser or greater period as may be
specifically required under the Loan Documents) of receipt of such
communication. Except as otherwise provided in this Agreement, unless a Lender
shall give written notice to the Agent that it specifically objects to the
recommendation or determination of the Agent (together with a written
explanation of the reasons behind such objection) within the applicable time
period for reply, such Lender shall be deemed to have conclusively approved of
or consented to such recommendation or determination.

 

Section 12.6. Lender Credit Decision, Etc.

 

Each Lender expressly acknowledges and agrees that neither the Agent nor any of
its officers, directors, employees, agents, counsel, attorneys-in-fact or other
affiliates has made any representations or warranties as to the financial
condition, operations, creditworthiness, solvency or other information
concerning the business or affairs of the Parent, the Borrower, any other Loan
Party, any Subsidiary or any other Person to such Lender and that no act by the
Agent hereafter taken, including any review of the affairs of the Parent, the
Borrower, any other Loan Party or any other Subsidiary, shall be deemed to
constitute any such representation or warranty by the Agent to any Lender. Each
Lender acknowledges that it has made its own credit and legal analysis and
decision to enter into this Agreement and the transactions contemplated hereby,
independently and without reliance upon the Agent, any other Lender or counsel
to the Agent, or any of their respective officers, directors, employees and
agents, and based on the financial statements of the Parent, the Borrower, the
other Subsidiaries or any other Affiliate thereof, and inquiries of such
Persons, its independent due diligence of the business and affairs of the
Parent, the Borrower, the other Loan Parties, the other Subsidiaries and other
Persons, its review of the Loan Documents, the legal opinions required to be
delivered to it hereunder, the advice of its own counsel and such other
documents and information as it has deemed appropriate. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent,
any other Lender or counsel to the Agent or any of their respective officers,
directors, employees and agents, and based on such review, advice, documents and
information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent under this Agreement or any of the other

 

- 89 -

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

Loan Documents, the Agent shall have no duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Parent, the
Borrower, any other Loan Party or any other Affiliate thereof which may come
into possession of the Agent, or any of its officers, directors, employees,
agents, attorneys-in-fact or other affiliates. Each Lender acknowledges that the
Agent’s legal counsel in connection with the transactions contemplated by this
Agreement is only acting as counsel to the Agent and is not acting as counsel to
such Lender.

 

Section 12.7. Collateral Matters.

 

(a) The Agent is authorized on behalf of all of the Lenders, without the
necessity of any notice to or further consent from any Lender, from time to time
prior to an Event of Default, to take any action with respect to any Collateral
or Loan Documents which may be necessary to perfect and maintain perfected the
Liens upon the Collateral granted pursuant to any of the Loan Documents.

 

(b) The Lenders hereby authorize the Agent, at its option and in its discretion,
to release any Lien granted to or held by the Agent upon any Collateral (i) upon
termination of this Agreement in accordance with Section 13.10.; or (ii) as
required or permitted by Section 4.3. Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent’s authority to release particular
types or items of Collateral pursuant to this Section or any other applicable
provision of any of the other Loan Documents.

 

(c) Upon any sale and transfer of Collateral which is expressly permitted
pursuant to the terms of this Agreement, and upon at least 5 Business Days’
prior written request by the Borrower, the Agent shall (and is hereby
irrevocably authorized by all of the Lenders to) execute such documents as may
be necessary to evidence the release of the Liens granted to the Agent for the
benefit of the Lenders herein or pursuant hereto upon the Collateral that was
sold or transferred; provided, however, that (i) the Agent shall not be required
to execute any such document on terms which, in the Agent’s opinion, would
expose the Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty; and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of the Borrower or any Loan Party in respect of)
all interests retained by the Borrower or any Subsidiary, including (without
limitation) the proceeds of the sale, all of which shall continue to constitute
part of the Collateral. In the event of any sale or transfer of Collateral, or
any foreclosure with respect to any of the Collateral, the Agent shall be
authorized to deduct all of the expenses reasonably incurred by the Agent from
the proceeds of any such sale, transfer or foreclosure.

 

(d) The Agent shall have no obligation whatsoever to the Lenders or to any other
Person to assure that the Collateral exists or is owned by any Loan Party or is
cared for, protected or insured or that the Liens granted to the Agent herein or
pursuant hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise or to continue exercising at all or in any manner or under any duty
of care, disclosure or fidelity any of the rights, authorities and powers
granted or available to the Agent in this Section or in any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, the Agent may act in

 

- 90 -

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

any manner it may deem appropriate, in its sole discretion, given the Agent’s
own interest in the Collateral as one of the Lenders and that the Agent shall
have no duty or liability whatsoever to the Lenders, except to the extent found
in a final non-appealable judgment by a court of competent jurisdiction to have
resulted from the Agent’s gross negligence or willful misconduct.

 

Section 12.8. Indemnification of Agent.

 

Each Lender agrees to indemnify the Agent (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so) pro rata
in accordance with such Lender’s respective Commitment Percentage, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent (in its capacity as Agent but not as a Lender) in any way
relating to or arising out of the Loan Documents, any transaction contemplated
hereby or thereby or any action taken or omitted by the Agent under the Loan
Documents (collectively, “Indemnifiable Amounts”); provided, however, that no
Lender shall be liable for any portion of such Indemnifiable Amounts to the
extent resulting from the Agent’s gross negligence or willful misconduct as
determined by a court of competent jurisdiction in a final, non-appealable
judgment or if the Agent fails to follow the written direction of the Requisite
Lenders (or all of the Lenders if expressly required hereunder) unless such
failure results from the Agent following the advice of counsel to the Agent of
which advice the Lenders have received notice. Without limiting the generality
of the foregoing but subject to the preceding proviso, each Lender agrees to
reimburse the Agent (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees of the
counsel(s) of the Agent’s own choosing) incurred by the Agent in connection with
the preparation, negotiation, execution, or enforcement of, or legal advice with
respect to the rights or responsibilities of the parties under, the Loan
Documents, any suit or action brought by the Agent to enforce the terms of the
Loan Documents and/or collect any Obligations, any “lender liability” suit or
claim brought against the Agent and/or the Lenders, and any claim or suit
brought against the Agent, and/or the Lenders arising under any Environmental
Laws. Such out-of-pocket expenses (including counsel fees) shall be advanced by
the Lenders on the request of the Agent notwithstanding any claim or assertion
that the Agent is not entitled to indemnification hereunder upon receipt of an
undertaking by the Agent that the Agent will reimburse the Lenders if it is
actually and finally determined by a court of competent jurisdiction that the
Agent is not so entitled to indemnification. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable hereunder
or under the other Loan Documents and the termination of this Agreement. If the
Borrower shall reimburse the Agent for any Indemnifiable Amount following
payment by any Lender to the Agent in respect of such Indemnifiable Amount
pursuant to this Section, the Agent shall share such reimbursement on a ratable
basis with each Lender making any such payment.

 

Section 12.9. Successor Agent.

 

The Agent may resign at any time as Agent under the Loan Documents by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent which appointment shall, provided no Default or Event of Default exists,
be subject to the Borrower’s approval, which approval shall

 

- 91 -

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

not be unreasonably withheld or delayed (except that the Borrower shall, in all
events, be deemed to have approved each Lender and its affiliates as a successor
Agent). If no successor Agent shall have been so appointed in accordance with
the immediately preceding sentence, and shall have accepted such appointment,
within 30 days after the resigning Agent’s giving of notice of resignation, then
the resigning Agent may, on behalf of the Lenders, appoint a successor Agent,
which shall be a Lender, if any Lender shall be willing to serve, and otherwise
shall be a commercial bank having total combined assets of at least
$50,000,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
the Loan Documents. Such successor Agent shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or shall make other arrangements satisfactory to the current Agent,
in either case, to assume effectively the obligations of the current Agent with
respect to such Letters of Credit. After any Agent’s resignation hereunder as
Agent, the provisions of this Article XII. shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under the Loan Documents.

 

Section 12.10. Titled Agents.

 

Each of the Titled Agents in each such respective capacity, assumes no
responsibility or obligation hereunder, including, without limitation, for
servicing, enforcement or collection of any of the Loans, nor any duties as an
agent hereunder for the Lenders. The titles of “Tri-Lead Arranger”,
“Tri-Bookrunner” and “Syndication Agent” are solely honorific and imply no
fiduciary responsibility on the part of the Titled Agents to the Agent, the
Borrower or any Lender and the use of such titles does not impose on the Titled
Agents any duties or obligations greater than those of any other Lender or
entitle the Titled Agents to any rights other than those to which any other
Lender is entitled.

 

ARTICLE XIII. MISCELLANEOUS

 

Section 13.1. Notices.

 

Unless otherwise provided herein, communications provided for hereunder shall be
in writing and shall be mailed, telecopied or delivered as follows:

 

If to the Borrower:

 

DiamondRock Hospitality Limited Partnership

6903 Rockledge Dr., Suite 800

Bethesda, Maryland 20817

Attn: Michael Schecter

Telephone:

  (301) 380-6012

Telecopy:

  (301) 380-6850

 

- 92 -

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

With a copy to:

 

Willkie Farr & Gallagher LLP

787 Seventh Ave.

New York, New York 10019

Attn: Steven D. Klein

Telephone:    (212) 728-8221 Telecopy:    (212) 728-8111

 

If to the Agent:

 

Wachovia Bank, National Association

301 S. College Street, NC0172

Charlotte, North Carolina 28288

Attn: David M. Blackman

Telephone:    (704) 374-6272 Telecopy:    (704) 383-6205

 

If to a Lender:

 

To such Lender’s address or telecopy number, as applicable, set forth on its
signature page hereto or in the applicable Assignment and Acceptance Agreement;

 

or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices and other communications shall be effective (i) if
mailed, when received; (ii) if telecopied, when transmitted; or (iii) if hand
delivered or sent by overnight courier, when delivered. Notwithstanding the
immediately preceding sentence, all notices or communications to the Agent or
any Lender under Article II. shall be effective only when actually received.
Neither the Agent nor any Lender shall incur any liability to the Borrower (nor
shall the Agent incur any liability to the Lenders) for acting upon any
telephonic notice referred to in this Agreement which the Agent or such Lender,
as the case may be, believes in good faith to have been given by a Person
authorized to deliver such notice or for otherwise acting in good faith
hereunder. Failure of a Person designated to get a copy of a notice to receive
such copy shall not affect the validity of notice properly given to any other
Person.

 

Section 13.2. Expenses.

 

The Borrower agrees (a) to pay or reimburse each of the Agent and the Arranger
for all of its reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, any of the Loan Documents (including
due diligence expenses and travel expenses relating to closing), and the
consummation of the transactions contemplated thereby, including the reasonable
fees and disbursements of counsel to the Agent and the Arranger and costs and
expenses in connection with (i) the use of IntraLinks, Inc. or other similar
information transmission systems in connection with the Loan Documents, and (ii)
the reasonable fees and disbursements of counsel to the Agent and all third
party costs and expenses incurred by the Agent in connection with the review of
Properties for inclusion in calculations of the Collateral Property Value and
the

 

- 93 -

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

Agent’s other activities under Article XII., including the cost of all
Appraisals, title insurance and the reasonable fees and disbursements of counsel
to the Agent relating to all such activities (b) to pay or reimburse the Agent,
the Arranger and the Lenders for all their reasonable costs and expenses
incurred in connection with the enforcement or preservation of any rights under
the Loan Documents, including the reasonable fees and disbursements of their
respective counsel (including the allocated fees and expenses of in-house
counsel) and any payments in indemnification or otherwise payable by the Lenders
to the Agent pursuant to the Loan Documents, (c) to pay, and indemnify and hold
harmless the Agent, the Arranger and the Lenders from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
failure to pay or delay in paying, documentary, stamp, excise and other similar
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of any of the Loan Documents, or consummation of
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, any Loan Document and (d) to the extent not already covered by
any of the preceding subsections, to pay or reimburse the Agent, the Arranger
and the Lenders for all their costs and expenses incurred in connection with any
bankruptcy or other proceeding of the type described in Sections 11.1.(f) or
11.1.(g), including the reasonable fees and disbursements of counsel to the
Agent, the Arranger and any Lender, whether such fees and expenses are incurred
prior to, during or after the commencement of such proceeding or the
confirmation or conclusion of any such proceeding. If the Borrower shall fail to
pay any amounts required to be paid by it pursuant to this Section, the Agent,
and/or the Lenders may pay such amounts on behalf of the Borrower and either
deem the same to be Loans outstanding hereunder or otherwise Obligations owing
hereunder.

 

Section 13.3. Setoff.

 

Subject to Section 3.3. and in addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, the Agent,
each Lender and each Participant is hereby authorized by the Borrower, at any
time or from time to time during the continuance of an Event of Default, without
prior notice to the Borrower or to any other Person, any such notice being
hereby expressly waived, but in the case of a Lender or Participant subject to
receipt of the prior written consent of the Agent exercised in its sole
discretion, to set off and to appropriate and to apply any and all deposits
(general or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by the Agent, such Lender or any
affiliate of the Agent or such Lender, to or for the credit or the account of
the Borrower against and on account of any of the Obligations, irrespective of
whether or not any or all of the Loans and all other Obligations have been
declared to be, or have otherwise become, due and payable as permitted by
Section 11.2., and although such obligations shall be contingent or unmatured.

 

Section 13.4. Litigation; Jurisdiction; Other Matters; Waivers.

 

(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR
AMONG THE PARENT, THE BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED
ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND
EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE LENDERS, THE AGENT, THE PARENT, AND THE BORROWER HEREBY

 

- 94 -

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

WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR
NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR
AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER
LOAN DOCUMENT OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE
WHATSOEVER BETWEEN OR AMONG THE PARENT, THE BORROWER, THE AGENT OR ANY OF THE
LENDERS OF ANY KIND OR NATURE RELATING TO ANY OF THE LOAN DOCUMENTS.

 

(b) EACH OF THE PARENT, THE BORROWER, THE AGENT AND EACH LENDER HEREBY AGREES
THAT THE FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, OR, AT
THE OPTION OF THE AGENT, ANY STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN OF
NEW YORK, NEW YORK, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN OR AMONG THE PARENT, THE BORROWER, THE AGENT OR ANY OF THE
LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE LOANS AND
LETTERS OF CREDIT, THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING
HEREFROM OR THEREFROM. THE PARENT, THE BORROWER AND EACH OF THE LENDERS
EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURTS WITH RESPECT TO SUCH CLAIMS OR DISPUTES.
EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM, AND EACH AGREES NOT TO PLEAD OR
CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE
DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY LENDER OR THE
ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN
ANY OTHER APPROPRIATE JURISDICTION.

 

(c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH THE
ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES
THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR
EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS AGREEMENT.

 

Section 13.5. Successors and Assigns.

 

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, except that neither the Parent or the Borrower may assign or otherwise
transfer any of its rights or obligations under this Agreement without the prior
written consent of all Lenders and any such assignment or other transfer to
which all of the Lenders have not so consented shall be null and void.

 

- 95 -

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

(b) Any Lender may make, carry or transfer Loans at, to or for the account of
any of its branch offices or the office of an affiliate of such Lender except to
the extent such transfer would result in increased costs to the Borrower.

 

(c) Any Lender may at any time grant to one or more banks or other financial
institutions (each a “Participant”) participating interests in its Commitment or
the Obligations owing to such Lender; provided, however, (i) any such
participating interest must be for a constant and not a varying percentage
interest, and (ii) after giving effect to any such participation by a Lender,
the amount of its Commitment, or if the Commitments have been terminated, the
aggregate outstanding principal balance of Notes held by it, in which it has not
granted any participating interests must be equal to $10,000,000. Except as
otherwise provided in Section 13.3., no Participant shall have any rights or
benefits under this Agreement or any other Loan Document. In the event of any
such grant by a Lender of a participating interest to a Participant, such Lender
shall remain responsible for the performance of its obligations hereunder, and
the Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement pursuant to which any Lender may grant such a
participating interest shall provide that such Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided, however, such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase, or extend the term (to the extent consent is
required with respect thereto) or extend the time or waive any requirement for
the reduction or termination of, such Lender’s Commitment, (ii) extend the date
fixed for the payment of principal of or interest on the Loans or portions
thereof owing to such Lender, (iii) reduce the amount of any such payment of
principal, (iv) reduce the rate at which interest is payable thereon or (v)
release any Guarantor (except as otherwise permitted under Section 4.3.). An
assignment or other transfer which is not permitted by subsection (d) or (e)
below shall be given effect for purposes of this Agreement only to the extent of
a participating interest granted in accordance with this subsection (c). Upon
request from the Agent, a Lender shall notify the Agent of the sale of any
participation hereunder and, if requested by the Agent, certify to the Agent
that such participation is permitted hereunder and that the requirements of
Section 3.12. (c) have been satisfied.

 

(d) Any Lender may with the prior written consent of the Agent and, so long as
no Default or Event of Default exists, the Borrower (which consent, in each
case, shall not be unreasonably withheld (it being agreed that the Borrower’s
withholding of consent to an assignment which would result in the Borrower
having to pay amounts under Section 3.12. shall be deemed to be reasonable)),
assign to one or more Eligible Assignees (each an “Assignee”) all or a portion
of its rights and obligations under this Agreement and the Notes (including all
or a portion of its Commitments and the Loans owing to such Lender); provided,
however, (i) no such consent by the Borrower shall be required in the case of
any assignment to another Lender or any affiliate of such Lender or another
Lender and no such consent by the Agent shall be required in the case of any
assignment by a Lender to any affiliate of such Lender; (ii) unless the Borrower
and the Agent otherwise agree, after giving effect to any partial assignment by
a Lender, the Assignee shall hold, and the assigning Lender shall retain, a
Commitment, or if the Commitments have been terminated, Loans having an
outstanding principal balance, of at least

 

- 96 -

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

$10,000,000 and integral multiples of $1,000,000 in excess thereof; and (iii)
each such assignment shall be effected by means of an Assignment and Acceptance
Agreement. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Lender of an amount equal to the purchase price
agreed between such transferor Lender and such Assignee, such Assignee shall be
a Lender party to this Agreement with respect to the assigned interest as of the
effective date of the Assignment and Acceptance Agreement and shall have all the
rights and obligations of a Lender with respect to the assigned interest as set
forth in such Assignment and Acceptance Agreement, and the transferor Lender
shall be released from its obligations hereunder with respect to the assigned
interest to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this subsection, the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that new Notes are issued to the Assignee and such
transferor Lender, as appropriate. In connection with any such assignment, the
transferor Lender shall pay to the Agent an administrative fee for processing
such assignment in the amount of $3,500. Anything in this Section to the
contrary notwithstanding, no Lender may assign or participate any interest in
its Commitment or any Loan held by it hereunder to the Borrower or any
Subsidiary or Affiliate of the Borrower.

 

(e) The Agent shall maintain at the Principal Office a copy of each Assignment
and Acceptance Agreement delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Commitment of each
Lender (including the outstanding principal balance, accrued and unpaid interest
and other fees due thereunder) from time to time (the “Register”). The Agent
shall give each Lender and the Borrower notice of the assignment by any Lender
of its rights as contemplated by this Section. The Borrower, the Agent and the
Lenders shall treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register and copies of
each Assignment and Acceptance Agreement shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice to the Agent. Upon its receipt of an Assignment and
Acceptance Agreement executed by an assigning Lender, together with each Note
subject to such assignment, the Agent shall, if such Assignment and Acceptance
Agreement has been completed and if the Agent receives the processing and
recording fee described in subsection (d) above, (i) accept such Assignment and
Acceptance Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.

 

(f) In addition to the assignments and participations permitted under the
foregoing provisions of this Section, any Lender may assign and pledge all or
any portion of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank, and such Loans and Notes shall be fully transferable as
provided therein. No such assignment shall release the assigning Lender from its
obligations hereunder.

 

(g) A Lender may furnish any information concerning the Borrower, any other Loan
Party or any of their respective Subsidiaries in the possession of such Lender
from time to time to Assignees and Participants (including prospective Assignees
and Participants) subject to compliance with Section 13.8.

 

- 97 -

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

(h) Anything in this Section to the contrary notwithstanding, no Lender may
assign or participate any interest in any Loan held by it hereunder to the
Borrower, any other Loan Party or any of their respective Affiliates or
Subsidiaries.

 

(i) Each Lender agrees that, without the prior written consent of the Borrower
and the Agent, it will not make any assignment hereunder in any manner or under
any circumstances that would require registration or qualification of, or
filings in respect of, any Loan or Note under the Securities Act or any other
securities laws of the United States of America or of any other jurisdiction.

 

Section 13.6. Amendments.

 

(a) Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement or any other Loan Document to
be given by the Lenders may be given, and any term of this Agreement or of any
other Loan Document may be amended, and the performance or observance by the
Borrower or any other Loan Party or any Subsidiary of any terms of this
Agreement or such other Loan Document or the continuance of any Default or Event
of Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of the Requisite Lenders (and, in the case of an amendment to any Loan Document,
the written consent of each Loan Party a party thereto).

 

(b) Notwithstanding the foregoing, without the prior written consent of each
Lender adversely affected thereby, no amendment, waiver or consent shall do any
of the following:

 

(i) increase the Commitments of the Lenders (except for any increase in the
Commitments effectuated pursuant to Section 2.15.) or subject the Lenders to any
additional obligations;

 

(ii) reduce the principal of, or interest rates that have accrued or that will
be charged on the outstanding principal amount of, any Loans or other
Obligations;

 

(iii) reduce the amount of any Fees payable hereunder or postpone any date fixed
for payment thereof;

 

(iv) modify the definition of the term “Termination Date” (except as
contemplated under Section 2.12.) or otherwise postpone any date fixed for any
payment of any principal of, or interest on, any Loans or any other Obligations
(including the waiver of any Default or Event of Default as a result of the
nonpayment of any such Obligations as and when due), or extend the expiration
date of any Letter of Credit beyond the Termination Date;

 

(v) amend or otherwise modify the provisions of Section 3.2.;

 

(vi) modify the definition of the term “Requisite Lenders” or otherwise modify
in any other manner the number or percentage of the Lenders required to make any

 

- 98 -

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

determinations or waive any rights hereunder or to modify any provision hereof,
including without limitation, any modification of this Section 13.6. if such
modification would have such effect;

 

(vii) release any Guarantor from the Guaranty other than as provided in Section
4.3. in connection with the release of a Collateral Property or Section
8.15.(a);

 

(viii) release any of the Collateral from the Lien of the Security Documents
other than as provided in Section 4.3. in connection with the release of a
Collateral Property or Section 8.15.(b);

 

(ix) amend or otherwise modify the provisions of Section 4.1.;

 

(x) modify the definition of the term “Eligible Property”;

 

(xi) amend or otherwise modify the provisions of Section 2.14.; or

 

(xii) increase the number of Interest Periods permitted with respect to Loans
under Section 2.5.

 

(c) No amendment, waiver or consent, unless in writing and signed by the Agent,
in such capacity, in addition to the Lenders required hereinabove to take such
action, shall affect the rights or duties of the Agent under this Agreement or
any of the other Loan Documents. Any amendment, waiver or consent relating to
Section 2.2. or the obligations of the Swingline Lender under this Agreement or
any other Loan Document shall, in addition to the Lenders required hereinabove
to take such action, require the written consent of the Swingline Lender.

 

(d) No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon and any amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose set
forth therein. Except as otherwise provided in Section 12.5., no course of
dealing or delay or omission on the part of the Agent or any Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. Any Event of Default occurring hereunder shall continue to
exist until such time as such Event of Default is waived in writing in
accordance with the terms of this Section, notwithstanding any attempted cure or
other action by any Loan Party or any other Person subsequent to the occurrence
of such Event of Default. Except as otherwise explicitly provided for herein or
in any other Loan Document, no notice to or demand upon any Loan Party shall
entitle such Loan Party to any other or further notice or demand in similar or
other circumstances.

 

Section 13.7. Nonliability of Agent and Lenders.

 

The relationship between the Borrower and the Lenders and the Agent shall be
solely that of borrower and lender. Neither the Agent nor any Lender shall have
any fiduciary responsibilities to the Borrower or the Parent and no provision in
this Agreement or in any of the other Loan Documents, and no course of dealing
between or among any of the parties hereto, shall be deemed to create any
fiduciary duty owing by the Agent or any Lender to any Lender, the Borrower, any
Subsidiary or any other Loan Party. Neither the Agent nor any Lender

 

- 99 -

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

undertakes any responsibility to the Borrower or the Parent to review or inform
the Borrower or the Parent of any matter in connection with any phase of the
business or operations of the Borrower or the Parent.

 

Section 13.8. Confidentiality.

 

The Agent and each Lender shall use reasonable efforts to assure that
information about the Parent, Borrower, the other Loan Parties and other
Subsidiaries, and the Properties thereof and their operations, affairs and
financial condition, not generally disclosed to the public, which is furnished
to the Agent or any Lender pursuant to the provisions of this Agreement or any
other Loan Document, is used only for the purposes of this Agreement and the
other Loan Documents and shall not be divulged to any Person other than the
Agent, the Lenders, and their respective agents who are actively and directly
participating in the evaluation, administration or enforcement of the Loan
Documents and other transactions between the Agent or such Lender, as
applicable, and the Borrower, but in any event the Agent and the Lenders may
make disclosure: (a) to any of their respective affiliates (provided they shall
agree to keep such information confidential in accordance with the terms of this
Section 13.8.); (b) as reasonably requested by any bona fide Assignee,
Participant or other transferee in connection with the contemplated transfer of
any Commitment or participations therein as permitted hereunder (provided they
shall agree to keep such information confidential in accordance with the terms
of this Section); (c) as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process or in connection with any
legal proceedings; (d) to the Agent’s or such Lender’s independent auditors and
other professional advisors (provided they shall be notified of the confidential
nature of the information); (e) after the happening and during the continuance
of an Event of Default, to any other Person, in connection with the exercise by
the Agent or the Lenders of rights hereunder or under any of the other Loan
Documents; (f) upon Borrower’s prior consent (which consent shall not be
unreasonably withheld), to any contractual counter-parties to any swap or
similar hedging agreement or to any rating agency; and (g) to the extent such
information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to the Agent or any Lender on a
nonconfidential basis from a source other than the Borrower or any Affiliate.

 

Section 13.9. Indemnification.

 

(a) The Borrower shall and hereby agrees to indemnify, defend and hold harmless
the Agent, each of the Lenders, any affiliate of the Agent or any Lender, and
their respective directors, officers, shareholders, agents, employees and
counsel (each referred to herein as an “Indemnified Party”) from and against any
and all of the following (collectively, the “Indemnified Costs”): losses, costs,
claims, damages, liabilities, deficiencies, judgments or reasonable expenses of
every kind and nature (including, without limitation, amounts paid in
settlement, court costs and the reasonable fees and disbursements of counsel
incurred in connection with any litigation, investigation, claim or proceeding
or any advice rendered in connection therewith, but excluding losses, costs,
claims, damages, liabilities, deficiencies, judgments or expenses
indemnification in respect of which is specifically covered by Section 3.12. or
5.1. or expressly excluded from the coverage of such Sections 3.12. or 5.1.)
incurred by an Indemnified Party in connection with, arising out of, or by
reason of, any suit, cause of action, claim, arbitration, investigation or
settlement, consent decree or other proceeding

 

- 100 -

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

(the foregoing referred to herein as an “Indemnity Proceeding”) which is in any
way related directly or indirectly to: (i) this Agreement or any other Loan
Document or the transactions contemplated thereby; (ii) the making of any Loans
or issuance of Letters of Credit hereunder; (iii) any actual or proposed use by
the Borrower of the proceeds of the Loans or Letters of Credit; (iv) the Agent’s
or any Lender’s entering into this Agreement; (v) the fact that the Agent and
the Lenders have established the credit facility evidenced hereby in favor of
the Borrower; (vi) the fact that the Agent and the Lenders are creditors of the
Borrower and have or are alleged to have information regarding the financial
condition, strategic plans or business operations of the Parent, the Borrower
and the Subsidiaries; (vii) the fact that the Agent and the Lenders are material
creditors of the Borrower and are alleged to influence directly or indirectly
the business decisions or affairs of the Parent, the Borrower and the
Subsidiaries or their financial condition; (viii) the exercise of any right or
remedy the Agent or the Lenders may have under this Agreement or the other Loan
Documents; (ix) any civil penalty or fine assessed by the OFAC against, and all
reasonable costs and expenses (including counsel fees and disbursements)
incurred in connection with defense thereof by, the Agent or any Lender as a
result of conduct of the Borrower, any other Loan Party or any Subsidiary that
violates a sanction enforced by the OFAC; or (x) any violation or non-compliance
by the Parent, the Borrower or any Subsidiary of any Applicable Law (including
any Environmental Law) including, but not limited to, any Indemnity Proceeding
commenced by (A) the Internal Revenue Service or state taxing authority or (B)
any Governmental Authority or other Person under any Environmental Law,
including any Indemnity Proceeding commenced by a Governmental Authority or
other Person seeking remedial or other action to cause the Borrower or its
Subsidiaries (or its respective properties) (or the Agent and/or the Lenders as
successors to the Borrower) to be in compliance with such Environmental Laws;
provided, however, that the Borrower shall not be obligated to indemnify any
Indemnified Party for (A) any acts or omissions of such Indemnified Party in
connection with matters described in this subsection to the extent arising from
the gross negligence or willful misconduct of such Indemnified Party, as
determined by a court of competent jurisdiction in a final, non-appealable
judgment or (B) Indemnified Costs to the extent arising directly out of or
resulting directly from claims of one or more Indemnified Parties against
another Indemnified Party.

 

(b) The Borrower’s indemnification obligations under this Section 13.9. shall
apply to all Indemnity Proceedings arising out of, or related to, the foregoing
whether or not an Indemnified Party is a named party in such Indemnity
Proceeding. In this regard, this indemnification shall cover all Indemnified
Costs of any Indemnified Party in connection with any deposition of any
Indemnified Party or compliance with any subpoena (including any subpoena
requesting the production of documents). This indemnification shall, among other
things, apply to any Indemnity Proceeding commenced by other creditors of the
Borrower or any Subsidiary, any shareholder of the Borrower or any Subsidiary
(whether such shareholder(s) are prosecuting such Indemnity Proceeding in their
individual capacity or derivatively on behalf of the Borrower), any account
debtor of the Borrower or any Subsidiary or by any Governmental Authority. If
indemnification is to be sought hereunder by an Indemnified Party, then such
Indemnified Party shall notify the Borrower of the commencement of any Indemnity
Proceeding; provided, however, that the failure to so notify the Borrower shall
not relieve the Borrower from any liability that it may have to such Indemnified
Party pursuant to this Section 13.9. except to the extent such failure to notify
materially and adversely affects the Borrower.

 

- 101 -

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

(c) This indemnification shall apply to any Indemnity Proceeding arising during
the pendency of any bankruptcy proceeding filed by or against the Borrower
and/or any Subsidiary.

 

(d) All out-of-pocket fees and expenses of, and all amounts paid to
third-persons by, an Indemnified Party shall be advanced by the Borrower at the
request of such Indemnified Party notwithstanding any claim or assertion by the
Borrower that such Indemnified Party is not entitled to indemnification
hereunder, upon receipt of an undertaking by such Indemnified Party that such
Indemnified Party will reimburse the Borrower if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.

 

(e) An Indemnified Party may conduct its own investigation and defense of, and
may formulate its own strategy with respect to, any Indemnity Proceeding covered
by this Section and, as provided above, all Indemnified Costs incurred by such
Indemnified Party shall be reimbursed by the Borrower. No action taken by legal
counsel chosen by an Indemnified Party in investigating or defending against any
such Indemnity Proceeding shall vitiate or in any way impair the obligations and
duties of the Borrower hereunder to indemnify and hold harmless each such
Indemnified Party; provided, however, that if (i) the Borrower is required to
indemnify an Indemnified Party pursuant hereto and (ii) the Borrower has
provided evidence reasonably satisfactory to such Indemnified Party that the
Borrower has the financial wherewithal to reimburse such Indemnified Party for
any amount paid by such Indemnified Party with respect to such Indemnity
Proceeding, such Indemnified Party shall not settle or compromise any such
Indemnity Proceeding without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed). Notwithstanding the
foregoing, an Indemnified Party may settle or compromise any such Indemnity
Proceeding without the prior written consent of the Borrower where (x) no
monetary relief is sought against such Indemnified Party in such Indemnity
Proceeding or (y) there is an allegation of a violation of law by such
Indemnified Party.

 

(f) If and to the extent that the obligations of the Borrower under this Section
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law.

 

(g) The Borrower’s obligations under this Section shall survive any termination
of this Agreement and the other Loan Documents and the payment in full in cash
of the Obligations, and are in addition to, and not in substitution of, any
other of their obligations set forth in this Agreement or any other Loan
Document to which it is a party.

 

Section 13.10. Termination; Survival.

 

At such time as (a) all of the Commitments have been terminated, (b) all Letters
of Credit have terminated, (c) none of the Lenders nor the Swingline Lender is
obligated any longer under this Agreement to make any Loans and (d) all
Obligations (other than obligations which survive as provided in the following
sentence) have been paid and satisfied in full, this Agreement shall terminate.
The indemnities to which the Agent, the Lenders and the Swingline Lender are
entitled under the provisions of Sections 3.12., 5.1., 5.4., 12.8., 13.2. and
13.9. and any other

 

- 102 -

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

provision of this Agreement and the other Loan Documents, and the provisions of
Section 13.4., shall continue in full force and effect and shall protect the
Agent, the Lenders and the Swingline Lender (i) notwithstanding any termination
of this Agreement, or of the other Loan Documents, against events arising after
such termination as well as before and (ii) at all times after any such party
ceases to be a party to this Agreement with respect to all matters and events
existing on or prior to the date such party ceased to be a party to this
Agreement. The Agent agrees to furnish to the Borrower, upon the Borrower’s
request and at the Borrower’s sole cost and expense, any release, termination,
or other agreement or document evidencing the foregoing termination and the
release of the Liens created under any of the Security Documents as may be
reasonably requested by the Borrower.

 

Section 13.11. Severability of Provisions.

 

Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

Section 13.12. GOVERNING LAW.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.

 

Section 13.13. Patriot Act.

 

The Lenders and the Agent each hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)), it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of
the Borrower and other information that will allow such Lender or the Agent, as
applicable, to identify the Borrower in accordance with such Act.

 

Section 13.14. Counterparts.

 

This Agreement and any amendments, waivers, consents or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument.

 

Section 13.15. Obligations with Respect to Loan Parties.

 

The obligations of the Parent or the Borrower to direct or prohibit the taking
of certain actions by the other Loan Parties as specified herein shall be
absolute and not subject to any defense the Parent or the Borrower may have that
the Parent or the Borrower does not control such Loan Parties.

 

- 103 -

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

Section 13.16. Limitation of Liability.

 

Neither the Agent nor any Lender, nor any affiliate, officer, director,
employee, attorney, or agent of the Agent or any Lender shall have any liability
with respect to, and each of the Parent and the Borrower hereby waives,
releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, or consequential damages suffered or incurred by the
Parent or the Borrower in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Each of the Parent and the Borrower hereby waives, releases, and agrees not to
sue the Agent or any Lender or any of the Agent’s or any Lender’s affiliates,
officers, directors, employees, attorneys, or agents for punitive damages in
respect of any claim in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or financed hereby.

 

Section 13.17. Entire Agreement.

 

This Agreement, the Notes, and the other Loan Documents referred to herein
embody the final, entire agreement among the parties hereto and supersede any
and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof and thereof and
may not be contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto. There are no
oral agreements among the parties hereto.

 

Section 13.18. Construction.

 

The Parent, the Borrower, the Agent and each Lender acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by the Parent, the Borrower, the Agent
and each Lender.

 

[Signatures on Following Pages]

 

- 104 -

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

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

 

DIAMONDROCK HOSPITALITY LIMITED PARTNERSHIP By:   DiamondRock Hospitality
Company, its sole General Partner     By:       /s/  Mark W. Brugger        

Name:

  Mark W. Brugger        

Title:

 

Executive Vice President,

Chief Financial Officer and Treasurer

DIAMONDROCK HOSPITALITY COMPANY By:           /s/  Mark W. Brugger    

Name:

      Mark W. Brugger    

Title:

     

Executive Vice President,

Chief Financial Officer and Treasurer

 

[Signatures Continued on Next Page]

 

- 105 -

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

 

[Signature Page to Credit Agreement dated as of

July 8, 2005 with DiamondRock Hospitality Limited Partnership]

 

WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent, as a Lender and as Swingline
Lender

By:

      /s/  David M. Blackman    

Name:

  David M. Blackman    

Title:

  Managing Director

Commitment Amount: $25,000,000 Lending Office (all Types of Loans):

Wachovia Bank, National Association

301 S. College Street, NC0172

Charlotte, North Carolina 28288

Attn: David M. Blackman

Telephone:  

    (704) 374-6272

Telecopy:       (704) 383-6205

 

[Signatures Continued on Next Page]

 

- 106 -

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

 

[Signature Page to Credit Agreement dated as of

July 8, 2005 with DiamondRock Hospitality Limited Partnership]

 

CITICORP NORTH AMERICA, INC.

By:

 

/s/  David Bouton

   

Name:

 

David Bouton

   

Title:

 

Vice President

Commitment Amount: $25,000,000 Lending Office (all Types of Loans):

390 Greenwich

New York, New 10013

Attn: Niraj Shah

Telephone:  

 (212) 723-6351

Telecopy:    (212) 646-291-1622

 

- 107 -

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

 

[Signature Page to Credit Agreement dated as of

July 8, 2005 with DiamondRock Hospitality Limited Partnership]

 

BANK OF AMERICA, N.A.

By:

 

/s/  Steven Renwick

   

Name:

 

Steven Renwick

   

Title:

 

Senior Vice President

Commitment Amount: $25,000,000 Lending Office (all Types of Loans):

Bank of America, N.A.

901 Main Street, 64th Floor

Mail Code TX1-492-14-04

Dallas, Texas 75202

Attn: Ms. Jayshree Shah

Telephone:  

 (214) 209 1232

Telecopy:    (214) 290-9486

 

- 108 -