Exhibit 10.3

 

 

LOAN AGREEMENT

 

Dated as of April 15, 2011

 

among

 

ONE PARK BOULEVARD, LLC
as Borrower

 

and

 

SUNSTONE PARK LESSEE, LLC

as Operating Lessee

 

AAREAL CAPITAL CORPORATION,
as Agent for the Lenders,

 

and

 

AAREAL CAPITAL CORPORATION,

as Lender

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Article I DEFINITIONS

1

 

Section 1.1

Definitions

1

 

Section 1.2

Other Definitional Provisions

29

 

 

 

Article II THE LOAN

29

 

Section 2.1

The Loan; Use of Funds

29

 

Section 2.2

Interest

30

 

Section 2.3

Determination of Applicable Interest Rate

30

 

Section 2.4

Principal Payments

32

 

Section 2.5

Payment; Default Rate; Application of Certain Monies; Priority of Payments;
Set-offs

33

 

Section 2.6

Usury

34

 

Section 2.7

Interest Rate Protection Agreement

35

 

Section 2.8

Breakage

37

 

Section 2.9

“Additional Interest” under Lender Interest Rate Agreements

37

 

Section 2.10

No Withholdings

38

 

Section 2.11

Unavailability; Illegality of LIBOR

39

 

Section 2.12

Increased Costs and Capital Adequacy

39

 

Section 2.13

Obligation to Mitigate

42

 

Section 2.14

Closing

43

 

Section 2.15

Fees

43

 

 

 

Article III ACCOUNTS; RESERVES; LETTERS OF CREDIT

43

 

Section 3.1

Operating Account

43

 

Section 3.2

Cash Collateral Account; Cash Sweep Letter of Credit

43

 

Section 3.3

Tenant Security Account

44

 

Section 3.4

Capital/FF&E Reserve Account

46

 

Section 3.5

Security Interest in Accounts

47

 

Section 3.6

Letters of Credit

47

 

 

 

Article IV CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS LOAN AGREEMENT

49

 

Section 4.1

Representations and Warranties

49

 

Section 4.2

Closing Documents, Etc.

49

 

Section 4.3

Payment of Fees and Expenses

49

 

Section 4.4

No Default or Event of Default

49

 

Section 4.5

No Casualty or Taking

49

 

Section 4.6

Financial Statements

49

 

Section 4.7

Loan-To-Value

49

 

Section 4.8

Compliance with Other Conditions

49

 

Section 4.9

Other Documents

50

 

Section 4.10

Adverse Conditions; Internal Approval

50

 

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Article V REPRESENTATIONS AND WARRANTIES

50

 

Section 5.1

Due Organization

50

 

Section 5.2

Due Execution

50

 

Section 5.3

Enforceability

50

 

Section 5.4

No Violation

51

 

Section 5.5

No Litigation

51

 

Section 5.6

No Default or Event of Default

51

 

Section 5.7

Offsets, Defenses, Etc.

51

 

Section 5.8

Consents

51

 

Section 5.9

Financial Statements and Other Information

51

 

Section 5.10

Full Disclosure

52

 

Section 5.11

Accounts

52

 

Section 5.12

Indebtedness

52

 

Section 5.13

Insurance Policies

52

 

Section 5.14

Availability of Utilities and Access

52

 

Section 5.15

No Liens

52

 

Section 5.16

Compliance with Legal Requirements

53

 

Section 5.17

Certain Agreements

53

 

Section 5.18

Security Documents

54

 

Section 5.19

Casualty and Taking

54

 

Section 5.20

Brokerage

54

 

Section 5.21

Encroachments

54

 

Section 5.22

Foreign Person

54

 

Section 5.23

Control Person

54

 

Section 5.24

Government Regulation

54

 

Section 5.25

ERISA

55

 

Section 5.26

Labor Relations

55

 

Section 5.27

Name; Principal Place of Business

55

 

Section 5.28

Intellectual Property

55

 

Section 5.29

Flood Zone

56

 

Section 5.30

Taxes

56

 

Section 5.31

Title

56

 

Section 5.32

Creditworthiness

56

 

Section 5.33

Patriot Act

56

 

Section 5.34

Leases

57

 

Section 5.35

Special Purpose Entity

57

 

Section 5.36

Intentionally Deleted

57

 

Section 5.37

Ground Lease

58

 

 

 

Article VI GENERAL AND OPERATIONAL COVENANTS

58

 

Section 6.1

Financial Statements, Reports and Documents of Loan Parties

58

 

Section 6.2

Marketing, Management, Maintenance and Repairs

63

 

Section 6.3

Inspection of Premises and Books and Records

64

 

Section 6.4

Compliance with Legal, Insurance and Contractual Requirements

65

 

Section 6.5

Appraisals

65

 

Section 6.6

Payment of Impositions

66

 

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Section 6.7

Liens and Encumbrances; Ownership of Collateral

66

 

Section 6.8

Permitted Contests

67

 

Section 6.9

Alterations

68

 

Section 6.10

Leases

70

 

Section 6.11

Required Insurance

72

 

Section 6.12

Damage or Destruction

74

 

Section 6.13

Taking of the Mortgaged Property

79

 

Section 6.14

Costs and Expenses

81

 

Section 6.15

Transfers

82

 

Section 6.16

Defense of Title

84

 

Section 6.17

Recordation and Certain Taxes

84

 

Section 6.18

Name, Fiscal Year and Accounting Method

84

 

Section 6.19

Consolidation, Merger, Conveyance, Transfer or Lease

84

 

Section 6.20

Organization Restrictions

84

 

Section 6.21

Changes in Zoning

84

 

Section 6.22

Distributions, Dividends and Affiliate Payments

85

 

Section 6.23

ERISA

85

 

Section 6.24

Maintenance of Existence

85

 

Section 6.25

Subsidiaries and Joint Ventures

85

 

Section 6.26

Intentionally Deleted

85

 

Section 6.27

Utilities

86

 

Section 6.28

Margin Stock

86

 

Section 6.29

Compliance with Anti-Money Laundering and OFAC Laws

86

 

Section 6.30

Limitation on Indebtedness

87

 

Section 6.31

Loans to Members, Etc.

87

 

Section 6.32

Transactions with Affiliates

87

 

Section 6.33

Debt Service Coverage Ratio

87

 

Section 6.34

Required Repairs

88

 

Section 6.35

Ground Lease

88

 

Section 6.36

Operating Leases

88

 

 

 

Article VII EVENTS OF DEFAULT

89

 

Section 7.1

Events of Default

89

 

Section 7.2

Acceleration of Loan

92

 

Section 7.3

Agent’s Right to Perform; Protective Advances

92

 

Section 7.4

Assignment of Funds

94

 

Section 7.5

Accounts

94

 

Section 7.6

No Liability of Agent or Lenders

95

 

Section 7.7

Management Agreement

95

 

Section 7.8

Right of Offset

95

 

Section 7.9

Termination of Loan Agreement

95

 

 

 

Article VIII ASSIGNMENTS AND PARTICIPATIONS

96

 

Section 8.1

Assignment and Participations

96

 

Section 8.2

Participation

97

 

Section 8.3

Availability of Records

97

 

Section 8.4

Loan Parties’ Facilitation of Transfer

97

 

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Section 8.5

Notice; Registration Requirement

99

 

Section 8.6

Registry

99

 

Section 8.7

Lender Interest Rate Protection Agreements

99

 

Section 8.8

Disclosure by Agent or Lender

100

 

 

 

Article IX AGENT AND LENDERS

100

 

Section 9.1

Scope of Article IX

100

 

Section 9.2

Agent

100

 

Section 9.3

Distributions

102

 

Section 9.4

Authority, No Reliance; Binding Effect

102

 

Section 9.5

Loan

103

 

Section 9.6

Equitable Adjustments

106

 

Section 9.7

Other Transactions

106

 

Section 9.8

Obligations Absolute

106

 

Section 9.9

Indemnification

106

 

Section 9.10

Taxes

107

 

Section 9.11

Return of Payments

107

 

Section 9.12

No Partnership

108

 

Section 9.13

Resignation and Removal of Agent; Successor Agent

108

 

Section 9.14

Defaults by any Lender

109

 

Section 9.15

Purchase Price; Payment for Defaulting Lender’s Pro Rata Share

110

 

Section 9.16

Enforcement Action Plan

110

 

 

 

Article X GENERAL CONDITIONS

111

 

Section 10.1

Indemnity

111

 

Section 10.2

No Waivers

113

 

Section 10.3

Submission of Evidence

113

 

Section 10.4

Loan

114

 

Section 10.5

Contractors

114

 

Section 10.6

Entire Agreement

114

 

Section 10.7

Assignment

114

 

Section 10.8

Further Assurances; Filing of Financing Statements

114

 

Section 10.9

Cumulative Remedies

114

 

Section 10.10

Amendments, Consents, Waivers, Approvals, Etc.

115

 

Section 10.11

Notices

115

 

Section 10.12

Limitation on Liability

117

 

Section 10.13

Binding Effect

117

 

Section 10.14

Severability of Provisions

117

 

Section 10.15

Governing Law and Consent to Jurisdiction

118

 

Section 10.16

Waiver of Jury Trial

118

 

Section 10.17

No Joint Venture

118

 

Section 10.18

Determinations and Consents of Agent and Lenders

118

 

Section 10.19

Reliance by Agent and Lenders on Action on Behalf of Loan Parties

118

 

Section 10.20

Headings, Etc.

119

 

Section 10.21

Incorporation by Reference

119

 

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Section 10.22

Counterparts

119

 

Section 10.23

Attorneys’ Fees

119

 

Section 10.24

Employer Identification Number Etc.

119

 

Section 10.25

Confidentiality

119

 

Exhibits and Schedules

 

Exhibit A:

The Land

Exhibit B:

Definition of Single Purpose Entity

Exhibit C:

Required Amortization Payments

Schedule 2.7(a):

Interest Rate Protection Agreement Acknowledgment

Schedule 5:

Exceptions to Representations and Warranties

Schedule 5.11:

Accounts

Schedule 5.17:

Material Operating Agreements

Schedule 6.11:

Insurance Requirements

Schedule 6.34:

Required Repairs

Schedule 8.5:

Assignment and Acceptance

 

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LOAN AGREEMENT

 

This LOAN AGREEMENT (this “Loan Agreement”) dated as of April 15, 2011 by and
among ONE PARK BOULEVARD, LLC, a Delaware limited liability company, having
offices at 120 Vantis, Suite 350, Aliso Viejo, California 92656 (“Borrower”),
SUNSTONE PARK LESSEE, LLC, a Delaware limited liability company, having offices
at 120 Vantis, Suite 350, Aliso Viejo, California 92656 (“Operating Lessee”;
Borrower and Operating Lessee are each sometimes referred to as a “Loan Party”
and as “Loan Parties”), AAREAL CAPITAL CORPORATION, a Delaware corporation,
having offices at 250 Park Avenue, Suite 820, New York, New York 10177, as agent
for the Lenders (in its capacity as agent, together with its permitted
successors and assigns, “Agent”) and AAREAL CAPITAL CORPORATION, a Delaware
corporation, having offices at 250 Park Avenue, Suite 820, New York, New York
10177, as “Lender”, and the lenders party to this Loan Agreement from time to
time (such lenders, together with their respective permitted successors and
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as “Lenders”).

 

W I T N E S S E T H:

 

WHEREAS, Borrower is the owner of (a) a leasehold interest in certain real
property and (b) the improvements constructed thereon, which are collectively
known as “The Hilton San Diego Bayfront Hotel” located in San Diego, California,
which property is more particularly described in Exhibit A attached hereto (the
“Land”);

 

WHEREAS, Borrower, as lessor, and Operating Lessee, as lessee, are parties to
that certain Lease Agreement dated as of April 15, 2011 (the “Operating
Lease;”); and

 

WHEREAS, Borrower wishes to borrow $240,000,000.00 (the “Loan Amount”) from
Lenders upon the terms and conditions contained herein; and

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants
contained herein and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1            Definitions.  For purposes of this Loan Agreement, the
following terms shall have the respective meanings set forth in this Article I:

 

“Aareal” means Aareal Capital Corporation, its successors or assigns by merger,
consolidation, sale of all or substantially all of its assets or interests in
one or a series of related transactions or other corporate reorganization.

 

“Acceleration Event” means the occurrence and continuance of the principal
balance of the Loan being immediately due and payable in accordance with this
Loan Agreement.

 

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“Account Agreement” means in the case of any Account specified herein as being
controlled by Agent, an account control agreement reasonably acceptable to Agent
that satisfies the requirements of Section 9-104 of the Uniform Commercial Code
and that provides Loan Parties with full access to such Account until the
required notice has been given by Agent to the depository bank in accordance
with such account control agreement, to be executed and delivered by Loan
Parties, Agent and the bank at which the Account that is the subject of such
agreement is held, which bank shall be reasonably acceptable to Agent.

 

“Account(s)” means, collectively, all accounts of each Loan Party and all
accounts of any Person held on behalf of or for the benefit of each Loan Party,
including the Tenant Security Account (if any), the Cash Collateral Account and
the Capital/FF&E Reserve Account.

 

“Additional Costs” has the meaning set forth in Section 2.12(c).

 

“Additional Interest” means, without duplication, all sums payable pursuant to
Sections 2.8, 2.9, 2.10 and 2.12.

 

“Adjusted Debt Service” means as of any Testing Determination Date, the greatest
of:

 

(a)           the Debt Service as of the applicable Testing Determination Date;

 

(b)           the aggregate amount of interest and principal amortization
payments that would be payable over a twelve (12) month period on a hypothetical
30-year fully amortizing loan in an original principal amount equal to the
outstanding principal amount of the Loan as of the applicable Testing
Determination Date with an interest rate equal to the sum of the Treasury Rate
plus two and one-quarter percent (2.25%) and which requires monthly constant
payments of principal and interest on the first date of each month throughout
the term of such loan; and/or

 

(c)           the product of (i) the outstanding principal amount of the Loan as
of the Testing Determination Date multiplied by (ii) seven percent (7.00%).

 

“Adjusted Debt Service Coverage Ratio” means as of any Testing Determination
Date, the ratio of (i) the Net Operating Income for the twelve (12) month period
ending on the Testing Determination Date to (ii) the Adjusted Debt Service
applicable to such twelve (12) month period (provided that, in the case of
clause (a) of the definition of Adjusted Debt Service, with respect to the first
three (3) Testing Determination Dates which shall occur during the term of the
Loan, the Adjusted Debt Service shall be annualized based upon the period
commencing on the Closing Date and ending on such Testing Determination Date).

 

“Administrative Fee” has the meaning set forth in the Loan Fee Letter.

 

“Affected Lender” has the meaning set forth in Section 2.12(e).

 

“Affiliate” means, with respect to any Person, any other Person:

 

2

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(a)           which directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such Person or
is an executive officer or board member (or other member of an equivalent
governing body) of such Person; or

 

(b)           which, directly or indirectly, beneficially owns or holds ten
percent (10%) or more of any class of stock or any other ownership interest in
such Person;

 

(c)           which is a member of the family (as defined in
Section 267(c)(4) of the IRC) of such Person or which is a trust or estate, the
beneficial owners of which are members of the family (as defined in
Section 267(c)(4) of the IRC) of such Person; or

 

(d)           which is a subsidiary (whether direct or indirect), general
partner, controlling shareholder, managing member, executive officer or board
member (or other member of an equivalent governing body) of such Person.

 

For purposes of this definition, each Sponsor and Guarantor shall be deemed to
be Affiliates of Loan Parties but neither Sponsor shall be deemed to be an
Affiliate of the other.

 

“Agent” has the meaning set forth in the first paragraph of this Loan Agreement.

 

“Agent’s Counsel” means such counsel as Agent from time to time may engage on
behalf of itself and/or Lenders.

 

“Agent’s Counsel Fees” means the reasonable, documented out-of-pocket fees and
disbursements of Agent’s Counsel for services heretofore or hereafter rendered
to Agent on behalf of itself and/or Lenders in connection with the Loan (except
as otherwise set forth herein), including the preparation, negotiation,
administration and modification of the Loan Documents, and the enforcement of
Agent’s and Lenders’ rights and remedies under the Loan Documents.

 

“Anti-Money Laundering Laws” means any laws or regulations relating to money
laundering or terrorist financing, including, without limitation, the Bank
Secrecy Act, 31 U.S.C. sections 5301 et seq.; the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA Patriot Act); Laundering of
Monetary Instruments, 18 U.S.C. section 1956; Engaging in Monetary Transactions
in Property Derived from Specified Unlawful Activity, 18 U.S.C. section 1957;
the Financial Recordkeeping and Reporting of Currency and Foreign Transaction
Regulations, 31 C.F.R. Part 103; and any similar laws or regulations currently
in force or hereafter enacted.

 

“Applicable Accounting Standards” means (i) with respect to reports prepared by
Loan Parties or a Guarantor, GAAP, and (ii) with respect to reports prepared by
Property Manager, the Uniform System of Accounts for the Lodging Industry, Tenth
Revised Edition (unless otherwise set forth in the Management Agreement),
consistently applied.

 

“Applicable Interest Rate” has the meaning set forth in Section 2.2(a).

 

“Appraisal” means a written appraisal report of the Premises as the term
“appraisal” is defined in the Code of Professional Ethics of the Appraisal
Institute, meeting the

 

3

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requirements of the Financial Institutions Reform, Recovery and Enforcement Act
of 1989, prepared by a professional appraiser retained by Agent (except with
respect to an Appraisal provided in accordance with Section 3.2(b),
Section 3.6(c) and/or Section 7.9, in which case such appraiser may be retained
by Loan Parties (and reasonably approved by Agent) or a refinancing lender) at
Borrower’s expense (to the extent provided in Section 6.5) who is a member of
the Appraisal Institute, addressed to Agent (except with respect to an Appraisal
provided in accordance with Section 3.2(b), Section 3.6(c) and/or Section 7.9,
in which case such Appraisal may be addressed to Borrower or a refinancing
lender but shall provide that Agent may rely thereon) and in form, scope and
substance reasonably satisfactory to Agent, setting forth such appraiser’s
determination of the Appraised Value.

 

“Appraisal Update” means any written supplement or “update” to an Appraisal
required hereunder, prepared by a professional appraiser retained by Agent at
Borrower’s expense (to the extent provided in Section 6.5) who is a member of
the Appraisal Institute, addressed to Agent and in form, scope and substance
reasonably satisfactory to Agent, setting forth such appraiser’s determination
of the Appraised Value.

 

“Appraised Value” means the “as-is” fair market value of the Premises, which
would be obtained in an arm’s length sale of the Premises between an informed
and willing buyer and an informed and willing seller, under no compulsion,
respectively, to buy or sell, on the appraisal date of the Appraisal or
Appraisal Update, as applicable.

 

“Approved Assignee” means an Eligible Assignee which, as of the date of
determination, is not then directly or through an Affiliate adverse to Agent or
its Affiliates in any pending litigation, action, proceeding, mediation or
arbitration involving claims or counterclaims of fraud or bad faith against such
Eligible Assignee or Affiliate.

 

“Approved Bank” means Agent and any other bank or other financial institution,
the long term unsecured debt obligations of which are rated at least “A-” by
Standard & Poor’s Ratings Group and “A3” by Moody’s or equivalent rating by
Fitch Inc.

 

“Approved Capital/FF&E Expenditures Budget” means, for any fiscal year of Loan
Parties, the Capital/FF&E Expenditures Budget approved (or deemed approved) by
Agent pursuant to Section 6.1(j), and any amendments or modifications thereto
approved (or deemed approved) by Agent pursuant to Section 6.1(j).

 

“Assignee” has the meaning set forth in Section 8.1.

 

“Assignment and Acceptance” has the meaning set forth in Section 8.5.

 

“Assignment of Agreements” means that certain Assignment of Agreements dated as
of the Closing Date made by Loan Parties in favor of Agent.

 

“Assignment of Leases and Rents” means that certain Assignment of Leases and
Rents dated as of the Closing Date made by Loan Parties in favor of Agent.

 

4

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“Authorized Agent Representative” means Joseph Kelly, and any other person
designated as such by Agent from time to time for purposes of Sections 2.3(c) or
(d) by delivery of a notice to Loan Parties.

 

“Authorized Loan Parties’ Representative” means either of Lindsay Monge or Bryan
Giglia and any other Person designated as such by Loan Parties from time to time
for purposes of Sections 2.3(c) or (d) by delivery of a notice to Agent.

 

“Bankruptcy Proceeding” means with respect to any Person, (i) consenting in
writing to the appointment of a conservator, receiver, trustee, custodian or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to it or of or relating to
all, or substantially all, of its property, or for the winding-up or liquidation
of its affairs, (ii) admitting in writing its inability to pay its debts
generally as they become due or (iii) filing a petition, or otherwise
instituting, or consenting in writing to the institution against it of,
proceedings to take advantage of any law relating to bankruptcy, insolvency or
reorganization or the relief of debtors under any federal, state or foreign
bankruptcy, insolvency, receivership or similar law.

 

“Base Rate” means, as of any date of determination, the sum of (a) the higher of
(i) the prime rate announced from time to time by JPMorgan Chase Bank, N.A., or 
such other bank as agreed to by Loan Parties and Agent, and (ii) the Federal
Funds Rate plus one-half of one percent (0.50%) per annum, plus (b) the Margin.

 

“Borrower” has the meaning set forth in the first paragraph of this Loan
Agreement.  For the avoidance of doubt, in no event shall Operating Lessee be
deemed a co-borrower under the Loan, and any and all agreements, covenants and
other undertakings of Operating Lessee hereunder shall be limited solely to
itself and the performance of its own obligations.

 

“Breakage Costs” shall have the meaning set forth in Section 2.8.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York City, London, England or Frankfurt, Germany are
authorized or required by law or executive order to close.

 

“Calendar Quarter” means each of the periods of January 1 through the
immediately succeeding March 31, April 1 through the immediately succeeding
June 30, July 1 through the immediately succeeding September 30, and October 1
through the immediately succeeding December 31.

 

“Capital/FF&E Expenditures” means expenditures for (a) capital alterations or
improvements to the Premises which are required or permitted under Applicable
Accounting Standards to be capitalized or (b) the repair, replacement or
acquisition (as appropriate) of FF&E.

 

“Capital/FF&E Expenditures Budget” means, for any fiscal year of Loan Parties, a
budget for Capital/FF&E Expenditures delivered to Agent pursuant to
Section 6.1(j).

 

5

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“Capital/FF&E Reserve Account” has the meaning set forth in Section 3.4.

 

“Capital/FF&E Reserve Amount” means, for any calendar month, an amount equal to
four percent (4%) of FF&E Gross Revenues for the month prior to the immediately
preceding calendar month.  (E.g., the Capital/FF&E Reserve Amount due and
payable on August 1, 2011 will be four percent (4%) of FF&E Gross Revenues for
June, 2011.)

 

“Cash Collateral Account” has the meaning set forth in Section 3.2(a).

 

“Cash Collateral Payment Amount” means, as of any Payment Date, the excess of
(a) Gross Revenues for the previous month with respect to which a determination
is being made, over (b) the sum of, without duplication, to the extent paid by
or on behalf of Borrower during such previous month:

 

(i) Operating Expenses, Capital/FF&E Expenditures (except to the extent paid
from the Capital/FF&E Reserve Account) paid or reasonably reserved for in such
month;

 

(ii) expenses incurred with respect to a Restoration, if any, paid or reasonably
reserved for in such month;

 

(iii) Required Amortization Payments, payments on account of Interest (taking
into account any payments received on account of any Interest Rate Protection
Agreement then in effect), deposits into the Capital/FF&E Reserve Account and
other sums due to Agent and/or the Lenders for such month;

 

(iv) federal and state income taxes, franchise taxes and other taxes based on
income due and owing from Loan Parties (but, for the avoidance of doubt, not
from any Loan Party Member or any other owner of a direct or indirect interest
in either Loan Party) paid or reserved for in such month; and

 

(v) amounts due by Loan Parties to Agent, Lender or any other Person pursuant to
Section 2.7 paid in such month.

 

“Cash Sweep Condition” shall exist:

 

(a)           during the continuance of an Event of Default; and/or

 

(b)           with respect to each Testing Determination Date (i) from the
thirtieth (30th) day after the delivery of the Quarterly Compliance Statement
required to be delivered to Agent pursuant to Section 6.1(c) for the Calendar
Quarter ending on such Testing Determination Date which provides that the
Adjusted Debt Service Coverage Ratio for the applicable Calendar Quarter is less
than 1.40:1.00 (the “Minimum DSCR”) or (ii) if the Quarterly Compliance
Statement required to be delivered to Agent pursuant to Section 6.1(c) for the
Calendar Quarter ending on such Testing Determination Date is not delivered to
Agent by the date required under Section 6.1(c), from such date of required
delivery unless, in the case of clause (i) (but not clause (ii)), Borrower shall
have either (y) made a partial prepayment of the Loan in an amount such that,
after giving

 

6

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effect thereto as though such prepayment was made on the first day of the twelve
(12) month period ending on such Testing Determination Date (but, for the
avoidance of doubt, giving effect to Required Amortization Payments and other
payments of principal actually received during such twelve (12) month period),
the Adjusted Debt Service Coverage Ratio would be greater than or equal to the
Minimum DSCR (which prepayment Borrower shall not be permitted to make prior to
the Permitted Prepayment Date) or (z) delivered to Agent a Cash Sweep Letter of
Credit, and in the case of any Cash Sweep Condition occurring under clauses
(i) and/or (ii) above, such Cash Sweep Condition shall continue to exist
thereafter until there shall occur two (2) consecutive Testing Determination
Dates on which the Adjusted Debt Service Coverage Ratio for the Calendar Quarter
ending on such Testing Determination Date shall be equal to or greater than the
Minimum DSCR.  Notwithstanding the foregoing, any Cash Sweep Condition which
commenced solely with respect to the matter described in clause (b)(ii) above
shall end upon the delivery of the Quarterly Compliance Statement then required
to be delivered to Agent pursuant to Section 6.1(c), if such Quarterly
Compliance Statement provides that the Adjusted Debt Service Coverage Ratio was
equal to or greater than the Minimum DSCR as of the last Testing Determination
Date, but only to the extent that such Quarterly Compliance Statement is
delivered to Agent within thirty (30) days of the date due, it being agreed that
this provision shall not be applicable with respect to any Quarterly Compliance
Statement which is delivered more than thirty (30) days after the date due.

 

“Cash Sweep Letter of Credit” means a Letter of Credit in an amount which if
deducted from the outstanding principal amount of the Loan on the first day of
the twelve (12) month period ending on such Testing Determination Date (but, for
the avoidance of doubt, giving effect to Required Amortization Payments and
other payments of principal actually received during such twelve (12) month
period) would cause the Adjusted Debt Service Coverage Ratio to be greater than
or equal to the Minimum DSCR.

 

“Casualty” means damage or destruction to all or any part of the Premises.

 

“Casualty Threshold” means $10,000,000.

 

“Central Bank Pledge” has the meaning set forth in Section 8.1.

 

“Claim” has the meaning set forth in Section 10.1.

 

“Closing” means the execution and delivery of this Loan Agreement and the
funding of the Loan.

 

“Closing Date” means the date upon which the Closing occurs.

 

“Collateral” means the Mortgaged Property and all other property, real or
personal, tangible or intangible, and all Loan Parties’ rights thereto, now or
hereafter pledged, mortgaged, assigned or delivered pursuant or with respect to
the Loan Documents or otherwise by Loan Parties to Agent and/or Lenders as
security for the Obligations.

 

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“Commitment(s)” means, (a) as to any Lender, the commitment of such Lender with
respect to the Loan in the amount set forth on the signature page hereto, and
hereafter, as any Lender’s commitment shall be established pursuant to any
Assignment and Acceptance by which such Lender becomes a Lender or by which such
Lender assigns all or any portion of its rights and/or obligations in and to the
Loan and the other Loan Documents to an Assignee, and (b) as to all Lenders, the
aggregate commitment of all Lenders to make the Loan, which aggregate commitment
shall be the Loan Amount on the Closing Date, as the amounts set forth in the
foregoing clauses (a) and (b) may be adjusted in accordance with this Loan
Agreement.

 

“Comparable Standards” means the standards of management, operation and
maintenance of first-class hotels in San Diego County, California which are
comparable to the Premises in size, facilities, amenities, quality and nature;
provided, however, that for so long as Hilton (or any Affiliate thereof which
customarily manages hotels under the ‘Hilton” brand) is Property Manager,
“Comparable Standards” shall mean the operation, management, and maintenance of
the Premises in accordance with and as required under Section 4.1 of the
Management Agreement.

 

“Condemnation Threshold” means $10,000,000.

 

“Consented-to-Lender” has the meaning set forth in the Ground Lease.

 

“Constituent Member(s)” means any direct shareholder, member or partner in Loan
Parties and any person or entity that, directly or indirectly through one or
more other partnerships, limited liability companies, corporations or other
entities is a member or partner in Loan Parties or owns an interest in Loan
Parties.

 

“Contingent Obligations” means contingent indemnity obligations of Loan Parties
which survive the repayment of the principal amount of the Loan and Interest for
which no claim has been asserted by Agent or Lenders (other than such claims
which have been settled and paid).

 

“Control” (and its correlative meanings) 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 stock, by contract or
otherwise; provided that neither a change in the composition of the board of
directors of the REIT nor the change in the identity of any officer of the REIT
shall be deemed to constitute a change of Control.

 

“Covered Bond Pool Pledge” has the meaning set forth in Section 8.1.

 

“Debt Service” means as of any Testing Determination Date, the sum of (i) the
Required Amortization Payments under the Loan Documents for the twelve (12)
month period ending on the applicable Testing Determination Date and (ii) the
scheduled Interest payments (net of any payments received on account of any
Interest Rate Protection Agreement in effect) due under the Loan Documents for
the twelve (12) month period ending on the applicable Testing Determination
Date.

 

“Debt Service Coverage Ratio” means as of any Testing Determination Date, the
ratio of (i) the Net Operating Income for the twelve (12) month period ending on
the Testing

 

8

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Determination Date to (ii) the Debt Service applicable to such twelve (12) month
period (provided that, with respect to the first three (3) Testing Determination
Dates which shall occur during the term of the Loan, the Debt Service shall be
annualized based upon the period commencing on the Closing Date and ending on
such Testing Determination Date).

 

“Deed of Trust” means that certain Leasehold and Subleasehold Deed of Trust,
Security Agreement, Financing Statement, Fixture Filing and Assignment of Rents
dated as of the Closing Date made by Loan Parties to the trustee named therein
for the benefit of Agent.

 

“Default” means any event which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default.

 

“Default DSCR” has the meaning set forth in Section 6.33.

 

“Default DSCR Letter of Credit” means a Letter of Credit in an amount which if
deducted from the outstanding principal of the Loan as of the first day of the
twelve (12) month period ending on the most recent Testing Determination Date
(but, for the avoidance of doubt, giving effect to Required Amortization
Payments and other payments of principal actually received during such twelve
(12) month period) would cause the Debt Service Coverage Ratio to be greater
than or equal to the Default DSCR.

 

“Default Rate” means, as to any date (i) with respect to any Loan Portion, the
Applicable Interest Rate for such Loan Portion, plus four percent (4%) per annum
and (ii) with respect to any other sums due and payable under any Loan
Documents, the highest Applicable Interest Rate then in effect plus four percent
(4%) per annum.

 

“Defaulting Lender(s)” has the meaning set forth in Section 9.14(a).

 

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

 

“Documentation” has the meaning set forth in Section 10.24.

 

“Eligibility Requirements” means, with respect to any Person in connection with
a Covered Bond Pool Pledge, that such Person (i) has total assets (in name or
under management) in excess of $600,000,000 and (except with respect to a
pension advisory firm or similar fiduciary) capital/statutory surplus or
shareholder’s equity of $250,000,000 and (ii) is regularly engaged in the
business of making or owning commercial real estate loans or operating
commercial mortgage properties.

 

“Eligible Assignee” means any of the following which is not an Affiliate of Loan
Parties or Sponsor and which constitutes a Consented-to-Lender:

 

(a)           a Lender;

 

(b)           Agent;

 

(c)           an Affiliate of any Lender or Agent (but not any natural person);

 

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(d)           a commercial bank organized under the laws of the United States,
or any State thereof, which is not directly or indirectly an Affiliate of Loan
Parties and which has (x) total assets in excess of $5,000,000,000 and (y) a
combined capital and surplus of at least $500,000,000;

 

(e)           a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
(“OECD”), or a political subdivision of any such country which is not directly
or indirectly an Affiliate of Loan Parties and has (x) total assets in excess of
$5,000,000,000 and (y) a combined capital and surplus of at least $500,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
OECD;

 

(f)            a life insurance company organized under the laws of any State of
the United States, or organized under the laws of any country and licensed as a
life insurer by any State within the United States which is not directly or
indirectly an Affiliate of Loan Parties, and has assets of at least
$5,000,000,000; or

 

(g)           a pension fund in the business of making loans, or an Affiliate
thereof organized under the laws of any State of the United States, and licensed
or qualified to conduct such business under the laws of any such State which is
not directly or indirectly an Affiliate of Loan Parties and has (1) total assets
of at least $5,000,000,000 and (2) a net worth of at least $500,000,000.

 

“Environmental Indemnity” means that certain Environmental Indemnity dated as of
the Closing Date made by Borrower and Guarantor in favor of Agent.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder by any Governmental
Authority, as from time to time in effect.

 

“ERISA Affiliate” means any organization, trade or business, or other
arrangement (whether or not incorporated) which is a member of a group of which
either Loan Parties is also a member and which is treated as a single employer
within the meaning of IRC, Section 414(b), (c), (m) or (o) or Section 4001 of
ERISA.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Pension Plan (other
than an event for which the 30-day notice period is waived); (b) the withdrawal
of Loan Parties or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA, (c) the complete or partial
withdrawal of either Loan Party or any ERISA Affiliate from any Multiemployer
Plan, (d) notice of reorganization or insolvency of a Multiemployer Plan,
(e) the filing of a notice of intent to terminate a Pension Plan or the
treatment of a plan amendment as a termination under Section 4041 of ERISA,
(f) the institution, or threat of institution, of proceedings to terminate or
appoint a trustee to administer a Pension Plan or Multiemployer Plan by the
PBGC, (g) the failure to make any required contribution to a Pension Plan or
Multiemployer Plan, (h) the

 

10

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imposition of a lien under IRC Section 430(k) or Section 303(k) of ERISA on
either Loan Party or any ERISA Affiliate, (i) the failure with respect to any
Pension Plan to satisfy the minimum funding standards IRC Section 412 or
Section 302 of ERISA, whether or not waived, or (j) any event or condition that
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or the imposition on either Loan Party or any ERISA Affiliate of
any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA.

 

“Event of Default” has the meaning set forth in Section 7.1.

 

“Excluded Sums” has the meaning set forth in Section 9.3.

 

“Excluded Taxes” means (a) income, franchise, branch profits or similar Taxes
imposed on (or measured by) any Person’s net income or net profits by any
jurisdiction (other than a jurisdiction (other than the State of California and
any political subdivision thereof, it being agreed that income taxes payable by
any Lender in the State of California and any political subdivision thereof
shall constitute Excluded Taxes) in which such Person would not have a
connection but for and solely as a result of its execution, delivery of any Loan
Document or its exercise of its rights or performance of its obligations
thereunder); (b) withholding Taxes, except to the extent imposed solely as a
result of a change in applicable law occurring after (i) the date that such
Person became a party to this Loan Agreement, or (ii) with respect to an
assignment, acquisition, designation of a new applicable lending office or the
appointment of a successor Agent or other transfer, the effective date thereof,
except that such Person shall be entitled to additional amounts for withholding
Taxes to the extent that such Person’s predecessor was entitled to such amounts
(or in the case of a designation of a new applicable lending office, to the
extent such Person was entitled to such amounts with respect to its prior
applicable lending office) and (c) Taxes imposed by reason of the failure of the
Agent or such Person to comply with its obligations under Section 2.10 and/or
Section 9.10.

 

“Exercise Notice” has the meaning set forth in Section 9.14(c).

 

“FF&E” has the meaning set forth in the Deed of Trust.

 

“FF&E Gross Revenues” means “Gross Revenues” as defined in the Management
Agreement.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum (based on a 360-day year) equal, for each day of such period, to the rate
of interest quoted at 11:00 a.m. New York time charged on overnight federal
funds transactions with member banks of the Federal Reserve System.

 

“Full Recourse Event” means any of those events or circumstances described in
clause (e) or clause (g) of the definition of “Recourse Liability Events” in
this Section 1.1.

 

“Funding Direction Letter” means that certain Funding Direction Letter dated as
of the Closing Date from Borrower to Agent.

 

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GAAP” means those generally accepted accounting principles and practices which
are recognized as such by the American Institute of Certified Public Accountants
or by the Financial Accounting Standards Board  and which are consistently
applied for all periods, so as to properly reflect the financial position of a
Person.

 

“Government List” means (a) the OFAC SDN List, (b) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the Rules and Regulations of OFAC that Agent notified Loan Parties in writing is
now included in “Government Lists,” (c) any similar lists maintained by (i) the
United States Department of State, (i) the United States Department of Commerce,
(ii) any other U.S. Governmental Authority, (iii) the European Union or (iv) the
Federal Republic of Germany or (d) any similar lists maintained pursuant to any
Executive Order of the President of the United States of America that Agent
notified Loan Parties in writing is now included in “Government Lists.”

 

“Governmental Authority” means any federal, state, county, municipal, parish,
provincial or other government, or any department, commission, board, court,
agency, committee, or quasi-governmental unit whether of the United States of
America or any instrumentality of any of them, or any other political
subdivision thereof.  For purposes of Section 2.12, “Governmental Authority”
shall include the European Union and the Federal Republic of Germany and any
government, department, commission, board, court, agency, committee,
quasi-governmental unit, any other political subdivision thereof or any
instrumentality of any of them.

 

“Gross Revenues” means all revenue of Loan Parties derived from the ownership
and operation of the Premises from whatever source determined on cash basis
(provided that, for the purpose of determining Net Operating Income, Gross
Revenues shall be determined on an accrual basis), excluding, without
duplication, for the purpose of determining Net Operating Income and for the
purpose of determining the Cash Collateral Payment Amount on any Payment Date,
the following:  (a) gratuities to employees; (b) federal, state, or municipal
excise, and sales or use taxes or any other taxes collected directly from
patrons or guests or included as part of the sales price of any goods or
services; (c) proceeds received on account of a Taking which are other than in
the nature of compensation for lost rents or profits; (d) proceeds received
pursuant to any Insurance Policy (other than the proceeds received on account of
any business interruption or rental/loss); and (e) unapplied Security Deposits.

 

“Ground Lease” has the meaning set forth in the Deed of Trust.

 

“Ground Lessor” means the ground lessor under the Ground Lease.

 

“Ground Rent” means any and all rent payable by Borrower under the Ground Lease.

 

“Guarantor” means, individually and collectively, each Person constituting
Sponsor or any other Person that now or hereafter guarantees any of Loan
Parties’ obligations under the Loan Documents.

 

“Hilton” means Hilton Worldwide, Inc., a Delaware corporation (f/k/a Hilton
Hotels Corporation).

 

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“Hilton Management” means HLT Conrad Domestic LLC, a Delaware limited liability
company.

 

“Impositions” means and includes all taxes, assessments for public improvements
or benefits and any payments in lieu thereof, whether or not commenced or
completed prior to the date hereof or while any of the Obligations are
outstanding, water and sewer rents, charges, and other governmental levies or
payments, of every kind and nature whatsoever, general and special, foreseen or
unforeseen, ordinary and extraordinary, which now or at any time hereafter are
assessed, levied, confirmed, imposed or which become a lien upon the Mortgaged
Property, or any portion thereof, or which are payable with respect thereto, or
upon the rents, issues, revenue, income, proceeds or profits thereof, or on the
occupancy, operation, use, possession or activities thereof, whether any or all
of the same be levied directly or indirectly or as excise or income or franchise
taxes in lieu of taxes which are otherwise imposed upon the Mortgaged Property,
together with any penalties or other charges with respect to the late payment or
non-payment thereof.

 

“Improvements” has the meaning set forth in the Deed of Trust.

 

“Indebtedness” means:

 

(a)           all indebtedness for borrowed money or for the deferred purchase
price of property or services (including all obligations, contingent or
otherwise in connection with letter of credit facilities, acceptance facilities
or other similar facilities);

 

(b)           all obligations evidenced by bonds, notes, debentures or other
similar instruments;

 

(c)           all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property);

 

(d)           all capital lease obligations; and

 

(e)           all indebtedness of the nature referred to in clauses (a) through
(d) above of another Person guaranteed or secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any lien, security interest or other charge or encumbrance upon or in
property (including accounts and contract rights) owned by the Person with
respect to whom Indebtedness is being determined, even though such Person has
not assumed or become liable for the payment of such Indebtedness.

 

“Indemnified Party” has the meaning set forth in Section 10.1(a).

 

“Insurance Policies” means, in addition to any insurance required to be
maintained by Loan Parties pursuant to the Ground Lease and the Management
Agreement, the policies of insurance required to be maintained pursuant to
Section 6.11.

 

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“Insurance Premiums” means the premiums payable with respect to the Insurance
Policies.

 

“Insurance Requirements” means and includes all requirements of any Insurance
Policy, all requirements of the issuer of any such Insurance Policy, and all
orders, rules, regulations and other requirements of the National Board of Fire
Underwriters (or any other body exercising similar functions) applicable to or
affecting the Premises.

 

“Interest” means interest payable on the Loan at the Applicable Interest Rate or
the Default Rate, as applicable.

 

“Interest Period” means the period commencing on each Payment Date and ending on
the day immediately preceding the next succeeding Payment Date, provided that
the first Interest Period shall commence on the Closing Date.

 

“Interest Rate Protection Agreement” means an agreement with respect to an
interest rate cap or swap or other derivative arrangement reasonably acceptable
to Agent, in each case, which conforms to the requirements set forth in
Section 2.7 and shall include any Lender Interest Rate Protection Agreement.

 

“Interest Rate Protection Agreement Acknowledgment” has the meaning set forth in
Section 2.7(a)(v).

 

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

 

“Land” has the meaning set forth in the recitals hereof.

 

“Lease” has the meaning set forth in the Deed of Trust, but shall be limited to
commercial leases entered into by a Loan Party from time to time with a Lessee
and shall specifically exclude the Ground Lease and Operating Lease.

 

“Lease Letter(s) of Credit” means any letter of credit provided to Operating
Lessee by any Lessee under or guarantor of any Lease as security or otherwise.

 

“Legal Requirements” means, collectively, (a) all current and future laws,
statutes, regulations, ordinances, codes, rules, rulings, orders, judgments,
decrees, injunctions and other requirements of any Governmental Authority
(including those regarding fire, health, handicapped access, sanitation,
ecological, historic, zoning, environmental protection, wetlands and building
laws and the Americans with Disabilities Act of 1990, Pub. L. No. 89-670, 104
Stat. 327 (1990), as amended, and all regulations promulgated pursuant thereto)
in any way applicable to Loan Parties or to the acquisition, construction,
development, sale, use, occupancy, possession, operation, management,
maintenance or ownership of the Premises, or any part thereof; and (b) all
requirements of each Operating Permit.

 

“Lender” and “Lenders” have the meaning set forth in the first paragraph of this
Loan Agreement.

 

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“Lender Interest Rate Protection Agreement” means any Interest Rate Protection
Agreement to which Borrower and any Lender or any Affiliate of any Lender are
parties in the event that Loan Parties and any Lender or any Lender’s Affiliate
elect to enter into an Interest Rate Protection Agreement.  Borrower’s
performance of its obligations pursuant to any Lender Interest Rate Protection
Agreement which is not an interest rate cap is secured by the Collateral.

 

“Lessee” means a lessee, tenant, licensee, concession holder or other Person
having the right to use or occupy all or any portion of the Premises pursuant to
a Lease, but excluding each and all hotel guests of the Premises and excluding
Borrower as lessee under the Ground Lease and Operating Lessee, as lessee, under
the Operating Lease.

 

“Letter of Credit” means an irrevocable, unconditional, transferable, clean
sight draft letter of credit acceptable to Agent in its good faith reasonable
discretion (either an evergreen letter of credit or one which does not expire
until at least one hundred (100) days after the scheduled Maturity Date) in
favor of Agent and entitling Agent to draw thereon in New York, New York (or in
accordance with the procedures of the issuing bank, provided that such issuing
bank allows for draws by facsimile), issued by a domestic Approved Bank or the
U.S. agency or branch of a foreign Approved Bank, at the request of an
applicant/obligor that is not the Loan Parties.

 

“LIBOR” means (a) the London Interbank Offered Rate for Dollar deposits in an
amount equal to the applicable Loan Portion being determined as appearing on the
Reuters Screen LIBOR 01 Page (or such other page as may replace LIBOR 01 Page on
that service or such other service as may be nominated by the British Bankers’
Association as the information vendor for the purpose of displaying British
Bankers’ Association Interest Settlement Rates for Dollar deposits) at
approximately 11:00 A.M. London time (or as soon thereafter as practicable) on
the day which is two (2) LIBOR Banking Days prior to the first day of the
applicable LIBOR Rate Period and with respect to which the LIBOR Rate is being
determined for a time period equal to, or if no equal time period is so
appearing on the Reuters Screen LIBOR 01 Page (or substitute thereof as
aforesaid), the time period so appearing which is most approximately equal to,
such LIBOR Rate Period; or (b) if the method referred to in clause (a) above for
determining the London Interbank Offered Rate shall not be available, the
arithmetic average of the rates per annum (rounded upwards, if necessary, to the
nearest 1/1000th of 1%) quoted by the Reference Banks at approximately
11:00 a.m. London time (or as soon thereafter as practicable) on the day which
is two (2) LIBOR Banking Days prior to the first day of the applicable LIBOR
Rate Period for the offering by the Reference Banks to leading banks in the
London interbank Eurodollar market having a term comparable to such LIBOR Rate
Period and in an amount equal to the applicable Loan Portion.  Each
determination of the London Interbank Offered Rate by Agent shall be conclusive,
absent manifest error.

 

“LIBOR Banking Day” means any Business Day on which dealings in deposits in
Dollars are transacted in the London interbank market and banks are also open
for business in London, England.

 

“LIBOR Rate” means, as to any Loan Portion, with respect to any period during
which an Applicable Interest Rate shall be a LIBOR Rate, an interest rate per
annum equal to the sum of (a) the applicable LIBOR, plus (b) the Margin.

 

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“LIBOR Rate Period” means for any Loan Portion, each period for the computation
of Interest on a Loan Portion at a LIBOR Rate.  Subject to Section 2.3(e), each
LIBOR Rate Period shall have a duration of three (3) or six (6) months (in each
case, subject to general availability), as selected by Borrower in accordance
with Section 2.3(a) and/or Section 2.3(c), or such other period as Borrower and
Lenders shall agree.  Notwithstanding the foregoing, in the case of a LIBOR Rate
Period which would otherwise end after the date which is the Maturity Date, such
LIBOR Rate Period shall have a duration equal to the period commencing on the
effective date of such LIBOR Rate Period and ending on and including the
Maturity Date.  Each LIBOR Rate Period shall commence with respect to any
outstanding principal of the Loan, on any date selected by Borrower in
accordance with Section 2.3; provided, however, that notwithstanding anything in
this definition of LIBOR Rate Period to the contrary, (i) if any LIBOR Rate
Period would otherwise end on a day which is not a LIBOR Banking Day, such LIBOR
Rate Period shall be extended to the next succeeding LIBOR Banking Day, unless
the result of such extension would be to carry such LIBOR Rate Period over into
another calendar month, in which event such LIBOR Rate Period shall end on the
immediately preceding LIBOR Banking Day and (ii) any LIBOR Rate Period that
begins on the last LIBOR Banking Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such LIBOR Rate Period) shall end on the last LIBOR Banking Day of the calendar
month during which the LIBOR Rate Period would otherwise expire (e.g., three
(3) or six (6) months).

 

“Lien” means any deed of trust, mortgage, pledge, assignment of leases and
rents, security interest, encumbrance, lien or charge of any kind including any
conditional sale or other title retention agreement, any lease in the nature
thereof, or the filing of, or any agreement to give, any financing statement
under the Uniform Commercial Code of any jurisdiction.

 

“Loan” has the meaning set forth in Section 2.1.

 

“Loan Agreement” has the meaning set forth in the first paragraph of this Loan
Agreement.

 

“Loan Amount” has the meaning set forth in the recitals hereof.

 

“Loan Documents” means, collectively, this Loan Agreement, the Note, the Deed of
Trust, the Assignment of Leases and Rents, the Assignment of Agreements, the
Environmental Indemnity, the Recourse Liability Agreement, the Loan Fee Letter,
the Funding Direction Letter, the Loan Parties’ Certificate, the UCC Financing
Statements, the Manager SNDA, any Lender Interest Rate Protection Agreement, any
Account Agreement(s) and all other agreements, certificates or other documents
now or hereafter evidencing or securing or entered into by either Loan Party
and/or Guarantor (or any Affiliate(s) of Loan Parties and/or Guarantor) for the
benefit of Agent and/or Lenders in connection with the Loan.

 

“Loan Fee Letter” means that certain Loan Fee Letter dated as of the Closing
Date between Agent and Borrower.

 

“Loan Parties” has the meaning set forth in the first paragraph of this Loan
Agreement.

 

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“Loan Parties’ Certificate” means that certain Loan Parties’ Certificate dated
as of the Closing Date made by Loan Parties in favor of Agent.

 

“Loan Party Member” shall mean, collectively, HHC One Park Boulevard, LLC, a
Delaware limited liability company, and Sunstone Park, LLC, a Delaware limited
liability company.

 

“Loan Portion” means any principal of the Loan with respect to which an
Applicable Interest Rate has been established (and, in the case of any LIBOR
Rate, whether or not such Applicable Interest Rate has become effective);
provided, however, that the amount of any Loan Portion with respect to which a
LIBOR Rate is established shall be at least equal to $1,000,000.

 

“Loan-to-Value Ratio” means, to the extent required to be determined pursuant to
Section 4.7 and/or Section 6.12(d)(i)(F) of this Loan Agreement, the ratio of
the outstanding principal amount of the Loan as of the date of determination to
the Appraised Value of the Premises based on the then most current Appraisal or
Appraisal Update.

 

“Manager SNDA” means that certain Manager Subordination and Cooperation
Agreement dated as of the Closing Date and entered into between Agent, Property
Manager and Loan Parties, as may be amended, restated, replaced, severed, split,
supplemented or otherwise modified from time to time pursuant to the terms
hereof.

 

“Management Agreement” means that certain Management Agreement, dated as of
April 15, 2011, between Property Manager and Operating Lessee, with such
modifications, together with any replacement Management Agreement entered into
with another Property Manager, as shall be entered into in accordance with an
Assignment and Assumption of Management Agreement and this Loan Agreement.

 

“Margin” means three and one-quarter of one percent (3.25%) per annum.

 

“Material Adverse Effect” means the occurrence or existence of a condition or
event which could be reasonably in good faith expected to (i) materially
adversely affect the condition (financial or otherwise) or business of Loan
Parties or Guarantor, (ii) materially adversely affect the condition, use, value
or ownership of the Mortgaged Property, (iii) adversely affect the validity or
enforceability of any Loan Document (or the priority of the Lien thereof),
(iv) materially adversely affect the ability of Loan Parties to pay any amounts
under the Loan Documents as they become due, (v) prevent Loan Parties or
Guarantor from performing the material obligations under such Loan Documents
which Loan Parties or Guarantor, as the case may be, are party to, or
(vi) prevent or materially impede or limit in any material respect Agent’s
ability to exercise those rights and remedies which Agent must reasonably be
able to exercise in order to realize the principal benefits and/or security
intended to be provided by the Loan Documents.

 

“Material Alteration” means either (a) a structural alteration or (b) an
alteration to the Improvements where the anticipated cost to complete such
alterations exceeds $5,000,000; provided, however, that in no event shall any of
the following constitute a Material Alteration: (i) any tenant improvement work
performed pursuant to any Lease existing on the date hereof or

 

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entered into hereafter in accordance with the provisions of this Loan Agreement;
(ii) any work required to be completed pursuant to Section 6.12 or 6.13; or
(iii) any work to be performed under an Approved Capital/FF&E Expenditures
Budget.

 

“Material Lease” means (i) all Leases which individually or in the aggregate
with respect to the same Lessee and its Affiliates demise more than 7,500 square
feet of space in the Improvements or (ii) any Lease which by its terms requires
the performance of a Material Alteration.

 

“Material Lease Action” has the meaning set forth in Section 6.10(a).

 

“Material Operating Agreement” means the Operating Agreements listed on
Schedule 5.17 hereto and any additional Operating Agreements entered into after
the date hereof which either (a) have non-cancelable terms of longer than ninety
(90) days and are not terminable at any time without cause by Loan Parties
without any penalty or other fee (other than payment of amounts then due and
owing) or (b) require payments by Loan Parties in excess of $1,000,000 per
calendar year.

 

“Material Taking” means a Taking of a portion of the Premises (a) in excess of
fifteen percent (15%) of the area of the Improvements and (b) where the
condemnation award is greater than or equal to fifteen percent (15%) of the
outstanding principal amount of the Loan.

 

“Maturity Date” means April 15, 2016, or such earlier date as the entire
principal amount of the Loan shall become due and payable by acceleration or
otherwise pursuant to the terms of the Loan Documents.

 

“Mechanic’s Claim” has the meaning set forth in Section 6.7.

 

“Minimum DSCR” has the meaning set forth in the definition of “Cash Sweep
Condition.”

 

“Minor Lease” means any Lease which is not a Material Lease.

 

“Mortgaged Property” has the meaning set forth in the Deed of Trust.

 

“Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which either Loan Party or any ERISA Affiliate
has any obligation or liability, contingent or otherwise.

 

“Net Operating Income” means, as of any Testing Determination Date, the excess,
if any, of Gross Revenues for the immediately preceding twelve (12) month period
over the Operating Expenses for such twelve (12) month period; provided, that,
for the purposes of calculating Net Operating Income, Gross Revenues (which, for
the avoidance of doubt shall be determined after giving effect to exclusions set
forth in clauses (a)-(e) of the definition of “Gross Revenues”) shall exclude:
(i) proceeds of the Loan and any loan, equity investment or capital contribution
made by any member of Loan Parties or any other Person to Loan Parties; (ii) any
gain arising from any write-up of assets or other non-cash items; (iii) proceeds
from the sale of FF&E and all other non-recurring extraordinary items of income;
(iv) Rent payable under any

 

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Lease with a Lessee which is the subject of a Bankruptcy Proceeding unless such
Lease shall have been affirmed; (v) Rent payable under any Lease where there
exists a rent default and such rent default has continued for a period in excess
of sixty (60) days; (vi) lease termination payments; (vii) interest income; and
(viii) any refunds, rebates, discounts and credits of a similar nature, given,
paid or returned in the course of obtaining Gross Revenues or components
thereof.

 

“Net Proceeds” means the amount of all insurance proceeds paid pursuant to any
Insurance Policy as the result of a Casualty, after deduction of the reasonable
costs and expenses (including fees of any insurance consultant or adjuster and
reasonable attorneys’ fees and disbursements), if any, incurred in collecting
the same.

 

“Net Restoration Award” means the amount of all awards and payments received by
or for the account of Loan Parties on account of a Taking, after deduction of
the costs and expenses (including reasonable attorneys’ fees and disbursements),
if any, incurred in collecting the same.

 

“Non-Availability Notice” has the meaning set forth in Section 2.11(a).

 

“Note” means that certain Promissory Note dated as of the Closing Date in an
amount equal to $240,000,000.00 made by Borrower in favor of Agent.

 

“Obligations” means, collectively, all present and future indebtedness,
obligations, duties and liabilities of each Loan Party to Agent and Lenders
arising, as applicable, pursuant to the terms of this Loan Agreement, any Lender
Interest Rate Protection Agreement and the other Loan Documents or evidenced by
the Note, and all interest accruing thereon, pursuant to the Loan Documents,
regardless of whether such indebtedness, obligations, duties or liabilities are
fixed, contingent, joint, several or joint and several.

 

“OECD” has the meaning set forth in the definition of “Eligible Assignee” in
this Section 1.1.

 

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

 

“OFAC Laws” means any laws, regulations, and Executive Orders relating to the
economic sanctions programs administered by OFAC, including without limitation,
the International Emergency Economic Powers Act, 50 U.S.C. sections 1701 et
seq.; the Trading with the Enemy Act, 50 App. U.S.C. sections 1 et seq.; and the
Office of Foreign Assets Control, Department of the Treasury Regulations, 31
C.F.R. Parts 500 et seq. (implementing the economic sanctions programs
administered by OFAC) and any similar laws, regulations or orders of the
European Union or the Federal Republic of Germany.

 

“OFAC SDN List” means the list of “Specially Designated Nationals and Blocked
Persons” maintained by OFAC

 

“OFAC Violation” has the meaning assigned to such term in Section 6.29(e).

 

“Operating Account” means, collectively, each of those certain bank account
numbers 4121689186 and 4122175292 at Wells Fargo Bank, National Association, and
other

 

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bank account(s) in which, during the continuance of an Event of Default, the
receipts from the operation and management of the Mortgaged Property are
deposited by Loan Parties  or Property Manager in accordance with Section 3.1 of
this Loan Agreement.

 

“Operating Agreement” means any agreement entered into by a Loan Party, other
than the Premises Documents, the limited liability company agreement (or
comparable agreement) of Loan Parties, the Leases, the Ground Lease, the
Operating Lease, any Management Agreement and any reservation agreement with a
hotel guest entered into by a Loan Party or Property Manager in the ordinary
course of business, which relates to the ownership, operation or maintenance of,
or the use, licensing or leasing of any personal property or equipment in
connection with the operation and maintenance of, the Premises.

 

“Operating Expenses” means, for any period, collectively but without
duplication, the operating costs and expenses incurred by Loan Parties or
reserved by Loan Parties  to the extent such reserves are maintained in the
ordinary course of business and in a manner consistent with good business
practices, during such period in connection with the ownership, use, occupancy,
management, leasing and/or operation of the Premises, determined in accordance
with Applicable Accounting Standards, including, Ground Rent, departmental
expenses, management fees payable under the Management Agreement and amounts
actually deposited into the “Capital Renewals Reserve” (as defined in the
Management Agreement);

 

excluding, without duplication, the following:

 

(a)           any Operating Expense to the extent paid from any reserve
maintained by Loan Parties or any other Person, including Property Manager and
Agent, on behalf of or for the benefit of Loan Parties and treated as an
Operating Expense in prior periods;

 

(b)           the scheduled Interest payments, Required Amortization Payments
and other amounts payable to Agent or a Lender under the Loan Documents and any
sums payable by Loan Parties in connection with an Interest Rate Protection
Agreement;

 

(c)           federal and state income taxes, franchise taxes or other taxes
based on income due and owing from Loan Parties;

 

(d)           depreciation and amortization or any other non-cash deductions of
Loan Parties; and

 

(e)           amounts funded from insurance or condemnation proceeds which are
applied to the repair or Restoration of the Mortgaged Property.

 

Nothing contained in this definition shall be deemed to limit or restrict the
payment of operating expenses, tenant improvement costs, leasing commissions or
other costs and expenses of Loan Parties or with respect to the Mortgaged
Property; provided, however, the foregoing does not limit any restrictions,
limitations or other requirements specifically provided elsewhere in this Loan
Agreement or in the other Loan Documents.

 

“Operating Lease” has the meaning set forth in the recitals hereto.

 

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“Operating Lessee” has the meaning set forth in the recitals hereto.

 

“Operating Permits” means, collectively, all authorizations, consents and
approvals given by and licenses and permits issued by Governmental Authorities
which are required for the ownership, use and occupancy of the Premises in
accordance with all Legal Requirements.

 

“Par Prepayment Date” means April 15, 2013.

 

“Participant” has the meaning set forth in Section 8.2.

 

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001, as the same may be amended, supplemented or replaced from time to
time, and corresponding provisions of future laws.

 

“Patriot Act Offense” means any violation of the criminal laws of the United
States of America or of any of the several states, or that would be a criminal
violation if committed within the jurisdiction of the United States of America
or any of the several states, relating to terrorism or the laundering of
monetary instruments, including any offense under (i) the criminal laws against
terrorism or (ii) the Anti-Money Laundering Laws.  “Patriot Act Offense” also
includes the crimes of conspiracy to commit, or aiding and abetting another to
commit, a Patriot Act Offense.

 

“Payment Date” means the first (1st) Business Day of each calendar month during
the Term, and the Maturity Date.  “Payment Date” shall also include such earlier
date, if any, on which the unpaid principal amount of the Loan is paid in full.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

 

“Pension Plan” means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA, IRC
Section 412 or Section 302 of ERISA, and in respect of which a Loan Party or any
ERISA Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Permitted Encumbrances” means, collectively (i) the matters set forth in
Schedule B-I of the Title Policy and/or on the Survey, (ii) Liens created by the
Loan Documents, (iii) Liens, if any, for Impositions or any Mechanic’s Claim for
amounts not yet due and payable or delinquent or that are being contested as set
forth in Section 6.8; (iv) any pledge which would constitute a Permitted
Transfer, (v) such other matters expressly consented to by Requisite Lenders in
their reasonable discretion, (vi) Liens (including “precautionary” UCC financing
statements) to secure or memorialize Permitted Equipment Financing.

 

“Permitted Equipment Financing” means equipment financing (including, without
limitation, any Equipment Lease) that is (i) entered into in the ordinary course
of Loan Parties’ business, (ii) for equipment related to the ownership or
operation of the Premises whose removal

 

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would not materially damage or impair the value of the Premises and (iii) which
is secured only by the financed equipment.

 

“Permitted Indebtedness” means any Indebtedness of Loan Parties under (a) the
Loan, (b) Operating Agreements entered into in accordance with this Loan
Agreement, (c) Permitted Equipment Financing and (d) unsecured trade payables
incurred in the ordinary course of business relating to the ownership and
operation of the Mortgaged Property which in the case of Permitted Equipment
Financing and trade payables (1) are not evidenced by a note, (2) do not exceed,
at any time, a maximum aggregate amount (for all Permitted Equipment Financing
and all of such trade payables) of four percent (4%) of the original principal
amount of the Loan and (3) subject to Loan Parties’ contest rights set forth in
Section 6.8, are paid prior to delinquency.

 

“Permitted Prepayment Date” means April 15, 2012.

 

“Permitted Transfer” means

 

(a)           a Transfer by (i) HHC One Park Boulevard, LLC (or any direct or
indirect owner of HHC One Park Boulevard, LLC) to Sunstone (or a wholly-owned
Affiliate of Sunstone) of all or any portion of the direct or indirect ownership
interest in a Loan Party owned by HHC One Park Boulevard, LLC (or any direct or
indirect owner of HHC One Park Boulevard, LLC) or (ii) HLT JV Acquisition LLC
(or any direct or indirect owner of HLT JV Acquisition LLC ) to Sunstone (or a
wholly-owned Affiliate of Sunstone) of all or any portion of the direct or
indirect ownership interest in a Loan Party owned by HLT JV Acquisition LLC (or
any direct or indirect owner of HLT JV Acquisition LLC ); provided that
(i) after giving effect to such Transfer, Hilton (or a replacement Property
Manager reasonably acceptable to the Requisite Lenders) shall continue to manage
the Premises and (ii) such Transfer shall be permitted under the Ground Lease;

 

(b)           a Transfer by (i) Sunstone of all or a portion of its direct or
indirect ownership interest in a Loan Party to an Affiliate of Sunstone which is
wholly-owned and Controlled by Sunstone, or (ii) Hilton of all or a portion of
its direct or indirect ownership interest in a Loan Party to an Affiliate of
Hilton which is wholly-owned and Controlled by Hilton;

 

(c) a Transfer, directly or indirectly, of any interests in Borrower (other than
the interest owned by Borrower GP) provided that:

 

(i)            after giving effect to such Transfer (1) Sunstone shall directly
or indirectly retain not less than fifty-one percent (51%) of the interests in
Borrower in the aggregate, (2) Sunstone shall, directly or indirectly, continue
to Control Borrower and (3) the representation set forth in Section 5.33 of this
Loan Agreement shall be true; and

 

(ii)           with respect to any Transfer of a direct or indirect interest in
Borrower equal to or greater than twenty percent (20%), (1) the proposed
transferee shall (x) be solvent, (y) have never been the subject of a voluntary
or involuntary (to the extent the same has not been discharged) bankruptcy
proceeding and (z) have no outstanding material judgments against them and
(2) except with respect to a transferee which is

 

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controlled by Sunstone, Agent shall have received a credit check and background
investigation against such individuals and/or entities reasonably acceptable to
Agent;

 

(d)           any pledge (but not the foreclosure thereon, except with respect
to the foreclosure of the direct or indirect ownership interests in a Loan Party
owned by Hilton or its Affiliates, in which event the foreclosure shall be
permitted) of indirect ownership interests in a Loan Party to an institutional
lender providing a corporate line of credit or other financing to the holder of
such indirect ownership interests in a Loan Party; provided that (A) such
operating line of credit or other financing benefits all or substantially all of
the portfolio of such entity comprising any Sponsor, and (B) the value of the
equity in the Premises which is indirectly pledged as collateral under such
corporate line of credit or other financing constitutes no more than ten percent
(10%) of the total value of all assets directly or indirectly securing such line
of credit or other financing at the time of such pledge;

 

(e)           a Transfer and/or issuance of any publicly traded shares
(including the Transfer or issuance of shares or of operating partnership units
in the REIT or Sunstone, as the case may be; provided that, after giving effect
to such Transfer, Borrower shall continue to be Controlled by Sunstone);

 

(f)            a Transfer of Personal Property in the ordinary course of
business provided that such Personal Property is replaced with comparable
Personal Property;

 

(g)           a Lease entered into in accordance with the Loan Documents; and

 

(h)           a Transfer, including a pledge, of the direct or indirect equity
interest in Hilton Worldwide, Inc.

 

“Person” means an individual, partnership, limited partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, or other entity of any kind.

 

“Personal Property” has the meaning set forth in the Deed of Trust.

 

“Plan Assets” has the meaning set forth in Section 5.25.

 

“Premises” has the meaning set forth in the Deed of Trust.

 

“Premises Documents” has the meaning set forth in the Deed of Trust.

 

“Prepayment Fee” means, with respect to any principal amount prepaid prior to
the Par Prepayment Date (other than with respect to such prepayments of any
portion of the principal amount of the Loan for which a Prepayment Fee shall not
be required as expressly set forth in this Loan Agreement), an amount equal to
(i) with respect to any prepayment made on or after the Permitted Prepayment
Date and prior to the Par Prepayment Date, an amount equal to three quarters of
one percent (0.75%) of the amount of such prepayment.  For the avoidance of
doubt, it is agreed that (i) on and after the Par Prepayment Date, there shall
be no Prepayment Fee payable with respect to any principal amount repaid, and
(ii) notwithstanding anything contained herein to the contrary, no Prepayment
Fee shall be payable in connection with any

 

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prepayment made by Borrower in order to meet the Default DSCR or the Minimum
DSCR or funded with amounts drawn from the Cash Collateral Account by Agent
pursuant to Section 3.2.

 

“Pro Rata Share” means, with respect to all matters relating to any Lender, the
ratio, expressed as a percentage, obtained by dividing (a) the Commitment of
such Lender by (b) the aggregate Commitment of all Lenders, in each case as of
the date of determination.

 

“Property Manager” means (i) as of the date hereof, HLT Conrad Domestic LLC, and
(ii) at any time after the date hereof, (A) Hilton or any Affiliate of Hilton
which is then the manager of all of the “Hilton” brand hotels (including, Hilton
Management), to the extent that such Person is at such time party to the
Management Agreement as the “Manager”, or (B) any other property manager of the
Premises that is hereafter approved in the reasonable discretion of the
Requisite Lenders in accordance with this Loan Agreement.

 

“Proposed Material Lease(s)” has the meaning set forth in Section 6.10(a).

 

“Purchase Date” has the meaning set forth in Section 9.14(c).

 

“Qualified Counterparty” means a financial institution which is reasonably
acceptable to Agent and whose senior long term debt is rated “A-” or better by
Standard & Poor’s Ratings Group and A3 by Moody’s Investors Service, Inc.

 

“Quarterly Compliance Statement” has the meaning set forth in Section 6.1(c).

 

“Recourse Liability Agreement” means that certain Recourse Liability Agreement
dated as of the Closing Date made by Borrower and Sponsor for the benefit of
Agent.

 

“Recourse Liability Events” means, collectively, any or all of the following in
connection with the Loan and/or the Mortgaged Property:

 

(a)           fraud or willful misconduct on the part of Loan Parties, or
Guarantor or any Affiliate of any such Person (but, for the avoidance of doubt,
excluding any representation or warranty made on behalf of Loan Parties or
Sponsor by Agent or any Lender pursuant to the exercise by Agent or any Lender
of any power of attorney granted to Agent or any Lender under the Loan
Documents) in connection with the execution, delivery and/or performance of this
Loan Agreement, the Note, the Deed of Trust, any of the other Loan Documents, or
any certificate, report, financial statement or other instrument or document
furnished to Agent or any Lender at the time of the closing of the Loan or
during the Term of the Loan;

 

(b)           a material, intentional misrepresentation on the part of Loan
Parties or Guarantor or any Affiliate of any such Person in connection with the
execution, delivery and/or performance of this LoanAgreement, the Note, the Deed
of Trust, any of the other Loan Documents, or any certificate, report, financial
statement or other instrument or document furnished to Agent or any Lender at
the time of the closing of the Loan or during the Term of the Loan;

 

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(c)           misappropriation or misapplication by Loan Parties, Property
Manager, Guarantor (or any Affiliate of any of the foregoing) of Gross Revenues,
insurance proceeds, condemnation awards, Security Deposits, sums payable
pursuant to any Interest Rate Protection Agreement, proceeds of the disposition
of all or any portion of the Collateral in contravention of this Loan Agreement
or any other Loan Document, including a breach by Loan Parties or Property
Manager of Section 3.1, Section 3.2, Section 3.3 and/or Section 3.4 of this Loan
Agreement;

 

(d)           material physical waste of the Mortgaged Property or any material
part thereof caused by Loan Parties or Sponsor (or any Affiliate of Loan Parties
or Sponsor), provided that, for the avoidance of doubt, none of the following
shall in any event constitute a Recourse Liability Event: (i) any waste caused
solely by the failure of the Premises to generate sufficient Net Operating
Income to avoid such waste; (ii) the occurrence of a Casualty or Taking and/or
the failure to complete the Restoration of the Premises thereafter; or (iii) the
failure of any direct or indirect owner of Loan Parties to make additional
capital contributions or other advances to Loan Parties to avoid such waste;

 

(e)           the occurrence of any Transfer which is not a Permitted Transfer
(to the extent that the Event of Default resulting therefrom has not been waived
by all of the Lenders) or is not consented to by all of the Lenders (provided
that, for the avoidance of doubt, a Transfer (i) from Borrower to Ground Lessor
resulting from the termination of the Ground Lease by reason of the exercise of
Ground Lessor’s rights under the Ground Lease to terminate the Ground Lease as a
result of a default by Borrower as lessee thereunder, (ii) to a Governmental
Authority as a result of a Taking, (iii) as a result of a foreclosure of the
Deed of Trust (or the delivery of a deed-in-lieu thereof), (iv) which results
from Impositions and/or Mechanic’s Claims and (v) the foreclosure of any pledge
which is otherwise a Permitted Transfer, shall not, in each case, constitute a
Recourse Liability Event);

 

(f)            the incurrence by Loan Parties of any Indebtedness which is not
Permitted Indebtedness (provided that, any Indebtedness (i) which was Permitted
Indebtedness when incurred but became non Permitted Indebtedness due to the
inability of Loan Parties to repay such Indebtedness as it became due caused by
the failure of the Premises to generate sufficient Net Operating Income or the
refusal of Agent or the Lenders to consent to a withdrawal of the required funds
from the Operating Account or (ii) which was incurred by a receiver which was
appointed at the request of Agent or the Lenders shall not, in each case,
constitute a Recourse Liability Event);

 

(g)           the occurrence of an Event of Default pursuant to clause (o) of
Section 7.1 with respect to Loan Parties (it being agreed that a Bankruptcy
Proceeding where the debtor is not a Loan Party shall not constitute a Recourse
Liability Event) or the occurrence of a Default or an Event of Default pursuant
to clause (p) of Section 7.1 as a result of (i) an action taken by Loan Parties
in collusion with another Person, (ii) the failure of Loan Parties to contest or
otherwise seek dismissal of any proceeding or petition referred to therein, or
(iii) an action taken by an Affiliate of Loan Parties either alone or in
collusion with another Person.

 

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(h)           the incurrence of any liability by Loan Parties pursuant to ERISA
caused by any act or omission of Loan Parties or their Affiliates;

 

(i)            distributions, dividends or payments made in contravention of
Section 6.22; and

 

(j)            the failure of either Loan Party to be a Single Purpose Entity to
the extent there occurs a substantive consolidation of the assets of a Loan
Party with any other Person in a Bankruptcy Proceeding pursuant to a final,
non-appealable judgment of a court of competent jurisdiction.

 

“Reference Banks” means Aareal Bank AG, Deutsche Bank AG, Barclays Bank PLC and
BNP Paribas London or such other banks constituting Approved Banks as may be
reasonably and in good faith selected by Agent (without any implied requirement
of advance consultation with Loan Parties) from time to time with concurrent
written notice to Loan Parties.

 

“REIT” means Sunstone Hotel Investors, Inc., a Maryland corporation.

 

“Register” has the meaning set forth in Section 8.6.

 

“Release Condition” and “Release Conditions” has the meaning set forth in
Section 6.12(d)(i).

 

“Rents” has the meaning set forth in the Deed of Trust.

 

“Rent Roll” has the meaning set forth in Section 5.34.

 

“Replacement Lender” has the meaning set forth in Section 2.12(f) of this Loan
Agreement.

 

“Required Amortization Payments” means, with respect to each Payment Date, the
amortization payment in the amount set forth on Exhibit C attached hereto,
required to be made pursuant to Section 2.4(b).

 

“Required Repairs” has the meaning set forth in Section 6.34.

 

“Requisite Lenders” means, at any time, non-Defaulting Lenders having
Commitments representing at least sixty seven percent (67%) of the total
Commitments of all non-Defaulting Lenders at such time and, provided there are
two (2) or more non-Defaulting Lenders at such time, not less than two
(2) Lenders.

 

“Restoration” means in case of a Casualty or a Taking, the restoration,
replacement or rebuilding of the portion of the Premises affected by the
Casualty or Taking such that when such restoration, replacement or rebuilding is
completed, the Premises shall have been restored, in the case of any Casualty,
substantially to the same character and condition as prior to such Casualty, and
in the case of any Taking, to an integral unit as substantially similar as
reasonably possible, taking into account the extent of the Taking, to the
character and condition of the Premises prior to such Taking, in each case in
accordance with this Loan Agreement, all

 

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Legal Requirements and the Permitted Encumbrances in all material respects.  In
any case, Restoration shall provide sufficient (in Agent’s reasonable and good
faith determination) access across and over the Premises to the public roads and
highways, provided that if the Premises has the same access that existed before
the Casualty or Taking, such access shall be deemed sufficient.

 

“Section 2.12 Prepayment Notice” has the meaning set forth in Section 2.12(e).

 

“Section 2.12 Replacement Notice” has the meaning set forth in Section 2.12(e).

 

“Security Deposit” means any cash security or other deposit given by or on
behalf of a Lessee to Operating Lessee as the landlord under a Lease that has
not been applied or returned in accordance with such Lease.

 

“Security Documents” means, collectively, this Loan Agreement, the Deed of
Trust, the Assignment of Agreements, the Assignment of Leases and Rents, any
Account Agreement, the UCC Financing Statements and any other Loan Document
entered into to secure the Obligations.

 

“Single Purpose Entity” has the meaning set forth on Exhibit B attached hereto.

 

“Sponsor” means, individually and collectively, Sunstone and Hilton.

 

“Spread Maintenance Premium” means, with respect to any payment or prepayment of
the outstanding principal amount of the Loan (including an acceleration of the
Loan but excluding any prepayment by Borrower to satisfy the Default DSCR or
Minimum DSCR or any mandatory prepayment of the Loan as a result of a Casualty,
a Taking or usury in accordance with this Loan Agreement) prior to the Permitted
Prepayment Date, an amount equal to the greater of (i) five percent (5%) of the
amount prepaid and (ii) product of the following:  (A) the amount of such
prepayment (or the amount of principal so accelerated), multiplied by (B) the
then applicable Margin, as applicable), multiplied by (C) a fraction (expressed
as a percentage) having a numerator equal to the number of days difference
between the Permitted Prepayment Date and the date such prepayment occurs and a
denominator equal to three hundred sixty (360).

 

“Sunstone” means Sunstone Hotel Partnership, LLC, a Delaware limited liability
company.

 

“Survey” means that certain survey prepared by Millman Surveying, Inc., dated
November 29, 2010, and last revised December 7, 2010.

 

“Taking” (and its correlative meanings) means any temporary or permanent taking
by any Governmental Authority of the Premises or any portion thereof through
eminent domain, condemnation or other proceedings or by any settlement or
compromise of such proceedings, or any voluntary conveyance of such property or
any portion thereof during the pendency of any such proceedings.

 

“Taxes” has the meaning set forth in Section 2.10.

 

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“Tenant Security Account” has the meaning set forth in Section 3.3(a).

 

“Term” means the period commencing on the Closing Date and ending on the
Maturity Date.

 

“Term Sheet” means that certain Term Sheet dated as of March 23, 2011 of Agent
pertaining to the Loan.

 

“Testing Determination Date” means the date which is the last day of the
Calendar Quarter with respect to which a Quarterly Compliance Statement is
required to have been delivered to Agent pursuant to Section 6.1(c).

 

“Title Company” means Stewart Title Guaranty Company.

 

“Title Policy” means the mortgagee title insurance policy in favor of Agent
issued on the Closing Date, including all endorsements thereto.

 

“Transfer” means (a) the conveyance, transfer, assignment, pledge, mortgage,
encumbrance, hypothecation or sale, by operation of law or otherwise, of (i) the
Collateral, or any part thereof or interest therein (except for the sale or
other disposition of inventory in the ordinary course of business and the
replacement or disposition of tangible personal property that is obsolete or
worn out and is being or will be replaced with items of at least the same
utility, quality and value, unless Property Manager reasonably determines that
the replacement of such personal property is not required in order to continue
to operate the Premises in accordance with Comparable Standards), or (ii) a
direct or indirect equity or beneficial interest as a partner, shareholder,
member or otherwise in a Loan Party or in any Person having a direct or indirect
equity or beneficial interest in a Loan Party, (b) the leasing of all or
substantially all of the Premises (except in accordance with this Loan
Agreement) or (c) any change in Control of either Loan Party, as the case may
be.  The term “Transfer” does not include Permitted Encumbrances or Permitted
Equipment Financing.

 

“Treasury Rate”  means, as of any Testing Determination Date, the annualized
yield on securities issued by the United States Treasury having a remaining
maturity of one hundred twenty (120) months, as quoted in Federal Reserve
Statistical Release H. 15(519) under the heading “U.S. Government Securities -
Treasury Constant Maturities” for the Treasury Rate Determination Date,
converted to a monthly equivalent yield.  If yields for such securities of such
applicable maturity are not shown in such publication, then the Treasury Rate
shall be determined by Agent by linear interpolation between the yields of
securities of the next longer and next shorter maturities.  If said Federal
Reserve Statistical Release or any other information necessary for determination
of the Treasury Rate in accordance with the foregoing is no longer published or
is otherwise unavailable, then the Treasury Rate shall be reasonably determined
by Agent based on comparable data.

 

“Treasury Rate Determination Date”  means the date which is five (5) Business
Days prior to the applicable Testing Determination Date.

 

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“UCC Financing Statements” means such UCC financing statements as Agent shall
deem reasonably necessary or desirable to perfect Agent’s security interest in
the Collateral (or any portion thereof).

 

“Withdrawal Liability” means at any time the aggregate liability incurred
(whether or not assessed) with respect to all Multiemployer Plans pursuant to
Section 4201 of ERISA or for increases in contributions required to be made
pursuant to Section 4243 of ERISA.

 

Section 1.2            Other Definitional Provisions.

 

(a)           All terms defined in this Loan Agreement shall have the
above-defined meanings when used in the Note or any of the other Loan Documents,
or in any other certificate, report or other document made or delivered pursuant
to this Loan Agreement, unless the context therein shall otherwise require.

 

(b)           Whenever appropriate herein or required by the context or
circumstances, the masculine shall be construed as the feminine and/or the
neuter, the singular as the plural, and vice versa.

 

(c)           The words “hereof”, “herein”, “hereunder” and similar terms when
used in this Loan Agreement shall refer to this Loan Agreement as a whole and
not to any particular provision of this Loan Agreement.

 

(d)           The words “include” and “including” wherever used in this Loan
Agreement or any other Loan Document shall be deemed to be followed by the words
“without limitation”.

 

(e)           Any reference to any Loan Document or any other document,
instrument or agreement in this Loan Agreement or in any other Loan Document
shall be deemed to mean such Loan Document or other document, instrument or
agreement, as applicable, as it may from time to time be amended, supplemented,
restated, consolidated, severed, split, extended, substituted for, partially
released, replaced, increased, waived, cross-collateralized, renewed or
otherwise modified in accordance with the terms of the Loan Documents.

 

ARTICLE II

 

THE LOAN

 

Section 2.1            The Loan; Use of Funds.  Subject to the conditions and
upon the terms herein provided, each Lender severally agrees to lend to Borrower
and Borrower agrees to borrow from each Lender, on the Closing Date, an amount
up to such Lender’s Commitment, which Commitments in the aggregate shall equal
the Loan Amount, or such lesser amount as shall be the maximum amount available
pursuant to the terms of this Loan Agreement (the “Loan”).  The Loan shall be
made by Lenders ratably in proportion to their respective Commitments.  The Loan
shall be evidenced by the Note.  Interest and Additional Interest, if any, shall
be payable in accordance with the Note and this Loan Agreement.  The Loan shall
be repaid with Interest, Additional Interest, costs, fees and charges as more
particularly set forth in this Loan Agreement, the Note, the Deed of Trust and
the other Loan Documents.  Principal

 

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amounts of the Loan which are repaid for any reason may not be reborrowed.  The
proceeds of the Loan shall be used to (i) repay indebtedness, (ii) pay
transaction costs and (iii) make deposits into Accounts as required in this Loan
Agreement.  Any excess proceeds may be used for any lawful purpose.

 

Section 2.2            Interest.

 

(a)           Interest at the Applicable Interest Rate.  Until paid in full, and
subject to Sections 2.5(c), 2.11 and 2.12(d), each Loan Portion shall bear
interest at an interest rate which shall be a LIBOR Rate as designated by
Borrower pursuant to Section 2.3 or the Base Rate as provided in Section 2.11 or
Section 2.12 (the “Applicable Interest Rate”).

 

(b)           Interest Payments.

 

(i)            On the date hereof, Borrower shall pay Interest on the unpaid
outstanding principal amount of the Loan from the date hereof through and
including April 29, 2011.

 

(ii)           On June 1, 2011 and on each Payment Date thereafter, Borrower
shall pay Interest as provided in this Loan Agreement on each Loan Portion, in
arrears, for the Interest Period then ending.

 

(iii)          Borrower shall pay Additional Interest as and when provided
herein, and in the event any Lender Interest Rate Protection Agreement is in
effect, in such Lender Interest Rate Protection Agreement.

 

(c)           Calculation of Interest.

 

(i)            Interest accruing at the Applicable Interest Rate shall be
calculated on the basis of the actual number of days elapsed and a year of 360
days.

 

(ii)           Any change in the Base Rate shall be automatically effective as
of the day on which such change in rate occurs.

 

(iii)          Each determination of an interest rate by Agent pursuant to the
provisions of this Loan Agreement shall be conclusive and binding on Borrower in
the absence of manifest error.

 

Section 2.3            Determination of Applicable Interest Rate.

 

(a)           Applicable Interest Rate.

 

(i)            The initial Applicable Interest Rate for the Loan shall be the
applicable LIBOR Rate based on the LIBOR Rate Period(s) selected by Borrower in
writing and delivered to Agent on or prior to the Closing Date for each Loan
Portion.

 

(ii)           The Applicable Interest Rate (and any related LIBOR Rate Period)
from time to time applicable to any Loan Portion upon and after the expiration
of any

 

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LIBOR Rate Period with respect to such Loan Portion shall be determined in the
manner set forth in Section 2.3(c), (d) and (e), Section 2.11(a) and (b) and
Section 2.12(d).

 

(iii)          After a conversion election, each Loan Portion shall bear
interest during each applicable Interest Period at the Applicable Interest Rate
as shall have been designated pursuant to Section 2.3(c) or (e), or as otherwise
provided in Section 2.3(d).  In connection with the selection or conversion of
the Applicable Interest Rate pursuant to Section 2.3(c) or (e), Borrower shall
specify the principal amount of the Loan Portion for which such selection or
conversion is being made.

 

(iv)          At any particular time, the sum of all Loan Portions shall equal
the outstanding principal amount of the Loan.

 

(v)           There shall be no more than six (6) Loan Portions at any one time.

 

(b)           Intentionally Omitted.

 

(c)           LIBOR Rate Conversion Options.  Subject to Section 2.3(f) and
Section 2.5(c), Borrower may elect to convert the Applicable Interest Rate from
one LIBOR Rate to another LIBOR Rate effective upon the expiration of the then
current LIBOR Rate Period; provided, however, that (x) there shall not have
occurred and be continuing any Event of Default, (y) the circumstances referred
to in Section 2.11 or Section 2.12(d) shall not have occurred and be continuing,
and (z) after giving effect to such conversion, the number of LIBOR Rate Loan
Portions in effect shall not exceed, in the aggregate, six (6).  If Borrower
wishes to convert the Applicable Interest Rate on any Loan Portion as permitted
by the preceding sentence, an Authorized Loan Parties’ Representative shall give
notice thereof (which shall be irrevocable) to Agent to the attention of an
Authorized Agent Representative prior to 3:00 p.m. (New York City time) on the
day that is not less than three (3) LIBOR Banking Days prior to the proposed
conversion date specifying (A) the principal amount of the Loan with respect to
which such conversion shall occur, (B) the proposed conversion date, which shall
be determined in accordance with the preceding sentence, and (C) the applicable
LIBOR Rate Period.

 

(d)           Reversion to Three-Month LIBOR Rate.  If an Authorized Loan
Parties’ Representative fails to timely notify an Authorized Agent
Representative in accordance with Section 2.3(a)(i), (c) or (e) of Borrower’s
election of a LIBOR Rate or Base Rate for any Loan Portion with an expiring
LIBOR Rate Period or fails to provide all of the information required by
Section 2.3(c) or (e) for the election of a LIBOR Rate, the Applicable Interest
Rate on such Loan Portion shall, provided that no Event of Default shall then
exist, automatically upon the expiration of such LIBOR Rate Period convert to a
LIBOR Rate having a LIBOR Rate Period of three (3) months or, if such
three-month LIBOR Rate Period would end after the Maturity Date, a LIBOR Rate
Period having a duration equal to the period commencing upon the expiration of
such expiring LIBOR Rate Period and ending on and including the Maturity Date,
subject to the proviso in the definition of “LIBOR Rate Period” herein.

 

(e)           Interest Rate Corresponding to Interest Rate Protection
Agreements.  Notwithstanding anything to the contrary set forth in this
Section 2.3, at all times that a LIBOR Rate shall be in effect, Borrower shall
cause a portion of the Loan corresponding to the notional

 

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amount with respect to which any such Interest Rate Protection Agreements were
established to have an Applicable Interest Rate which is a LIBOR Rate having a
LIBOR Rate Period that is the same as and is co-terminous with the period used
in such Interest Rate Protection Agreement.

 

(f)            Notice of Applicable Interest Rate Conversion.  Agent shall
promptly notify each Lender upon its receipt of notice from Borrower pursuant to
Section 2.3(c) electing to convert to an Applicable Interest Rate.

 

Section 2.4            Principal Payments.

 

(a)           Principal Payment at Maturity.  Borrower shall pay the then
outstanding unpaid principal amount of the Loan in a single installment on the
Maturity Date, together with all accrued and unpaid Interest and all other sums
then due to Agent and Lenders under the Loan Documents.

 

(b)           Amortization Payments.  On each Payment Date, Borrower shall pay
to Agent, in addition to Interest then due, the applicable Required Amortization
Payment.  Prepayments of the Loan made pursuant to Section 2.4(d) or other
provision hereof shall not reduce the amount of such scheduled amortization
payments.

 

(c)           Cash Sweep Condition Prepayment.  Agent (with the consent or at
the direction of the Requisite Lenders) may, in accordance with and subject to
the terms and conditions of Section 3.2, apply funds on deposit in the Cash
Collateral Account to the repayment of (i) principal, (ii) Breakage Costs, if
any, payable in accordance with Section 2.8 and (iii) all sums required to be
paid pursuant to Section 2.4(g).

 

(d)           Optional Prepayments.  Borrower may not voluntarily prepay the
Loan, in whole or in part, prior to the Permitted Prepayment Date.  From and
after the Permitted Prepayment Date, Borrower may, upon at least seven (7) days’
prior written notice to Agent, prepay the Loan, in whole or in part, in
accordance with this Section 2.4(d).  Any such prepayment notice shall specify
the date and amount of the prepayment to be made; provided, however, neither
Borrower’s failure to make such prepayment, nor Borrower’s making of such
prepayment on a date which is different than the date specified in such
prepayment notice, shall be a Default or an Event of Default; provided, further,
that Borrower shall pay within five (5) Business Days of written demand by Agent
(i) all reasonable out-of-pocket expenses incurred by Agent by reason of
Borrower’s failure to make such prepayment on the date specified in such
prepayment notice and (ii) Breakage Costs and Additional Interest which, in each
case, results from Agent not having received such payment prior to 11:00 A.M.
(New York time) on the date specified in such prepayment notice.  Concurrently
with any such prepayment, Borrower shall pay to Agent all sums required to be
paid pursuant to, and shall otherwise comply with, Section 2.4(g).

 

(e)           Other Sums.  Borrower shall pay to Agent all other sums owed to
Agent and/or Lenders pursuant to the Loan Documents when such sums are due and
payable as provided in the applicable Loan Document, or if not provided therein,
within ten (10) days after the due date thereof or if expressly required or with
respect to amounts payable which cannot be determined by Borrower in the absence
of determination by Agent or Lenders, within ten

 

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(10) days after written demand by Agent.  To the extent any other such sums are
determined on a per diem or similar basis, such sums shall be calculated on the
basis of a three hundred sixty (360) day year and the actual number of days
elapsed.

 

(f)            Mandatory Prepayment.  Borrower shall be required to prepay the
Loan upon the occurrence of any of the circumstances expressly requiring
prepayment described in Section 6.12 and/or Section 6.13 in this Loan Agreement
by paying the principal amount so required to be prepaid, provided that such
prepayment shall be without payment of any Prepayment Fee or other penalty or
premium (for the avoidance of doubt, it is agreed that the payment of Additional
Interest shall not be deemed to be a penalty or premium).  Concurrently with any
such prepayment, Borrower shall pay to Agent all sums required to be paid
pursuant to, and shall otherwise comply with Section 2.4(g).  For the avoidance
of doubt, it is agreed that any prepayment made in accordance with Section 6.33
and any prepayment made to prevent the commencement of or end the continuation
of a Cash Sweep Condition shall not be subject to payment of the Prepayment Fee.

 

(g)           Reduction of Interest Rate Protection Arrangement and Payment of
Other Sums.  Concurrently with any prepayment of principal pursuant to this
Section 2.4, Borrower shall, as a further condition of such prepayment,
(w)(1) in the case of any Lender Interest Rate Protection Agreement other than
an interest rate cap then in effect, cause a reduction of the notional amount of
such interest rate protection arrangement so as to cause such notional amount to
correspond to the outstanding principal amount of the Loan, after giving effect
to such prepayment, (2) pay all sums, if any, payable by Borrower pursuant to
any Interest Rate Protection Agreement with respect to such reduction and
(3) provide evidence to Agent of Borrower’s compliance with clauses (1) and
(2) above, (x) pay all accrued and unpaid Interest to and including the date of
such prepayment on the amount being prepaid, (y) pay all Additional Interest and
any other amounts due and payable to Agent and/or Lenders hereunder and under
the Note, the Deed of Trust and the other Loan Documents and (z) pay all
reasonable fees and out-of-pocket expenses incurred by Agent in connection with
the Loan and/or with the prepayment of the Loan.  In addition, concurrently with
any prepayments of principal, other than as expressly set forth in
Section 2.4(f), which occur prior to the Par Prepayment Date, Borrower shall, in
addition to the other sums described in this Section 2.4(g), pay the Prepayment
Fee, applicable thereto.

 

Section 2.5            Payment; Default Rate; Application of Certain Monies;
Priority of Payments; Set-offs.

 

(a)           Manner of Payment.  All sums payable by Borrower under this Loan
Agreement or any other Loan Document shall be made in Dollars and in immediately
available funds not later than 11:00 a.m. (New York City time) on the date when
such payment is due.  Such sums shall be payable by wire transfer to the credit
of Agent, at Bank of New York, New York, ABA # 021000018 / Routing #
IRVTUS3NXXX, Account # 8900492465, Account Name:  Aareal Bank AG, Wiesbaden /
AARBDE5WXXX, Reference:  Loan # # 1037274600/ 9000141197, or to such other
account or address as Agent may from time to time designate in writing to
Borrower.  In the event that any sums are received by Agent from or on behalf of
Borrower after the applicable time limit set forth in this Section 2.5(a), such
sums shall be treated as being received by Agent on the immediately succeeding
Business Day for all purposes.

 

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(b)           Payment on a Non-Business Day.  Whenever any payment to be made
under the Loan Documents shall be stated to be due, or if the Maturity Date
would otherwise occur, on a day which is not a Business Day, such payment shall
be made, and the Maturity Date shall occur, as applicable, on the immediately
succeeding Business Day.  Any such extension of time shall be included in the
computation of payment of Interest (including interest at the Default Rate),
fees, and Additional Interest.

 

(c)           Default Rate.

 

(i)            Notwithstanding anything to the contrary contained herein or in
another Loan Document, if an Event of Default shall have occurred and be
continuing, each Loan Portion and any other sums which are due but unpaid shall
bear Interest from and including the date of the occurrence of such Event of
Default (after as well as before judgment) at a fluctuating rate of interest per
annum equal to the Default Rate with respect to each Loan Portion and any other
sums which are due but unpaid, which interest at the Default Rate shall be
payable upon demand of Agent.  Interest accruing at the Default Rate shall be
calculated on the basis of the actual number of days elapsed and a year of three
hundred sixty (360) days.

 

(ii)           Agent’s failure to collect interest at the Default Rate at any
time shall not constitute a waiver of Lenders’ right thereafter, at any time and
from time to time (including upon acceleration of the Maturity Date or upon
payment in full of the Loan), to collect such previously uncollected interest at
the Default Rate or to collect subsequently accruing interest at the Default
Rate.

 

(d)           Priority of Payments.  All payments received with respect to the
Loan shall be applied on account of sums due and owing pursuant to the Note,
this Loan Agreement, the Deed of Trust or the other Loan Documents in the manner
set forth in the Note.

 

(e)           No Set-offs.  All sums payable by Borrower under the Note, this
Loan Agreement and the other Loan Documents shall be paid in full and without
set-offs, counterclaims, deductions or withholdings of any kind except as
expressly provided in Section 2.10 and Section 9.10.

 

Section 2.6            Usury.  The Note, this Loan Agreement, the Deed of Trust,
and the other Loan Documents are subject to the express condition that at no
time shall Borrower be obligated or required to pay interest on the Obligations
at a rate which could subject any Lender to either civil or criminal liability
as a result of being in excess of the maximum interest rate which Borrower is
permitted by law to contract for or to agree to pay.  If by the terms of the
Note, this Loan Agreement, the Deed of Trust or any other Loan Document,
Borrower is at any time required or obligated to pay interest at a rate in
excess of such maximum rate, the rate of interest shall be deemed to be
immediately reduced to such maximum rate and the interest payments in excess of
such maximum rate shall be applied (without any Prepayment Fee or other premium
or penalty, (for the avoidance of doubt, it is agreed that the payment of
Additional Interest shall not be deemed to be a penalty or premium)) and shall
be deemed to have been payments in reduction of principal.

 

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Section 2.7            Interest Rate Protection Agreement.

 

(a)           Interest Rate Protection Agreement.  At or before the Closing,
Borrower shall, enter into and satisfy all conditions precedent to the
effectiveness of one or more Interest Rate Protection Agreements that shall
collectively satisfy all of the following conditions and shall thereafter
maintain such Interest Rate Protection Agreement in full force and effect:

 

(i)            The Interest Rate Protection Agreement shall be an interest rate
cap or swap, the effect of which is to protect Borrower against upward
fluctuations of an Applicable Interest Rate which is LIBOR (as distinguished
from the LIBOR Rate) applicable to a LIBOR Rate Period of three (3) months in
excess of the amount which would cause the LIBOR Rate to exceed three and
three-quarter percent (3.75%) per annum for a minimum term of two (2) years in
the notional amount equal to One Hundred Twenty Million Dollars ($120,000,000);

 

(ii)           The Interest Rate Protection Agreement shall be entered into
between Borrower and a Qualified Counterparty;

 

(iii)          All sums payable by Borrower on account of the purchase price for
the Interest Rate Protection Agreement during the term of the Interest Rate
Protection Agreement shall have been paid in full on or prior to the effective
date thereof;

 

(iv)          Borrower’s interest in such Interest Rate Protection Agreement,
including all rights of Borrower to payment thereunder and any residual value
thereof, shall have been collaterally assigned to Agent pursuant to the Deed of
Trust and the Assignment of Agreements;

 

(v)           The financial institution which is party to such Interest Rate
Protection Agreement shall have executed and delivered to Agent a consent to the
collateral assignment of Borrower’s interest in such Interest Rate Protection
Agreement referred to in clause (iv) above pursuant to a consent substantially
in the form annexed hereto as Schedule 2.7(a) or otherwise in form and content
reasonably acceptable to Agent (the “Interest Rate Protection Agreement
Acknowledgment”); and

 

(vi)          Such Interest Rate Protection Agreement shall be reasonably
satisfactory to Agent in form and content.

 

(b)           Supplemental Interest Rate Protection Agreement.  Prior to the
expiration of the Interest Rate Protection Agreement described in
Section 2.7(a), Borrower shall enter into an Interest Rate Protection Agreement
in a notional amount equal to one half (50%) of the then outstanding principal
amount of the Loan and which otherwise satisfies the requirements of
Section 2.7(a) and shall thereafter maintain such an Interest Rate Protection
Agreement in full force and effect throughout the remainder of the Term.

 

(c)           Failure to Provide Interest Rate Protection.  In the event that
Borrower breaches its obligation to maintain an Interest Rate Protection
Agreement in full force and effect as set forth in Section 2.7(a) and/or
Section 2.7(b) and such failure continues for ten (10) Business Days after
Borrower’s receipt of notice from Agent, in addition to Agent’s and

 

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Lenders’ rights and remedies hereunder or under the other Loan Documents, Agent
may, but shall have no obligation to, at Borrower’s sole cost and expense and on
Borrower’s behalf, enter into an Interest Rate Protection Agreement as may be
required pursuant to Section 2.7(a).  In the event that Agent shall elect to
enter into an Interest Rate Protection Agreement on Borrower’s behalf after the
above described notice and cure period, such Interest Rate Protection Agreement,
at Agent’s election, may be a Lender Interest Rate Protection Agreement;
provided that such Lender Interest Rate Protection Agreement contains
commercially reasonable terms consistent with an arms-length transaction
comparable to the transaction which is the subject of this Loan Agreement. 
Agent is hereby irrevocably appointed the true and lawful attorney of Borrower
(coupled with an interest), in its name and stead, to execute such an Interest
Rate Protection Agreement and all necessary documents ancillary thereto (each of
which shall be in a reasonable form),  Borrower hereby ratifying and confirming
all that its said attorney shall lawfully do by virtue hereof consistent with
the terms hereof, provided that Agent shall not exercise such power of attorney
unless Borrower has failed to enter into an Interest Rate Protection Agreement
in the form and content required pursuant to Section 2.7(a) following the
expiration of the ten (10) Business Day cure period set forth in this
Section 2.7(c).  All sums paid and liabilities incurred by Agent pursuant to
this Section 2.7 shall be paid by Borrower (and not from the proceeds of the
Loan) within ten (10) days after Agent’s demand with interest at the Default
Rate to the date of payment to Agent and such sums and liabilities, including
such interest until paid, shall be deemed and shall constitute advances under
this Loan Agreement and be evidenced by the Note and be secured by the Security
Documents.

 

(d)           Obligation of Borrower Unaffected by Interest Rate Protection
Agreement.  No Interest Rate Protection Agreement shall alter, impair, restrict,
limit or modify in any respect the obligation of Borrower to pay Interest or
Additional Interest on the Loan, as and when the same becomes due and payable in
accordance with the provisions of the Loan Documents.

 

(e)           Termination, etc. of Interest Rate Protection Agreement.  Borrower
shall not terminate, modify, cancel or surrender, or consent to the termination,
modification, cancellation or surrender of, any Interest Rate Protection
Agreement without the prior consent of the Requisite Lenders.  Within thirty
(30) days after Borrower obtains knowledge of or receipt of notice (which may be
given by Agent or a Lender) of a default by the financial institution that is a
party to any Interest Rate Protection Agreement, Borrower shall substitute for
such defaulted Interest Rate Protection Agreement another Interest Rate
Protection Agreement (to which the Person that defaulted under the defaulted
Interest Rate Protection Agreement is not a party) so that, after giving effect
to such substitution, Borrower is in compliance with the requirements of
Section 2.7(a).

 

(f)            Receipts from Interest Rate Protection Agreements.  All payments
due to Borrower pursuant to any Interest Rate Protection Agreement, including
upon any termination thereof, shall be payable to and held by Agent until
repayment in full of the Obligations (other than Contingent Obligations);
provided, however, that all periodic “net payments” due to Borrower so received
by Agent in connection with a payment made by a counterparty to an Interest Rate
Protection Agreement shall be applied by Agent on account of Interest then due
and payable on the Loan or if no Interest is then due and payable, on account of
Interest next due and payable on the Loan.  If an Event of Default occurs, Agent
may, in its sole discretion, for so long

 

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as such Event of Default is continuing and in addition to any other rights and
remedies hereunder, apply the amounts so held by Agent to the Loan or other
amounts due by Borrower under the Loan Documents at Agent’s election.  Until
such time as all Obligations (other than Contingent Obligations) have been paid
in full, Borrower shall have no right to withdraw or otherwise apply any funds
received by Agent on account of any Interest Rate Protection Agreement.  Such
funds shall constitute additional security for the Obligations, a security
interest therein being granted hereby.  In the event Borrower receives any sums
pursuant to or in connection with any Interest Rate Protection Agreement, it
shall promptly pay such sums to Agent to be held by Agent and applied to
Interest which is or shall become due and payable.

 

(g)           Security.  No Interest Rate Protection Agreement shall be secured
by all or any portion of the Collateral unless it is a Lender Interest Rate
Protection Agreement which is not an interest rate cap, in which case such
Lender Interest Rate Protection Agreement shall be secured by the Deed of Trust
and other Security Documents.

 

Section 2.8            Breakage.  Borrower shall pay Agent and/or Lenders, as
applicable, any documented out-of-pocket loss and/or reasonable and documented
out-of-pocket cost or expense (excluding lost profits) which Agent or any Lender
actually sustains or incurs as a consequence of any payment or prepayment
(whether voluntary or involuntary) of the Loan or any portion thereof, whether
or not required by any provision of this Loan Agreement or any other Loan
Document or otherwise, made and applied on account of principal on a date other
than the last day of a LIBOR Rate Period (noting, for purpose of clarification,
that no such sums would be incurred with respect to an Applicable Interest Rate
which is a Base Rate), including any loss or expense actually sustained or
incurred by any Lender(s) in obtaining, liquidating or redeploying deposits or
other funds acquired by such Lender(s) to maintain or fund the Loan or any
portion thereof (“Breakage Costs”).  The amount of any loss or expense for which
Borrower shall pay Agent or Lenders under this Section 2.8 shall be an amount
equal to the excess, if any, as reasonably determined by Agent or the applicable
Lender(s), of (i) the reasonable and documented out-of-pocket cost to the
applicable Lender(s) of obtaining the funds for the portion of the Loan being
paid or prepaid for the period from the date of such payment or prepayment to
the last day of the LIBOR Rate Period over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such
Lender(s) in redeploying the funds so paid or prepaid, as the case may be. 
Agent’s or any Lender’s determination of any amount or amounts which Agent
and/or any Lender is entitled to receive pursuant to this Section 2.8 shall be
conclusive, absent manifest error.  Upon Borrower’s request, Agent or the
affected Lender shall provide Borrower with a calculation of the Breakage Costs
incurred setting forth such Breakage Costs in reasonable detail.

 

Section 2.9            “Additional Interest” under Lender Interest Rate
Agreements.  Borrower shall pay to Agent all documented losses and all
reasonable and documented out-of-pocket, costs and expenses of Agent or any
Lender incurred and payable by Borrower pursuant to any Lender Interest Rate
Protection Agreement, including any termination thereof, unless such Lender
Interest Rate Protection Agreement has been terminated in accordance with
Section 2.7(e).  In the event of the foregoing, Borrower shall pay to Agent,
concurrently with any principal payment, or within such shorter period as shall
be specified in any Lender Interest Rate Protection Agreement, such amount as
shall equal the amount of the Additional Interest (without duplication of
payments due hereunder or under the Lender Interest Rate Protection Agreement)

 

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certified (with supporting detail) by Agent (or the applicable Lender) to
Borrower by reason of such event.  Failure on the part of Agent to demand
payment from Borrower for any Additional Interest attributable to any particular
period shall not constitute a waiver of Agent’s (or the applicable Lender’s)
right to demand payment of such amount for any subsequent or prior period.

 

Section 2.10         No Withholdings.  All sums payable by Borrower under the
Note, this Loan Agreement and the other Loan Documents, shall be paid in full
and without set-off or counterclaims and free of any deductions or withholdings
for any and all present and future taxes, levies, imposts, deductions, duties,
filing and other fees or charges (collectively, “Taxes”) other than Excluded
Taxes.  In the event that Borrower is prohibited by any law from making any such
payment free of such deductions or withholdings with respect to Taxes as a
result of any change in any applicable law, regulation or treaty, or in the
interpretation or administration thereof by any domestic or foreign governmental
authority charged with the interpretation or administration thereof (whether or
not having the force of law), or by any domestic or foreign court, then Borrower
shall pay such additional amount to Agent as may be necessary in order that the
actual amount received by Lenders after such deduction or withholding (and after
payment of any additional Taxes due as a consequence of the payment of such
additional amount) shall equal the amount that would have been received if such
deduction or withholding were not required; provided, however, that Borrower
shall not be obligated to pay such additional amounts attributable to Excluded
Taxes.  In addition, Borrower shall not be obligated to pay such additional
amounts on account of a specific Lender or the Agent if at the time such Lender
became a “Lender” hereunder or at the time Agent became the “Agent” hereunder or
as a result of the failure to update a form or document described below or in
Section 9.10, Borrower is required to deduct or withhold any sums solely because
such Lender or Agent had a legal basis to deliver, but failed to deliver, to
Borrower (a) a duly executed copy of United States Internal Revenue Service
Form W-8 BEN, W-8 ECI or W-8 IMY and/or any successor form or any required
renewal thereof, as the case may be, certifying in each case that such Lender or
Agent is entitled to receive payments hereunder or under the other Loan
Documents without deduction or withholding of any United States federal income
taxes, (b) a duly executed United States Internal Revenue Service Form W-9 or
any successor form or any required renewal thereof and/or (c) other required
form or documentation establishing that a full exemption exists from United
States backup withholding tax, and as result of such failure, Borrower was
prohibited by the applicable Legal Requirements, from making any such payment
free of such deductions or withholding.  Notwithstanding anything contained in
this Section 2.10, in no event will any Lender’s failure to deliver any such
forms, or any renewal or extension thereof, affect, postpone or relieve Borrower
from any obligation to pay Interest, principal, Additional Interest and other
amounts due under the Loan Documents (other than amounts due under this
Section 2.10 as a result of Agent’s or a Lender’s failure to deliver such
forms).  Such additional amount shall be due concurrently with the payment with
respect to which such additional amount is owed in the amount of Taxes certified
by Agent (or the applicable Lender).  A certificate as to the amount of Taxes
submitted by Agent to Borrower setting forth Agent’s (or the applicable
Lender’s) basis for the determination of Taxes shall be conclusive evidence of
the amount thereof, absent manifest error.  Failure on the part of Agent to
demand payment from Borrower for any Taxes attributable to any particular period
shall not constitute a waiver of Agent’s (or the applicable Lender’s) right to
demand payment of such amount for any subsequent or prior period.

 

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Section 2.11         Unavailability; Illegality of LIBOR.

 

(a)           Unavailability of LIBOR.  If on any date on which Borrower seeks
to establish a LIBOR Rate as the Applicable Interest Rate pursuant to
Section 2.3, or if Section 2.3(d) applies, Agent reasonably and in good faith
determines that (i) Dollar deposits in an amount approximately equal to the then
outstanding principal amount of the Loan Portion bearing interest at a LIBOR
Rate are not generally available at such time in the London interbank Eurodollar
market for deposits in Eurodollars or (ii) reasonable means do not exist for
ascertaining LIBOR, Agent shall promptly give notice (the “Non-Availability
Notice”) of such fact to Borrower and the option to convert to or to continue
the Applicable Interest Rate on such Loan Portion as a LIBOR Rate shall be
suspended until such time as such condition no longer exists.  In the event that
the option to elect, to convert to or to continue an Applicable Interest Rate as
a LIBOR Rate shall be suspended as provided in this Section 2.11(a), effective
upon the giving of the Non-Availability Notice, and if applicable, effective as
of the first date that the one (1) month LIBOR Rate Period would otherwise be in
effect pursuant to Section 2.3(d), interest on the Loan Portion for which a
LIBOR Rate was to be determined shall be payable at the Base Rate, from and
including the date of the giving of the Non-Availability Notice (or the date
that the one (1) month LIBOR Rate Period would otherwise be in effect pursuant
to Section 2.3(d), if applicable) until the earlier to occur of:  the Maturity
Date and the date that the conditions referred to in this Section 2.11(a) no
longer exist.

 

(b)           Illegality.  In the event that at any time while any Loan Portion
bears interest at a LIBOR Rate, any Lender determines (which determination shall
be conclusive and binding on Borrower absent manifest error) that it shall
become illegal for such Lender to maintain the Loan or a portion thereof on the
basis of one or more LIBOR Rates, Agent shall promptly after receiving notice
thereof from such Lender give notice of such fact to Borrower, and the option to
elect, to convert to or to continue the Applicable Interest Rate on the
applicable Loan Portions as a LIBOR Rate shall be suspended until such time as
such condition shall no longer exist.  In the case of existing Loan Portions
affected by the circumstances described in the immediately preceding sentence,
the Applicable Interest Rate on such Loan Portion shall be converted
automatically to the Base Rate (unless such Lender determines that such
conversion is not required with respect to any existing Loan Portion) and shall
be payable at the Base Rate in the same manner as provided in
Section 2.11(a) until the circumstance described in the first sentence of this
Section 2.11(b) no longer exists.

 

Section 2.12         Increased Costs and Capital Adequacy.

 

(a)           Borrower agrees to pay to Agent, without duplication of any other
amounts paid by Borrower hereunder, such additional amounts as any applicable
affected Lender shall reasonably and in good faith determine will compensate
such affected Lender for documented out-of-pocket costs incurred in maintaining
the Loan or any portion thereof outstanding or for the reduction of any amounts
received or receivable with respect to the Loan as a result of (1) compliance by
any Lender, or any lending office of any Lender, or the holding company of any
Lender, with any applicable new request or new directive implemented after the
date hereof of any foreign or domestic Governmental Authority, central bank or
comparable agency and/or (2) any change after the date hereof in any applicable
law, regulation or treaty, or in the interpretation or administration thereof by
any domestic or foreign Governmental

 

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Authority charged with the interpretation or administration thereof (whether or
not having the force of law), or by any domestic or foreign court, (i) changing
the basis of taxation of payments to any Lender (other than Excluded Taxes),
(ii) imposing, modifying or applying any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, credit
extended by, or any other acquisition of funds for loans by any Lender (whether
directly, indirectly or on a portfolio wide basis) or (iii) imposing on any
Lender any other condition affecting the Note or the Loan, excluding, in each
case, amounts relating to Taxes, which shall be governed solely by Section 2.10,
in each case, to the extent increasing the costs incurred by any Lender in
maintaining the Loan or any portion thereof.  Notwithstanding the foregoing, all
requests, rules, guidelines or directions under or in connection with the
Dodd-Frank Wall Street Reform and Consumer Protection Act shall be deemed not to
have been the subject of any request or directive implemented or any change
having occurred prior to the date hereof.  No Lender shall impose on Borrower
any Additional Cost pursuant to this Section 2.12(a) unless such Lender’s
imposition of such cost is reasonably allocable to the Loan and unless such
Lender imposes such costs on other similarly situated borrowers to which such
governmental rules apply.

 

(b)           If any Lender shall reasonably and in good faith determine that
(i) any change after the date hereof in the general application of any law,
rule, regulation or guideline adopted or arising out of the June 2006 report of
the Basel Committee on Banking Regulations and Supervisory Practices entitled
“Basel II:  International Convergence of Capital Measurement and Capital
Standards:  a Revised Framework - Comprehensive Version”, or any change in the
interpretation or administration thereof by any domestic or foreign Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, (ii) any applicable change after the date hereof in or
adoption or implementation after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy (other than any rule,
regulation or guideline adopted or issued after the date hereof that is
consistent with any law in effect before the date hereof) or (iii) compliance by
any Lender, or any lending office of any Lender, or the holding company of any
Lender, with any applicable request or directive regarding capital adequacy
(having the force of law) of any such authority, central bank or comparable
agency based on any such change, adoption or implementation, has the effect of
reducing the rate of return on any Lender’s capital to a level below that which
such Lender would have achieved but for such adoption, change, implementation or
compliance (taking into consideration the policies of such Lender or such
holding company with respect to capital adequacy), then upon notice from time to
time Borrower shall, without duplication of any other amounts paid by Borrower
hereunder, pay to Agent such additional amounts as will compensate such Lender
for such actual reduction with respect to any portion of the Loan, if any,
outstanding.  Notwithstanding the foregoing, any change based on the reports and
supporting documentation of the Basel Committee on Banking Supervision of
December 2009 entitled “Strengthening the Resilience of the Banking Sector” and
“International Framework for Liquidity Risk Measurement, Standards and
Monitoring”, in each case together with any amendments thereto, shall not be
deemed to have occurred on or prior to the date hereof.  No Lender shall impose
on Borrower any Additional Cost pursuant to this Section 2.12(b) unless such
cost is reasonably allocable to the Loan and unless such Lender imposes such
costs on other similarly situated borrowers to which such governmental
rules apply.

 

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(c)           Any amount payable by Borrower pursuant to Section 2.12(a) or
(b) (such amounts collectively referred to as “Additional Costs”) shall be paid
to Agent within ten (10) Business Days of receipt by Borrower of a certificate
of Agent (or of the applicable Lender, with a copy to Agent) setting forth the
amount due and Agent’s (or the applicable Lender’s) basis (with reasonable
detail) for the determination of such Additional Costs, which certificate shall
be sent by Agent within one hundred twenty (120) days after Agent (or the
applicable Lender) obtains actual knowledge thereof.  If Agent (or the
applicable Lender) fails to demand payment from Borrower for any such Additional
Costs attributable to any particular period within such one hundred twenty (120)
day period, Agent (or the applicable Lender) shall only be entitled to demand
payment for costs incurred from and after the date that is one hundred twenty
(120) days prior to the date that Agent (or the applicable Lender) actually
notifies Borrower.

 

(d)           If any Lender shall reasonably and in good faith determine that
the LIBOR Rate does not adequately and fully reflect such Lender’s costs of
funds, then such Lender shall give prompt notice (including reasonable detail)
to Borrower (with a copy to Agent) of such fact and the option to convert to or
to continue the Applicable Interest Rate as a LIBOR Rate shall be suspended
until such time as such condition no longer exists.  In the event that the
option to convert to or to continue an Applicable Interest Rate as a LIBOR Rate
shall be suspended as provided in this Section 2.12(d), effective upon the
giving of such notice, and if applicable, effective as of the first date that
the LIBOR Rate Period would otherwise be in effect pursuant to Section 2.3(d),
interest on the Loan Portion for which a LIBOR Rate was to be determined shall
be payable at the Base Rate, from and including the date of the giving of such
notice (or the date that the LIBOR Rate Period would otherwise be in effect
pursuant to Section 2.3(d), if applicable) until the earlier to occur of: the
Maturity Date and the date that the conditions referred to in this
Section 2.12(d) no longer exist.  No Lender shall provide notice of the
suspension of the option to convert or continue the Applicable Interest Rate as
a LIBOR Rate pursuant to this Section 2.12(d) unless such Lender takes similar
action with respect to other similarly situated borrowers with respect to loans
where such Lender has a contractual right to do so.

 

(e)           If any Lender (an “Affected Lender”) gives notice to Borrower of
the occurrence of the circumstances described in Section 2.10, Section 2.11(b),
Section 2.12(a), Section 2.12(b), or Section 2.12(d), Borrower may, within
ninety (90) days of receipt of such notice, give written notice to Agent and to
each Lender of Borrower’s intention to (y) replace the Affected Lender with an
Eligible Assignee designated in such notice and otherwise reasonably acceptable
to Agent (any such notice, a “Section 2.12 Replacement Notice”), or (z) from and
after the Permitted Prepayment Date only, prepay the entire outstanding
principal balance of the Loan, together with any Breakage Costs in connection
therewith under Section 2.8, but, provided that no Event of Default shall have
occurred and be continuing and provided further that Borrower shall have used
commercially reasonable efforts for a period not less than ninety (90) days to
replace the Affected Lender with a Replacement Lender, without any Prepayment
Fee or any other prepayment premium or fee (any such notice, a “Section 2.12
Prepayment Notice”).

 

(f)            If Borrower delivers a Section 2.12 Replacement Notice, then
unless the Affected Lender agrees, within ten (10) days of receipt of such
Section 2.12 Replacement Notice, to waive the application of Section 2.11(b),
Section 2.12(a), Section 2.12(b), or Section 2.12(d), as applicable, the
Affected Lender shall thereafter, so long as no Event of Default exists,

 

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assign all of its rights and obligations under this Loan Agreement to a
financial institution which is an Approved Assignee (the “Replacement Lender”)
and the Replacement Lender shall assume all of the Affected Lender’s rights and
obligations under this Loan Agreement, in each case pursuant to an agreement,
substantially in the form of an Assignment and Acceptance, executed by the
Affected Lender and the Replacement Lender.  In connection therewith, the
Replacement Lender shall pay to the Affected Lender an amount equal to the
Affected Lender’s Pro Rata Share of the outstanding principal amount of the Loan
plus all interest accrued thereon, plus all other then accrued and unpaid
amounts, if any, allocable to the Affected Lender.  Upon the effective date of
such Assignment and Acceptance, the Replacement Lender shall become a party to
this Loan Agreement and shall have all the rights and obligations of a Lender
hereunder and the Affected Lender shall be released from its obligations
hereunder, and no further consent or action by any party shall be required. 
Borrower, Agent and the Lenders shall execute such modifications to the Loan
Documents as shall be reasonably required in connection with and to effectuate
the foregoing.  Any Affected Lender which is replaced as a Lender under this
Section 2.12(f) shall remain entitled to the benefits of this Loan Agreement,
including, without limitation, this Section 2.12, in respect of the period prior
to its replacement.

 

(g)           If Borrower delivers a Section 2.12 Prepayment Notice, then unless
the Affected Lender agrees, within ten (10) days of receipt of such Section 2.12
Prepayment Notice, to waive the application of Section 2.11(b), Section 2.12(a),
Section 2.12(b), or Section 2.12(d), Borrower shall have the right, exercisable
within ninety (90) days after the end of such ten (10) day period, to prepay the
entire outstanding principal balance of the Loan, together with any Breakage
Costs thereon under Section 2.8, but, provided that no Event of Default shall
have occurred and be continuing and provided further that Borrower shall have
used commercially reasonable efforts for a period not less than ninety (90) days
to replace the Affected Lender with a Replacement Lender, without a Prepayment
Fee, it being agreed, however, that Borrower shall have no right to make a
prepayment under this Section 2.12(g) whatsoever until the occurrence of the
Permitted Prepayment Date.  By way of example and not limitation, if Borrower
delivers a Section 2.12 Prepayment Notice on April 1, 2013, the Affected Lender
would have until April 10, 2013 to decide whether or not to waive the payment of
the Additional Costs in question, and Borrower would then have until July 10,
2013 (so long no Event of Default exists at the time of such prepayment) to make
such a prepayment of the Loan.

 

Section 2.13         Obligation to Mitigate.  Each Lender agrees that, within a
reasonable period of time after the officer of such Lender having primary
responsibility for administering its portion of the Loan becomes aware of the
occurrence of an event or the existence of a condition that would entitle such
Lender to receive payments or exercise rights under Section 2.11 or 2.12, such
Lender will, to the extent not inconsistent with the internal policies of such
Lender and any applicable legal or regulatory restrictions, use reasonable
efforts to (a) make, issue, fund or maintain its portion of the Loan through
another office of such Lender, or (b) take such other measures as such Lender
may deem reasonable, if as a result thereof the circumstances which would cause
the additional amounts which would otherwise be required to be paid to such
Lender, or invoke the rights of such Lender, pursuant to Section 2.11 or 2.12 to
be materially reduced and if, as determined by such Lender in its sole
discretion, the making, issuing, funding or maintaining of its portion of the
Loan through such other office or in accordance with such other measures, as the
case may be, would not otherwise adversely affect such Loan portion or the
interests of such Lender; provided, such Lender will not be obligated to utilize
such other

 

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office pursuant to this Section 2.13 unless Borrower agrees to pay all
incremental expenses incurred by such Lender as a result of utilizing such other
office as described above.

 

Section 2.14         Closing.  The Closing shall be effectuated pursuant to an
escrow with the Title Company.

 

Section 2.15         Fees.  Borrower shall pay to Agent all fees provided for in
the Loan Fee Letter in accordance with the terms of the Loan Fee Letter.

 

ARTICLE III

 

ACCOUNTS; RESERVES; LETTERS OF CREDIT

 

Section 3.1            Operating Account.  Loan Parties shall cause all Gross
Revenue to be deposited into the Operating Account promptly after Loan Parties’
or Property Manager’s receipt thereof in accordance with the Management
Agreement.  Loan Parties hereby grant to Agent a security interest in all rights
of Loan Parties in and to the Operating Account and all sums on deposit therein
as additional security for the Obligations, and at any time during the
continuance of an Event of Default, Agent shall have all the rights specified in
this Loan Agreement or in the other Loan Documents with respect to the Operating
Account, in each case subject to the Manager SNDA.  Subject to the Manager SNDA,
Property Manager (or Loan Parties) may make deposits into and receive
withdrawals from the Operating Account to pay for Operating Expenses and for all
other purposes except to the extent prohibited by this Loan Agreement.  On each
Payment Date during the continuance of a Cash Sweep Condition, an amount equal
to the Cash Collateral Payment Amount shall be deposited by Loan Parties (or
Property Manager) into the Cash Collateral Account for application in accordance
with Section 3.2.

 

Section 3.2            Cash Collateral Account; Cash Sweep Letter of Credit.

 

(a)           If a Cash Sweep Condition shall exist, then on the immediately
succeeding Payment Date and on each Payment Date thereafter during the
continuance of such Cash Sweep Condition, Loan Parties shall (or shall cause
Property Manager to) deposit an amount equal to the Cash Collateral Payment
Amount into an Account (the “Cash Collateral Account”) as additional, cash
collateral for the Obligations; provided, that, if an Account Agreement has not
been fully executed with respect to such Cash Collateral Account, such Cash
Collateral Payment Amount shall be held by Agent until the applicable Account
Agreement is delivered (which funds shall be deposited by Agent in such Account
upon the execution and delivery of the Account Agreement).  Provided that no
Event of Default or monetary Default shall then be continuing, any funds in the
Cash Collateral Account that have not been previously disbursed or applied shall
be disbursed to Loan Parties upon the termination of such Cash Sweep Condition;
provided further, that, if such Cash Sweep Condition shall exist for four
(4) consecutive Testing Determination Dates, then Agent, may, if directed by the
Requisite Lenders, apply all or any portion of the sums then on deposit in the
Cash Collateral Account to the Obligations as set forth in Section 2.4(c) (or,
to the extent that a Cash Sweep Letter of Credit has been delivered to Agent,
draw on such Cash Sweep Letter of Credit and apply the proceeds thereof to the

 

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Obligations, in either case in such order as Agent may elect).  Any amounts not
applied to the Obligations in accordance with the previous sentence after a Cash
Sweep Condition shall have existed for four (4) consecutive Testing
Determination Dates shall, subject to Section 3.5, be held as cash collateral
for the Obligations for the remainder of the Term.  Neither the application by
Agent of sums on deposit in the Cash Collateral Account to the Obligations nor
the application of proceeds of a Cash Sweep Letter of Credit to the Obligations
shall be subject to payment of a Prepayment Fee.

 

(b)           If Loan Parties shall have delivered a Cash Sweep Letter of Credit
to Agent so as to prevent the occurrence of a Cash Sweep Condition (in
accordance with the definition of Cash Sweep Condition in Section 1.1), then,
provided that no Default or Event of Default shall then be continuing, Agent
shall return such Cash Sweep Letter of Credit, (i) within ten (10) Business Days
after the date on which the Cash Sweep Period which would have (in Agent’s
determination) commenced in the absence of the delivery of such Cash Sweep
Letter of Credit would have (in Agent’s reasonable and good faith determination)
ended or (ii) in any event, upon repayment of the Obligations (other than
Contingent Obligations) (or with respect to a repayment of the Obligations where
the Appraised Value (as set forth in an Appraisal which is not dated more than
thirty (30) days prior to the date of such repayment) is less than the
Obligations (other than Contingent Obligations), one hundred (100) days after
such prepayment).

 

(c)           In addition, Agent shall have the rights with respect to any Cash
Sweep Letter of Credit set forth in Section 3.6.

 

Section 3.3            Tenant Security Account.

 

(a)           Loan Parties shall comply with all Legal Requirements in all
material respects and the applicable Lease with respect to any security given
under any Lease (excluding the Ground Lease or Operating Lease).  Subject to the
foregoing and if required by applicable Legal Requirements, Loan Parties shall
deposit or cause to be deposited all Security Deposits under the Leases into an
account with a bank or other financial institution approved by Agent (the
“Tenant Security Account”) within two (2) Business Days after receipt.  Subject
to the terms of the applicable Leases and Legal Requirements, Loan Parties
hereby grant to Agent and Lenders a security interest in all rights of Loan
Parties in and to the Tenant Security Account and all sums on deposit therein as
additional security for the Obligations.

 

(b)           Loan Parties shall not withdraw any sums from the Tenant Security
Account or apply any Security Deposits if an Acceleration Event is continuing,
except as provided below.  Loan Parties may make withdrawals from the Tenant
Security Account at any time when an Acceleration Event is continuing, provided
the proceeds are (i) applied in the ordinary course of business to sums due
under the applicable Lease when the terms of such Lease or applicable Legal
Requirements permit the application thereof or (ii) returned to the applicable
Lessee pursuant to Legal Requirements or the terms of the applicable Lease which
require Loan Parties to return such Security Deposit.  If an Acceleration Event
is continuing, neither Loan Parties nor any other Person shall have any right
to, and each Loan Party covenants that it shall not, withdraw any amounts from
the Tenant Security Account or apply any Security Deposits, except as may be
approved by Agent or as may be required by the terms of the applicable Lease or
by Legal Requirements.  If, during the continuance of an Acceleration Event,

 

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either Loan Party is required pursuant to the terms of the applicable Lease or
applicable Legal Requirements to return any Security Deposit to the applicable
Lessee, such Loan Party shall deliver a notice to Agent certifying same and
stating the reason therefor.  Agent shall promptly, at Agent’s option and at
such Loan Party’s sole cost and expense, either permit such Loan Party to return
the Security Deposit to the applicable Lessee or, if Agent elects, cause such
Security Deposit to be returned directly to the applicable Lessee.

 

(c)           Within ten (10) Business Days of Agent’s request therefor during
the continuance of an Event of Default, Loan Parties shall transfer (to the
extent transferable) to the name of Agent and deliver to Agent all original
Lease Letters of Credit obtained by Loan Parties promptly after receipt of same,
together with reasonable evidence that all fees payable to the issuer on account
of such assignment and transfer have been paid.  Subject to the terms of the
applicable Lease and Legal Requirements, each Loan Party hereby grants to Agent
and Lenders a security interest in all rights of Loan Parties in and to all
Lease Letters of Credit, including all proceeds thereof, as additional security
for the Obligations.  In addition to all other rights and remedies of Agent and
Lenders, Agent may, and to the extent necessary in order to do so, each Loan
Party hereby grants to Agent an irrevocable power of attorney, coupled with an
interest, and Agent shall be entitled to act pursuant to such power following an
Event of Default that shall have occurred and be continuing by reason of a
failure to comply with the terms of this Section 3.3, solely to draw upon or
otherwise realize on each such Lease Letters of Credit in accordance with its
terms, applicable Legal Requirements and those of the applicable Lease.

 

(d)           If a Loan Party is entitled to make a drawing on any Lease Letter
of Credit which is being held by Agent in accordance with Section 3.3(c) above
under the terms of the applicable Lease, Lease Letter of Credit or Legal
Requirements, Agent shall, at such Loan Party’s sole cost and expense,
re-transfer such Lease Letter of Credit to such Loan Party in trust for the
benefit of Agent and subject to Agent’s security interest, provided that such
Loan Party delivers to Agent a written request certifying that such Loan Party
is entitled to draw on the applicable Lease Letter of Credit, and indicating the
applicable Lease and Lease Letter of Credit, the amount of the draw and the
reasons for such draw.  Loan Parties shall hold any such Lease Letter of Credit
solely for the purpose of drawing or realizing thereon in accordance with the
provisions of the applicable Lease or Lease Letter of Credit and Legal
Requirements and, during the continuance of an Event of Default, shall promptly
remit the proceeds of any such drawing to Agent and Agent shall apply the same
in reduction of the Obligations in such order as Agent shall elect, unless the
drawing is being made to liquidate any Lease Letter of Credit because the issuer
thereof has elected to cancel or not to renew same or for any other reason not
arising from a default by the Lessee in which case the applicable Loan Party
shall deposit such proceeds in the Tenant Security Account.  The original of any
Lease Letters of Credit (to the extent not fully drawn) delivered to Loan
Parties under this Section 3.3(d) shall be promptly re-assigned, transferred (to
the extent transferrable) and re-delivered to Agent following Loan Parties’ draw
on same.  If either Loan Party is required by the terms of the applicable Lease
or applicable Legal Requirements to return any Lease Letter of Credit to the
Lessee, Agent shall, at such Loan Party’s sole cost and expense, re-assign and
transfer (to the extent transferable) and deliver possession of such original
Lease Letter of Credit to such Loan Party provided such Loan Party delivers to
Agent a written request for same, certifying the foregoing and indicating the
applicable Lease and Lease Letter of Credit and the reasons for such return. 
Upon a Loan Party’s receipt, such Loan Party shall promptly return the same to
the applicable Lessee.  At

 

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Agent’s election and at such Loan Party’s sole cost and expense, instead of
delivering such Lease Letter of Credit to such Loan Party, Agent may timely
return same to the applicable Lessee.  If a Lease permits a Lessee to re-post a
new Lease Letter of Credit, or to amend an existing Lease Letter of Credit,
Agent will permit same and cooperate with such Loan Party to effect same, at
such Loan Party’s sole cost and expense.

 

Section 3.4            Capital/FF&E Reserve Account Funding the Capital/FF&E
Reserve Account.  On each Payment Date Loan Parties shall, or shall cause
Property Manager to, deposit the Capital/FF&E Reserve Amount for the month prior
to the immediately preceding calendar month in an interest-bearing account (the
“Capital/FF&E Reserve Account”) at Agent and under Agent’s sole dominion and
control as more particularly set forth in the applicable Account Agreement, but
subject to the Manager SNDA.  All amounts deposited into the Capital/FF&E
Reserve Account by or on account of Loan Parties shall be held and applied in
accordance with the terms of this Loan Agreement.  Subject to the restrictions
on disbursements from the Capital/FF&E Reserve Account contained in this
Section 3.4, any interest on amounts held in the Capital/FF&E Reserve Account
shall accrue for the benefit of Loan Parties  and may be used by Loan Parties
for the payment of Capital/FF&E Expenditures pursuant to Section 3.4(b) hereof.

 

(b)           Disbursements.  Loan Parties (or Property Manager) may withdraw
from the Capital/FF&E Reserve Account amounts to pay for Capital/FF&E
Expenditures (provided that, during a Cash Sweep Condition (except in the case
of an emergency), Loan Parties (or Property Manager) shall not make more than
one withdrawal in any calendar month) subject to satisfaction of the following
conditions:

 

(i)            at the time of making of such request and at the time a
withdrawal is to be made, no Acceleration Event shall have occurred and be
continuing;

 

(ii)           the Capital/FF&E Expenditures that are the subject of the
disbursement request were identified in an Approved Capital/FF&E Expenditures
Budget or are otherwise approved in writing by Agent (which approval shall not
be unreasonably withheld, conditioned or delayed), except with respect to
Capital/FF&E Expenditures made on account of an emergency;

 

(iii)          except in the case of an emergency, Loan Parties (or Property
Manager) shall have delivered to Agent, if a Cash Sweep Condition is then in
effect, a written request for the withdrawal at least ten (10) Business Days
prior to the date requested for the withdrawal, which shall include (x) a
certificate of a duly authorized officer of Loan Parties certifying as to the
matters set forth in the preceding clauses (i) through (iii) above, (y) invoices
or bills for the payment of the Capital/FF&E Expenditures which are the subject
of such withdrawal request, and (z) the total amount of the requested
withdrawal.

 

Notwithstanding anything set forth herein to the contrary, subject to the terms
of the Manager SNDA, so long as the Management Agreement (or a replacement
management agreement with Hilton or any Affiliate thereof) is in effect, Manager
shall have the right

 

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to use funds in the “Capital Renewals Reserve” and “Capital Renewals Account” in
accordance with the Management Agreement.

 

Section 3.5            Security Interest in Accounts.  Loan Parties hereby grant
to Agent a security interest in all rights of Loan Parties in and to the
Accounts and all sums on deposit therein.  Loan Parties shall cause all banks or
financial institutions other than Agent which are holding any Account to execute
and deliver to Agent an Account Agreement with respect to such Account.  Subject
to the rights of Loan Parties (or Property Manager) expressly set forth herein
to make withdrawals from the Accounts, and subject to the Manager SNDA, Loan
Parties hereby acknowledge and agree that Agent shall have sole dominion and
control of the Accounts as more particularly described in the Account
Agreements.  Loan Parties shall not close any Account without obtaining the
prior written consent of Agent, or to the extent that such closed Account is not
immediately replaced with another Account which shall be subject to a security
interest in favor of Agent, the Requisite Lenders.  Loan Parties shall not open
any Account other than the Accounts open as of the Closing Date (whether in
substitution of another Account or otherwise) (a) without delivering to Agent at
least ten (10) Business Days prior notice of Loan Parties’ intention to open a
new Account and (b) unless, (i) the bank or other financial institution at which
such Account is to be opened is reasonably acceptable to Agent and (ii) prior to
the opening of such Account, Loan Parties shall have delivered to Agent an
Account Agreement with respect to such Account.  Loan Parties shall maintain the
Accounts and shall pay all fees and charges payable to the depository bank with
respect thereto when due, and shall keep in full force and effect the Account
Agreement with respect thereto.  All interest earned on amounts deposited in any
Accounts shall be re-deposited therein and become part thereof.  No funds in any
Account may be commingled with any other funds of Loan Parties, Property
Manager, any Affiliate of Loan Parties or Property Manager or with any other
Person or with any funds contained in any other Account; provided, that, the
funds in any Account held by Agent, may be commingled with the general funds of
Agent.  Agent shall not be liable for any loss of interest on or any penalty or
charge assessed against the funds in, payable on, or credited to any Account as
a result of the exercise by Agent of any of its rights, remedies or obligations
under any of the Loan Documents.  All sums held in the Accounts shall constitute
additional security for the Obligations.  At any time following the occurrence
and during the continuance of an Event of Default, Agent may (at the direction
of the Requisite Lenders) apply such sums (except with respect to the Tenant
Security Account) as set forth in Section 7.5, subject to the Manager SNDA.

 

Section 3.6            Letters of Credit.

 

(a)           Each Letter of Credit (other than a Lease Letter of Credit)
delivered to Agent in accordance with this Loan Agreement shall be held by Agent
subject to the terms and conditions of this Loan Agreement and this Section 3.6.

 

(b)           Neither Loan Parties nor the applicant/obligor under any Letter of
Credit shall be entitled to draw upon any such Letter of Credit.  If a Loan
Party shall, at any time, receive notice that the bank issuing such Letter of
Credit has ceased to be an Approved Bank, such Loan Party shall within twenty
(20) Business Days after receipt of such notice replace such Letter of Credit
with another Letter of Credit in the same amount as the replaced Letter of
Credit, which new Letter of Credit shall be issued by a bank that is an Approved
Bank.  Agent shall

 

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reasonably cooperate with Loan Parties to cause any such Letter of Credit to be
cancelled timely so that any collateral securing such Letter of Credit may be
used to issue the replacement Letter of Credit.

 

(c)           Each Letter of Credit delivered by or on behalf of a Loan Party
under this Loan Agreement shall be additional security for the payment of the
Obligations so long as such Letter of Credit continues to be held by Agent in
accordance with this Loan Agreement.  Upon the occurrence and during the
continuance of an Event of Default, Agent shall have the right, at its option,
to draw on any such Letter of Credit and to apply the proceeds thereof to
payment of the Obligations in such order, proportion or priority as Agent may
determine.  Any such application to the Obligations after an Event of Default
which occurs prior to the Par Prepayment Date shall be subject to the Spread
Maintenance Premium (if prior to the Permitted Prepayment Date) or the
Prepayment Fee (if on or after the Permitted Prepayment Date but prior to the
Par Prepayment Date), as applicable, to the extent of the principal reduction
and further, only to the extent that in such circumstances the Prepayment Fee or
the Spread Maintenance Premium, as the case may be, would otherwise be payable
under the terms of this Loan Agreement.  Each Letter of Credit not previously
returned to a Loan Party in accordance with the terms of this Loan Agreement
shall be returned to such Loan Party promptly after repayment of the Obligations
(other than Contingent Obligations), (or with respect to a repayment of the
Obligations where the Appraised Value (as set forth in an Appraisal which is not
dated more than thirty (30) days prior to the date of such repayment) is less
than the Obligations (other than Contingent Obligations), one hundred (100) days
after such prepayment).

 

(d)           In addition to any other right Agent may have to draw upon a
Letter of Credit pursuant to the terms and conditions of this Loan Agreement,
Agent shall have the additional rights to draw in full any Letter of Credit
(unless such Letter of Credit is required to be re-delivered to a Loan Party
under the other terms of this Loan Agreement):  (i) with respect to any
evergreen Letter of Credit, if Agent has received a notice from the issuing bank
that such Letter of Credit will not be renewed and a substitute Letter of Credit
is not provided at least ten (10) days prior to the date on which such Letter of
Credit is scheduled to expire; (ii) with respect to any Letter of Credit with a
stated expiration date, if Agent has not received a notice from the issuing bank
that it has renewed such Letter of Credit at least ten (10) days prior to the
date on which such Letter of Credit is scheduled to expire and a substitute
Letter of Credit is not provided at least ten (10) days prior to the date on
which such outstanding Letter of Credit is scheduled to expire; (iii) upon
receipt of notice from the issuing bank that any Letter of Credit will be
terminated and has not been replaced within ten (10) days of such notice;
(iv) if Agent has received notice that the bank issuing such Letter of Credit
shall cease to be an Approved Bank and Loan Parties shall not have replaced such
Letter of Credit with a Letter of Credit issued by an Approved Bank within
twenty (20) Business Days after notice thereof; or (v) if either Loan Party
shall become a debtor in a Bankruptcy Proceeding within ninety (90) days after
the prepayment of all or any portion of the Loan.  Notwithstanding anything to
the contrary contained in the above, Agent is not obligated to draw any Letter
of Credit upon the happening of an event specified in (i), (ii), (iii), (iv) or
(v) above and shall not be liable for any losses sustained by Loan Parties due
to the insolvency of the bank issuing any Letter of Credit if Agent has not
drawn such Letter of Credit.

 

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(e)                                  This Section 3.6 shall not apply or govern
with respect to any Lease Letters of Credit.

 

ARTICLE IV

 

CONDITIONS PRECEDENT TO THE
EFFECTIVENESS OF THIS LOAN AGREEMENT

 

This Loan Agreement shall not be effective until the following conditions shall
have been satisfied, except to the extent that Agent may elect (which election
may be made without written or express notice of such waiver) to irrevocably
waive any such conditions:

 

Section 4.1                                   Representations and Warranties. 
The representations and warranties made by Loan Parties and Guarantor in the
Loan Documents and in any certificate, document, or financial or other statement
furnished by Loan Parties or Guarantor pursuant to or in connection therewith,
shall be true and correct in all material respects on and as of the Closing
Date.

 

Section 4.2                                   Closing Documents, Etc.  Agent
shall have received fully executed and, where appropriate, acknowledged
counterparts of this Loan Agreement, each of the other Loan Documents and all
other documents, agreements, instruments, certificates and other items which are
expressly required under the Loan Documents or Agent shall otherwise require,
each of which shall be dated as of the Closing Date, unless otherwise expressly
stated (all of which shall be in such form, substance and content as Agent shall
require).

 

Section 4.3                                   Payment of Fees and Expenses. 
Agent and Lenders shall have received payment of all fees and expenses required
to be paid pursuant to the Loan Fee Letter, this Loan Agreement or the other
Loan Documents, including Section 6.14.

 

Section 4.4                                   No Default or Event of Default. 
No Default or Event of Default shall have occurred and be continuing.

 

Section 4.5                                   No Casualty or Taking.  No
Casualty shall have occurred to any portion of the Premises.  No Taking of any
portion of the Premises or any modification, realignment or relocation of any
streets or roadways abutting the Premises or denial of access to the Premises,
from any point of access (public or private), shall have occurred or be
threatened or pending.

 

Section 4.6                                   Financial Statements.  Loan
Parties shall have delivered to Agent such balance sheets and other financial
statements of Loan Parties and Guarantor as Agent and/or any Lender may
reasonably request.

 

Section 4.7                                   Loan-To-Value.  Agent shall have
confirmed in accordance with its internal underwriting criteria and standards
that the Loan-to-Value Ratio shall not exceed sixty five percent (65%).

 

Section 4.8                                   Compliance with Other Conditions. 
Loan Parties and Guarantor shall have complied fully with all other conditions
to funding set forth in the Term Sheet.

 

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Section 4.9                                   Other Documents.  Loan Parties
shall have delivered to Agent such other documents, instruments, opinions,
reports, estoppel certificates and approvals as Agent or Agent’s Counsel shall
have requested.

 

Section 4.10                            Adverse Conditions; Internal Approval. 
Agent shall be satisfied that there has been no material disruption or material
adverse change in financial, banking or capital market conditions that could
materially impair the sale or syndication of the Loan and that there has been no
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, and shall have
received all internal underwriting approvals to make the Loan and otherwise
pertaining to Loan Parties and all other relevant parties.

 

The conditions precedent in this Article IV shall be deemed satisfied or waived
upon the authorization of Agent and Lenders to release the Loan proceeds from
the closing escrow established among Agent, Loan Parties and the Title Company.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

To induce Lenders to make the Loan and to induce Lenders and Agent to enter into
this Loan Agreement and to perform Lenders’ and Agent’s obligations hereunder,
Loan Parties hereby represent and warrant to Agent and Lenders as follows as of
the date hereof (which representations and warranties shall survive (but shall
not be re-made or deemed to be made or re-made after the date hereof) the
execution and delivery of this Loan Agreement and the other Loan Documents,
regardless of any investigation made by Agent or Lenders or on its or their
behalf), except to the extent (if any) disclosed on Schedule 5 hereto with
reference to a specific Section of this Article V:

 

Section 5.1                                   Due Organization.  Each Loan Party
is duly organized and validly existing under the laws of the state of its
formation and duly qualified to do business in the state where the Premises are
located.  Each Loan Party has all necessary limited liability company power and
authority to own or lease the Mortgaged Property and to conduct its business as
presently conducted and to enter into and perform its obligations under this
Loan Agreement and the other Loan Documents to which it is a party, and all
other agreements and instruments to be executed by Loan Parties, in connection
herewith and therewith.  Attached to the Loan Parties’ Certificate is a true and
correct organizational chart of Loan Parties as of the Closing Date as to the
entities shown thereon.

 

Section 5.2                                   Due Execution.  This Loan
Agreement and the other Loan Documents to which each Loan Party is a party have
been duly executed and delivered, and all necessary actions have been taken to
authorize each Loan Party to perform its obligations hereunder and thereunder.

 

Section 5.3                                   Enforceability.  This Loan
Agreement and the other Loan Documents to which each Loan Party is a party
constitute legal, valid and binding obligations of

 

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each Loan Party, subject to principles of equity, bankruptcy, insolvency and
other laws generally affecting creditors’ rights and enforcement of debtors’
obligations.

 

Section 5.4                                   No Violation.  The consummation of
the transactions herein contemplated, the execution and delivery of this Loan
Agreement, the other Loan Documents to which each Loan Party is a party, and all
other agreements and instruments to be executed by each Loan Party in connection
herewith and therewith, and the performance by each Loan Party of its
obligations hereunder and thereunder, do not and will not (a) violate any Legal
Requirement currently in effect, (b) result in a breach of any of the terms,
conditions or provisions of, or constitute a default under any mortgage, deed of
trust, indenture, agreement, permit, franchise, license, note or instrument to
which each Loan Party is a party or by which it or any of its properties is
bound to the extent that any such breach is reasonably likely to result in a
Material Adverse Effect, (c) result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the assets of either
Loan Party or any Guarantor (except as contemplated by this Loan Agreement and
by the other Loan Documents) or (d) violate any provision of any organizational
documents of either Loan Party.  Neither Loan Party is in default with respect
to any Legal Requirement currently in effect relating to its formation or
organization.

 

Section 5.5                                   No Litigation.  There are no
actions, suits or proceedings at law or in equity or before or instituted by any
Governmental Authority pending to which each Loan Party or any Guarantor is a
party, or, to either Loan Party’s actual knowledge, threatened (in writing),
against or affecting either Loan Party, Guarantor, the Premises, the Collateral
or any material part thereof (including any condemnation or eminent domain
proceeding against the Premises, or any part thereof) which is reasonably likely
to result in a Material Adverse Effect.

 

Section 5.6                                   No Default or Event of Default. 
No Default or Event of Default has occurred and is continuing.

 

Section 5.7                                   Offsets, Defenses, Etc.  Neither
Loan Party has an offsets, defenses or counterclaims against its obligations
under the Loan Documents as of the Closing Date, any and all such offsets,
defenses and counterclaims, if any, being waived by Loan Parties.

 

Section 5.8                                   Consents.  All consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, or other actions with respect to or by, any Governmental
Authorities or any party to any Permitted Encumbrance that are required in
connection with the valid execution, delivery and performance by Loan Parties of
this Loan Agreement and the other Loan Documents have been obtained and are in
full force and effect.

 

Section 5.9                                   Financial Statements and Other
Information.  All statements of financial condition and related schedules of
Loan Parties and Guarantor heretofore delivered to Agent or any Lender (when
taken together) are true, correct and complete in all material respects, fairly
present the financial conditions of the subjects thereof as of the respective
dates thereof and have been prepared in accordance with Applicable Accounting
Standards.  No material adverse change has occurred in the financial conditions
reflected in the most recent of the aforesaid statements of financial condition
and related schedules since the respective dates thereof.  Neither the aforesaid
statements of financial condition and related schedules nor any

 

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written certificate, statement, document or information furnished to Agent, any
Lender, Agent’s Counsel or to any other Person at the request of Agent or any
Lender by or on behalf of Loan Parties or any Affiliate of Loan Parties in
connection with or related to the transactions contemplated hereby, when taken
together, nor any representation nor warranty in this Loan Agreement or any
other Loan Document, when taken together, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein or herein not materially misleading in light of the
circumstances under which it was furnished.  Notwithstanding anything herein to
the contrary, no representation or warranty is made with respect to any
projections made by or on behalf of Loan Parties or Property Manager in respect
of the Premises, Loan Parties or any Sponsor other than that such projections
have been made by Loan Parties in good faith.

 

Section 5.10                            Full Disclosure.  To Loan Parties’
actual knowledge, there is no material fact pertaining to Loan Parties, Sponsor,
the Premises or the Collateral known to Loan Parties that Loan Parties have not
disclosed to or is not known by Agent that is reasonably likely to result in a
Material Adverse Effect.

 

Section 5.11                            Accounts.  All Accounts of Loan Parties
or of any other Person, held on behalf of or for the benefit of Loan Parties
which are required to be established pursuant to this Loan Agreement or any
other Loan Document and which are not held at or by Agent, including the account
number of each Account and the name and address of the financial institution at
which each Account is held, are as set forth on Schedule 5.11 attached hereto. 
Loan Parties have no other Accounts except those held at Agent and those set
forth on said schedule.

 

Section 5.12                            Indebtedness.  Loan Parties are not
currently indebted or in contract for any Indebtedness, and are not otherwise
liable in respect of any Indebtedness, other than Permitted Indebtedness and are
not holding out their credit as being available to satisfy the obligations of
any other Person.

 

Section 5.13                            Insurance Policies.  The Insurance
Policies required to be maintained pursuant to this Loan Agreement are in full
force and effect.

 

Section 5.14                            Availability of Utilities and Access.
All utility services and facilities necessary for the current operation, use and
occupancy of the Premises are available at the boundaries of the Premises,
including water supply, storm and sanitary sewer facilities, gas and electric
and telephone facilities.  The Premises have direct physical access to and from
at least one public road.

 

Section 5.15                            No Liens.  Except for the Loan Documents
and Permitted Encumbrances, Loan Parties have not made, assumed or been assigned
any contract or arrangement of any kind, the performance of which by the other
party thereto would give rise to a Lien against all or any portion of the
Collateral.  There exists no Lien on any direct or, with respect to holders of
indirect interests equal to or greater than twenty percent (20%), indirect
equity or beneficial interest in Loan Parties, other to the extent of Liens
which constitute Permitted Encumbrances and/or Permitted Transfers.

 

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Section 5.16                            Compliance with Legal Requirements.  The
Legal Requirements, including zoning ordinances and regulations, permit the
current operation, use and occupancy of the Premises in all material respects. 
All Operating Permits for the existing use and operation of the Premises have
been obtained and are in full force and effect, except those Operating Permits
(if any) the failure of which to possess would not be reasonably likely to
result in a Material Adverse Effect and all conditions to the continued
effectiveness of such permits have been satisfied in all material respects,
except to the extent that the failure to comply is not reasonably likely to have
a Material Adverse Effect.  There are no pending or, to Loan Parties’ actual
knowledge, threatened (in writing) actions, suits or proceedings to revoke,
attach, invalidate, rescind or modify the ordinances and regulations currently
in effect and to which the Premises or any of the Operating Permits as currently
existing are subject, in each case, to the extent that any such revocation,
attachment, invalidation, rescission or modification is reasonably likely to
have a Material Adverse Effect.  Loan Parties, the Premises and the existing
uses thereof comply in all material respects with all Legal Requirements,
including all applicable zoning ordinances and regulations and building codes.

 

Section 5.17                            Certain Agreements.  Each Loan Party has
delivered to Agent true, correct and complete copies of any unrecorded Permitted
Encumbrances, the Management Agreement and the Premises Documents.  No default
or failure of performance in any material respect by Loan Parties exists under
the Management Agreement, any Material Operating Agreement in effect as of the
Closing Date, the Premises Documents or any Permitted Encumbrance, and each of
said documents is in full force and effect.  To Loan Parties’ knowledge, there
are no offsets, claims or defenses to the enforcement by Loan Parties of the
Management Agreement, the Premises Documents, any Material Operating Agreement
or Permitted Encumbrance presently outstanding and Loan Parties have not
received a notice of default under the Management Agreement, the Premises
Documents, any Material Operating Agreement or any Permitted Encumbrance, in
each case, which is reasonably likely to result in a Material Adverse Effect. 
No Material Operating Agreement, Premises Document or unrecorded Permitted
Encumbrance contains any option to purchase or right of first refusal to
purchase the Mortgaged Property or any part thereof.  There are no Operating
Agreements which are Material Operating Agreements except those set forth on
Schedule 5.17 attached hereto.  The Management Agreement is in full force and
effect and is valid and enforceable.  Neither the Premises Documents nor the
Management Agreement, if any, has been amended, modified, terminated, assigned
or otherwise changed, or the provisions thereof waived by Loan Parties, except
as permitted hereunder.  To Loan Parties’ knowledge, no default exists and no
grounds for termination by Loan Parties or any other party to the Premises
Documents or the Management Agreement exists and no event exists which, with the
giving of notice or passage of any cure period, or both, would constitute a
default thereunder or give rise to any right of any party thereto to terminate
same.  To Loan Parties’ knowledge, there are no offsets, claims or defenses to
the enforcement by Loan Parties of the Management Agreement, if any.  Except as
set forth in the limited liability company agreement of Loan Parties, the
Management Agreement and the Manager SNDA, taken together, represent the entire
agreement between Loan Parties and Property Manager with respect to the
management of the Premises, and there are no other agreements or
representations, written or oral, between Loan Parties and Property Manager with
respect to thereto.  The Management Agreement, if any, does not contain any
option to purchase or right of first refusal to purchase the Mortgaged Property
or any part thereof.

 

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Section 5.18                            Security Documents.  The provisions of
each Security Document are effective to create, in favor of Agent for the
benefit of itself and Lenders, a legal, valid and enforceable Lien on or
security interest in all of Loan Parties’ right, title and interest of Loan
Parties  in the collateral described therein, to the extent a Lien or security
interest can be created therein (it being acknowledged and agreed to by Agent
and Lenders that no representation or warranty is made with respect to any
collateral description purporting to cover “all assets” or “all personal
property” of any Person, or using similar language) under the governing law
specified in such Security Document, and when the appropriate recordings and
filings have been effected in public offices, each of the Security Documents
will create a perfected Lien on and security interest in all right, title,
estate and interest in the collateral described therein, prior and superior to
all other Liens to the extent perfection can be achieved by such recording and
filing, subject to the Permitted Encumbrances except as permitted under the Loan
Documents.

 

Section 5.19                            Casualty and Taking.  No Casualty has
occurred to any portion of the Premises that has not been repaired.  No Taking
of any portion of the Premises, or modification, realignment or relocation of
any streets or roadways abutting the Premises or denial of access to the
Premises from any point of access (public or private), has occurred or is
pending,  or, to Loan Parties’ knowledge, has been threatened in writing.

 

Section 5.20                            Brokerage.  Loan Parties have not dealt
with any brokers or “finders” in connection with the Loan other than Eastdil
Secured Broker Services, Inc. and Chatham Financial Corp.

 

Section 5.21                            Encroachments.  Other than as disclosed
on the Survey, the Premises do not encroach upon any building line, setback
line, side yard line, any Permitted Encumbrance or any other recorded easement
or any visible easement or other easement of which Loan Parties are aware,
except in the case of immaterial encroachments which are either permitted
pursuant to the Permitted Encumbrances currently in effect or are affirmatively
insured over in the Title Policy, or encroach over any property line of the
Land.

 

Section 5.22                            Foreign Person.  Neither Loan Party is a
“foreign person” within the meaning of Section 1445 or 7701 of the IRC.

 

Section 5.23                            Control Person.  Neither Loan Party is,
and no Person having “control” (as that term is defined in 12 U.S.C. § 375b or
in regulations promulgated pursuant thereto) of either Loan Party is, an
“executive officer,” “director,” or “person who directly or indirectly or in
concert with one or more persons, owns, controls, or has the power to vote more
than ten percent (10%) of any class of voting securities” (as those terms are
defined in 12 U.S.C. § 375b or in regulations promulgated pursuant thereto) of
any Lender, of a bank holding company of which any Lender is a subsidiary, or of
any other subsidiary of a bank holding company of which any Lender is a
subsidiary.

 

Section 5.24                            Government Regulation.  Neither Loan
Party is an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940.  Neither
Loan Party is engaged principally, or as one of its important activities, in the
business of extending, or arranging for the extension of, credit for the purpose
of “purchasing or carrying any margin stock,” within the meaning of Regulation U
of

 

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the Board of Governors of the Federal Reserve System.  No portion of the assets
of either Loan Party consists of any such margin stock, and no part of the
proceeds of the Loan shall be used to purchase or carry any such margin stock
within the meaning of said regulation or to extend credit to others for such
purpose.

 

Section 5.25                            ERISA.  None of the assets of either
Loan Party constitute or, as long as any Obligations remain outstanding, will
constitute “Plan Assets” of one or more such plans within the meaning of 29
C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA; and neither Loan
Party is nor, as long as any Obligation remains outstanding, will it be a
“governmental plan” within the meaning of § 3(3) of ERISA.  Each Pension Plan is
in compliance in all material respects with all applicable provisions of ERISA,
the IRC and other requirements of applicable law.  There has been no, nor is
there reasonably expected to occur any, ERISA Event that could reasonably be
expected to, alone or in the aggregate with all other ERISA Events, result in
material liability to Loan Parties.  Neither Loan Parties nor any ERISA
Affiliate has incurred any Withdrawal Liability as a result of a complete
withdrawal as of the date hereof from any Multiemployer Plan.

 

Section 5.26                            Labor Relations.  Neither Loan Party is
a party to any collective bargaining agreement other than (i) the Agreement
between Borrower and the International Union of Operating Engineers Local 501
dated as of September 1, 2010 and (ii) the Agreement between Borrower and Unite
Here Local #30 effective as of February 3, 2010.  There are no material
grievances, disputes or controversies with any union or any other organization
of employees at the Premises, including employees of Loan Parties, or threats of
strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization.

 

Section 5.27                            Name; Principal Place of Business. 
Except as set forth in Section 5.28, Loan Parties do not use nor will Loan
Parties use any trade name and have not done nor will it do business under any
name other than Loan Parties’ actual names set forth herein.  The principal
place of business of Loan Parties is as stated in the first paragraph of this
Loan Agreement.

 

Section 5.28                            Intellectual Property.  Loan Parties
shall notify Agent of any trademark (other than “The Hilton San Diego Bayfront
Hotel”) used by Loan Parties in connection with the Premises.  Agent may make
any filing, at Loan Parties’ sole cost and expense, with the United States
Patent and Trademark Office or otherwise in order to obtain and perfect a
security interest in such trademarks which are owned by Loan Parties.  To Loan
Parties’ knowledge, there exists no claim by any Person that contests or
questions Loan Parties’ right to use all applicable patents, trademarks,
copyrights, technology, know-how and processes necessary for the conduct of the
business and the operation of the Premises by Loan Parties or Property Manager
substantially in the manner currently conducted and operated.  To Loan Parties’
knowledge, there are no claims and there is no infringement of the rights of any
Person, arising from the use of such patents, trademarks, copyrights,
technology, know-how and processes by Loan Parties.  To Loan Parties’ knowledge,
there is no infringement by any third party on any rights of Loan Parties in any
of their intellectual property.  No name or logo used by Loan Parties in
connection with the Premises or any part thereof or business therein is a

 

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registered tradename or trademark, other than the intellectual property licensed
or used by Property Manager or tradenames or trademarks registered by Loan
Parties.

 

Section 5.29                            Flood Zone.  Other than as disclosed on
the Survey or in any flood hazard certificate delivered to Agent, neither the
Premises nor any portion thereof is located within an area that has been
designated or identified as an area having special flood hazards by the
Secretary of Housing and Urban Development of the United States or by such other
official as shall from time to time be authorized by federal or state law to
make such designation pursuant to the National Flood Insurance Act of 1968, as
such act may from time to time be amended, or pursuant to any other national,
state, county or city program of flood control.

 

Section 5.30                            Taxes.  All material tax returns
required to be filed by Loan Parties in any jurisdiction have been filed and all
material taxes, assessments, fees, and other governmental charges upon Loan
Parties or upon any of its properties, income or franchises have been paid that
are required to be paid prior to the time that the non-payment of such taxes
could give rise to a lien on any asset of Loan Parties, unless such tax,
assessment, fee or charge is being contested in accordance with Section 6.8
hereof.  To Loan Parties’ knowledge, there is no material proposed tax
assessment against the Premises which are in addition to those assessments
currently affecting the Premises or any basis for such new assessment which is
material and not being contested in good faith by Loan Parties through
appropriate proceedings after the establishment of appropriate reserves therefor
with Agent’s approval.  The Land is separately assessed from all other adjacent
land for purposes of real estate taxes, and for all purposes may be dealt with
as an independent parcel.

 

Section 5.31                            Title.  Borrower has a good, marketable
and indefeasible leasehold estate in the real property comprising the Mortgaged
Property and Operating Lessee has a good, marketable and indefeasible
sub-leasehold estate in the real property comprising the Mortgaged Property, in
each case subject to no Liens or encumbrances other than the Permitted
Encumbrances.  Each Loan Party owns its Personal Property free and clear of all
Liens and encumbrances other than Permitted Encumbrances.

 

Section 5.32                            Creditworthiness.  Both before and
immediately after entering into each of the Loan Documents to which it is a
party, Loan Parties are  able to pay their debts and other obligations when due
and has a positive net worth.

 

Section 5.33                            Patriot Act.  Neither Loan Parties nor,
any Persons holding any legal or beneficial interest in Loan Parties, whether
directly or indirectly:  (a) appear on any Government List; (b) are included in,
owned by, Controlled by, acting for or on behalf of, providing assistance,
support, sponsorship, or services of any kind to any of the Persons referred to
or described in any Government List; (c) to Loan Parties’ knowledge, have
conducted business with or engaged in any transaction with any Person named on
any Government List or any Person included in, owned by, Controlled by, acting
for or on behalf of, providing assistance, support, sponsorship, or services of
any kind to any of the Persons referred to or described in any Government List
in contravention of applicable Legal Requirements; (d) are Persons who have been
determined by competent authority to be subject to the prohibitions contained in
Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar
prohibitions contained in the rules and regulations of OFAC or in any enabling
legislation or other

 

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Presidential Executive Orders in respect thereof; (e) have been previously
indicted for or convicted of any felony involving a crime or crimes or moral
turpitude or for Patriot Act Offense; or (f) are currently under investigation
by any Governmental Authority for alleged criminal activity.  Borrower is the
ultimate beneficiary of the Loan.

 

Section 5.34                            Leases.  A true, correct and complete
copy (in all material respects) of the most recent rent roll for the Leases in
effect for the Premises as of the Closing Date is attached to Loan Parties’
Certificate (such rent roll and any rent roll for the Premises subsequently
delivered to Agent, a “Rent Roll”).  As of the Closing Date, there are no Leases
with respect to the Premises other than the Leases that are set forth on the
Rent Roll which is attached to the Loan Parties’ Certificate.  Except as set
forth on the Rent Roll or any estoppels:  (a) each Lease is in full force and
effect; (b) all Rents due and payable under the Leases have been paid and no
portion of any Rent has been paid for any period more than thirty (30) days in
advance; (c) the fixed rent payable under each Lease is the amount of fixed rent
set forth in the Rent Roll, and, to Loan Parties’ actual knowledge, there is no
claim or basis for a claim by the Lessee thereunder for an adjustment to such
fixed rent; (d) no Lessee has made any material written claim against Loan
Parties or Property Manager that remains outstanding that either Loan Party is
in default under its applicable Lease; (e) no material default has occurred by
Loan Parties or, to Loan Parties’ actual knowledge, any Lessee under any Lease,
and no event which, with the giving of notice or passage of time, or both, would
constitute a material default under any Lease by Loan Parties or, to Loan
Parties’ actual knowledge, any Lessee, has occurred; (f) each Lease is the
valid, binding and enforceable obligation of Loan Parties, as applicable and, to
Loan Parties’ actual knowledge, the applicable Lessee thereunder; (g) all
Security Deposits under the Leases are as set forth on the Rent Roll and are
held pursuant to Section 3.3 and Loan Parties and Property Manager, if any, are
in compliance with all Legal Requirements in all material respects with respect
to all Security Deposits; (h) no use restriction contained in any Lease,
Permitted Encumbrance or Premises Document is violated by any use permitted
under any other Lease, any Permitted Encumbrances or any Premises Document where
such violation is reasonably likely to result in a Material Adverse Effect;
(i) no Lease contains any option to purchase or right of first refusal to
purchase the Premises or any part thereof; (j) to Loan Parties’ actual
knowledge, no Lease has been assigned or sublet by any tenant to any Person; and
(k) to Loan Parties’ knowledge, no Lessee has (i) consented to the appointment
of a conservator, receiver, trustee, custodian or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to it or of or relating to all, or substantially all,
of its property, or for the winding-up or liquidation of its affairs,
(ii) admitted in writing its inability to pay its debts generally as they become
due, (iii) filed a petition, or otherwise instituted, or consented to the
institution against it, of proceedings to take advantage of any law relating to
bankruptcy, insolvency or reorganization or the relief of debtors, (iv) made an
assignment for the benefit of its creditors or (v) suspended payment of its
obligations.  Nothing in this Section 5.34 shall apply or extend to the Ground
Lease or Operating Lease.

 

Section 5.35                            Special Purpose Entity.  Each Loan Party
is a Single Purpose Entity and has been a Single Purpose Entity since its
formation.

 

Section 5.36                            Intentionally Deleted.

 

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Section 5.37                            Ground Lease.(a)   Recording;
Modification.  A memorandum of ground lease has been duly recorded (or shall be
recorded at closing prior to the recordation of the Deed of Trust).  The Ground
Lease permits the interest of Borrower thereunder to be encumbered by a
mortgage.

 

(b)                                 No Liens.  Except for the Permitted
Encumbrances, Borrower’s interest in the Ground Lease is not subject to any
Liens or encumbrances superior to, of equal priority with, or subordinate to the
Deed of Trust.

 

(c)                                  Default.  As of the date hereof, the Ground
Lease is in full force and effect, there is no default on the part of Borrower
thereunder and, to Borrower’s knowledge, (i) no default on the part of Ground
Lessor exists thereunder and (ii) there is no existing condition which, but for
the passage of time or the giving of notice, would result in a default by
Borrower under the terms of the Ground Lease.  Neither Borrower nor Ground
Lessor has commenced any action or given or received any notice for the purpose
of terminating the Ground Lease.

 

ARTICLE VI

 

GENERAL AND OPERATIONAL COVENANTS

 

Section 6.1                                   Financial Statements, Reports and
Documents of Loan Parties.  Loan Parties shall deliver to Agent each of the
following:

 

(a)                                  Annual Financial Statements.  Within one
hundred and twenty (120) days after the close of each fiscal year of Loan
Parties, financial statements of Loan Parties for such period, which shall
include a detailed balance sheet, statement of operations (income and expenses),
statement of cash flow and statement of changes in members’ or partners’ capital
or shareholder’s equity, as applicable, and contingent liability schedule in
form reasonably acceptable to Agent, prepared in accordance with Applicable
Accounting Standards.  Such financial statements shall be certified by Loan
Parties as being true, correct and complete in all material respects and fairly
presenting the financial position of Loan Parties as of the date of such
statement and audited by and accompanied by an opinion thereon by an independent
certified public accounting firm selected by Loan Parties and reasonably
acceptable to Agent, which audit shall be unqualified as to the scope of audit
and state that such financial statements were prepared in accordance with
Applicable Accounting Standards, and that the examination of such accounting
firm in connection with such financial statements has been made in accordance
with generally accepted auditing standards (provided that, the annual financial
statements of Loan Parties shall not be required to be audited if (i) the annual
financial statements of such Loan Parties are audited in connection with the
audit of the REIT’s annual financial statements and (ii) the annual financial
statements of the REIT are delivered to Agent within one hundred and twenty
(120) days after the close of its fiscal year).

 

(b)                                 Quarterly Financial Statements.

 

(i)                                     Within forty five (45) days after the
end of each Calendar Quarter (other than the Calendar Quarter ending
December 31st of any year), Loan Parties shall deliver (or shall cause Property
Manager to deliver) to Agent:

 

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(A)                              a rent roll containing the names of all
Lessees, the term and expiration date of their respective Leases, the space
occupied, the rents payable and the Security Deposits, if any, thereunder, and
the name of any Lease guarantor thereof;

 

(B)                                the balance sheet of Loan Parties prepared in
accordance with Applicable Accounting Standards and certified by Loan Parties as
being true, correct and complete in all material respects and fairly presenting
the financial position of Loan Parties as of the date of such statement;

 

(C)                                statement of operations (income and
expenses);

 

(D)                               statement of cash flow; and

 

(E)                                 a comparison of the balance sheet and
statement of operations to the to the applicable Calendar Quarter of the then 
previous year.

 

Each of the foregoing items shall be certified by Loan Parties (or Property
Manager) as being true, correct and complete in all material respects and the
items described in clauses (B), (C) and (D) shall be prepared in accordance with
Applicable Accounting Standards.

 

(c)                                  Compliance Certificate.  Within forty five
(45) days after the end of each of the Calendar Quarters in any fiscal year of
Loan Parties, a certificate (a “Quarterly Compliance Statement”) executed by
Loan Parties which certificate shall (i) set forth the Adjusted Debt Service
Coverage Ratio as of the Testing Determination Date occurring as of the end of
such Calendar Quarter (together with the calculation thereof), (ii) set forth
the Debt Service Coverage Ratio as of the Testing Determination Date occurring
as of the end of such Calendar Quarter (together with the calculation thereof),
(iii) certify that to the knowledge of Loan Parties, no Event of Default shall
exist as of the date of such statement, and, if so, stating the facts with
respect thereto, and (iv) contain such other statements pertaining to the
operations of the Premises as Agent may reasonably request.

 

(d)                                 Notices by Governmental Authorities. 
Promptly upon Loan Parties’ receipt of same, true and complete copies of any
official written notice, claim or complaint by any Governmental Authority
pertaining to Loan Parties, Property Manager or Guarantor, the Premises, the
Collateral, Loan Parties’ rights under any Permitted Encumbrance or any
Operating Permit obtained by Loan Parties, in each case, which is reasonably
likely to have a Material Adverse Effect, including any written notice from a
public authority concerning any tax or special assessment, or any notice of any
alleged violation of any zoning ordinance and any written notice of any Taking
or other eminent domain action or proceeding affecting or threatened in writing
against any portion of the Premises.

 

(e)                                  Annual Budgets.  No later than
December 31st of each calendar year, a copy of the preliminary operating and
capital expense budget for the Premises for the following calendar year.  No
later than March 31st of each calendar year, Loan Parties shall deliver to Agent
a copy of the final operating and capital expense budget for the Premises for
such calendar year.

 

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(f)                                    Monthly Reports. As soon as practical,
but in any event no later than thirty (30) days after the end of each calendar
month, Loan Parties shall deliver (or cause Property Manager to deliver) (w) a
monthly operating statement of the Premises which statement shall (1) reflect
the cash flow and operations of the Premises for such calendar month and on a
year-to-date basis and (2) set forth the Gross Revenues, FF&E Gross Revenues,
Operating Expenses, required deposits into the Capital/FF&E Reserve Account and
Cash Collateral Payment Amount, if any, for such calendar month, (x) the Smith
Travel Research STAR report for the Premises for such month, (y) the monthly
Ground Lease rent credit reconciliation prepared by Property Manager for such
calendar and (z) the monthly Ground Lease rent calculation prepared by Property
Manager for such calendar month.

 

(g)                                 Management.  Except as otherwise set forth
in Section 6.1(h), contemporaneous with Loan Parties’ receipt or giving of same,
a copy of all financial statements and reports provided to or by Loan Parties
pursuant to the Management Agreement and any material notice or other material
written communication (other than communications subject to a joint defense and
communication agreement) given under, pursuant to or in connection with the
Management Agreement.

 

(h)                                 Notification by Loan Parties.  The following
notifications:

 

(i)                                     promptly upon Loan Parties’ learning
thereof, any litigation or proceeding before any Governmental Authority or any
mediation or arbitration with respect to Loan Parties, Guarantor, the Premises,
the Collateral, Loan Parties’ rights under any Permitted Encumbrance, or any
license, permit or approval obtained by Loan Parties or the Liens securing the
Obligations, in each case, provided same is reasonably likely to have a Material
Adverse Effect, including any challenge to or appeal of any Operating Permit or
zoning applicable to the Premises, specifying the nature and status thereof, and
any material determinations in all such litigation, proceedings, mediations and
arbitrations to the extent an unfavorable ruling in such litigation, proceeding,
arbitration or mediation is reasonably likely to have a Material Adverse Effect;

 

(ii)                                  within ten (10) Business Days after Loan
Parties’ learning thereof, of any acceleration of any material Indebtedness of
Loan Parties;

 

(iii)                               within ten (10) Business Days after the
occurrence thereof, of any name change or change in fiscal year of Loan Parties;

 

(iv)                              promptly upon the occurrence thereof, a copy
of any material amendment to any organizational document of Loan Parties, and
promptly following Agent’s request (not to be made more frequently than twice
per fiscal year of Loan Parties), a list or organizational chart of the owners
of direct or indirect beneficial and equitable interests in Loan Parties in the
form and scope attached to the Loan Parties’ Certificate;

 

(v)                                 promptly upon Loan Parties’ learning
thereof, any breach, default or failure of performance by any party under, or
any notice that a party has challenged or denied the validity or enforceability
of any material Permitted Encumbrances, any

 

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Material Operating Agreement, the Management Agreement or any material other
agreement, contract, or other instrument to which any Loan Party is a party or
by which any of its properties are bound to the extent the same is reasonably
likely to have a Material Adverse Effect;

 

(vi)                              promptly upon Loan Parties’ learning thereof,
any Event of Default.

 

(vii)                           promptly upon Loan Parties’ learning thereof,
the occurrence or existence, as applicable, of any act, event, condition or
state of facts which in Loan Parties’ reasonable judgment, is reasonably likely
to result in a Material Adverse Effect;

 

(viii)                        promptly upon Loan Parties’ learning thereof, any
material adverse claim against or affecting Loan Parties, the Premises, the
Collateral, Loan Parties’ rights under any Permitted Encumbrance or any license,
permit or approval obtained by Loan Parties or the Liens securing the
Obligations to the extent the same is reasonably likely to result in a Material
Adverse Effect;

 

(ix)                                (i) within ten (10) days after Loan Parties
or any ERISA Affiliate knows or has reason to know that any ERISA Event has
occurred, written notice describing such event; (ii) within ten (10) days after
Loan Parties or any ERISA Affiliate knows or has reason to know that a request
for a minimum funding waiver under IRC Section 412 has been filed with respect
to any Pension Plan or Multiemployer Plan, a written statement of Loan Parties
describing such ERISA Event or waiver request and the action, if any, Loan
Parties and ERISA Affiliates propose to take with respect thereto and a copy of
any notice filed with the PBGC or the Internal Revenue Service pertaining
thereto; (iii) within thirty (30) days after Loan Parties or any ERISA Affiliate
knows or has reason to know that there has been a material increase in the
unfunded pension liability of any Pension Plan, notice of such occurrence;
(iv) simultaneously with the date that Loan Parties or any ERISA Affiliate files
a notice of intent to terminate any Pension Plan, if such termination would
reasonably be expected to require material additional contributions in order to
be considered a standard termination within the meaning of Section 4041(b) of
ERISA, a copy of each notice; and (v) within ten (10) days after Loan Parties or
any ERISA Affiliate adopts a new Pension Plan or becomes obligated to contribute
to a Multiemployer Plan, written notice describing same;

 

(x)                                   other than statements and reports which
are expressly referred to in  Section 6.1(a), Section 6.1(b) or Section 6.1(h),
promptly following Loan Parties’ receipt or giving of same, a copy of all
material statements and reports provided to or by a Loan Parties pursuant to the
Management Agreement and any material notice or other material written
communication given under, pursuant to or in connection with the Management
Agreement; and

 

(xi)                                within ten (10) days of a Loan Parties’
receipt or giving of same, a copy of any written notice under, pursuant to or in
connection with any Lease, (i) alleging a default by any Loan Parties or Lessee
thereunder (provided that, with respect to a Lease which is not a Material
Lease, such notice under this clause (i) shall not be required

 

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unless and until such default has continued beyond applicable notice and cure
periods) or (ii) exercising a renewal, extension, expansion or termination
option thereunder.

 

(i)                                     Notice Regarding Contracts.  Promptly
following the occurrence thereof, notification of any material changes in any
Material Operating Agreement, and with respect to any other contracts which are
necessary for the operation of the Premises, including elevator maintenance
agreements, agreements with respect to electricity, gas, water, and telephone
service (both local and long distance), heating, ventilating and air
conditioning, and other major mechanical maintenance agreements, Loan Parties
will (or will cause Property Manager to) notify Agent if any such contracts are
not renewed or replaced with similar agreements upon their expiration or
termination.

 

(j)                                     Capital/FF&E Expenditures Budget.  As
soon as available, but in no event prior to the end of each fiscal year of Loan
Parties, Loan Parties shall deliver (y) a copy of the preliminary Capital/FF&E
Expenditures Budget and (z) a copy of the operating budget  approved by Loan
Parties and Property Manager, each for the next fiscal year of Loan Parties. 
Loan Parties shall not approve any Capital/FF&E Expenditures Budget without
Agent’s approval, which approval shall not be unreasonably withheld, conditioned
or delayed.  Agent’s failure to approve or disapprove any Capital/FF&E
Expenditures Budget or revision thereto within fifteen (15) days after Agent’s
receipt thereof shall be deemed to constitute Agent’s approval thereof.  No
Approved Capital/FF&E Expenditures Budget shall be amended or modified without
the prior consent of Agent, which consent shall not be unreasonably withheld,
conditioned or delayed.  Except in the case of an emergency or variances not
exceeding ten percent (10%) in respect of the applicable line item and ten
percent (10%) in the aggregate, no operating budget shall be materially amended
or modified without delivering a copy of such amendment or modification to Agent
at ten (10) days prior to the effectiveness thereof.  Notwithstanding the
foregoing, (1) so long as Hilton (or any Affiliate thereof) is Property Manager,
Agent shall not disapprove any the Capital/FF&E Expenditures Budget or any
amendments thereto or modifications thereof to the extent that such disapproval
would prevent the maintenance and operation of the Premises in accordance with
the standards set forth in the “Operating Manual” (as defined in the Management
Agreement) and (2) so long as the applicable Management Agreement is in effect
(y) any Capital/FF&E Expenditures Budget in effect by operation of the dispute
resolution provisions of Section 12.4 of such Management Agreement and (z) any
variance from (including any additional expenditures to) any Approved
Capital/FF&E Expenditures Budget permitted under Section 4.2.6 of the Management
Agreement shall be deemed approved by Agent.

 

(k)                                  Estoppel Certificates.

 

(i)                                     Within ten (10) Business Days after
request therefor from Agent (such request not to be made more than once per
fiscal year of Loan Parties except in connection with an assignment or
participation of a Lender’s interest in the Loan in accordance with
Article VIII), Loan Parties will deliver to Agent a certificate executed by Loan
Parties, stating (1) the amount due under the Note and this Loan Agreement,
(2) any known offsets or defenses to the payment of the Obligations, if any,
(3) that this Loan Agreement and the other Loan Documents have not been modified
or if modified, giving particulars of such modification and (4) that as of the
date of such certificate, to Loan

 

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Parties’ best knowledge, no Event of Default has occurred and is continuing or,
if any such Event of Default has occurred and is continuing, describing in
reasonable detail each such Event of Default and the action, if any, taken or
being taken to cure the same, and such other information regarding the Loan, the
Premises and Loan Parties as Agent reasonably requests.

 

(ii)                                  Within ten (10) Business Days after
request therefor from Loan Parties or Guarantor, Agent will deliver to Loan
Parties a certificate executed by Agent, stating (1) the amount due under the
Note and this Loan Agreement, (2) any offsets or defenses to the payment of the
Obligations, if any, (3) that this Loan Agreement and the other Loan Documents
have not been modified or if modified, giving particulars of such modification
and (4) that as of the date of such certificate whether or not Agent has sent
any notice of default under the Loan Documents which remains uncured in the
opinion of Agent.

 

(l)                                     Other Information.  Promptly upon
Agent’s request and at Loan Parties’ sole cost and expense, such other
information concerning the business, properties, or financial condition of Loan
Parties and Guarantor, including the performance of their obligations under the
Loan Documents, as Agent shall reasonably request.

 

Section 6.2                                   Marketing, Management, Maintenance
and Repairs.

 

(a)                                  The Premises shall at all times be managed
exclusively by Property Manager under the Management Agreement in a manner
consistent in all material respects with Comparable Standards.  Loan Parties
shall cause the Management Agreement to remain in full force and effect at all
times, except as replaced in accordance with this Section 6.2, and subject to
the application of the dispute resolution mechanism set forth in Section 12.4 of
the Management Agreement, shall comply with the Management Agreement in all
material respects at all times.  In the event Property Manager is replaced, Loan
Parties shall cause the replacement manager to enter into a manager
subordination, non-disturbance and attornment agreement substantially in the
form of the Manager SNDA (and with changes thereto reasonably acceptable to the
Requisite Lenders).  Operating Lessee shall not, without the prior consent of
the Requisite Lenders, surrender, terminate or cancel the Management Agreement. 
Operating Lessee shall not modify, amend or supplement any term or provision of
the Management Agreement which would increase Loan Parties’ economic obligations
thereunder, enter into any agreement in substitution for the Management
Agreement, or consent to the assignment of the Management Agreement without, in
each instance, the Requisite Lenders’ prior consent.  Operating Lessee shall
comply in all material respects with all terms of the Management Agreement. 
During the continuance of an Event of Default, Agent (with the consent of the
Requisite Lenders) shall have the right, subject to the Manager SNDA (i) to
terminate or require that Operating Lessee terminate, the Management Agreement
and (ii) require Loan Parties upon such termination to engage a replacement
manager reasonably acceptable to the Requisite Lenders and the Ground Lessor
pursuant to a replacement management agreement reasonably acceptable to the
Requisite Lenders and on commercially reasonable terms.

 

(b)                                 Loan Parties shall not commit or permit any
physical waste of or to the Premises or other Improvements, structures and
equipment thereon (provided that the occurrence

 

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of a Casualty shall not constitute a breach of such covenant so long as Loan
Parties performs their obligations under Section 6.12(c)).  Loan Parties shall
promptly, diligently and continuously restore, replace or rebuild or cause to be
restored, replaced or rebuilt any part of and Improvements on the Premises
damaged or destroyed by any Casualty (including any Casualty for which insurance
was not obtained or obtainable) or which may be affected by any Taking, in
accordance with the Loan Documents.  Loan Parties shall promptly replace, or
caused to be replaced, any part of the Premises taken by theft to the extent
necessary to comply with the provisions of this Section 6.2(b).  All such
repairs, renewals and replacements shall be substantially similar in quality,
value and class to that of the Improvements which are the subject of such
repairs, renewals and replacements.

 

(c)                                  Loan Parties shall cause the Premises to be
at all times operated, managed and, without limiting Section 6.2(b) hereof,
maintained, at all times and in the manner and accordance with the standards
required pursuant to the Management Agreement (including all marketing,
advertising, promotional and reservation programs in all material respects), but
in no event below Comparable Standards.

 

(d)                                 The Management Agreement, including all of
Property Manager’s rights thereunder, subject to the terms of the Manager SNDA,
shall at all times be unconditionally subject, junior and subordinate to the
terms and the Lien of this Loan Agreement, the Deed of Trust and the other Loan
Documents to the extent set forth in the Manager SNDA.

 

(e)                                  Loan Parties shall not consent to any
assignment by Property Manager of its rights and obligations under the
Management Agreement without the prior written consent of the Requisite Lenders,
noting, that for the purpose of avoiding any ambiguity, that Property Manager
may assign its rights and obligations under the Management Agreement without the
consent of Loan Parties to the extent that Loan Parties’ consent is not required
under the Management Agreement (without giving effect to any subsequent
amendment thereof) and the consent of Ground Lessor is not required under the
Ground Lease (without giving effect to any subsequent amendment thereof).

 

Section 6.3                                   Inspection of Premises and Books
and Records.

 

(a)                                  Subject to the rights of Lessees and hotel
guests, Loan Parties will permit Agent and Lenders or designated representatives
of Agent and Lenders to enter upon and inspect the Premises, or any part
thereof, in an emergency and at all other times during normal business hours and
upon reasonable notice, provided that such inspection shall be made in a way to
minimize any disruption to the operation of the Premises.

 

(b)                                 Agent shall have no duty to make any
inspection nor shall Agent incur any liability or obligation for not making any
such inspection or, once having undertaken any such inspection, for making the
inspection, not making the same carefully or properly, or for not completing the
same; nor shall the fact that such inspection may not have been made by Agent
relieve Loan Parties of any obligations that it may otherwise have under the
Loan Documents.

 

(c)                                  Loan Parties shall at all times keep
complete and accurate books, records and accounts of its transactions.  At Loan
Parties’ expense (but not more than two times in any

 

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twelve (12) month period, unless an Event of Default shall be continuing), Loan
Parties shall permit any representative of Agent, at all times during normal
business hours upon reasonable notice, to examine and copy the books and records
of Loan Parties, and all contracts, statements, invoices, bills, and claims for
labor, materials, and services supplied for the construction, reconstruction,
maintenance, operation and repair of the Premises in the possession of Loan
Parties, Property Manager or any Affiliate of Loan Parties.  Loan Parties shall
have no obligation to disclose materials (y) which are protected by
attorney-client privilege or (z) to the extent the disclosure thereof would
violate confidentiality obligations of Loan Parties, Property Manager or such
Affiliate.

 

Section 6.4                                   Compliance with Legal, Insurance
and Contractual Requirements.

 

(a)                                  Subject to Loan Parties’ right to contest
as set forth in Section 6.8, Loan Parties, at its sole cost and expense, shall
in all material respects comply and cause compliance of the Premises and the
construction, use, occupancy, possession, operation, management, maintenance and
ownership thereof, in all material respects of all Legal Requirements and all
Insurance Requirements whether or not compliance therewith shall require changes
in, or interfere with the use and enjoyment of, the Premises or any part
thereof.  Subject to Loan Parties’ rights under Section 6.8, Loan  Parties shall
preserve and maintain all of their material rights, privileges, licenses and
Operating Permits necessary to operate the Premises in accordance with
Section 6.2 hereof.  Agent shall not have any obligation or responsibility
whatsoever for any matter incident to the Premises or the maintenance and
operation of the Premises.  Subject to Loan  Parties’ right to contest Legal
Requirements in accordance with Section 6.8, Loan  Parties agree that all
consents, approvals, orders or authorizations of, or registrations, declarations
or filings with, or other actions with respect to or by, any Governmental
Authorities required for the operation and maintenance of the Premises will be
obtained when required, except where the failure to obtain is not reasonably
likely to have a Material Adverse Effect.

 

(b)                                 Each Loan Party, at its sole cost and
expense, shall comply with all of its material covenants, obligations,
agreements and undertakings under the Premises Documents, the Permitted
Encumbrances and the Material Operating Agreements to the extent that failure to
comply is reasonably likely to result in a Material Adverse Effect, and shall
use commercially reasonable efforts to secure the performance of the obligations
of the other parties thereto.  Loan Parties shall keep in full force and effect
and not terminate, cancel, surrender, materially modify, materially amend or
enter into any agreement in substitution for any Permitted Encumbrance, any
Premises Document or any Material Operating Agreement to the extent the same is
reasonably likely to result in a Material Adverse Effect, in each case without
the prior consent of the Requisite Lenders, which consent shall not be
unreasonably withheld, conditioned or delayed.

 

Section 6.5                                   Appraisals.

 

(a)                                  Agent shall be entitled to obtain, at Loan
Parties’ expense, an Appraisal or Appraisal Update (as applicable) at Agent’s
election if one or more of the following circumstances apply:

 

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(i)                                     at any time that an Event of Default has
occurred and is continuing;

 

(ii)                                  in connection with the foreclosure of the
Deed of Trust or the granting of a deed-in-lieu thereof or the exercise of other
remedies against Loan  Parties hereunder;

 

(iii)                               if required for regulatory purposes
applicable to Agent or any Lender;

 

(iv)                              if required to determine the satisfaction of
the condition described in Section 6.12(d)(i)(F) of this Loan Agreement; and

 

(v)                                 at any other time requested by any Lender
from and after November 10, 2012; provided, that, Loan Parties shall not be
required to pay for more than one (1) Appraisal or Appraisal Update under clause
(iii) or this clause (v) in any twenty-four (24) month period.

 

Loan Parties shall reasonably cooperate with Agent and any such appraiser and
their agents and employees in connection with Appraisals and Appraisal Updates.

 

(b)                                 Nothing in this Loan Agreement shall require
Loan Parties to cause the maintenance of any Loan-to-Value Ratio after the
Closing Date (except as set forth in Section 6.12(d)(i)(G)), and the statements
and conclusions set forth in any Appraisal or Appraisal Update shall in no event
give rise to a Default or an Event of Default.

 

(c)                                  For any Appraisal or Appraisal Update paid
for by Loan Parties, Agent shall deliver a copy of such Appraisal or Appraisal
Update to Loan Parties and Sponsor upon a request from any of them.

 

Section 6.6                                   Payment of Impositions.  Subject
to Loan Parties’ right to contest as set forth in Section 6.8, Loan Parties
shall pay or cause to be paid all Impositions on or before the due date thereof
and in any event before any fine, penalty, interest or cost may be added for
non-payment.  Loan Parties promptly shall deliver to Agent after payment of any
Imposition and at other times, upon request, copies of official receipts or
other evidence reasonably satisfactory to Agent evidencing the payment of the
Impositions.

 

Section 6.7                                   Liens and Encumbrances; Ownership
of Collateral.  Borrower shall at all times be the owner of, and have marketable
legal, beneficial and indefeasable leasehold title to the Premises, subject only
to the Permitted Encumbrances.  Loan Parties shall at all times be the sole and
absolute owner of and have legal and beneficial title to the other Collateral,
free and clear of any Lien but subject to the Permitted Encumbrances and the
Loan Documents, provided that Loan Parties shall be entitled to contest the
validity of the demands of mechanics, materialmen, laborers and others which, if
unpaid, might result in a Lien (each, a “Mechanic’s Claim”) in accordance with
Section 6.8.  In furtherance of the foregoing, (a) Loan Parties shall not make,
grant, modify or terminate any rights of way or use, declarations, transfers of
air rights, other declarations, zoning lot development agreements, privileges,
franchises, licenses, servitudes, easements and other encumbrances over, under
or on the Land or

 

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Improvements or any portion thereof, without the prior consent of the Requisite
Lenders, which consent shall not be unreasonably withheld, conditioned or
delayed and (b) Loan Parties shall not directly or indirectly create or permit
or suffer to be created any Lien on Loan Parties’ interest in the Collateral or
any part thereof, other than the Permitted Encumbrances and the Loan Documents. 
Subject to its rights under Section 6.8, no Loan Party shall directly or
indirectly suffer or permit, and shall promptly discharge or cause to be
discharged, any Lien on any direct or indirect equity or beneficial interest in
a Loan Party or any Person directly or indirectly holding an equity or
beneficial interest in either Loan Party except for Permitted Encumbrances.

 

Section 6.8                                   Permitted Contests.  Each Loan
Party, at its sole cost and expense, may contest, or cause to be contested, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition,
Mechanic’s Claim, Legal Requirement, utility payment or Insurance Requirement
and defer the payment thereof or compliance therewith, subject, however, to the
following conditions:

 

(i)                                     in the case of an unpaid Imposition,
such proceedings shall suspend the collection thereof from Loan Parties, Agent,
Lenders and the Mortgaged Property and other Collateral;

 

(ii)                                  neither the Mortgaged Property, the other
Collateral, any Rents nor any part thereof or interest therein with a market or
replacement value in excess of $100,000 in the aggregate over the term of the
Loan would be in any imminent danger of being sold, forfeited, terminated,
canceled or lost in any respect;

 

(iii)                               in the case of a Legal Requirement, Loan
Parties would not be in danger of criminal liability for failure to comply
therewith and neither Agent nor any Lender would be in danger of any civil or
criminal liability for Loan Parties’ failure to comply therewith;

 

(iv)                              Loan Parties shall have furnished such
security, if any, as may be required in the proceedings, or, if none is
required, as may be reasonably and in good faith requested by Agent to ensure
the payment of any Imposition or the compliance with any Legal Requirement or
Insurance Requirement, as the case may be, together with any interest or
penalties which become due in connection therewith;

 

(v)                                 the non-payment of the whole or any part of
any tax, assessment or charge during the pendency of any such action will not
result in the delivery of a tax deed to the Mortgaged Property or any part
thereof, because of such non-payment;

 

(vi)                              the payment of any sums required to be paid
under this Loan Agreement and the other Loan Documents (other than any unpaid
Imposition, Mechanic’s Claim, Legal Requirement or Insurance Requirement at the
time being contested in accordance with this Section 6.8) shall not be
interfered with or otherwise adversely affected;

 

(vii)                           in the case of any Insurance Requirement, the
failure of Loan Parties to comply therewith shall not affect the validity or
effectiveness of any insurance required to be maintained by Loan Parties under
Section 6.11;

 

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(viii)                        each Loan Party complies with any and all
conditions or requirements set forth in any other agreement to which such Loan
Party is a party or pursuant to which the Premises is bound with respect to such
contest where the failure to comply therewith is reasonably likely to result in
a Material Adverse Effect; and

 

(ix)                                Loan Parties give Agent prompt written
notice of the commencement of such permitted contest.

 

provided, that, the conditions set forth in clauses (i), (iii), (iv), (v) and
(vii) shall not be conditions to a permitted contest pursuant to this
Section 6.8 if Loan Parties pay and otherwise comply with such Imposition,
Mechanic’s Claim, Legal Requirement or Insurance Requirement.

 

Section 6.9                                   Alterations.

 

(a)                                  All repairs and alterations at the Premises
shall be done in a good and workmanlike manner and shall be completed in
accordance with all Legal Requirements in all material respects and, subject to
the Permitted Encumbrances, free and clear of Liens or claims for materials
supplied or for labor or services performed in connection with such repairs and
alterations or otherwise.

 

(b)                                 Neither Agent’s nor any Lender’s prior
approval shall be required in connection with any alterations or repairs to the
Improvements (including entering into any contract regarding such alterations or
repairs) which is not a Material Alteration.

 

(c)                                  Loan Parties shall not perform any Material
Alteration without the Requisite Lenders’ prior written consent, which consent
shall be conditioned on the satisfaction of the following conditions but shall
not be unreasonably withheld or delayed:

 

(i)                                     the Requisite Lenders shall have
determined in their reasonable discretion that (x) each Loan Party has the
financial resources to complete the Material Alteration on a timely and
lien-free basis and (y) the Material Alteration can be completed prior to the
Maturity Date;

 

(ii)                                  is applicable considering the size, scope
and nature of the alteration or repair, Agent shall have received architectural
or engineering plans and specifications for the Material Alteration and an
estimate of the costs and expenses of such Material Alteration, all of which
shall be reasonably acceptable to Agent and Agent’s construction consultants;

 

(iii)                               if requested by Agent, Agent shall have
received copies of the agreements pursuant to which the Material Alteration
shall be done all of which shall be in form and substance reasonably
satisfactory to the Requisite Lenders and, which also shall be reasonably
satisfactory to the Requisite Lenders as to the party performing the
construction obligations thereunder;

 

(iv)                              Agent shall have received the assignment to
Agent of all construction and design-professional contracts related to the
Material Alteration, together with the written consent to such assignments by
all parties to such contracts (which may

 

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be included in any such contract), all of which shall be in form and substance
reasonably satisfactory to Agent;

 

(v)                                 with respect to any Material Alteration
which is being performed in connection with a new Lease, such Lease shall have
been approved by Agent if required under Section 6.10;

 

(vi)                              Agent shall have received all authorizations,
consents and approvals given by and licenses and permits issued by Governmental
Authorities that are required and then obtainable for the performance of the
Material Alterations in accordance with all Legal Requirements, each of which
shall be reasonably acceptable to Agent and Agent’s construction consultants;

 

(vii)                           with respect to any proposed Material Alteration
which will increase the rentable square footage of the Premises, Agent shall
have received evidence reasonably satisfactory to Agent that the Premises, after
giving effect to such Material Alteration, comply with applicable zoning
regulations; and

 

(viii)                        Agent shall have received such other information
and documentation as Agent may reasonably request regarding the Material
Alteration and the cost thereof.

 

Loan Parties shall not perform any Material Alteration except in compliance with
this Section 6.9.  After completion of the Material Alteration, Loan Parties
shall provide Agent with a copy of the as-built plans and specifications for
same, if available.  Notwithstanding anything to the contrary set forth herein,
the approval by Agent of a Lease in accordance with this Loan Agreement which
requires the performance of a Material Alteration shall constitute approval of
such Material Alteration under this Section 6.9 (provided that Loan Parties
shall be required to satisfy the conditions set forth in clauses (ii) through
(iv) and (vi) through (vii) of this Section 6.9(c).

 

(d)                                 Agent’s Inspection.  From time to time and
upon not less than two (2) Business Days’ prior notice to Loan Parties, Loan
Parties shall permit Agent, Lenders and their agents and representatives, to
enter upon the Premises during normal business hours for the purpose of
inspection of a Material Alteration, provided that such inspection shall be
conducted in such a manner as to minimize any disruption to the operation of the
Premises.  Upon Agent’s reasonable request, Loan Parties shall to the extent
available provide to Agent a copy of:

 

(i)                                     All materials, plans, specifications and
drawings, including drawings marked up to reflect as-built conditions,
substitutions and approved changes pertaining to the performance of the Material
Alteration;

 

(ii)                                  Any material contracts, bills of sale,
statements, receipts or vouchers pertaining to the Material Alteration; and

 

(iii)                               All books and records of Loan Parties
pertaining to the Material Alteration, including all work done, labor performed
or materials furnished.

 

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provided, however, Loan Parties shall have no obligation to disclose materials
(y) which are protected by attorney-client privilege or (z) to the extent the
disclosure thereof would violate confidentiality obligations of Loan Parties,
Property Manager or such Affiliate.

 

(e)                                  This Section 6.9 shall not apply to any
rebuilding, repair or restoration being performed under Section 6.12 or 6.13.

 

Section 6.10                            Leases.

 

(a)                                  Loan Parties shall not materially amend,
materially modify, terminate, consent to the assignment (unless required to do
so under the applicable Material Lease and excluding any assignment pursuant to
any Loan Document) or surrender of, or grant a waiver of any material provision
or right of Loan Parties under, or otherwise materially supplement any Material
Lease or any guaranty thereof or subject to Section 6.10(b), any Minor Lease or
any guaranty thereof (each, a “Material Lease Action”) without Requisite
Lenders’ prior consent in the case of a Material Lease or Agent’s prior consent
in the case of a Minor Lease or enter into a Material Lease or any Minor Lease
that does not satisfy the requirements of clause (ii) of Section 6.10(b) without
Requisite Lenders’ prior consent in the case of a Material Lease or Agent’s
prior consent in the case of such a Minor Lease, which consent shall not be
unreasonably withheld, conditioned or delayed.  Prior to seeking Requisite
Lenders’ consent to enter into any Material Lease, Loan Parties shall deliver to
Agent and Lenders a copy of such proposed lease (a “Proposed Material Lease”). 
Subject to clause (h) below, Agent (with the approval of Requisite Lenders where
required) shall approve or disapprove each Proposed Material Lease or Material
Lease Action for which Agent’s and/or Requisite Lenders’, as applicable,
approval is required under this Loan Agreement within ten (10) Business Days of
the submission by Loan Parties to Agent and each Lender of a written request for
such approval, accompanied by a final copy of the Proposed Material Lease,
non-conforming Minor Leases or Material Lease Action.  If requested by Loan
Parties, Agent and Requisite Lenders, as applicable, will grant conditional
approvals of Proposed Material Leases, non-conforming Minor Leases or proposed
Material Lease Actions at any stage of the leasing process, including from
initial “term sheet” through negotiated lease drafts, provided that Agent and
Requisite Lenders, as applicable, shall retain the right to disapprove any such
Proposed Material Lease, non-conforming Minor Lease or proposed Material Lease
Action, if subsequent to any preliminary approval material changes are made to
the terms previously approved by Agent and/or Requisite Lenders, as applicable,
or additional material terms are added that had not previously been considered
and approved by Agent and/or Requisite Lenders, as applicable, in connection
with such Proposed Material Lease, non-conforming Minor Lease or proposed
Material Lease Action.  Notwithstanding anything set forth herein to the
contrary, Agent’s and/or Requisite Lenders, as applicable, consent shall not be
required for any renewal, extension, expansion, termination, assignment or
subletting of or any action with respect to, a Lease unilaterally exercised by
the tenant thereunder in accordance with the provisions of such Lease.  Without
limiting this Section 6.10(a), Loan Parties shall deliver to Agent a copy of any
Material Lease and any amendment, modification or supplement thereof within ten
(10) Business Days after the execution and delivery thereof.

 

(b)                                 Notwithstanding the provisions of
Section 6.10(a) above, provided that no Event of Default is continuing, Leases
and any actions with respect thereto shall not be subject to the prior approval
of Agent provided (i) the proposed Lease would be a Minor Lease or the

 

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existing Lease is (or, as amended, modified or renewed, if applicable, would
still be) a Minor Lease, and (ii)(w) with respect to a proposed Lease only, the
proposed Lease shall be written substantially in accordance with a form of Lease
used for other Lessees which shall have been approved by Agent, subject in each
case to any commercially reasonable changes (given the prevailing market
conditions) made in the course of negotiation with the applicable tenant,
(y) with respect to a proposed Lease or an extension of an existing Minor Lease,
the tenant under the proposed Lease or existing Minor Lease shall be
creditworthy (or there shall be a creditworthy guarantor or a commercially
reasonable Security Deposit) and (z) the Minor Lease as amended or modified or
the renewal of the Minor Lease or series of leases or proposed lease or series
of leases:  (a) shall provide for net effective rental rates comparable to
existing local market rates and (b) shall provide for automatic self-operative
subordination to the Deed of Trust and, at Agent’s option, (x) attornment to
Agent and (y) the unilateral right by Agent, at the option of Agent, to
subordinate the Lien of the Deed of Trust to the Minor Lease.

 

(c)                                  Each Loan Party shall perform its
obligations under the Leases in all material respects and shall not permit any
Lessee to prepay Rents pursuant to the terms of any Lease other than the usual
prepayment of Rent as would result from the acceptance on the first day of each
month of the Rent for the ensuing month, according to the terms of any Leases. 
Loan Parties shall promptly (i) notify Agent, in writing, of any material
defaults by any Lessee or Lease guarantor under any Lease after Loan Parties
become aware of such defaults and (ii) deliver to Agent a copy of all
termination notices, default notices, notices claiming any offset rights and all
other material notices from any Lessee or Lease guarantor to Loan Parties or
from Loan Parties to any Lessee or Lease guarantor.

 

(d)                                 Without limiting Loan Parties’ obligation to
deliver to Agent copies of each Material Lease and each amendment and supplement
thereto, Loan Parties shall furnish to Agent, within ten (10) days after a
request by Agent to do so, true copies of each Lease and any Lease guaranty
thereof or amendments and supplements thereto not previously furnished to Agent.

 

(e)                                  Loan Parties shall use commercially
reasonable efforts to enforce the performance of the obligations of the Lessees
and Lease guarantor.

 

(f)                                    All Leases hereafter entered into by Loan
Parties shall be made expressly subject and subordinate to the Deed of Trust and
the terms and provisions thereof and shall contain provisions obligating the
Lessees thereunder to attorn to Agent or any purchaser therefrom upon its
written demand in the event Agent or such purchaser succeeds to the interest of
Loan Parties under such Leases.  Each Lease guaranty shall provide that it shall
remain in full force and effect, and that the guarantor thereunder shall perform
for the benefit of Agent or such purchaser, upon attornment by the Lessee.  Upon
Loan Parties’ request in connection with any Material Lease, Agent agrees to
enter into with a Lessee a subordination, non-disturbance and attornment
agreement that is substantially similar to those delivered at the Closing (with
such changes as are reasonably acceptable to Agent).

 

(g)                                 Loan Parties shall pay all documented,
reasonable out-of-pocket expenses of Agent, including Agent’s Counsel Fees,
incurred in connection with the review of any

 

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proposed Lease, amendment, modification, waiver, supplement, termination or
surrender under this Section 6.10 which requires Agent’s and or Requisite
Lenders’ approval.

 

(h)                                 In the event that Loan Parties request
Agent’s consent under this Section 6.10, including, without limitation consent
to a Minor Lease that does not meet the requirements of Section 6.10(b), Agent
shall be deemed to have given such consent in the event Agent fails to notify
Loan Parties whether or not it consents to such requested action within three
(3) Business Days after the following conditions are satisfied:

 

(y)                                 Loan Parties shall have delivered to Agent a
notice requesting Agent’s consent, together with the items required to be
delivered in connection therewith in accordance with this Section 6.10 and  such
other information concerning the applicable Lease or the proposed Lessee as may
be reasonably necessary for Agent to respond to such request (provided such
information is requested within five (5) Business Days of Agent’s receipt of
Loan Parties’ notice); and

 

(z)                                   In the event that Agent shall have failed
to respond to Loan Parties’ notice within ten (10) Business Days after delivery
of the notice and other materials set forth in clause (y) above, Loan Parties
shall have delivered to Agent another notice which shall contain in boldface
type at the beginning of such notice text to the following effect:  “THIS IS A
SECOND REQUEST MADE PURSUANT TO SECTION 6.10 OF THE LOAN AGREEMENT BETWEEN ONE
PARK BOULEVARD, LLC, SUNSTONE PARK LESSEE, LLC AND AAREAL CAPITAL CORPORATION AS
AGENT WITH RESPECT TO APPROVAL OF A PROPOSED LEASE OR LEASE ACTION WITH
[LESSEE’S NAME] SENT TO YOU ON [DATE].  FAILURE TO RESPOND WITHIN FIVE
(5) BUSINESS DAYS OF RECEIPT OF THIS NOTICE SHALL BE DEEMED TO BE A CONSENT TO
SAID LEASE OR LEASE ACTION.

 

Section 6.11                            Required Insurance.

 

(a)                                  Required Coverage.  In addition to any
insurance required to be maintained by Loan Parties pursuant to the Management
Agreement, the Premises Documents or the Leases, Loan Parties, at their sole
cost and expense, shall maintain, or, as specifically set forth below, cause to
be maintained, the Insurance Policies set forth on Schedule 6.11 attached
hereto.

 

(b)                                 General Requirements of Insurance Policies. 
All Insurance Policies shall be issued by financially sound and responsible
insurers reasonably acceptable to Agent and authorized to do business in the
state in which the Premises are located.  All Insurance Policies shall be issued
by an insurer or insurers with an A.M. Best rating of A:X or better (or as
otherwise may be approved by Agent).  All Insurance Policies shall name each
Loan Party as a named Insured.  The property, boiler and machinery Insurance
Policies shall also name Agent and each Lender under a non-contributing New York
Standard Mortgagee or Lender Loss Payee clause and, with respect to rental
income, as Lender Loss Payee, on forms reasonably acceptable to Agent, or
equivalent endorsements reasonably satisfactory to Agent and shall be otherwise
reasonably satisfactory to Agent in form and content.  All property Insurance
Policies also shall

 

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include a replacement cost and co-insurance waiver and/or an agreed amount
endorsement and other endorsements as are provided in Schedule 6.11 attached
hereto.  The amount of any deductible under any Insurance Policy must be
reasonably acceptable to Agent, provided that Agent hereby approves the
deductibles in effect under the Insurance Policies in effect on the Closing
Date.  No Insurance Policy shall contain any exclusion for terrorism or
terrorist acts or be subject to any sublimit for terrorism or terrorist acts
without the prior approval of Agent.  Without Agent’s prior consent, Loan
Parties shall not name any Person other than Agent as loss payee (except as may
be required in connection with any Permitted Equipment Financing and in such
case only to the extent of the equipment which is the subject thereof) or
mortgagee under any property Insurance Policies nor shall Loan Parties carry
separate or additional insurance coverage covering the Premises and such
improvements and betterments which Loan Parties are required to insure pursuant
to any agreement concurrent in form or contributing in the event of loss with
that required by this Loan Agreement; provided, that, if blanket policies are
obtained, this sentence shall not apply to property covered by such blanket
policies, other than the Premises and such improvements and betterments.  Loan
Parties shall pay the Insurance Premiums as the same become due and payable, and
shall not finance premiums without the prior approval of the Agent.

 

(c)                                  Proof of Required Insurance to Agent.  Loan
Parties shall deliver to Agent certified copies of the Insurance Policies
required to be maintained pursuant to Section 6.11(a), provided, however, Agent
shall not be deemed by reason of the custody of such Insurance Policies to have
knowledge of the contents thereof.  Loan Parties also shall deliver to Agent,
within ten (10) days of Agent’s request, a certificate of each insurance carrier
evidencing the coverages set forth herein together with evidence that all
Insurance Premiums due thereon have been paid and that such coverages are in
full force and effect.  Not later than seven (7) days prior to the expiration
date of each of the Insurance Policies, Loan Parties shall deliver to Agent a
certificate of insurance, evidencing renewal of coverage as required herein or
binders of all such renewal Insurance Policies, if available, provided that if
the foregoing are not available as of such date, then Loan Parties shall deliver
to Agent evidence reasonably satisfactory to Agent that the coverages required
herein shall be timely renewed, and shall promptly deliver to Agent such
certificates and/or binders once they are available; provided, however, the
certificates and/or binders shall be delivered not later than the expiration of
the current insurance.  Such proof of renewal insurance shall include evidence
satisfactory to Agent that all Insurance Premiums therefor have been paid and
that the Insurance Policies are in full force and effect.  Any certificate of
insurance delivered to Agent in compliance with the requirements of this Loan
Agreement shall include a letter from the respective insurance company
confirming that the Person issuing such certificates of insurance is authorized
to do so, and in delivering such certificates such Person is acting as an agent
of the insurance company providing the coverage.  If such letter is not
provided, then the Agent will only accept insurance company issued binders or
full policies confirming that the Required Insurance is in full force and
effect.

 

(d)                                 As to Agent and the Lenders.  Each Insurance
Policy shall contain a provision whereby the insurer (1) agrees that such policy
shall not be canceled or fail to be renewed, or the terms thereof modified as
described in clauses (y) and (z) below without, in each case, at least thirty
(30) days’ prior written notice to Agent, (2) waives any right to claim any
premiums and commissions against Agent and the Lenders, provided, that the
policy need not waive the requirement that the premium be paid in order for a
claim to be paid to the insured and

 

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(3) provides that Agent is permitted to make payments to effect the continuation
of such policy upon notice of cancellation due to nonpayment of premiums.  Loan
Parties shall notify Agent in the event that (x) such policy shall be canceled
or terminated, (y) the coverage, deductible and limits of such policy shall be
modified or (z) other provisions of such policy shall be modified if such
policy, after giving effect to such modification, and all modifications in the
aggregate, would not satisfy the requirements of this Loan Agreement. 
Notwithstanding anything to the contrary in the preceding sentence, Loan Parties
shall be required to maintain such Insurance Policies in accordance with the
requirements of this Loan Agreement.  In the event any Insurance Policy (except
for general public and other liability and workers’ compensation insurance)
shall contain breach of warranty provisions, such policy shall provide that with
respect to the interest of Agent, such Insurance Policy shall not be invalidated
by and shall insure Agent regardless of (A) any act, failure to act or
negligence of or violation of warranties, declarations or conditions contained
in such policy by any named insured, (B) the occupancy or use of the Premises
for purposes more hazardous than permitted by the terms thereof or (C) any
foreclosure or other action or proceeding taken by Agent pursuant to any
provision of this Loan Agreement.

 

(e)                                  Blanket Policies.  Any insurance maintained
pursuant to this Section 6.11 may be evidenced by blanket insurance policies
covering the Premises and other properties or assets of Loan Parties or their
Affiliates; provided, that, any such policy shall in all other respects comply
with the requirements of this Section 6.11.

 

(f)                                    Agent’s Right to Procure Insurance. 
Notwithstanding anything to the contrary contained herein, if at any time Agent
is not in receipt of written evidence reasonably confirming that all insurance
required hereunder is maintained in full force and effect, then after giving
written notice to Loan Parties, Agent shall have the right (but not the
obligation) to obtain such undocumented insurance coverages as are required
hereunder, and all out-of-pocket expenses incurred by Agent in connection with
obtaining such insurance and keeping it in effect shall be paid by Loan Parties
promptly after demand and shall be secured by the Loan Documents.

 

Section 6.12                            Damage or Destruction.

 

(a)                                  Promptly, and in any case within five
(5) Business Days after the occurrence thereof, Loan Parties shall notify Agent
of any fire or other Casualty with respect to any portion of the Premises with
an estimated claims value in excess of $250,000.  Such notice also shall
generally describe the nature and extent of such Casualty.  Promptly upon the
same becoming available, Loan Parties shall deliver to Agent Loan Parties’ best
estimate of the cost of Restoration.

 

(b)                                 Agent shall be entitled to receive all
insurance proceeds payable on account of a Casualty in excess of the Casualty
Threshold (for the avoidance of doubt, it is understood that all proceeds
payable on account of a Casualty in excess of the Casualty Threshold shall be
deposited with Agent, not merely the portion of such proceeds which exceeds the
Casualty Threshold).  Subject to the terms hereof, each Loan Party hereby
irrevocably assigns, transfers and sets over to Agent all of such Loan Party’s
right to any such insurance proceeds, award or payment.  Loan Parties hereby
irrevocably authorize and empower Agent, in the name of Loan Parties or
otherwise, to file for and prosecute in its own name what would

 

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otherwise be Loan Parties’ claim for any such insurance proceeds. 
Notwithstanding the foregoing, so long as no Event of Default shall have
occurred and shall then be continuing and provided Loan Parties promptly file
all claims and diligently prosecute same, and subject to the terms of the Ground
Lease, Loan Parties shall have the right to file, adjust, settle and prosecute
any claim for such insurance proceeds; provided, however, that Loan Parties
shall not agree to any adjustment or settlement of any such claim payable with
respect to a Casualty the insurance proceeds with respect to which are greater
than the Casualty Threshold without the prior consent of the Requisite Lenders,
which consent shall not be unreasonably withheld, conditioned or delayed.  Loan
Parties shall within ten (10) days after demand pay to Agent all documented,
reasonable out-of-pocket costs and expenses (including the fee of any insurance
consultant or adjuster and reasonable attorneys’ fees and disbursements)
incurred by Agent in connection with a Casualty and seeking and obtaining any
insurance proceeds, award or payment with respect thereto.  Net Proceeds held by
Agent, together with any interest earned thereon, shall constitute additional
security for the payment of the Obligations (a security interest therein being
granted hereby), until the earlier of the disbursement of such Net Proceeds and
interest in accordance with this Section 6.12 or the satisfaction of the
Obligations (other than Contingent Obligations).

 

(c)                                  Loan Parties shall, at the sole cost and
expense of Loan Parties, promptly commence and diligently and continually
perform to completion the Restoration in a good and workmanlike manner and in
compliance with all Legal Requirements and the requirements of the Permitted
Encumbrances which, if not complied with is reasonably likely to result in a
Material Adverse Effect, whether or not Loan Parties shall have satisfied the
requirements of Section 6.12(d) in order to cause the Net Proceeds to be made
available for such Restoration and whether or not such insurance proceeds on
account of the Casualty shall be sufficient for such purpose.

 

(d)                                 In the case of any Casualty with respect to
which the insurance proceeds payable are less than the Casualty Threshold and
provided that no Event of Default shall then exist, the Net Proceeds shall be
held by Loan Parties to be applied and used for the Restoration.  If the
insurance proceeds are equal to or greater than the Casualty Threshold, the Net
Proceeds shall be held by Agent, if Agent so elects, in an interest bearing
account, as a part of the Collateral and shall be applied by Agent as follows:

 

(i)                                     Subject to the terms of the Ground
Lease, the Net Proceeds shall be made available to reimburse Loan Parties for
the costs of Restoration or to be applied directly to such costs provided that
the following conditions are satisfied (each a “Release Condition” and
collectively, the “Release Conditions”):

 

(A)                              no Event of Default shall have occurred and be
continuing;

 

(B)                                the loss is in an aggregate amount less than
twenty-five percent (25%) of the outstanding principal amount of the Loan (or
such higher amount agreed to by the Requisite Lenders in their sole and absolute
discretion);

 

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(C)                                the Ground Lease shall remain in full force
and effect during and after the completion of the Restoration, notwithstanding
the occurrence of such Casualty;

 

(D)                               Loan Parties shall have demonstrated to the
reasonable satisfaction of Agent that the Restoration can be completed at least
six (6) months prior to the scheduled Maturity Date, or such earlier time as may
be required by applicable Legal Requirements;

 

(E)                                 Loan Parties shall have demonstrated to the
reasonable satisfaction of Requisite Lenders that sufficient funds are available
to Loan Parties through rent and/or business interruption insurance maintained
pursuant to this Loan Agreement, cash and/or a Letter of Credit or other similar
cash-equivalent security reasonably satisfactory to Agent as to form, content
and issuer, and which shall be for the benefit of Agent, to pay any anticipated
shortfall in Debt Service with respect to the Loan or operating expenses with
respect to the Mortgaged Property during the period reasonably estimated by Loan
Parties as necessary for the completion of the Restoration;

 

(F)                                 to the extent, in the Requisite Lenders’
reasonable and good faith judgment, the Net Proceeds are insufficient to pay the
costs of the Restoration, Loan Parties shall have provided Agent with a Letter
of Credit, cash deposit or similar equivalent security in the amount of such
deficiency in form and content and with an issuer reasonably satisfactory to
Agent;

 

(G)                                Agent shall have been provided an Appraisal
or any Appraisal Update, certifying that upon completion of the Restoration of
the Mortgaged Property the Loan-to-Value Ratio shall be equal to or less than
the Loan-to-Value Ratio immediately preceding the subject Casualty;

 

(H)                               Agent shall have reasonably determined that
upon completion of the Restoration, the Adjusted Debt Service Coverage Ratio
shall not be less than the Minimum DSCR, provided that Loan Parties may provide
Agent with a Letter of Credit, cash deposit or similar equivalent security in a
face amount which, if deducted from the outstanding principal would cause the
Adjusted Debt Service Coverage Ratio to be greater than or equal to the Minimum
DSCR; and

 

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(I)                                    Agent shall have received architectural
plans and specifications for the Restoration and an estimate of the costs and
expenses of all such Restoration, all of which shall be in form reasonably
acceptable to Agent.

 

(ii)                                  Notwithstanding anything to the contrary
in this Section 6.12(d), if Agent (with the consent of the Requisite Lenders)
does not elect to hold the Net Proceeds which it has the right to hold pursuant
to Section 6.12(b) or 6.12(d), Loan Parties shall not disburse any Net Proceeds
other than in accordance with the conditions of this Section 6.12(d) and
Sections 6.12(e) and (f).

 

(e)                                  If one or more of the Release Conditions
are not satisfied or otherwise waived by the Requisite Lenders within one
hundred eighty (180) days (or such longer period as may be agreed to by Agent
(with the consent of the Requisite Lenders) in writing) of the date of the
Casualty, Net Proceeds may be applied in accordance with Section 6.12(h).

 

(f)                                    All documented, reasonable out-of-pocket
costs and expenses incurred by Agent in connection with making the Net Proceeds
available for the Restoration (including documented, reasonable out-of-pocket
attorneys’ fees and disbursements and reasonable fees and actual out-of-pocket
expenses of Agent’s construction consultants and inspectors) shall be paid by
Loan Parties.  Any Net Proceeds (including, without limitation, any excess
business interruption/rent loss proceeds) remaining after the Restoration and
the payment in full of all costs incurred in connection with the Restoration
shall, provided that no Event of Default shall be continuing, be distributed by
Agent to Loan Parties.

 

(g)                                 Business interruption/rent loss insurance
proceeds of Loan Parties shall be deposited into either (i) an Account or
subaccount of Agent or (ii) an Account at a bank or other financial institution
approved by Agent and shall be disbursed to Loan Parties each month in the
amount equal to the proceeds allocable to such month.  Loan Parties hereby grant
to Agent a security interest in all rights of Loan Parties in and to such
Account and all sums on deposit therein as additional security for the
Obligations.  Upon the occurrence and during the continuation of an Event of
Default, Agent shall have the rights and remedies with respect to such Account
specified in this Loan Agreement and in any other Loan Document.  If held by
Agent, the credit balance in such Account or subaccount may be commingled with
the general funds of Agent.  If not held by Agent, Loan Parties shall cause the
bank or financial institution at which such Account is held to execute and
deliver to Agent an Account Agreement with respect to such Account, Loan Parties
shall pay all fees and costs with respect thereto and Loan Parties shall not
close such account without obtaining the prior consent of Agent, or to the
extent that such closed Account is not immediately replaced with another Account
which shall be subject to a security interest in favor of Agent, the Requisite
Lenders.  Neither Agent nor Lenders shall be liable for any loss of interest on
or any penalty or charge assessed against the funds in, payable on, or credited
to such Account as a result of the exercise by Agent of any of its rights or
remedies hereunder or under any other Loan Document.  Any interest earned on the
balance of such Account shall be deposited into such account and be applied with
the balance of such account in accordance with this Section 6.12(g).  Agent
shall have sole control over such Account subject to the terms of the Account
Agreement.

 

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(h)                                 Upon a Casualty, if the disposition of the
Net Proceeds is governed by Section 6.12(e), at the option of Requisite Lenders,
the Loan shall be due and payable upon sixty (60) days prior written notice to
Loan Parties or, if earlier, the Maturity Date.  Regardless of whether Agent
shall so elect to accelerate the maturity of the Loan as aforesaid, Agent (with
the approval of the Requisite Lenders) shall have the option to (i) make
available the Net Proceeds to Loan Parties for Restoration in the manner
provided in Section 6.12(d) or (ii) apply the Net Proceeds to the Obligations,
in such order and manner as Requisite Lenders determine, as the case may be,
without payment of the Prepayment Fee or any other prepayment premium, fee or
penalty (for the avoidance of doubt, it is agreed that the payment of Additional
Interest shall not be deemed to be a penalty or premium).

 

(i)                                     With respect to any Net Proceeds which
Agent is required to make available (or otherwise elects to make available in
its sole discretion), such Net Proceeds shall be disbursed to Loan Parties from
time to time in accordance with Agent’s customary and reasonable construction
lending practices and upon the receipt of the following, each in form and
substance reasonably satisfactory to Agent:

 

(i)                                     A request for disbursement signed by
Loan Parties, accompanied by billing statements, vouchers or invoices, which
request for disbursement shall expressly warrant that the work with respect to
which the advance is requested has been or will be performed in accordance with
the approved plans and specifications for the Restoration;

 

(ii)                                  Proof that all invoices for labor and
materials previously submitted by Loan Parties and approved and reimbursed or
paid by Agent have been paid, except for those the subject of the current
request for disbursement;

 

(iii)                               With respect to payments in excess of
$25,000, Lien waivers for all payees under previous requests for disbursements;

 

(iv)                              If requested by Agent, a report from Loan
Parties’ architect or, if Agent shall elect, Agent’s consultant, which shall
specify the percentage of completion of Restoration, shall provide reasonably
detailed comments on specific work performed since the date of the last such
report, and, if required by Agent, an estimate of the cost to complete the
Restoration after taking into account the work then completed;

 

(v)                                 At the request of Agent, a title report
which shall show no Liens of record (other than Permitted Encumbrances);

 

(vi)                              If requested by Agent, copies of the
agreements pursuant to which the Restoration or repair shall be done, including,
without limitation, any general contractor agreement, construction management
agreement, architect’s agreement or material subcontract, all of which shall be
in form and substance reasonably satisfactory to Agent, and which also shall be
reasonably satisfactory to Agent as to the party performing the construction
obligations thereunder;

 

(vii)                           If requested by Agent, a collateral assignment
to Agent of all construction and design-professional contracts with respect to
the Restoration (which

 

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may be pursuant to the Assignment of Agreements), together with the written
consent to such assignments by all parties to such contracts (which may be
included in any such contract); and

 

(viii)                        If requested by Agent, such other information and
documentation as Agent may reasonably and in good faith request regarding the
Improvements and the Restoration and the cost thereof.

 

(j)                                     Notwithstanding anything to the contrary
contained in this Section 6.12, in the event of any conflict between the
provisions of this Section 6.12 and the Ground Lease with respect to the payment
or application of Net Proceeds, the provisions of the Ground Lease shall
control.  In amplification of the foregoing sentence, the Net Proceeds shall be
applied to the costs of Restoration to the extent required by the Ground Lease;
provided that (i) the Release Conditions (C), (F) and (I) set forth in
Section 6.12(d) have been satisfied and (ii) the disbursement of any Net
Proceeds shall be subject to Section 6.12(i).  If a Loan Party or its Affiliate
should hereafter acquire the lessor’s interest in the Ground Lease, the
provisions of this Section 6.12(j) shall automatically cease to be of any force
or effect.

 

Section 6.13                            Taking of the Mortgaged Property.

 

(a)                                  Within five (5) Business Days after the
occurrence thereof, Loan Parties shall notify Agent of any Taking of any portion
of the Mortgaged Property or the commencement of any proceedings or negotiations
which could be reasonably expected to result in such a Taking.  Such notice
shall generally describe the nature and extent of such Taking or the nature of
such proceedings or negotiations and the nature and extent of the Taking which
might result therefrom.  Agent shall be entitled hereunder to hold and apply in
accordance with this Section 6.13 all awards or compensation payable to or on
account of Loan Parties by reason of a Taking if such awards or compensation
exceed the Condemnation Threshold.  Each Loan Party hereby irrevocably assigns,
transfers and sets over to Agent all rights of each Loan Party to any such
awards or compensation and irrevocably authorizes and empowers Agent, in the
name of Loan Parties or otherwise, to collect and receipt for any such award or
compensation and grants to Agent the right to file and prosecute any and all
claims for any such awards or compensation and to participate in any and all
hearings, trials and appeals in connection with a Taking on behalf of Loan
Parties to the extent the condemnation award or compensation exceeds the
Condemnation Threshold; provided that, so long as no Event of Default shall be
continuing, Agent shall not exercise the right to file and/or prosecute any such
claim and Loan Parties shall have the right to settle claims with the reasonable
prior consent of the Requisite Lenders.  Upon the occurrence and continuance of
an Event of Default, Agent may participate in such proceedings or negotiations
upon prior notice to Loan Parties and Loan Parties will deliver or cause to be
delivered to Agent all instruments requested by Agent to permit such
participation; provided, however, that Agent shall be under no obligation to
question the amount of the award or compensation.  Although it is hereby
expressly agreed that the same shall not be necessary, and in any event, Loan
Parties shall, upon demand of Agent, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or compensation in excess of the Condemnation Threshold to Agent,
free and clear of any encumbrances of any kind or nature whatsoever other than
Permitted Encumbrances.  In connection with a taking where the condemnation
award or compensation exceeds the

 

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Condemnation Threshold, Agent may be represented by counsel satisfactory to it
at the reasonable expense of Loan Parties.  Loan Parties will pay within ten
(10) days after demand therefor reasonable and documented out-of-pocket costs
and expenses (including attorneys’ fees and disbursements and fees and
disbursements of any appraiser or other consultant) incurred by Agent in
connection with any Taking and seeking and obtaining any award or payment on
account thereof.

 

(b)                                 Loan Parties shall, at their sole cost and
expense, promptly commence and diligently and continually perform to completion
the Restoration in a good and workmanlike manner and in compliance with all
Legal Requirements and the requirements of the Permitted Encumbrances, whether
or not Loan Parties shall have satisfied the Release Conditions in order to
cause the Net Restoration Award to be made available for such Restoration and
whether or not such awards or compensation, if any, on account of the Taking
shall be sufficient for such purpose.

 

(c)                                  All Net Restoration Awards payable on
account of a Taking in excess of the Condemnation Threshold (for the avoidance
of doubt, it is understood that all Net Restoration Awards payable on account of
a Taking in excess of the Condemnation Threshold shall be deposited with Agent,
not merely the portion of such proceeds which exceeds the Condemnation
Threshold) shall be held by Agent at its election in an interest bearing
account.  All such Net Restoration Awards shall be applied as follows:

 

(i)                                     If the Release Conditions are satisfied
(other than the Release Condition described in Section 6.12(d)(i)(A), which
Release Condition shall not be applicable to a Taking), and the Taking is not a
Material Taking, all Net Restoration Awards shall be applied to pay the cost of
Restoration in accordance with the terms of the Ground Lease, such application
to be effected in the same manner as provided in Section 6.12(d) with respect to
Net Restoration Awards and the balance, if any, of such Net Restoration Awards
shall, at the option of Agent, be applied as a prepayment of the principal
amount of the Loan (and, provided that no Event of Default shall have occurred
and be continuing, without payment of the Prepayment Fee or any other prepayment
premium, fee or penalty (for the avoidance of doubt, it is agreed that the
payment of Additional Interest shall not be deemed to be a penalty or premium))
or be paid over or assigned to Loan Parties following completion of the
Restoration.

 

(ii)                                  If the Taking is a Material Taking or one
or more of the Release Conditions are not satisfied within one hundred eighty
(180) days of the date of the Taking (other than the Release Condition described
in Section 6.12(d)(i)(B), which Release Condition shall not be applicable to a
Taking), all Net Restoration Awards being held by Agent or Loan Parties shall be
applied in accordance with Section 6.12(h).

 

(iii)                               In the case of a Taking for temporary use,
any Net Restoration Awards shall be treated as business interruption/rent loss
proceeds and shall be applied as set forth in Section 6.12(g).

 

(iv)                              Upon a Taking, if the disposition of the Net
Restoration Awards is governed by Section 6.13(c)(ii), at the option of Agent,
the Loan shall be due and payable

 

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upon sixty (60) days prior written notice to Loan Parties, or if earlier, the
Maturity Date.  Regardless of whether Agent shall so elect to accelerate the
maturity of the Loan as aforesaid, Agent shall have the option to (i) make
available the Net Restoration Awards to Loan Parties for Restoration in the
manner provided in Section 6.12(d) or (ii) apply the Net Restoration Awards to
the Obligations, in such order and manner as Agent determines, as the case may
be without payment of the Prepayment Fee (unless an Event of Default shall then
be continuing, in which event the Prepayment Fee shall be due and payable) or
any other prepayment premium, fee or penalty (for the avoidance of doubt, it is
agreed that the payment of Additional Interest shall not be deemed to be a
penalty or premium).

 

(d)                                 Notwithstanding anything to the contrary
contained in this Section 6.13, in the event of any conflict between the
provisions of this Section 6.13 and the Ground Lease with respect to the payment
or application of any Net Restoration Award, the provisions of the Ground Lease
shall control.  In amplification of the foregoing sentence, the Net Restoration
Award shall be applied to the costs of Restoration to the extent required by the
Ground Lease provided that (i) the Release Conditions (C), (F) and (I) set forth
in Section 6.12(d) have been satisfied and (ii) the disbursement of any Net
Restoration Award shall be subject to Section 6.12(i).  If Loan  Parties or
their Affiliates should hereafter acquire the lessor’s interest in the Ground
Lease, the provisions of this Section 6.13(d) shall automatically cease to be of
any force or effect.

 

Section 6.14                            Costs and Expenses.  Without limiting
any other provision of this Loan Agreement or of any other Loan Document, Loan
Parties shall pay within ten (10) days after demand by Agent (or to the extent
expressly otherwise provided in this Loan Agreement, within the time period set
forth within such express provision), to or for the account of Agent as the case
may be, Agent’s Counsel Fees and all other documented, reasonable out-of-pocket
costs and expenses incurred by or on behalf of Agent in connection with the
closing of the Loan (together with the documented, reasonable out-of-pocket
attorney’s fees of each Lender incurred in respect of negotiating Article VII
and Article IX of this Loan Agreement for the Closing), any prepayments of the
Loan, Agent’s responses to requests for consents and waivers under the Loan
Documents, all payments from any Accounts, any modification, amendment or
restructuring of the Loan or the Loan Documents requested by Loan Parties
(regardless if such modification, amendment or restructuring closes) and, during
an Event of Default, the enforcement of Agent’s and Lenders’ rights and remedies
under the Loan Documents, including the following, whether currently outstanding
or which may arise at any time during the term of the Loan:

 

(a)                                  all taxes and recording expenses, including
all filing fees and mortgage recording and deed transfer taxes, with respect to
the Security Documents, and any other documents requested by Loan Parties
modifying, extending or consolidating the Security Documents;

 

(b)                                 in the event the Mortgaged Property or other
Collateral, or any part thereof, shall be advertised for foreclosure sale and
not sold, all costs in connection therewith, including documented, reasonable
out-of-pocket attorneys’ fees and disbursements, advertising costs and trustees’
commissions;

 

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(c)                                  all title insurance charges and premiums;
and

 

(d)                                 subject to the provisions hereof and/or the
other Loan Documents, appraisal, fees and expenses and all costs of preparing
environmental and insurance reports concerning the Premises.

 

Section 6.15                            Transfers.

 

(a)                                  No Transfer shall be made without the prior
consent of all Lenders except for a Permitted Transfer; provided, that, in the
case of a Permitted Transfer:

 

(i)                                     Except with respect to a Permitted
Transfer described in clauses (d),(e) or (h) of the definition of “Permitted
Transfer”, no Event of Default shall have occurred and be continuing as of the
date of such Permitted Transfer;

 

(ii)                                  Except with respect to a Permitted
Transfer described in clauses (d),(e), (f), (g) or (h) of the definition of
“Permitted Transfer,” Loan Parties shall have given Agent prior written notice
of the proposed Transfer, which notice shall identify the proposed
transferee(s) and the proposed percentage interest to be transferred and include
the following items:

 

(A)                              a revised organizational chart of Loan Parties
which shall show the effect of such proposed Transfer, which organizational
chart shall be in substantially the same form, detail and scope as the Loan
Parties’ organizational chart delivered on the Closing Date;

 

(B)                                drafts (other than initial or interim drafts)
of all consents, notices, instruments of transfer and other documents required
to be executed or delivered under the organizational documents of the entity
whose ownership interests are being transferred, along with any amendment to the
organizational documents of the entity whose ownership interests are being
transferred, any consent of the members, partners, shareholders, as applicable,
of the entity whose ownership interests are being transferred, and any other
instrument of transfer which is entered into or delivered in connection with any
such transfer (and final executed copies of each of the foregoing shall be
delivered to Agent within ten (10) days after the date upon which such Permitted
Transfer occurs); and

 

(C)                                such information as may be reasonably
requested by Agent within ten (10) Business Days of receipt of Loan Parties’
notice in order to evidence Loan Parties’ compliance with Sections 6.20 and
6.29;

 

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(iii)                               the proposed Transfer shall not result in
Loan Parties, the transferor or the proposed transferee being in default under
any Loan Document or under any other agreement, instrument or document of which
any of the foregoing Persons is a party, either upon such transfer or but for
the passage of time or the giving of notice or both;

 

(iv)                              all taxes (other than income taxes),
including, stamp taxes, mortgage recording taxes, transfer taxes, recordation
taxes, intangible taxes and other taxes, charges and fees incurred in connection
with such Transfer shall have been paid by the transferor or the proposed
transferee at the time of such proposed transfer, and if such amounts shall
become due as a result of the proposed transferor’s or transferee’s direct or
indirect ownership interest in Loan Parties or the Premises, evidence of such
payment shall have been delivered to Agent within ten (10) days after such
transfer;

 

(v)                                 Agent shall have been or shall be reimbursed
for all documented, reasonable out-of-pocket expenses incurred by Agent, if any,
in connection with such proposed transfer, including Agent’s Counsel Fees;

 

(b)                                 If, as a result of any Permitted Transfer,
any Guarantor no longer owns any direct or indirect interest in Loan Parties, it
shall also be a condition hereunder that a replacement guarantor (1) with a Net
Worth and Cash or Cash Equivalents (as such terms are defined in the Recourse
Liability Agreement) which is not less than $120,000,000 and $10,000,000,
respectively, (2) which is otherwise satisfactory to the Lenders, (3) which is
an Affiliate of the proposed transferee and (4) which owns a direct or indirect
interest in Loan Parties, shall execute and deliver a recourse liability
agreement (in the same form as the Recourse Liability Agreement) and an
environmental indemnity agreement (in the same form as the Environmental
Indemnity) on or prior to the date of such Permitted Transfer, pursuant to
which, in each case, the replacement guarantor/indemnitor agrees to be liable
under each such recourse liability agreement and environmental indemnity
agreement from and after the date of such Permitted Transfer (whereupon the
applicable Guarantor shall be released from any further liability under the
Recourse Liability Agreement and Environmental Indemnity from and after the date
of such Permitted Transfer and such replacement guarantor/indemnitor shall be
the “Guarantor” for all purposes set forth in this Loan Agreement); and

 

(c)                                  Without limiting Section 6.15(a), Loan
Parties shall not assign, sell, pledge, encumber, transfer, hypothecate or
otherwise dispose of its interest or rights in the Loan, the Loan Documents or
the Collateral, or attempt to do any of the foregoing or suffer any of the
foregoing, nor shall any party owning a direct or indirect interest in Loan
Parties assign, sell, pledge, encumber, transfer, hypothecate or otherwise
dispose of any of its rights or interest (direct or indirect) in Loan Parties,
attempt to do any of the foregoing or suffer any of the foregoing, if such
action would cause the Loan, or the exercise of any of Agent’s or Lenders’
rights in connection therewith, to constitute a prohibited transaction under
ERISA or the IRC (unless Loan Parties furnish to Agent a legal opinion
reasonably satisfactory to Lenders that the transaction is exempt from the
prohibited transaction provisions of ERISA and the IRC) or otherwise result in
Agent or any Lender being deemed in violation of any applicable provision of
ERISA.  Loan  Parties agree to indemnify and hold Agent and Lenders free and
harmless from and against all actual losses, reasonable out-of-pocket costs
(including reasonable attorneys’ fees

 

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and expenses), taxes, actual damages and reasonable expenses Agent or any Lender
may suffer by reason of the investigation, defense and settlement of claims and
in obtaining any prohibited transaction exemption under ERISA by reason of a
breach of the foregoing prohibitions.

 

Section 6.16                            Defense of Title.  Loan Parties will
defend title to the Premises and all other material Collateral, subject to the
Permitted Encumbrances, but Agent shall have the right, at any time, to
intervene in any suit affecting such title and to employ independent counsel in
connection with any such suit to which it may be a party by intervention or
otherwise; and upon demand, Loan Parties agree to pay Agent within ten (10) days
of demand all documented, reasonable expenses paid or incurred by Agent in
respect of any such suit affecting title to any such property or affecting
Agent’s Lien or rights hereunder, including Agent’s Counsel Fees.  Loan Parties
will indemnify and hold harmless Agent from and against any and all reasonable
and documented out-of-pocket costs and expenses, including any and all cost,
loss, damage or liability which Agent may suffer or incur by reason of the
failure of Loan Parties to hold leasehold title to all or any part of the
Premises or fee title to any part of the Improvements or of Agent to have a
security interest in any material Collateral and all amounts at any time so
payable by Loan Parties shall be secured by the Security Documents.

 

Section 6.17                            Recordation and Certain Taxes.  Loan
Parties, at their sole cost and expense, shall pay all recording, registration
and filing fees, taxes and other similar charges, including any recording,
transfer or intangible personal property tax or similar imposition, with respect
to the Security Documents, and shall comply with all Legal Requirements in order
fully and effectively to establish, preserve, perfect and protect the lien of
the Security Documents subject only to Permitted Encumbrances.  Loan Parties
hereby authorize Agent to file UCC Financing Statements (and continuations
thereof) with respect to the Collateral.

 

Section 6.18                            Name, Fiscal Year and Accounting
Method.  Except as may be approved by Agent (which approval shall not be
unreasonably withheld, conditioned or delayed), Loan Parties will not change its
fiscal year or its method of accounting.

 

Section 6.19                            Consolidation, Merger, Conveyance,
Transfer or Lease.  Without the prior consent of Requisite Lenders, Loan Parties
shall not consolidate with or merge into any other Person or convey, transfer or
lease its properties or assets substantially as an entirety to any Person.

 

Section 6.20                            Organization Restrictions.  Each Loan
Party shall at all times be a Single Purpose Entity.  Each Loan Party shall not
(i) make or permit any change, amendment or modification to any of its
organizational documents that would be material and adverse to the interests of
Agent or Lenders or (ii) terminate or cancel or permit any termination or
cancellation of its organizational documents, in each case without the prior
consent of the Requisite Lenders (which consent shall not be unreasonably
withheld, conditioned or delayed).  Each Loan Party shall not take or permit any
action which would result in a Loan Party not being a Single Purpose Entity.

 

Section 6.21                            Changes in Zoning.  Loan Parties shall
not request or seek to obtain any change to, or consent to any request for or
change in, any Legal Requirement, restrictive covenant or other restriction
applicable to the Premises or any portion thereof or any

 

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other law, ordinance, rule, or regulation affecting the zoning, development or
use of the Premises or any portion thereof, or any variance or special exception
therefrom that would be binding on any Loan Party or the Premises, without the
prior consent of the Requisite Lenders (which consent shall not be unreasonably
withheld, conditioned or delayed).

 

Section 6.22                            Distributions, Dividends and Affiliate
Payments.  Loan Parties shall not make any dividends, payments (other than to
Hilton in its capacity as Property Manager as expressly set forth in the
Management Agreement) or distributions to any direct or indirect owner of any
equity interest issued in Loan Parties (solely on account of its capacity as a
direct or an indirect owner of Loan Parties) (i) during the continuance of an
Event of Default or a Cash Sweep Condition or (ii) at any time during which the
Adjusted Debt Service Coverage Ratio as of the then most recent Testing
Determination Date shall be less than the Minimum DSCR (after giving effect to
any principal reductions of the Loan or any reduction in the stated amount of
any Letter(s) of Credit (other than a Lease Letter of Credit) delivered to
Agent).

 

Section 6.23                            ERISA.  Loan Parties shall not at any
time while any Obligation remains outstanding have any employees or engage in
any transaction which would cause any obligation or action taken or to be taken
hereunder by Loan Parties to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.  Loan
Parties (i) shall, and shall cause all ERISA Affiliates to make all required
contributions to any Pension Plan or Multiemployer Plan and (ii) shall not, nor
shall it permit any ERISA Affiliate to, cause or permit to occur an event that
would result in the imposition of a Lien under IRC Section 430(k) or
Section 303(k) or 4068 of ERISA, or any ERISA Event that is reasonably likely,
alone or in the aggregate with all other ERISA Events, to have a Material
Adverse Effect on Loan Parties.

 

Section 6.24                            Maintenance of Existence.  Each Loan
Party shall (a) qualify to do business in and remain in good standing under the
laws of its jurisdiction of organization and the State where the Premises are
located and, to the extent a Material Adverse Effect is reasonably likely to
result from the failure to qualify or remain in good standing, under the laws of
such other jurisdiction as may be required for the ownership, management and
operation of its assets, (b) preserve, renew and keep in full force and effect
its existence as an entity organized and existing pursuant to the laws of its
jurisdiction of organization and qualified to do business in the State where the
Premises are located, (c) maintain all rights, privileges and franchises
necessary for the conduct of its business in its jurisdiction of organization
and the State where the Premises are located, and any other jurisdiction to the
extent a Material Adverse Effect is reasonably likely to result from the failure
to maintain such rights, privileges and franchises, and (d) comply in all
material respects with all Legal Requirements with respect to the foregoing.

 

Section 6.25                            Subsidiaries and Joint Ventures.  Loan
Parties shall not acquire any stock or assets of, or form a partnership, joint
venture or other similar arrangement with, any Person, without the prior consent
of all of the Lenders.  For the avoidance of doubt, it is acknowledged that this
Section 6.25 shall not prohibit the acquisition by Loan Parties of FF&E or
inventory in the ordinary course of business.

 

Section 6.26                            Intentionally Deleted.

 

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Section 6.27                            Utilities.  Loan Parties shall pay, or
cause to be paid, all charges for all utility services at any time rendered to
the Premises subject to Loan Parties’ right to challenge, in good faith, such
charges from time to time in accordance with Section 6.8, the payment of which
is the obligation of Loan Parties in connection with the Premises and will do
all other things required for the maintenance and continuance of utility
services necessary for the operation, use and occupancy of the Premises for
their intended purposes in accordance with this Loan Agreement, and use
commercially reasonable efforts to ensure that they are available at the
boundaries of the Premises.

 

Section 6.28                            Margin Stock.  Loan Parties shall not
use any of the proceeds of the Loan for the purpose of purchasing or carrying
“margin stock” within the meaning of Regulation T, U or X issued by the Board of
Governors of the Federal Reserve System, as at any time amended, and Loan
Parties agree to execute all instruments necessary to comply with all the
requirements of Regulation U of the Federal Reserve System, as at any time
amended.

 

Section 6.29                            Compliance with Anti-Money Laundering
and OFAC Laws.

 

(a)                                  Loan Parties shall comply at all times with
the requirements of all Anti-Money Laundering Laws in all material respects.

 

(b)                                 Loan Parties shall provide Agent any
information regarding Loan Parties, their Affiliates, and their subsidiaries
necessary for Agent and Lenders to comply with all Anti-Money Laundering Laws.

 

(c)                                  Loan Parties shall comply at all times with
the requirements of all OFAC Laws in all material respects.

 

(d)                                 Neither Loan Party, any Affiliates,
subsidiaries nor Persons holding any legal or beneficial interest in Loan
Parties (whether directly or indirectly) shall, conduct business with or engage
in any transaction with any Person named in any Government List or any Person
included in, owned by, Controlled by, acting for or on behalf of, providing
assistance, support, sponsorship, or services of any kind to any of the Persons
referred to or described in any Government List in violation of Legal
Requirements.

 

(e)                                  If either Loan Party obtains actual
knowledge or receives any written notice that a Loan Party or any Affiliate or
subsidiary of a Loan Party or any Person holding any legal or beneficial
interest whatsoever therein (whether directly or indirectly) is named on any
Government List (such occurrence, an “OFAC Violation”), such Loan Party shall
promptly (i) give written notice to Agent of such OFAC Violation and (ii) comply
with all applicable laws with respect to such OFAC Violation (regardless of
whether the party included on the OFAC SDN List is located within the
jurisdiction of the United States of America), including the OFAC Laws, and each
Loan Party hereby authorizes and consents to Agent’s or any Lender taking any
and all steps Agent or any Lender deems necessary, in its sole but good faith
discretion, to comply with all applicable laws with respect to any such OFAC
Violation, including the requirements of the OFAC Laws that are legally binding
on Agent or any Lender (including the “freezing” and/or “blocking” of assets and
reporting such action to OFAC as may be legally required on account of any
actual or potential OFAC Violation).

 

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n

(f)                                    Upon Agent’s request from time to time
(to be made not more frequently than once in any twelve (12) month period), Loan
Parties shall deliver a certification confirming its compliance with the
covenants set forth in this Section 6.29.

 

(g)                                 Without limiting Section 6.15, in the event
that Loan Parties shall not be the ultimate beneficiary of the Loan, Loan
Parties shall immediately notify Agent of same in writing, which written notice
shall include the name and address of the new ultimate beneficiary.

 

Section 6.30                            Limitation on Indebtedness.  Loan
Parties shall not incur, create, contract for, assume, have outstanding,
guarantee or otherwise become liable with respect to Indebtedness other than
Permitted Indebtedness.

 

Section 6.31                            Loans to Members, Etc.  Loan Parties
shall not make any loan or advance to Loan Party Member or to any employee or
Affiliate of Loan Parties, except for business travel, out-of-pocket incidental
personal business expenses and similar advances in the ordinary course of
business.

 

Section 6.32                            Transactions with Affiliates.  Loan
Parties shall not enter into, or be a party to, any transaction with any
Affiliates of Loan Parties except contracts for the providing of goods and
services in the ordinary course of Loan Parties’ business and upon fair and
reasonable terms which are fully disclosed to Agent and are no more onerous to
it than it would obtain in a comparable arm’s length transaction with a Person
not its Affiliate.  Lenders acknowledge that for purposes of this Section 6.32,
the Management Agreement constitutes an arm’s length agreement between Loan
Parties and Property Manager.

 

Section 6.33                            Debt Service Coverage Ratio.  Loan
Parties shall cause the Premises to maintain, as to any Testing Determination
Date, a Debt Service Coverage Ratio of not less than 1.15:1.00 (the “Default
DSCR”); provided that the failure of the Premises to maintain a Debt Service
Coverage Ratio greater than or equal to the Default DSCR at any time shall not
constitute a Default or an Event of Default if, within thirty (30) days after
the delivery of the Quarterly Compliance Statement required to be delivered to
Agent pursuant to Section 6.1(c) for the Calendar Quarter ending on such Testing
Determination Date, Borrower either (y) makes a partial principal prepayment of
the Loan in an amount such that, after giving effect thereto as though made on
the first day of the twelve (12) month period ending on such Testing
Determination Date most recently ended (but, for the avoidance of doubt, giving
effect to Required Amortization Payments and other payments of principal
actually received during such twelve (12) month period), the Debt Service
Coverage Ratio would be greater than or equal to the Default DSCR (which
prepayment Borrower shall not be permitted to make prior to the Permitted
Prepayment Date) or (z) Borrower delivers to Agent a Default DSCR Letter of
Credit.  Any such Letter(s) of Credit delivered to Agent shall be held in
accordance with Section 3.6.  Agent shall return each Default DSCR Letter of
Credit then being held by Agent at such time as the Adjusted Debt Service
Coverage Ratio shall have been equal to or greater than the Minimum DSCR as of
two (2) consecutive Testing Determination Dates; provided that, if the Adjusted
Debt Service Coverage Ratio is less than the Minimum DSCR for four
(4) consecutive Testing Determination Dates, then Agent, may, if directed by the
Requisite Lenders, draw on such Default DSCR Letter of Credit and apply the
proceeds thereof to the Obligations in such order as

 

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Agent may elect.  Any prepayment made in accordance with this Section 6.33 shall
not be subject to payment of the Prepayment Fee.

 

Section 6.34                            Required Repairs.  Loan Parties shall
perform the repairs and other work at the Premises as set forth on Schedule 6.34
hereto in all material respects (such repairs and other work hereinafter
referred to as “Required Repairs”) and shall complete each of the Required
Repairs on or before the date specified on Schedule 6.34.

 

Section 6.35                            Ground Lease.

 

(a)                                  Borrower shall:

 

(i)                                     pay when due any installment of fixed
rent payable under the Ground Lease prior to the expiration of any applicable
grace period following delivery of the notice required, if any, under the Ground
Lease to commence such grace period;

 

(ii)                                  pay additional rent or other charge
payable under the Ground Lease prior to the expiration of any applicable grace
period following delivery of the notice required, if any, under the Ground Lease
to commence such grace period, and

 

(iii)                               observe and perform all other terms,
covenants and conditions of the Ground Lease prior to the expiration of any
applicable grace period provided therein following the delivery of the notice,
if any, required under the Ground Lease to commence such grace period.

 

(b)                                 Borrower shall not:

 

(i)                                     cause or permit the occurrence of any
event that would cause the Ground Lease to terminate without notice or action or
would entitle Ground Lessor to terminate the Ground Lease and the term after
applicable notice and grace periods, if any, thereof by giving notice to
Borrower;

 

(ii)                                  voluntarily surrender the leasehold estate
created by the Ground Lease;

 

(iii)                               cause or permit the termination of Ground
Lease; or

 

(iv)                              cause or permit any term of the Ground Lease
to be modified or supplemented without the prior consent of the Requisite
Lenders.

 

Section 6.36                            Operating Leases.

 

(a)                                  Each Loan Party shall (i) perform and
observe as and when required thereunder all of the covenants required to be
performed and observed by it under the Operating Lease; (ii) promptly notify
Agent of any default (beyond any applicable notice, grace or cure period) under
the Operating Lease; and (iii) promptly deliver to Agent (without duplication) a
copy of any notice of default or other material notice under the Operating Lease
delivered to or from a Loan Party.

 

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(b)                                 If at any time, (i) Operating Lessee shall
become insolvent or a debtor in a bankruptcy proceeding or (ii) Agent or its
designee has taken title to the Premises by foreclosure, deed in lieu, or
assignment in lieu of foreclosure, has become a mortgagee-in-possession or has
otherwise taken title to the Premises, Agent shall have the absolute right to
(and each Loan Party shall reasonably cooperate and not in any way hinder, delay
or otherwise interfere with Agent’s right to), immediately terminate the
Operating Lease.

 

(c)                                  Loan Parties shall not, without the prior
written consent of Agent, which consent shall not be unreasonably withheld:
(i) surrender, terminate or cancel the Operating Lease or otherwise replace the
Operating Lessee or enter into any other operating lease with respect to the
Premises; provided, however, at the end of the term of the Operating Lease,
Borrower may renew the Operating Lease or enter into a replacement Operating
Lease with Operating Lessee at rent mutually determined by Loan Parties pursuant
to the Internal Revenue Code (if applicable) and otherwise on substantially the
same terms as the expiring Operating Lease (but Agent shall have the right to
approve any material change thereto) or (ii) reduce or consent to the reduction
of the term of the Operating Lease.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

Section 7.1                                   Events of Default.  The following
shall each constitute an “Event of Default” hereunder:

 

(a)                                  the failure of Borrower to pay when due the
principal of, and accrued, unpaid interest on, the Note;

 

(b)                                 the failure of Borrower to pay within five
(5) Business Days of the date due (i) any payment or deposit required pursuant
to Section 2.4(c), Section 2.4(f), Section 2.4(g) or Article III or (ii) any
Additional Interest following delivery of the certificate to Borrower detailing
the calculation thereof;

 

(c)                                  the failure of Loan Parties, as applicable,
(i) to pay within five (5) Business Days after same is due any payment on
account of any fees when due under the Loan Fee Letter or (ii) to pay when due
any other monetary Obligations, excluding those referred to in clause (a) or
(b) of this Section 7.1 on or before the due date therefor and such failure
described in this subclause (ii) continues for five (5) Business Days following
notice to Loan Parties of such failure;

 

(d)                                 if any of the Impositions are not paid prior
to the date such Impositions are delinquent, subject to the right to contest the
same as set forth herein and/or in the other Loan Documents;

 

(e)                                  if the Insurance Policies required
hereunder are not kept in full force and effect in accordance with the terms and
conditions hereof;

 

(f)                                    if any Transfer is made in violation of
the terms of this Loan Agreement or any other Loan Document which remains
uncured for thirty (30) days (for the avoidance of

 

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doubt, it is agreed that the foregoing thirty (30) day period shall commence
upon the occurrence of the Transfer and not upon Agent delivering notice thereof
to Loan Parties);

 

(g)                                 if, except as otherwise expressly permitted
under Section 6.10 of this Loan Agreement, any Lease shall hereafter be entered
into, terminated (other than by operation of its express terms), extended (other
than by operation of its express terms), modified or amended by Loan Parties
without the prior written consent of Agent or Requisite Lenders, as applicable;

 

(h)                                 if Loan Parties fail to deliver to Agent any
financial statement or certificate required to be delivered pursuant to
Section 6.1(a), (b) or (c), and such failure continues (i) for fifteen (15) days
after written notice from Agent with respect to any such financial statement or
certificate required to be delivered to Agent on a quarterly basis and (ii) for
thirty (30) days after written notice from Agent with respect to any such
financial statement required to be delivered to Agent on an annual basis,
provided, that, Loan Parties shall not be entitled to more than two (2) written
notices with respect to delivery of any of the foregoing financial statements
and/or certificates during any twelve (12) month period, and if after said two
(2) written notices have been delivered by Agent, any such financial statements
or certificates are not provided to Agent within fifteen (15) days after the
date such financial statement or certificate was required to be so delivered,
with respect to any financial statement required to be delivered to Agent on a
quarterly basis, or within thirty (30) days after the date such financial
statement was required to be so delivered, with respect to any financial
statement required to be delivered to Agent on an annual basis, an Event of
Default shall occur without notice;

 

(i)                                     Loan Parties shall fail in the due
performance or observance of any covenant, agreement or term binding upon Loan
Parties contained in this Loan Agreement or in any other Loan Document, other
than those covenants, agreements or terms which Loan Parties’ failure to perform
would constitute another Event of Default referred to in this Section 7.1, and
such failure shall continue un-remedied for more than thirty (30) days after
notice thereof shall have been given to Loan Parties by Agent; provided,
however, that if such failure is of a nature such that it cannot be cured by the
payment of money and if such failure requires work to be performed, acts to be
done or conditions to be removed which cannot by their nature, with due
diligence, be performed, done or removed, as the case may be, within such thirty
(30) day period and Loan Parties shall have commenced to cure such failure
within such thirty (30) day period, such period shall be deemed extended for so
long as shall be required by Loan Parties in the exercise of due diligence to
cure such failure, but in no event shall such thirty (30) day period be so
extended to be a period in excess of one hundred and twenty (120) days;

 

(j)                                     any “Event of Default” under any other
Loan Document or any other default shall occur under any other Loan Document,
and shall continue beyond the applicable grace period, if any, provided for
therein, (other than a Default under this Loan Agreement, such a default being
the subject of other provisions of this Section 7.1);

 

(k)                                  any warranty, representation or
certification made by Loan Parties or Guarantor in or pursuant to this Loan
Agreement or any other Loan Document or any document, instrument or certificate
heretofore or hereafter executed and delivered in connection herewith or
therewith shall prove to have been incorrect or misleading in any material
respect when made or

 

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deemed to have been made unless the breach of such representation, warranty or
certification was unintentional and is susceptible to cure and such breach is
cured to the reasonable satisfaction of the Requisite Lenders reasonable
satisfaction within thirty (30) days after Borrowers’ receipt of notice that the
applicable certification, representation or warranty was incorrect or
misleading;

 

(l)                                     intentionally omitted;

 

(m)                               the Management Agreement is amended, modified
or terminated without the prior consent or prior approval of the Requisite
Lenders, to the extent such consent or approval is required pursuant to this
Loan Agreement;

 

(n)                                 any breach or default by Borrower shall
occur and shall continue, beyond any applicable grace period provided for
therein, under any Interest Rate Protection Agreement;

 

(o)                                 Loan Parties or Guarantor (other than
Hilton) shall (i) voluntarily commence a Bankruptcy Proceeding (of the type
identified in clause (iii) of the definition thereof) under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter
in effect, (ii) consent to the institution of, or fail to contest in a timely
manner any such proceeding or petition (unless instituted by Agent or any of the
Lenders), (iii) take any actions described in clause (i) of the definition of
Bankruptcy Proceeding (except with respect to the appointment of a receiver or
trustee which is requested by Agent or any of the Lenders), (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding (other than petition by Agent or any of the Lenders and other than to
make a true, correct and complete response to such petition), (v) make a general
assignment for the benefit of creditors (other than Agent or the Lenders) or
(vi) admit in writing its inability to pay its debts generally as they become
due;

 

(p)                                 except with respect to any Bankruptcy
Proceeding initiated by Agent or any of the Lenders, an involuntary Bankruptcy
Proceeding shall be filed seeking (i) liquidation, reorganization or other
relief in respect of Loan Parties or Guarantor (other than Hilton) or its debts,
or of a substantial part of its assets, under any federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Loan Parties or Guarantor (other than
Hilton) or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for ninety (90) days or a
final, non-appealable order or decree approving or ordering any of the foregoing
shall be entered by a court of competent jurisdiction;

 

(q)                                 Borrower shall fail in the due performance
and observance of any of its covenants contained in Sections 2.7 or 6.35;

 

(r)                                    Loan Parties shall fail in the due
performance and observance of any of its covenants contained in Sections
6.10(a), 6.19, 6.20, 6.22, 6.23, 6.33, 6.34, 6.35, or 6.36; or

 

(s)                                  (i) Loan Parties or Guarantor shall have
incurred any liability, or an event or action shall have occurred that could
reasonably be expected to cause Loan Parties to incur any liability, (x) with
respect to any Pension Plan, including any liability under Section 412 of

 

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the IRC or Title IV of ERISA or (y) on account of a partial or complete
withdrawal (as such terms are defined in Section 4203 and 4205 of ERISA,
respectively) from, unpaid contributions to, or the reorganization, termination
or insolvency of, any Multiemployer Plan or (ii) Loan Parties or Guarantor shall
have engaged in any transaction in connection with which Loan Parties could be
subject to either a material civil penalty assessed pursuant to the provisions
of Section 502 of ERISA or a material tax imposed under the provisions of
Section 4975 of the IRC, and in each case in subclauses (i) and (ii) of this
clause (s), such event or condition, together with all other such events or
conditions under this clause (s), if any, is reasonably likely to result in a
Material Adverse Effect or which would materially and adversely impair the
ability of Agent and/or Lenders to enforce or collect any of the Obligations.

 

Section 7.2                                   Acceleration of Loan.  In addition
to any other rights and remedies which Agent and Lenders may have under this
Loan Agreement and the other Loan Documents or pursuant to law or equity, and
without limitation thereof, upon and at any time during the occurrence of any
Event of Default, Agent may, with the consent or at the direction of the
Requisite Lenders, by notice to Loan Parties, declare the indebtedness evidenced
by the Note, together with all other sums payable thereunder and under the other
Loan Documents (including, with respect to any acceleration prior to the
Permitted Prepayment Date, the Spread Maintenance Premium applicable thereto and
with respect to any acceleration from and after the Permitted Prepayment Date
and prior to the Par Prepayment Date, the Prepayment Premium applicable
thereto), immediately due and payable (except with respect to any event of the
nature described in Section 7.1(o) or (p), with respect to which such
indebtedness and other sums shall automatically become due and payable upon the
occurrence of any such event) and may exercise Agent’s rights and remedies
pursuant to any one or more of the Security Documents, the other Loan Documents
or as may be available at law or equity.

 

Section 7.3                                   Agent’s Right to Perform;
Protective Advances.  (a) In addition to any other rights and remedies which
Agent may have under this Loan Agreement and the other Loan Documents or
pursuant to law or equity, and without limitation thereof, upon the occurrence
and during the continuance of any Event of Default, Agent may, in its own name
or in the name of Loan Parties, (i) enter upon and into possession of the
Premises and any other Collateral, (ii) assume and/or perform all or any portion
of the obligations and exercise all or any portion of the rights of Loan Parties
under any or all Leases, agreements and documents to which a Loan Party is a
party or by which the Premises are bound, (iii) satisfy liens, claims and
judgments against the Collateral, (iv) pay Impositions, Carrying and Marketing
Costs, insurance premiums and other operating expenses of the Premises,
(v) perform and complete any construction or renovation that is then underway or
scheduled to be done or required to be done pursuant to a Lease or otherwise at
Loan Parties’ expense, and/or (vi) perform reconstruction and maintenance of,
and otherwise operate, the Premises or any portion thereof, all at the sole
risk, cost and expense of Loan Parties.  Agent shall have the right to
discontinue any work commenced by Agent and to change any course of action
undertaken by it and shall not be bound by any limitations or requirements of
time whether set forth herein or otherwise.  Upon the occurrence and during the
continuance of an Event of Default, Agent shall have the right and power (but
shall not be obligated) to assume all or any portion of the obligations of Loan 
Parties under any or all Leases, agreements and documents as Agent may elect and
to take over and use all or any part or parts of the labor, materials, supplies
and equipment contracted for by or on behalf of Loan Parties, whether or not
previously incorporated into the Premises.  Upon the

 

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occurrence and during the continuance of an Event of Default, Loan Parties
hereby appoint Agent as its attorney-in-fact (coupled with an interest), with
full power of substitution, and in the name of Loan Parties, if Agent elects to
do so, at any time upon the occurrence and during the continuance of any Event
of Default, (a) to use such sums as are necessary including all or any portion
of the funds in the Accounts to pay the reasonable and documented out-of-pocket
costs of the foregoing, (b) to endorse the name of Loan Parties on any checks or
drafts representing proceeds of the insurance policies or condemnation awards,
or other checks or instruments payable to Loan Parties with respect to the
Collateral, (c) to prosecute or defend any action or proceeding incident to the
Collateral, (d) to terminate any contract pertaining to the Collateral or any
portion thereof and any other contract to which a Loan Party is party, (e) to
negotiate and execute, on behalf of Loan Parties, any Lease, Management
Agreement or other agreement, and amendment, modification, extension or
supplement thereto and (f) to do every act with respect to the Premises,
including the alteration or construction that is then underway or scheduled to
be done or required to be done pursuant to a Lease or otherwise at Loan Parties’
expense, repair, reconstruction, maintenance, leasing and operation thereof or
any portion thereof, which Loan Parties otherwise may do.  The power-of-attorney
granted hereby is a power coupled with an interest and is irrevocable.  Agent
shall have no obligation to undertake any of the foregoing actions, and if Agent
should do so, it shall have no liability to Loan Parties for the sufficiency or
adequacy of any such actions taken by Agent, except with respect to liability
arising from Agent’s fraud, gross negligence or willful misconduct.  In
connection with the foregoing (and upon the occurrence and during the
continuance of any Event of Default), Agent may in good faith elect in order to
protect Agent’s and/or Lenders’ interest in the Premises:

 

(i)                                     engage builders, construction managers,
architects, general and trade contractors, suppliers, architects, engineers,
inspectors and others for the purpose of furnishing labor, materials, equipment
and fixtures;

 

(ii)                                  pay, settle or compromise all bills or
claims which may become Liens against the Premises, or which have been or may be
incurred in any manner in connection with such construction, reconstruction,
renovation or repair or for the discharge of liens, encumbrances or defects in
the title of the Premises; and

 

(iii)                               take such other action (including the
employment of watchmen and the taking of other measures to protect the Premises)
or refrain from acting under this Loan Agreement as Agent may in from time to
time determine without any limitation whatsoever.

 

(b)                                 Loan Parties shall be liable to Agent for
all documented, reasonable out-of-pocket sums paid or incurred in connection
with the construction, reconstruction, or repair of the Premises whether the
same shall be paid or incurred pursuant to the provisions of this Section 7.3,
and all other payments made or liabilities incurred by Agent under this Loan
Agreement of any kind whatsoever to the extent consistent with the rights and
remedies granted to Agent and/or Lenders hereunder, all of which shall be paid
by Loan Parties to Agent upon demand with interest at the Default Rate within
ten (10) Business Days of receipt by Loan Parties of written notice from Lender
of the payment of the same from the time incurred by Agent to the date of
payment to Agent, and all of the foregoing sums, including such interest at

 

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the Default Rate, shall be deemed and shall constitute disbursements of Loan
proceeds under this Loan Agreement and be evidenced by the Note and secured by
the Security Documents.

 

Section 7.4                                   Assignment of Funds.  During the
continuance of any Event of Default, the rights, powers and privileges provided
in Section 7.3 and all other remedies available to Agent under this Loan
Agreement or the other Loan Documents or by statute or by rule of law or equity
may be exercised by Agent at any time and from time to time whether or not the
Obligations shall be due and payable, and whether or not Agent shall have
instituted any foreclosure or other action for the enforcement of any of the
Security Documents, the Note or the other Loan Documents.  Loan Parties hereby
assign to Agent a security interest in all right, title and interest of Loan
Parties to all sums held in the Accounts and to the extent not held in an
Account, all sums held by Agent for the account of Loan Parties and any other
security delivered by Loan Parties as additional security (a security interest
in all of the foregoing being granted hereby to Agent) for the Loan and the
performance by Loan Parties of their obligations under the Loan Documents, all
of which security may be utilized by Agent for the purposes set forth in
Section 7.3 or the other Loan Documents or applied against the Obligations in
such order and manner as Agent shall determine.

 

Section 7.5                                   Accounts.  Notwithstanding
anything to the contrary contained herein, but subject to the terms of the
Manager SNDA, at the direction of the Requisite Lenders issued after the
occurrence and during the continuance of an Event of Default, the rights of Loan
Parties and each and every other Person (excluding Agent) with respect to
Accounts, upon notice to Loan Parties, shall immediately terminate, and no such
Person except Agent shall make any further withdrawal therefrom and except with
respect to checks initially issued in respect of such Account before such notice
but presented for payment after such notice.  Thereafter, Agent may from time to
time designate such signatories with respect to the Accounts as Agent may
desire, and may make or authorize withdrawals from the Accounts (other than the
Tenant Security Account) to pay the Obligations in whole or in part and/or pay
operating expenses and Capital Expenses with respect to the Premises, including
the sale and marketing thereof, and/or any other expenses, all as Agent may deem
necessary or appropriate and in such order as Agent may elect, subject in each
case to the terms of the Manager SNDA.  Agent may notify the financial
institutions in which any Account is held that Loan  Parties no longer have a
right to instruct such financial institution with respect to matters relating to
the withdrawal, operation or administration of, or investment or application of
funds on deposit in such Account, subject to the terms of the Manager SNDA. 
Without limiting the foregoing, Agent shall have the right, subject to the terms
of the Manager SNDA, to cause the withdrawal of all funds on deposit in any
Account and the deposit of such funds in an account established with Agent at
any time following receipt by Loan Parties and the financial institution in
which such Account is held of a notice from Agent pursuant to the Account
Agreement with respect to such Account, and Loan Parties hereby authorize and
direct such financial institutions to make payment directly to Agent of the
funds in or credited to such accounts, or such part thereof as Agent may
request.  Such financial institution shall have the absolute right to rely upon
such notice without inquiring as to the accuracy of the matters referred to in
such notice and the depositories shall be fully protected by Loan Parties in
relying upon such written notice from Agent.  In the event that Agent delivers
such a notice, Agent shall thereafter have the exclusive right to so instruct
such financial institution.  Nothing in this Section 7.5 shall be construed so
as to limit or impair Agent’s absolute right to have a receiver appointed
following an Event of Default.

 

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Section 7.6            No Liability of Agent or Lenders.  Whether or not Agent
elects to employ any or all of the remedies pursuant to the Loan Documents or
otherwise available to it at law or equity upon the occurrence of an Event of
Default, neither Agent nor Lenders shall be liable for the construction of or
failure to construct, complete or repair any improvements, or with respect to
any other rights or obligations of Loan Parties or their Affiliates, including
the rights and obligations of Loan Parties in, to or under any Permitted
Encumbrance or the Management Agreement, or to protect the Premises or the
Collateral, or for payment of any expense incurred in connection with the
exercise of any remedy available to Agent or for the performance or
non-performance of any other obligation of Loan Parties.  It is expressly
understood that Agent and Lenders assume no liability or responsibility for
(i) performance of any obligations or duties of Loan Parties hereunder or under
any of the other Loan Documents, any Leases or the Management Agreement,
(ii) compliance with any Legal Requirements or (iii) any other matters
pertaining to control over the management and affairs of Loan Parties or the
use, operation, management or ownership of the Premises or the Collateral, nor
by any such action shall Agent or any Lender be deemed to create a partnership
or joint venture with Loan Parties, provided that Lenders and Agent shall be
liable for either or both of their gross negligence and willful misconduct.

 

Section 7.7            Management Agreement.  Except as set forth in the
Management Agreement or the Manager SNDA, upon the occurrence and during the
continuance of any Event of Default, in addition to any other rights or remedies
of Agent hereunder or under the other Loan Documents, Agent, with the approval
of the Requisite Lenders, may terminate any Management Agreement entered into
with any Affiliate of Loan Parties and/or may require that Loan Parties
terminate the Management Agreement to the extent that Loan Parties have the
contractual right to do so.

 

Section 7.8            Right of Offset.  Loan Parties hereby grant to Agent and
Lenders a right of offset, to secure the repayment of the Obligations, upon any
and all monies, securities or other property of Loan Parties, and the proceeds
therefrom, now or hereafter held or received by or in transit to Agent and any
Lender, from or for the account of Loan Parties, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and also upon any and
all deposits (general or special) and credits of Loan Parties (including each
Account), and any and all claims of Loan Parties against Agent or any Lender at
any time existing.  At any time during the continuance of an Event of Default or
following the maturity (whether by acceleration or otherwise) of the Loan, Agent
and each Lender is hereby authorized from time to time, without notice to Loan
Parties, to offset, appropriate, apply and enforce said liens against any and
all sums hereinabove referred to against the Loan and the remaining Obligations,
provided that Section 7.5 shall govern Agent’s exercise of any rights or
remedies as to any of the Accounts.  Agent and Lenders shall not be liable for
any loss of interest on or any penalty or charge assessed against funds in,
payable on, or credited to any Account as a result of the exercise by Agent of
any of its rights, remedies or obligations under any of the Loan Documents.

 

Section 7.9            Termination of Loan Agreement.  The obligations of the
parties hereunder and the obligations in the other Loan Documents, excluding
those which expressly survive the termination hereof or repayment of the Loan,
shall automatically terminate only upon repayment in full of the outstanding
principal amount of the Loan, together with all interest and other indebtedness
due and payable in connection therewith, and all other outstanding

 

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Obligations (other than Contingent Obligations).  Upon such repayment, Agent
shall execute and deliver to Loan Parties at Loan Parties’ sole cost and
expense, such documentation as is reasonably necessary to confirm such
termination, to release the Liens and security interests created under any of
the Loan Documents and re-assign or transfer to Loan Parties any Collateral
delivered to, held by or assigned to Agent, each as in a form reasonably
acceptable to Agent; provided that, with respect to a prepayment of the
Obligations, any Letters of Credit then being held as Collateral shall be
returned to Loan Parties after such repayment (or with respect to a repayment of
the Obligations where the Appraised Value (as set forth in an Appraisal which is
not dated more than thirty (30) days prior to the date of such repayment) is
less than the Obligations (other than Contingent Obligations), one hundred (100)
days after such prepayment). If the Obligations have been repaid and thereafter
such all or any portion of such payment is rescinded or must otherwise be
returned or paid over by Agent or any Lender, whether required pursuant to any
bankruptcy or insolvency law or otherwise, the Obligations and the obligations
of each party under the Loan Documents, shall continue to the extent of such
payment.

 

ARTICLE VIII

 

ASSIGNMENTS AND PARTICIPATIONS

 

Section 8.1            Assignment and Participations.  Agent and Lenders shall
have the right, subject to this Section 8.1, to assign, sell, negotiate, pledge
or hypothecate all or any portion of their rights and obligations hereunder.  No
Lender shall assign, sell, negotiate, pledge, hypothecate or otherwise transfer
all or any portion of its rights in and to the Loan to any other Person (an
“Assignee”) (a) without Agent’s prior consent, not to be unreasonably withheld
in the case of a proposed transfer to an Assignee which is an Eligible Assignee
(provided that Agent’s consent shall not be required with respect to the
assignment, sale, negotiation, pledge or hypothecation by any Lender of all or
any portion of its interest in the Loan to (i) an Approved Assignee or
(ii) another Lender or an Affiliate of any Lender, unless, in the case of clause
(i) or clause (ii), the proposed transferee is an Affiliate of Loan Parties, in
which case the prior unanimous consent of all Lenders shall be required;
(b) other than in compliance with Section 8.5 hereof; (c) unless such
transaction shall be an assignment of a constant (and not varying), ratable
percentage of such Lender’s interest in the Loan; (d) unless the aggregate
principal amount of the Loan to be held by the Assignee after such transaction
is Fifteen Million Dollars ($15,000,000) or more (or such lesser amount approved
by Agent); (e) unless, after giving effect to such transaction, such Lender’s
aggregate unassigned interest in the Loan shall be in a principal amount of at
least Fifteen Million Dollars ($15,000,000) (or such lesser amount approved by
Agent) unless such transaction encompasses all of such Lender’s rights in and to
the Loan, in which case such Lender shall have assigned all of its rights in and
to the Loan and (f) unless such Assignee shall be a “Consented-To-Lender” under
the Ground Lease or Ground Lessor shall have otherwise consented thereto;
provided, however, any Lender shall have the right at any time without the
consent of or notice to Agent, any other Lender or other Person (other than as
required under the Ground Lease) to grant a security interest in all or any
portion of such Lender’s interest in the Note or the Loan (i) to any Federal
Reserve Bank or the central reserve bank or similar authority of any other
country to secure any obligation of such Lender to such bank or similar
authority (a “Central Bank Pledge”) and/or (ii) to a trustee, administrator or
receiver (or their respective nominees, collateral agents or collateral
trustees) of a mortgage pool securing covered mortgage bonds issued by a German
mortgage bank, or any other Person

 

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meeting the Eligibility Requirements and permitted to issue covered mortgage
bonds, under German Pfandbrief legislation, as such legislation may be amended
and in effect from time to time, or any substitute or successor legislation (a
“Covered Bond Pool Pledge”).  Effective on any such assignment and assumption by
the assignee and on compliance with Section 8.5 hereof, the assigning Lender
shall have no further liability hereunder with respect to the interest of such
Lender that was the subject of such transfer and such Assignee shall be a Lender
with respect to such interest.  Except for a Central Bank Pledge or a Covered
Bond Pool Pledge, a Lender making any such assignment shall notify Borrower and
to the extent required under the Ground Lease, the Ground Lessor of same,
specifying the Assignee thereof and the amount of the assignment.  The assigning
or selling Lender shall pay the reasonable and documented out-of-pocket costs
incurred by Agent to facilitate any assignment, sale or other transfer under
this Section 8.1, including without limitation, Agent’s reasonable and
documented out-of-pocket legal fees and expenses.

 

Section 8.2            Participation. Any Lender may assign, sell or otherwise
transfer a participation in and to all or any portion of its rights and
obligations in and to the Loan to any other Person (a “Participant”) without the
consent of Agent, any Lender, Loan Parties or any other Person; provided that no
such participation shall (i) release such Lender from any of its obligations
hereunder or (ii) result in the Participant having the right to approve or
provide any amendment, modification, termination, waiver, consent or approval
under any Loan Document, or to exercise any other right of a Lender under any
Loan Document except to the extent that any such amendment, modification,
termination, waiver, consent, approval or exercise of any right required the
unanimous consent of all Lenders.  Each Lender agrees to provide Agent prompt
notice of all participations sold by such Lender together with a copy of the
documentation governing such participations.  Each participation shall be
subject to the terms of the Ground Lease and each Participant shall be approved
by Ground Lessor.  The assigning or selling Lender shall pay the reasonable and
documented out-of-pocket costs incurred by Agent to facilitate any participation
under this Section 8.2, including without limitation, Agent’s reasonable and
documented out-of-pocket legal fees and expenses.

 

Section 8.3            Availability of Records.  Loan Parties acknowledge and
agree that Agent and each Lender may provide on a confidential basis to any
actual or proposed Assignee or Participant originals or copies of this Loan
Agreement, any other Loan Documents and any other documents, instruments,
certificates, opinions, insurance policies, financial statements and other
information, letters of credit, reports, requisitions and other materials and
information at any time submitted by or on behalf of Loan Parties, Guarantor or
other Persons and/or received by Agent or any Lender in connection with the
Loan.  As a condition precedent to providing such documentation and information,
each applicable Lender shall cause such Assignee or Participant to enter into a
confidentiality agreement in favor of Loan Parties and Guarantors that is
consistent with the scope and provisions of Section 10.25 hereof.

 

Section 8.4            Loan Parties’ Facilitation of Transfer.

 

(a)           In order to facilitate permitted assignments and other transfers
to Assignees and sales to Participants, each Loan Party, as applicable, shall
execute and deliver to Agent and shall cause Guarantor to execute and deliver to
Agent such further documents, instruments or agreements as Agent or any Lender
may reasonably and in good faith require,

 

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including one or more substitute promissory notes evidencing the Commitment of
each Lender, provided that such documents, instruments or agreements do not
(a) increase the obligations or liabilities of any such Person hereunder or
under any other Loan Documents in excess of the obligations or liabilities
provided herein or in any other Loan Documents or (b) decrease such Person’s
rights hereunder or under any other Loan Documents to less than what they were
prior to the execution of such documents, instruments or agreements, provided
that, without impairing Loan Parties’ obligations set forth in this Loan
Agreement, Loan Parties shall not be liable for any costs or expenses of Agent,
any Lender, any Assignee or any Participant associated with execution and
delivery of such documents, instruments or agreements.  In addition, Loan
Parties agree to reasonably cooperate with Agent and Lenders, including
providing such information and documentation regarding Loan Parties, Guarantor,
any other Person and the Premises as Agent or any Lender or any potential
Assignee or Participant may reasonably request from time to time, provided that
Loan Parties shall not be liable for any costs or expenses of Agent, any Lender,
any Assignee or any Participant associated with such cooperation, and provided,
further, that Loan Parties may, as a condition precedent to the provision of
such information and documentation, require Agent or any Lender to cause the
intended recipients of such information or documentation to enter into a
confidentiality agreement in favor of Loan Parties and Guarantors that is
consistent with the scope and provisions of Section 10.25 hereof.  The assigning
or selling Lender shall pay the reasonable and documented out-of-pocket costs
incurred by Loan Parties and Guarantor under this Section 8.4(a), including
without limitation, Loan Parties’ and/or Guarantor’s reasonable and documented
out-of-pocket legal fees and expenses.

 

(b)           Agent shall, with the approval or at the direction of all Lenders,
have the right, at any time (whether prior to, in connection with, or after any
permitted assignment, participation and other transfers to Assignees and sales
to Participants), with respect to all or any portion of the Loan, to modify,
split and/or sever all or any portion of the Loan as hereinafter provided, and
Loan Parties and Guarantor shall reasonably cooperate with Agent in connection
therewith.  Without limiting the foregoing, Agent may, with the consent of each
of the Lenders, (i) cause the Note, the Deed of Trust and the other Loan
Documents to be split into multiple mortgage loans, (ii) create one or more
senior and subordinate notes (e.g., an A/B or A/B/C structure), or (iii) create
multiple components of the Note or Notes (and allocate or reallocate the
principal amount of the Loan among such components and/or assign different
interest rates and/or LIBOR and/or Base Rate spreads to each Note), which
components may be represented by separate Notes, in each such case, in whatever
proportion and whatever priority Agent determines; provided, however, in each
such instance the outstanding principal amount of all the Notes evidencing the
Loan (or components of such Notes) immediately after the effective date of such
modification and economic terms (including as to the timing and the manner of
application of payments) of the Notes immediately after the effective date of
such modification is equivalent to the economic terms of the Notes immediately
prior to such modification; provided, further, however, neither Loan Parties nor
any of their Affiliates (including Guarantor) shall be required to enter into
any such modifications which would create new or greater obligations or
liabilities on or reduce the rights of Loan Parties or Guarantor or any of their
Affiliates under the Notes, as applicable.  If requested by Agent, Loan Parties
shall, and shall cause Guarantor and any applicable Affiliate of Loan Parties
to, execute and deliver such documentation as Agent may reasonably request to
evidence and/or effectuate any such modification or severance, provided,
however, that neither Loan Parties nor any of their Affiliates (including
Guarantor) shall be required to enter into any such documents or amendments
which would alter the economic terms

 

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of any of the Loan Documents or which would create new or greater obligations or
liabilities on or reduce the rights of Loan Parties or Guarantor or any of their
Affiliates under any of the Loan Documents.  Agent shall pay the reasonable and
documented out-of-pocket costs incurred by Loan Parties and Guarantor under this
Section 8.4(b), including without limitation, Loan Parties’ and Guarantor’s
reasonable and documented out-of-pocket legal fees and expenses and all costs
and expenses to comply with Section 2.7 on account of such modification, and
neither Loan Parties nor Guarantors shall be liable for any fees or expenses of
Agent or any Lender incurred in connection therewith.

 

Section 8.5            Notice; Registration Requirement.  No assignment, sale,
negotiation, pledge, hypothecation or other transfer of any part of any Lender’s
interest in and to the Loan shall be effective or permitted under this
Article VIII until (a) an assignment and acceptance agreement in the form
attached hereto as Schedule 8.5 (an “Assignment and Acceptance”) with such
changes thereto as are reasonably acceptable to Agent (or such other form as may
reasonably acceptable to Agent) with respect to such assignment, sale,
negotiation, pledge, hypothecation or other transfer shall have been delivered
to Agent, and (b) the parties to such transfer, assignment or purchase shall
have paid to Agent a processing and registration fee of $5,000.00.  The entries
in the Register shall be conclusive, absent manifest error.  Upon satisfaction
of the conditions set forth in the foregoing clauses (a) and (b), Agent shall
register such Assignee’s name and address in the Register which Agent maintains
for the recordation of the names, addresses and interests of Lenders.  This
Section 8.5 shall not apply to any Central Bank Pledge or Covered Bond Pool
Pledge.

 

Section 8.6            Registry.  Agent shall maintain a register (the
“Register”) on which Agent will record the Commitments from time to time of each
Lender, each repayment with respect to the principal amount of the Loan of each
Lender.  Failure to make any such recordation, or any error in such recordation
shall not affect Loan Parties’ obligations in respect of the Loan.  With respect
to any Lender, the transfer of the Commitments of such Lender and the rights to
the principal of, and interest on, any disbursement made pursuant to such
Commitments shall not be effective until such transfer is recorded on the
Register maintained by Agent with respect to ownership of such Commitments and
prior to such recordation all amounts owing to the transferor with respect to
such Commitments shall remain owing to the transferor.  The registration of a
transfer of all or part of any Commitment shall be recorded by Agent on the
Register only upon the acceptance by Agent of a properly executed and delivered
Assignment and Acceptance by the assignor and assignee.  At the assigning
Lender’s option, concurrently with the delivery of an Assignment and Acceptance
pursuant to which an interest of such Lender in the Loan was assigned to such
Assignee, the assigning Lender shall surrender its Note evidencing the portion
of the Loan corresponding to the interest so transferred and Borrower shall
deliver to Agent one or more new promissory notes in the same aggregate
principal amount issued to the assigning Lender and/or the Assignee in
accordance with Section 8.4.  The Register shall be available for inspection by
Loan Parties and/or any Lender at Agent’s New York City office, at the sole cost
and expense of Loan Parties or such Lender, at any reasonable time and from time
to time and upon reasonable prior written notice.

 

Section 8.7            Lender Interest Rate Protection Agreements.  Each Lender
that is a party to any Interest Rate Protection Agreement acknowledges that the
interest of Borrower in and to such Interest Rate Protection Agreement will be
pledged and collaterally assigned to

 

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Agent pursuant to the Loan Documents, and hereby consents without any
restrictions to such pledge and collateral assignment.  All payments, if any,
due under such Interest Rate Protection Agreement shall be paid directly to
Agent and all other rights of Borrower shall, upon the occurrence and during the
continuance of an Event of Default, be exercisable by Agent in accordance with
the terms of this Loan Agreement.  Each Lender that is a party to any Interest
Rate Protection Agreement shall execute and deliver to Agent, and cause any
Affiliate of such Lender that is a party to any Interest Rate Protection
Agreement to execute and deliver to Agent, upon entering into such agreement the
Interest Rate Protection Agreement Acknowledgment in order to confirm the
foregoing.

 

Section 8.8            Disclosure by Agent or Lender.  Without limiting
Section 8.3, Loan Parties consent to the issuance by Agent and Lenders of press
releases, advertisements and other promotional materials in connection with the
marketing activities of Agent and Lenders, including the disclosure that Aareal
is the Agent for the Loan, the amount of the Loan and the name, location and use
of the Premises; provided that the content of all such release, advertisements
and promotional materials shall be subject to Loan Parties’ reasonable prior
approval and provided, further, in no event shall such release, advertisements
or promotional materials disclose the identity of any Sponsor (other than
Hilton) or any direct or indirect owner of Loan Parties.

 

ARTICLE IX

 

AGENT AND LENDERS

 

Section 9.1            Scope of Article IX.  This Article IX shall be binding on
Agent and Lenders, but shall not be binding on or, except with respect to
Section 9.2(f)(i), enforceable by Loan Parties unless otherwise expressly
provided herein.  As among Agent and Lenders, the provisions of this Article IX
may be amended, waived or otherwise modified by Agent and Lenders without,
except as set forth in Section 9.2(f)(i), Loan Parties’ consent and without the
need for Loan Parties to be party to any of the same.  Without limiting the
foregoing, nothing contained in this Article IX or any amendments, waivers or
modifications thereof by Agent and Lenders, shall limit or modify the rights and
obligations of, and restrictions applicable to, Loan Parties, Agent or Lenders
set forth in any other provision of this Loan Agreement or in the other Loan
Documents, except as among Agent and Lenders.

 

Section 9.2            Agent.

 

(a)           Appointment.  Each Lender hereby irrevocably designates and
appoints Agent as the agent of such Lender with respect to the Loan and to act
as “Agent” under the Loan Documents.  Each Lender hereby irrevocably authorizes
Agent, as its agent, to take such action and to exercise such powers on such
Lender’s behalf as may be taken by Agent under any Loan Document, including as a
payee, mortgagee, assignee or beneficiary or otherwise, together with such other
powers as are reasonably incidental thereto.  Nothing contained in this Loan
Agreement, any Assignment and Acceptance or in any other Loan Document is
intended to create or shall be construed as imposing on Agent any obligations
except as expressly set forth in this Loan Agreement or in any other Loan
Document.  Agent shall not have any fiduciary or trustee relationship with
Lenders.

 

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(b)           Duties of Agent.  Agent shall not have any duties or
responsibilities except those expressly set forth in this Loan Agreement and in
the other Loan Documents; no implied covenants, functions, responsibilities,
duties, obligations or liabilities of Agent shall be construed to exist under
this Loan Agreement or any other Loan Document.  Agent shall perform its duties
hereunder in accordance with the same standard of care as that customarily
exercised by Agent with respect to the administration of a loan similar to the
Loan held entirely for its own account.  Agent shall not have any duty to
ascertain or inquire into or verify the performance or observance of any
covenants or agreements in any Loan Documents by Loan Parties or any other
Person or the satisfaction of any condition or to inspect the Premises.  Agent
shall not be liable for any undertaking of Loan Parties or any other Person or
for any error of judgment, or for any action taken or omitted to be taken by
Agent other than willful misconduct or gross negligence of Agent.

 

(c)           Reliance by Agent.  Agent is entitled to rely upon (and shall be
protected in relying upon) any written or oral statement and notices or any
other certification or documents believed by Agent to be genuine and correct and
to have been signed or made by the proper Person and, with respect to all of its
duties under the Loan Documents, upon advice of counsel (including counsel for
Loan Parties and Guarantor), independent public accountants, engineers,
architects and other experts selected by Agent and shall not be liable for any
action taken or omitted to be taken by Agent in good faith in accordance with
the advice of such counsel, independent public accountants, engineers,
architects and other experts.

 

(d)           Delegation of Duties.  Agent may execute any of its duties under
this Loan Agreement and any duties as Agent or as a party, payee, mortgagee,
assignee or beneficiary under any Loan Document, by or through agents,
Affiliates or attorneys-in-fact; provided that such agents, Affiliates or
attorneys-in-fact shall be subject to the same standard of care as Agent as set
forth in Section 9.2(b).  Agent shall not be responsible for the negligence or
misconduct of any agents, Affiliates or attorneys-in-fact selected by Agent with
reasonable care and prudence.

 

(e)           Agent in its Capacity as a Lender.  With respect to Aareal’s
ownership interest in the Loan as a Lender, Aareal in its capacity as Lender
shall have the rights and powers of a Lender under this Loan Agreement and the
other Loan Documents as set forth herein and therein and may exercise or refrain
from exercising the same as though it were not Agent, and the term “Lender” and
“Lenders” shall include Aareal in its individual capacity for so long as Aareal
shall hold any interest in the Loan.

 

(f)            Relationship with Loan Parties.

 

(i)            Each Lender acknowledges that, with respect to the Loan and the
Loan Documents, Agent shall have the sole and exclusive authority to deal and
communicate with Loan Parties and any other Person on behalf of Lenders and each
Lender acknowledges that any notices or demands from such Lender to Loan Parties
or such Person must be promptly forwarded to Agent for delivery. This subclause
(i) may not be amended or waived without the consent of Loan Parties.

 

(ii)           Each Lender agrees that it will not take any legal action,
institute any actions or proceedings, or otherwise exercise remedies, against
Loan Parties or any

 

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other Person with respect to any of the Obligations, without the prior consent
of Agent, which consent may be withheld by Agent in its discretion.

 

Section 9.3            Distributions.  Each Lender shall be entitled to receive,
and Agent shall transfer to each Lender, each Lender’s Pro Rata Share of all
payments received by Agent pursuant to the Loan Documents on account of
principal, interest and other sums, excluding, however, (a) any sums payable to
Agent or any Lender in a manner other than in proportion to each Lender’s Pro
Rata Share in connection with any Interest Rate Protection Agreement or pursuant
to Section 2.9 or 2.14, without regard as to whether such sums constitute
Additional Interest, (b) except as otherwise agreed among Agent and Lenders,
fees payable pursuant to the Loan Fee Letter and (c) any sums payable to Agent
in its capacity as Agent, including any sums payable on account of expenses
incurred by Agent which Loan Parties are obligated to reimburse Agent pursuant
to the Loan Documents to the extent that Lenders have not made a payment on
account thereof pursuant to Section 9.9 (the sums referred to in
clauses (a) through (c) are hereinafter referred to as, “Excluded Sums”). 
Payments actually received by Agent for the account of any Lenders shall be paid
to such Lenders promptly following receipt and in any event within two
(2) Business Days of Agent’s receipt thereof.  Notwithstanding anything to the
contrary set forth herein, without increasing Loan Parties’ obligations under
this Loan Agreement or any other Loan Document, if Aareal shall hereafter sell,
assign or otherwise transfer its interest in the Loan to Aareal Bank AG, it is
acknowledged and agreed that all Required Amortization Payments which are to be
made pursuant to Section 2.4(b) which are otherwise allocable to Aareal Bank AG,
shall not be received and transferred on a pro rata basis, but rather, shall be
received and transferred solely to Aareal until the portion of the principal
amount of the Loan attributable to Aareal is paid in full.

 

Section 9.4            Authority, No Reliance; Binding Effect.  Each Lender
(a) represents and warrants that it is legally authorized to enter into this
Loan Agreement, (b) agrees that neither Agent nor any Lender shall be
responsible to one another for the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectability of any of the Loan
Documents or any other instrument or document furnished pursuant thereto or in
connection with the Obligations, (c) confirms and agrees that neither Agent nor
any Lender has made or will be deemed to have made any warranty or
representation to another or shall be responsible to another for any statements,
warranties or representations (written or otherwise) made in or in connection
with the Loan or the Loan Documents or for the financial condition of Loan
Parties or any other Person or for the title or the value of any portion of the
Mortgaged Property or other Collateral and (d) agrees that it will be bound by
the provisions of this Loan Agreement and will perform in accordance with its
terms all the obligations which by the terms of this Loan Agreement are required
to be performed by it as a Lender.  Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Loan Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Loan Agreement.

 

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Section 9.5            Loan.

 

(a)           Amendments and Modifications; Exercise of Rights and Remedies. 
Except as set forth in Section 9.5(b), Agent reserves the right, in its
discretion, in each instance without prior notice to Lenders, (i) to exercise or
refrain from exercising any powers or rights which Agent or Lenders may have
under or with respect to the Note, this Loan Agreement or any other Loan
Document, (ii) to enforce or forbear from enforcing the Loan Documents, (iii) to
grant or withhold consents, approvals or waivers and to make any other
determinations in connection with the Loan and the Loan Documents, (iv) to amend
or modify the Loan Documents, (v) to acquire additional security or release any
security given with respect to the Loan, (vi) to collect all sums due under the
Loan Documents, (vii) to declare the Loan due and payable when permitted to do
so pursuant to the terms of the Loan Documents, (viii) to enforce the Loan
Documents, (ix) to take possession of, foreclose or accept a deed and/or
assignment of the Collateral or any portion thereof in lieu of foreclosure,
(x) to sell, dispose of or otherwise deal with the ownership and operation of
the Collateral, (xi) to bid at foreclosure of the Deed of Trust such amount as
Agent shall determine in its discretion and (xii) to exercise or determine not
to exercise all powers which are incidental to any of the foregoing. 
Notwithstanding anything to contrary contained in this Loan Agreement, any
modification or supplement of Article IX, or of any of the rights or duties of
the Agent hereunder, shall require the consent of the Agent.

 

(b)           Restrictions of Power of Agent.  Notwithstanding anything to the
contrary contained in Section 9.5(a) or elsewhere in this Loan Agreement:

 

(i)            Agent shall not, without the prior written consent of all
Lenders, do any of the following:

 

(A) agree to any amendment to or waiver of any of the terms or conditions of the
Note, this Loan Agreement or any other Loan Document which would:  (1) extend
the time for any payments of interest or principal, including the Maturity Date;
(2) reduce the rate of interest payable pursuant to this Loan Agreement;
(3) increase the principal amount of the Loan or the amount of any Commitment;
(4) release any material portion of the Collateral granted under the Loan
Documents except as required hereunder or thereunder; (5) release Loan Parties
or any Guarantor of the Loan from any of their material obligations with respect
to the Loan; (6) consent to any Transfer which is not a Permitted Transfer;
(7) permit Loan Parties to incur any indebtedness which is not Permitted
Indebtedness; (8) amend or modify Section 8.1; (9) amend or modify the
definitions of “Permitted Indebtedness,” “Permitted Transfer,” or “Transfer;” or
(10) amend or modify this Section 9.5(b);

 

(B) subordinate the lien on any Collateral for the Loan;

 

(C) modify the percentage or the requirement for a specific number of Lenders
where applicable in the definition of “Requisite Lenders”;

 

(D) cross-collateralize the Loan with any other loan or indebtedness; or

 

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(E) take any other action, or grant or withhold any other consent or approval
which pursuant to the express provisions of this Loan Agreement or any other
Loan Documents requires the unanimous consent or approval of all Lenders;

 

(ii)           Agent shall not without the prior written consent of the
Requisite Lenders:

 

(A) agree to any amendment to or waiver of any of the terms or conditions of the
Note, this Loan Agreement or any other Loan Document which would amend or modify
the following definitions: “Adjusted Debt Service,” “Adjusted Debt Service
Coverage Ratio,” “Cash Sweep Condition,” “Cash Sweep Letter of Credit,”
“Casualty Threshold,” “Condemnation Threshold,” ‘Debt Service Coverage Ratio,”
“Default DSCR Letter of Credit,” “Material Adverse Affect,” “Material Lease
Action,” “Material Operating Agreement,” “Material Taking,” “Single Purpose
Entity,” “Spread Maintenance Premium.”

 

(B) waive in writing any monetary or material non-monetary Event of Default on
the part of Loan Parties or any Guarantor under the Loan Documents;

 

(C) authorize, consent to, accept, vote to adopt or agree to any plan of
reorganization, arrangements, adjustment or composition in a Bankruptcy
Proceeding relative to Loan Parties or any guarantor under the Loan Documents;

 

(D) [reserved];

 

(E) adjust, compromise or settle any title insurance claim in excess of five
percent (5%) of the then outstanding principal amount of the Loan;

 

(F) take any other action, or grant or withhold any other consent or approval
which pursuant to the express provisions of this Loan Agreement or any other
Loan Documents requires the consent or approval of the Requisite Lenders; or

 

(G) in connection with an Event of Default which is continuing: (1) declare the
Loan to be immediately due and payable following an Event of Default or any
rescission of any acceleration; (2) bring any action to foreclose the lien of
the Deed of Trust, or conduct a foreclosure sale pursuant to a power of sale, or
accept a deed in lieu of foreclosure, or appoint or seek the appointment of a
receiver for the collection of Rents, or bringing any suit on the Notes to
collect the indebtedness evidenced thereby or secured by the Deed of Trust;
(3) determine the amount of any credit bid to be made by Agent in any
foreclosure action, if such amount is less than the unpaid principal amount of
the Loan, accrued and unpaid interest thereon at the interest rate thereon
(other than interest at the Default Rate) and all amounts required to be paid or
reimbursed to the Agent hereunder; (4) agree to any proposed sale of the
Property for less than the unpaid principal amount of the Loan, accrued and
unpaid interest thereon at the interest rate thereon (other than interest at the
Default Rate) and all amounts required to be paid or reimbursed to the Agent
hereunder; or (5) approve of any

 

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recommended course of action with respect to the Collateral for the Loan in the
event that all or any portion of the Collateral for the Loan is acquired by
Agent as the result of the exercise of any remedies under this Loan Agreement or
under any other Loan Document, or is retained in satisfaction of all or any part
of Loan Parties’ obligations under the Loan Documents, in which case, title to
any such Collateral or any portion thereof shall be held in the name of Agent or
a nominee or subsidiary of Agent and Lenders, as agent, for the ratable benefit
of Lenders.

 

(c)           Deemed Consent.  In the event that Agent requests a Lender’s
consent pursuant to Section 9.5(b) and Agent does not receive the Lender’s
written response within ten (10) Business Days of the request therefor, such
Lender shall be deemed to have consented to the action or determination proposed
in such request.  All such requests for consent from Agent to Lenders shall
(i) be given in the form of a written notice to each Lender, (ii) be accompanied
by a description of the matter or item as to which such consent is requested, or
shall advise each Lender where such matter or item may be inspected, or shall
otherwise describe the matter or issue to be resolved and (iii) shall include
Agent’s proposal in respect thereof.

 

(d)           Instructions from Lenders; Notices.

 

(i)            Agent may at any time request instructions from Lenders with
respect to any actions, consents, waivers or approvals which, by the terms of
any of the Loan Documents, Agent is permitted or required to take or to grant,
and Agent shall be absolutely entitled to refrain from taking any action or to
withhold any approval, consent or waiver and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval, consent or waiver under any of the Loan Documents until Agent shall
have received such instructions.

 

(ii)           With respect to any actions, consents, waivers or approvals
which, by the express terms of any of the Loan Documents, requires the approval
or consent of all Lenders or the Requisite Lenders, Agent shall (i) take such
action and shall grant any such consent, approval or waiver as shall be approved
(or deemed approved) by all of the Lenders or the Requisite Lenders, as the case
may be, and (ii) except as set forth in Section 9.16(b), shall refrain from
taking such action and/or granting any such consent, approval or waiver which
has not been approved (or deemed approved) by all of the Lenders or the
Requisite Lenders, as the case may be.

 

(iii)          Agent shall deliver to Loan Parties and/or Guarantor any request
by a Lender for information concerning the Premises or the business or financial
condition of Loan Parties and Guarantor, including the performance of their
obligations under the Loan Documents, as such Lender shall reasonably request.

 

(iv)          Agent shall (y) notify the Lenders of any action material action
taken by Agent in accordance with Section 9.5(a) without the consent or approval
of the Requisite Lenders, and (z) deliver to the Lenders a copy of all notices
of default sent to Loan Parties and/or Guarantor and copies of material notices
and material correspondence received from Loan Parties and/or Guarantor with
respect to the Loan.

 

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Section 9.6            Equitable Adjustments.  If a Lender shall obtain any
payment (whether voluntary, involuntary or otherwise) on account of such
Lender’s interest in the Loan in excess of such Lender’s Pro Rata Share to which
such Lender is entitled (other than payments on account of Excluded Sums payable
to such Lender) or payment on account of Excluded Sums payable to another
Person, such Lender shall forthwith pay over to Agent an amount sufficient to
enable Agent to cause such excess payment to be shared ratably with the other
Lenders or, in the case of Excluded Sums payable to another Person, such
Excluded Sums.

 

Section 9.7            Other Transactions.  Agent and each Lender and their
respective Affiliates and subsidiaries may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, Loan Parties, any Affiliate of Loan Parties, any subsidiaries of Loan
Parties or its Affiliates and any Person who may do business with or own
interests in or securities of Loan Parties or any such Affiliate or subsidiary
without any duty to account therefor to each other.  In the event that Agent or
a Lender shall enter into an Interest Rate Protection Agreement, Agent or such
Lender, as the case may be, shall be free to exercise its rights and remedies
pursuant to the terms of the applicable Interest Rate Protection Agreement as if
Agent or Lender, as the case may be, was not Agent or a Lender hereunder.

 

Section 9.8            Obligations Absolute.  Each Lender acknowledges and
agrees that its obligations hereunder are absolute and unconditional and shall
not be affected by any circumstance whatsoever, including any breach by Agent or
a Lender of their obligations under this Loan Agreement or any other Loan
Document, any lack of validity or enforceability of the Note, this Loan
Agreement or any other Loan Document, the occurrence and continuance of any
Default or Event of Default or the failure to satisfy any term or condition of
the Note, this Loan Agreement or any other Loan Document.  Without limiting the
generality of the immediately preceding sentence, each Lender agrees that any
payment required to be made by it shall be made without any offset, abatement,
withholding or reduction whatsoever and a breach by Agent or any Lender of any
of their obligations pursuant to this Loan Agreement or any other Loan Document
shall not limit or otherwise affect a Lender’s obligations pursuant to this Loan
Agreement.

 

Section 9.9            Indemnification.

 

(a)           Generally.  Lenders hereby agree to indemnify Agent (to the extent
Agent is not otherwise reimbursed hereunder or under the Loan Documents by Loan
Parties), on demand, in proportion to their Pro Rata Shares, for and against any
and all claims, demands, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements (including
reasonable fees and disbursements of counsel) of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against Agent in any way
relating to or arising hereunder or out of any of the Loan Documents, any action
taken or omitted by Agent hereunder or thereunder, the Premises or the
Collateral, including any matter required to be indemnified by Loan Parties
pursuant to Section 10.1; provided, however, that Lenders shall not be liable
for (a) any of such claims, demands, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting from Agent’s willful misconduct or gross negligence or (b) any
of such claims, demands, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or

 

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disbursements which arise pursuant to any Lender Interest Rate Protection
Agreement to which Agent or its Affiliate is party.  A certificate of Agent as
to the amount for which Lenders are required to reimburse Agent pursuant to this
Section 9.9 shall be prima facie evidence as to such amount in the absence of
manifest error.  Lenders’ obligations under this Section 9.9 shall survive the
termination of this Loan Agreement and the Loan Documents.  Without limiting the
foregoing, in the event Agent with the approval or at the direction of the
Requisite Lenders elects to make a protective advance, each Lender shall fund
its Pro Rata Share thereof.  If Agent advances its own funds for any protective
advance made with the approval or at the direction of the Requisite Lenders,
each Lender shall upon Agent’s demand reimburse Agent for same in the amount of
its Pro Rata Share thereof.

 

(b)           Indemnification Regarding Certain Actions.  Unless indemnified to
Agent’s satisfaction against any claims, demands, liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (including reasonable fees and disbursements of counsel), Agent
may not be compelled to do any act under this Loan Agreement or any other Loan
Document or to take any action toward the execution or enforcement of the powers
hereby or thereby created or to prosecute or defend any suit with respect to
this Loan Agreement or any other Loan Document.  In no event, however, shall
Agent be required to take any action that Agent determines would be in violation
of any applicable regulatory requirements, or could incur for Agent criminal or
onerous civil liability.

 

Section 9.10         Taxes.  All taxes due and payable on any payments to be
made to any Lender with respect to the Obligations or under the Loan Documents
shall be such Lender’s sole responsibility.  All payments payable by Agent to
any Lender hereunder or otherwise with respect to the Obligations shall be made
without deduction for any taxes, charges, levies or withholdings, except to the
extent, if any, that such amounts are required to be withheld by Agent under
applicable law or the terms of the Loan Documents or this Loan Agreement.  Each
Lender shall provide to Agent and Borrower before the first Payment Date after
the execution of any Assignment and Acceptance pursuant to which it becomes a
Lender hereunder, and from time to time thereafter, including upon a change in
circumstances and upon the expiration of a previously delivered form, a
completed and signed copy of any form(s) (including Internal Revenue Service
Forms W-8 BEN, W-8 ECI and/or W-9) that may be required by the United States
Internal Revenue Service in order to certify such Lender’s exemption from United
States withholding and backup withholding taxes with respect to payments to be
made to such Lender with respect to the Obligations or under the Loan Documents
and/or such other documents as are necessary to indicate that all such payments
are exempt from such taxes (or subject to such taxes at a rate reduced by an
applicable tax treaty, in which case Agent and/or Borrower, as applicable, shall
withhold Taxes to the extent required by law and, to the extent such Taxes are
Excluded Taxes, shall not be required to pay any additional amounts to such
Lender by reason of such withholding).  This paragraph shall inure to the
benefit of, and be enforceable by, Borrower.

 

Section 9.11         Return of Payments.  If Agent has received or applied any
payment with respect to the Loan and has paid to any Lender any portion of such
payment, and thereafter such payment or application is rescinded or must
otherwise be returned or paid over by Agent, whether required pursuant to any
bankruptcy or insolvency law, the Loan Documents, or otherwise, such Lender
shall, at Agent’s request, promptly return its share of such payment or
application to Agent.  In addition, such Lender shall simultaneously remit its
Pro Rata Share of

 

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any interest or other amounts required to be paid by Agent with respect to such
payment or application.  If any Lender fails to remit such payment to Agent
prior to 10:00 a.m. (New York City time) on the second (2nd) Business Day
following Agent’s request for such funds, the payment owed to Agent shall earn
interest at the Base Rate for each day from the date of Agent’s request until
its payment to Agent.

 

Section 9.12         No Partnership.  This Loan Agreement, the Assignment and
Acceptances and the other Loan Documents do not create a partnership or joint
venture among Agent and/or Lenders.

 

Section 9.13         Resignation and Removal of Agent; Successor Agent.

 

(a)           Resignation.  Agent may resign, without the consent of  any
Lender, from the performance of all its functions and duties hereunder at any
time by giving at least fifteen (15) Business Days’ prior written notice to Loan
Parties and Lenders, unless applicable law requires a shorter notice period or
that there be no notice period, in which instance such applicable law shall
control.

 

(b)           Removal of Agent.  (i) In the event of the occurrence of any
material gross negligence or willful misconduct of Agent and the Requisite
Lenders agree or (ii) if any of the following shall occur and the Requisite
Lenders agree, (A) Agent is and continues to be a Defaulting Lender, (B) Agent
has announced that Agent will not be engaged going forward or is no longer
engaged in the United States of America in the business of servicing commercial
real estate loans similar to the Loan, (C) Agent has announced that Agent will
not be engaged going forward or is no longer engaged in the United States of
America in the business of holding commercial real estate loans similar to the
Loan, (D) Agent is the debtor in a Bankruptcy Proceeding pursuant to Chapter 7
or Chapter 11 of the U.S. Bankruptcy Code, or in case of a foreign institution
acting as Agent, their respective domestic legal equivalent or is the subject of
dissolution or winding-down process or (E) the interest in the Loan being held
by Agent and/or its Affiliates as a Lender shall be less than ten percent (10%)
in the aggregate, then in any such event Agent may be removed as the
administrative agent under this Loan Agreement and the Loan Documents; provided,
however, that no such removal of Agent shall in any way affect the rights of
Agent in its individual capacity as a Lender.

 

(c)           Appointment of Successor Agent by Requisite Lenders.  Upon any
resignation or removal of Agent, the Requisite Lenders (including in the
determination of the Requisite Lenders, the Pro Rata Shares of such Lender that
is also the resigning or removed Agent) shall appoint a successor Agent (who, to
the extent a Lender shall be willing to serve, also shall be a Lender) which is
a “Consented-To-Lender” under the Ground Lease or shall otherwise have been
approved by Ground Lessor under the Ground Lease.  Such resignation or removal
shall take effect upon the acceptance by a successor Agent of appointment
pursuant to Section 9.13(c) or, if applicable, the appointment by Agent of a
successor Agent pursuant to Section 9.13(d).  Notwithstanding the foregoing, in
no event shall an Affiliate of Loan Parties be appointed Agent without the
unanimous consent of all Lenders.

 

(d)           Appointment by Resigning Agent.  If, upon the resignation of
Agent, a successor Agent shall not have been appointed within the fifteen (15)
Business Days or shorter

 

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period provided in Section 9.13(a), the resigning Agent shall then appoint a
successor Agent (who, to the extent a Lender shall be willing to serve, also
shall be a Lender), which successor shall serve as Agent until such time, if
any, as the Requisite Lenders appoint a successor Agent as provided above and
which successor shall be a “Consented-To-Lender” under the Ground Lease or shall
otherwise have been approved by Ground Lessor under the Ground Lease.

 

(e)           Rights of the Successor and Retiring Agent.  Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, or, if applicable,
the appointment of a successor Agent by Agent pursuant to Section 9.13(d), such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent arising from and
after the date of such acceptance and appointment, and the retiring Agent shall
be discharged from the duties and obligations of Agent arising from and after
such date.  After the resignation or removal of Agent as provided herein, the
provisions of this Loan Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Loan Agreement.

 

Section 9.14         Defaults by any Lender.

 

(a)           Consequences of Default.   If for any reason any Lender shall be
in default of any of its material obligations pursuant to this Loan Agreement or
any other Loan Document (a “Defaulting Lender”), then, in addition to the rights
and remedies that may be available to Agent and any other Lender under this Loan
Agreement, at law and in equity, such Defaulting Lender’s right to participate
as a Lender in decisions under this Loan Agreement, including any rights to
approve or direct any determination, action or inaction of Agent where the
approval or direction of Lenders is required or permitted hereby, and such
Defaulting Lender’s right to assign, transfer, sell all or any portion of its
rights in and to the Loan or a participation therein pursuant to Article VIII,
shall be suspended during the pendency of such failure or refusal.

 

(b)           Remedies.  If for any reason the Defaulting Lender fails to make
timely payment of any amount required to be paid by such Defaulting Lender to or
for the benefit of Agent or any other Lender hereunder, then, in addition to
other rights and remedies which Agent or such other Lender may have hereunder or
otherwise, Agent or any Lender shall be entitled, but not obligated (i) to
advance funds on behalf of any Defaulting Lender, (ii) to the extent not paid by
Borrower, to collect interest from the Defaulting Lender at the Base Rate until
the date on which the payment is made, (iii) to withhold or set off or in the
case of a Lender, to cause Agent to withhold or setoff, and to apply to the
payment of the defaulted amount and any related interest, any amounts to be paid
to the Defaulting Lender under this Loan Agreement, (iv) to bring an action or
suit against the Defaulting Lender in a court of competent jurisdiction to
recover the defaulted amount and any related interest and (v) to purchase the
Defaulting Lender’s interest in the Loan in the manner set forth in this
Section 9.14.  Upon the Defaulting Lender’s failure to make payments as set
forth herein and so long as such failure remains uncured (and it is agreed an
advance of funds by any other Lender pursuant to clause (i) above shall not be
considered a cure of the Defaulting Lender’s default), the Defaulting Lender
shall not be entitled to receive its share of any payments made by Borrower (or
amounts owed by Loan Parties) after such date pursuant to the Loan Documents. 
If Agent receives any payment with respect to the Obligations from Loan Parties
as to which a Defaulting Lender would otherwise have been

 

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entitled, then such Defaulting Lender’s share of such payment shall be credited
toward the amount owed hereunder by such Defaulting Lender on a dollar for
dollar basis.

 

(c)           Purchase of Defaulting Lender’s Interest After Default.  In the
event of a default by a Lender as referred to in Section 9.14(a), each Lender
which is not a Defaulting Lender shall have the right, but not the obligation,
in its sole discretion, to acquire such Defaulting Lender’s interest in the
Loan.  If more than one Lender exercises such right, each such Lender which is
not a Defaulting Lender shall have the right to acquire (in accordance with such
acquiring Lender’s Pro Rata Share or upon agreement of the Lenders that desire
to so purchase the Defaulting Lender’s interest, any other proportion) the
Defaulting Lender’s interest in the Loan.  Such right to purchase shall be
exercised by written notice from the applicable Lender(s) electing to exercise
such right to the Defaulting Lender (an “Exercise Notice”), copies of which
shall also be sent concurrently to each other Lender.  The Exercise Notice shall
specify (i) the purchase price for the interest of the Defaulting Lender,
determined in accordance with Section 9.15 and (ii) the date on which such
purchase is to occur, which shall be any Business Day which is not less than
fifteen (15) days after the date on which the Exercise Notice is given, provided
that if such Defaulting Lender shall have cured its default in full (including
with the payment of any interest and other amounts due in connection therewith)
to the satisfaction of Agent within said fifteen (15) day period, then the
Exercise Notice shall be of no further effect and the non-defaulting
Lender(s) shall no longer have a right to purchase such Defaulting Lender’s
interest.  Upon any such purchase of a Defaulting Lender’s interest and as of
the date of such purchase (the “Purchase Date”), the Defaulting Lender’s
interest in the Loan, and its rights hereunder as a Lender arising from and
after the Purchase Date (but not its rights and liabilities with respect thereto
or under this Loan Agreement or the other Loan Documents for obligations,
indemnities and other matters arising or matters occurring before the Purchase
Date) shall terminate on the Purchase Date, and the Defaulting Lender shall
promptly execute all documents reasonably requested to surrender and transfer
such interest.  Without in any manner limiting the remedies of Agent or any
other Lender, the obligation of a Defaulting Lender to sell and assign its
interest in the Loan under this Section 9.14 shall be specifically enforceable
by Agent and/or any other Lender by an action brought in any court of competent
jurisdiction for such purpose, it being acknowledged and agreed that, in light
of the disruption in the administration of the Loan and the other terms of the
Loan Documents that a Defaulting Lender may cause, damages and other remedies at
law are not adequate.

 

Section 9.15         Purchase Price; Payment for Defaulting Lender’s Pro Rata
Share.  The purchase price for the interest of a Defaulting Lender in the Loan
shall be equal to the sum of all of the Defaulting Lender’s advances under the
Loan Documents outstanding as of the Purchase Date, less the costs and expenses
incurred by Agent and any non-defaulting Lender directly as a result of the
Defaulting Lender’s default hereunder, including interest accrued on such unpaid
amounts (at the Base Rate), court costs and including reasonable attorneys’ fees
and disbursements, and fees for accountants and other similar advisors (provided
that such costs and expenses are paid by the Lenders acquiring the interest of
such Defaulting Lender to Agent and the Lenders incurring same).

 

Section 9.16         Enforcement Action Plan.  (a) Promptly after Agent acquires
knowledge (as defined below) thereof, Agent shall give written notice to each
Lender of any Event of Default under this Loan Agreement or any of the other
Loan Documents which in

 

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Agent’s reasonable judgment materially and adversely affects any of the Lenders’
interests in the Loan or the value of the Premises.  If Agent determines that
remedial action should not be taken, it shall so advise the Lenders, setting
forth Agent’s reasons therefor.  Otherwise Agent shall prepare a recommended
course of remedial action (other than the giving of notices of default and
demands for performance) (the “Enforcement Action Plan”), which shall be subject
to the approval of the Requisite Lenders to the extent provided in
Section 9.5(b).  Agent agrees to consult with Lenders in respect of and shall
act substantially in accordance with the decision of the Requisite Lenders (and
shall be fully protected by all Lenders in so acting), subject, however, to
Section 9.9(b) of this Loan Agreement, and provided that Agent shall not be
obligated to take any action which Agent determines is not consistent with the
Loan Documents or is not in accordance with applicable law, or exercise any
remedy unless Agent determines that the underlying Event of Default permits the
exercise of such remedy in accordance with applicable law and the Loan Documents
and that exercising any such remedy at such time would not preclude it from
thereafter commencing and prosecuting a foreclosure of the Deed of Trust.   As
used in this Section 9.16, the term “knowledge” shall mean the actual knowledge
of the officer of Agent then primarily responsible for the administration of the
Loan.  The provisions of Section 9.5(c) of this Loan Agreement shall apply to
each Lender’s consent to any Enforcement Action Plan proposed by Agent.

 

(b)           If the Requisite Lenders have not agreed on a proposed course of
action by the end of one hundred (120) days after the occurrence of the Maturity
Date or the acceleration of the Loan, as applicable, Agent shall commence to
foreclose on, or otherwise realize on, the Collateral and otherwise exercise
such other remedies as Agent determines.

 

ARTICLE X

 

GENERAL CONDITIONS

 

Section 10.1         Indemnity.

 

(a)           Each Loan Party hereby indemnifies and agrees to defend, protect
and hold harmless Agent and Lenders and their respective Affiliates,
participants, directors, officers, agents and employees (each, an “Indemnified
Party”) from and against any and all losses, liabilities, obligations, charges,
claims, damages, penalties, causes of action, reasonable and documented
out-of-pocket costs and expenses (including reasonable documented out-of-pocket
attorneys’ fees and disbursements) of any kind or nature, actually suffered or
incurred by an Indemnified Party in connection with this Loan Agreement, any of
the other Loan Documents, the consummation of the transactions contemplated
herein or therein, the use, operation or occupancy of any of the Premises or any
Mortgaged Property (each being a “Claim”), including the following:

 

(i)            any accident, injury to or death of Persons or loss of or damage
to property occurring on or about the Premises or any part thereof, or the
adjoining sidewalks, curbs, vaults and vault space, if any, and streets and
ways;

 

(ii)           any design, construction, operation, use, non-use or condition of
the Premises or any part thereof, or the adjoining sidewalks, curbs, vaults and
vault space,

 

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if any, and streets and ways, including claims or penalties arising from
violation of any Legal Requirement or Insurance Requirement, as well as any
claim based on any patent or latent defect, whether or not discoverable by Agent
or any Lender, any claim as to which the insurance is inadequate;

 

(iii)          any performance of or failure to perform any labor or services or
furnishing of or failure to furnish any materials or other property in respect
of the Premises or any part thereof;

 

(iv)          any negligence or tortious act or omission on the part of a Loan
Party or any of its agents, contractors, servants, employees, Lessees,
sublessees, licensees, guests or invitees;

 

(v)           any matter or other relationship that has arisen or may arise
between or among Agent and/or Lenders on the one hand, and Loan Parties,
Guarantor and/or any third party on the other hand (other than a prospective
Assignee or a prospective or actual Participant), with respect to the Premises
or the Mortgaged Property or any of the foregoing, as a result of the execution
and delivery of the Note, this Loan Agreement or the other Loan Documents, or
any other action contemplated hereby, thereby or by any other document executed
in connection with the Loan;

 

(vi)          any action or other proceeding brought by or on behalf of any
Person against Agent or any Lender as the holder of, or by reason of its
interest in, any sum deposited or paid hereunder or in connection herewith, any
insurance proceeds, any condemnation awards or other amounts applied to the
Obligations of Loan Parties; and

 

(vii)         any circumstance resulting in the impairment of the Liens of the
Deed of Trust and/or the other Security Documents, including as a result of
non-compliance with any applicable lien law.

 

(b)           If any action or proceeding shall be commenced or taken (including
an action to foreclose the Deed of Trust, collect the Obligations or enforce
Agent’s rights under this Loan Agreement, the Note or the other Loan Documents)
by Agent or any other Person, in which action or proceeding Agent or any Lender
is involved or is made a party by reason of the execution and/or delivery of the
Note, this Loan Agreement, or any other Loan Documents or in which it becomes
necessary to enforce, defend or uphold the lien on the Mortgaged Property
pursuant to the Deed of Trust, this Loan Agreement or the other Loan Documents
or the Agent’s and Lenders’ rights under the Note or any other Loan Documents,
all out-of-pocket sums paid by Agent for the expense of any such action or
litigation shall be paid by Loan Parties to Agent ten (10) days after demand. 
In the event the Mortgaged Property, or any part thereof, shall be advertised
for foreclosure sale and not sold, Loan Parties shall pay all reasonable and
documented out-of-pocket costs in connection therewith, including reasonable
attorneys’ fees and disbursements and advertising costs.

 

(c)           Each Loan Party hereby indemnifies and agrees to defend and hold
harmless the Indemnified Parties from and against any and all liabilities,
claims, charges, actual out-of-pocket losses and expenses (including attorneys’
fees and disbursements) or damages of

 

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any kind or nature which may arise as a result of any claim by any broker,
“finder” or advisor with which each Loan Party or any Affiliate of Loan Parties
has dealt or is alleged to have dealt.

 

(d)           Loan Parties will hold Agent and each Lender harmless against any
and all liability with respect to any mortgage/deed recording, transfer or
intangible personal property tax or similar imposition now or hereafter in
effect, to the extent that the same may be payable by Agent or any Lender with
respect to this Loan Agreement, any Note or any other Loan Document.

 

(e)           Within ten (10) Business Days of demand by any Indemnified Party,
Loan Parties shall commence to defend, and shall thereafter diligently pursue
defense of, any investigation, action or proceeding in connection with any claim
or liability, or alleged claim or liability, that would, if determined adversely
to such Indemnified Party, be covered by the indemnification provisions
contained in this Section, such defense to be at the sole cost and expense of
Loan Parties and by counsel selected by Loan Parties and reasonably approved by
such Indemnified Party, which counsel may, without limiting the rights of an
Indemnified Party pursuant to the next succeeding sentence, also represent Loan
Parties in such investigation, action or proceeding.  Any Indemnified Party may
elect to conduct its own defense through counsel of its own choosing and at the
expense of Loan Parties if (i) in the reasonable opinion of such Indemnified
Party, Loan Parties’ counsel has a conflict of interest or (ii) such defense is
not being conducted in a manner which is acceptable to such Indemnified Party in
its reasonable discretion.  In addition, notwithstanding anything to the
contrary set forth in this Loan Agreement or in any other Loan Document, Loan
Parties shall not be required to pay for the attorneys fees of more than one
Lender in connection with any act, condition, event or indemnity under this Loan
Agreement or under any other Loan Document.

 

(f)            The provisions of this Section 10.1 shall survive the repayment
of the Loan.  The provisions of the indemnities hereunder shall exclude (a) any
Claims arising from the gross negligence or willful misconduct or breach of any
provision of any Loan Document by any Indemnified Party; (b) any Claim arising
during the possession or control of the Premises by any Indemnified Party;
(c) any Claim arising as a result of any act, omission, event or conditions
which first occurred or existed from and after foreclosure, deed in lieu of
foreclosure or other similar proceeding; (d) any Claim arising as a result of
any claim by any broker, finder or advisor retained by Agent or any Lender; or
(e) any Claims arising on account of a dispute between or among Agent and/or
Lenders (or between or among Agent and/or Lenders on the one hand, and a
prospective Assignee or a prospective or actual Participant on the other hand).

 

Section 10.2         No Waivers.  No failure or delay on the part of Agent or
Lenders in exercising any right, power or remedy hereunder or under or in
connection with this Loan Agreement or the other Loan Documents or to insist
upon the strict performance of any term of this Loan Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy under or in
connection with this Loan Agreement or any other Loan Document.

 

Section 10.3         Submission of Evidence.  Any condition of this Loan
Agreement which requires the submission of evidence of the existence or
non-existence of a specified fact or

 

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facts implies as a condition the existence or non-existence, as the case may be,
of such fact or facts and Agent shall, at all times, be free to independently
establish to its satisfaction such existence or non-existence.

 

Section 10.4         Loan Parties, Agent and Lenders Sole Beneficiaries.  No
Person other than Loan Parties, Agent and Lenders shall be deemed to be
beneficiary of the terms, provisions, covenants and other conditions of this
Loan Agreement and the other Loan Documents (provided that the Constituent
Members are third party beneficiaries of Section 10.12), any or all of which
covenants and conditions of Loan Parties may be freely waived, in whole or in
part, by Agent at any time if Agent deems it advisable or desirable to do so.

 

Section 10.5         Contractors.  No contractor, supplier or any other Person
dealing with Loan Parties shall be, nor shall any of them be deemed to be, third
party beneficiaries of this Loan Agreement, but each shall be deemed to have
agreed, (a) that the contractor, supplier or other Person in question shall look
to Loan Parties as their sole source of recovery if not paid and (b) except as
otherwise agreed to in writing between Agent and such Person in question, that
they may not claim against Agent or Lenders under any circumstances.

 

Section 10.6         Entire Agreement.  This Loan Agreement and the other Loan
Documents embody the entire agreement and understanding between Loan Parties,
Agent and/or Lenders with respect to the Loan and supersede and cancel all prior
loan applications, expressions of interest, commitments, agreements and
understandings, whether oral or written, relating to the subject matter hereof,
except as specifically agreed in writing to the contrary.

 

Section 10.7         Assignment.  Loan Parties may not assign, transfer or
otherwise convey this Loan Agreement or any other Loan Document, in whole or in
part, nor all or any portion of the Loan nor any interest therein.

 

Section 10.8         Further Assurances; Filing of Financing Statements. 
Subject to the limitations of Section 8.4, Loan Parties shall, within ten
(10) Business Days after written request, make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such vouchers,
invoices, notices, certifications, instruments, additional agreements,
undertakings, conveyances, deeds of trust, mortgages, transfers, assignments,
financing statements or other assurances, and take all such other action, as
Agent may, from time to time, deem reasonably necessary or proper in connection
with this Loan Agreement or any of the other Loan Documents, the obligations of
Loan Parties hereunder or thereunder, or for better assuring and confirming unto
Agent and Lenders the full benefits and rights granted by this Loan Agreement or
the other Loan Documents.  Loan Parties hereby agree that, without notice to or
the consent of Loan Parties, Agent may file with the appropriate public
officials such financing statements or similar documents as are or may become
necessary to perfect and continue the perfection of the security interest
granted by any Security Document.

 

Section 10.9         Cumulative Remedies.  The remedies in this Loan Agreement
and the other Loan Documents herein are cumulative and not exclusive of any
remedies available at law or equity or in any other agreement, document or
instrument.

 

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Section 10.10       Amendments, Consents, Waivers, Approvals, Etc.  Except as
set forth in Section 9.1, no amendment, modification, termination, or waiver of
any provision of this Loan Agreement or the other Loan Documents shall be
effective unless in writing and signed by Loan Parties and Agent.  With respect
to any matter for which Agent’s and/or Lenders, as applicable, consent or
approval is required hereunder or under the other Loan Documents, no such
consent or approval by Agent and/or Lenders, as applicable, hereunder shall in
any event be effective unless the same shall be in writing and signed by Agent,
it being agreed that Loan Parties may rely on the consent of Agent as evidence
that Agent has received the consent of those Lenders whose consent is required
hereunder for the applicable matter.  No notice to or demand on Loan Parties in
any case shall entitle Loan Parties to any other or further notice or demand in
similar or other circumstances.  No failure or delay of Agent in exercising any
power or right hereunder or to demand payment for any sums due pursuant to this
Loan Agreement or any other Loan Document, shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other further exercise thereof or the exercise of any other right
or power.

 

Section 10.11       Notices.  Except as may be otherwise expressly provided
herein, all notices, certificates, demands, requests, approvals, consents,
waivers and other communications provided for herein shall be in writing and
(a) mailed (registered or certified mail, return receipt requested, and postage
prepaid), (b) hand-delivered, with signed receipt, or (c) sent by
nationally-recognized overnight courier as follows:

 

If to Loan Parties, to their address at:

 

c/o Hilton Worldwide, Inc.

7930 Jones Branch Drive, Suite 1100

McLean, Virginia 22102

Attention:  Treasurer

 

with copies similarly delivered to:

 

c/o Hilton Worldwide, Inc.

7930 Jones Branch Drive, Suite 1100

McLean, Virginia 22102

Attention:  General Counsel

 

with copies similarly delivered to:

 

c/o Sunstone Hotel Investors, Inc.

120 Vantis, Suite 350

Aliso Viejo, California 92656

Attention:  Finance Department

 

with copies similarly delivered to:

 

Gibson, Dunn & Crutcher LLP

 

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323 South Grand Avenue

Los Angeles, California 90071-3197

Attention:  Michael F. Sfregola, Esq.

 

If to Agent, to:

 

Aareal Capital Corporation

250 Park Avenue, Suite 820

New York, New York 10177

Attention:  Ralph C. Marra, Jr.

 

with copies similarly delivered to:

 

Aareal Capital Corporation

250 Park Avenue, Suite 820

New York, New York 10177

Attention:  Alan Griffin, Esq.

 

with copies similarly delivered to:

 

Kaye Scholer LLP

425 Park Avenue

New York, New York  10022

Attention:  Warren J. Bernstein, Esq.

 

If to Aareal Capital Corporation, as Lender:

 

Aareal Capital Corporation

250 Park Avenue, Suite 820

New York, New York 10177

Attention:  Ralph C. Marra, Jr.

 

with copies similarly delivered to:

 

Aareal Capital Corporation

250 Park Avenue, Suite 820

New York, New York 10177

Attention:  Alan Griffin, Esq.

 

with copies similarly delivered to:

 

Kaye Scholer LLP

425 Park Avenue

New York, New York  10022

Attention:  Warren J. Bernstein, Esq.

 

or to such other address with respect to any, as such party shall notify the
other parties in writing.  All such notices, certificates, demands, requests,
approvals, waivers and other communications

 

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given pursuant to this Section 10.11 shall be effective when received (or
delivery is refused) at the address specified as aforesaid.

 

Section 10.12       Limitation on Liability.  All Obligations shall be recourse
to Borrower.  Notwithstanding anything to the contrary contained in this Loan
Agreement, in the Note, the Deed of Trust or in the other Loan Documents, no
recourse or any personal liability shall be had for the payment of the
principal, Interest, Additional Interest or other amounts owed hereunder or
under the Note or the other Loan Documents, or for any claim based on this Loan
Agreement, the Note or any other Loan Document against any (i) Constituent
Member, (ii) any present or future, direct or indirect, shareholder, officer,
director, employee, trustee, beneficiary, advisor, member, partner, participant,
principal or agent of or in Loan Parties or in any Person that is or becomes a
Constituent Member, (iii) any of their respective successors and assigns, or
(iv) any of the assets of any Person described in clauses (i) through
(iii) above, it being expressly understood that the sole remedies of Agent and
Lenders with respect to such amounts and claims shall be against Loan Parties
and the assets of Loan Parties, including the Mortgaged Property, and other
Collateral; provided, however, that:

 

(a)           nothing contained in this Loan Agreement (including the provisions
of this Section 10.12), the Note or the other Loan Documents shall constitute a
waiver of any of Borrower’s obligations herein, under the Note or the other Loan
Documents, or of any of any obligations of Guarantors (including, to the extent
a direct or indirect member of Loan Parties) under the Loan Documents to which
it is a party;

 

(b)           nothing contained in this Loan Agreement (including the provisions
of this Section 10.12), the Note or the other Loan Documents shall constitute a
limitation of liability of Borrower or any of its assets;

 

(c)           nothing contained in this Loan Agreement (including the provisions
of this Section 10.12), the Note or the other Loan Documents shall constitute a
limitation of liability of Guarantor or any of its respective assets with
respect to (i) the Recourse Liability Agreement, (ii) the Environmental
Indemnity or (iii) any other guaranty or indemnity agreement given by it in
connection with the Loan, as applicable; and

 

(d)           the liability of Operating Lessee shall be limited to its interest
in the Mortgaged Property.

 

Section 10.13       Binding Effect.  This Loan Agreement shall be binding upon
and inure to the benefit of Agent and Lenders and their respective permitted
successors and assigns and Loan Parties and their permitted successors and
assigns.

 

Section 10.14       Severability of Provisions.  Any provision of this Loan
Agreement which is prohibited or unenforceable in the State of New York or in
any other jurisdiction in the United States shall be, as to the State of New
York or such other jurisdiction in the United States, ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.

 

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Section 10.15       Governing Law and Consent to Jurisdiction.  This Loan
Agreement shall be governed by, and construed in accordance with, the
substantive laws of the State of New York.  Loan Parties, Agent and Lenders
irrevocably (a) agree that any suit, action or other legal proceeding arising
out of or relating to this Loan Agreement, the Note or the other Loan Documents
may be brought in the Courts of the United States of America located in the
Southern District of New York or in a state court of record in New York County,
New York, (b) consent to the jurisdiction of each such court in any such suit,
action or proceeding and (c) waive any objection which it may have to the laying
of venue of any such suit, action or proceeding in any of such courts and any
claim that any such suit, action or proceeding has been brought in an
inconvenient forum.  Loan Parties irrevocably consent to the service of any and
all process in any such suit, action or proceeding by service of copies of such
process to Loan Parties at their address provided in Section 10.11.  Nothing in
this Section 10.15, however, shall affect the right of Agent to serve legal
process in any other manner permitted by law or affect the right of Agent to
bring any suit, action or proceeding against Loan Parties or their property in
the courts of any other jurisdictions.

 

Section 10.16       Waiver of Jury Trial.  Loan Parties, Agent and Lenders each
hereby expressly and unconditionally waives any and every right either party may
have to a trial by jury, in any suit, action or proceeding brought under or with
respect to this Loan Agreement, the Note or the other Loan Documents.

 

Section 10.17       No Joint Venture.  Loan Parties are not and shall not be
deemed to be a joint venturer, partner, tenant in common or joint tenant with,
or an agent of, Agent or Lenders for any purpose.  Neither Agent nor Lenders
shall be deemed to be in privity of contract with any Person providing services
with respect to the construction, operation and management the Premises or any
part thereof unless and until and except to the extent that Agent shall
affirmatively act to establish any such privity pursuant to Article VII, or in
the exercise of Agent’s and Lenders’ remedies pursuant to the Deed of Trust, the
Assignment of Agreements or any other Loan Document.

 

Section 10.18       Determinations and Consents of Agent and Lenders.  Unless
expressly provided to the contrary in any particular instance, any
determination, election or judgment made or any consent or waiver given by Agent
and/or Lenders pursuant to this Loan Agreement or any other Loan Document shall
be made or given, as the case may be, in Agent’s or Lender’s, as the case may
be, sole and absolute discretion, whether or not the applicable provision of
this Loan Agreement or such other Loan Document expressly so provides.  In
making any such determination, election or judgment or in providing or deciding
not to provide any such consent or waiver, Agent and Lenders shall be entitled
to rely, to the extent Agent and/or Lenders so elect, in whole or in part on the
advice of counsel, independent public accountants, engineers, architects and
other experts selected by Agent and/or Lenders, as applicable.

 

Section 10.19       Reliance by Agent and Lenders on Action on Behalf of Loan
Parties.  Unless Loan Parties shall have previously provided Agent and Lenders
with express written notice that such Person shall not be authorized to bind
Loan Parties, Agent and Lenders shall be entitled to rely on any notice,
communication or other action taken by any Person purporting to sign as the
officer or other authorized agent, signatory, representative or agent of

 

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Loan Parties purporting to be taken on Loan Parties’ behalf as being conclusive
evidence of Loan Parties’ right to take such action and, in doing so, bind Loan
Parties to the action taken.

 

Section 10.20       Headings, Etc.  The headings and captions of various
sections of this Loan Agreement have been inserted for convenience only and are
not to be construed as defining, modifying, limiting or amplifying, in any way,
the scope or intent of the provisions hereof.

 

Section 10.21       Incorporation by Reference.  Loan Parties agree that the
Note and the other Loan Documents shall be made subject to all the terms,
covenants, conditions, obligations, stipulations and agreements contained in
this Loan Agreement to the same extent and effect as if fully set forth in and
made a part of the Note and the other Loan Documents.  In the event of a
conflict between any of the Loan Documents and the provisions of this Loan
Agreement, this Loan Agreement shall control.

 

Section 10.22       Counterparts.  This Loan Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Loan Agreement
to produce or account for more than one such counterpart.

 

Section 10.23       Attorneys’ Fees.  Any provisions of this Loan Agreement or
any other Loan Document that require payment to Agent or Lenders of legal fees
or expenses incurred by any of them shall be construed as including any and all
such fees and expenses incurred in connection with litigation, mediation,
arbitration, other alternative dispute processes, administration proceedings and
Bankruptcy Proceedings, and any appeals from any of the foregoing (any of the
foregoing, an “Action”); provided that, so long as no Event of Default shall
have occurred and be continuing, in no event shall Loan Parties be required to
pay more than one set of legal fees and expenses in any Action with respect to
the payment of Lenders’ and Agent’s legal fees and expenses.

 

Section 10.24       Employer Identification Number Etc.  Loan Parties
acknowledge that in order for Lenders to comply with the requirements under the
Patriot Act, Loan Parties must provide to Agent certain information or
supporting documentation (collectively “Documentation”) at the time of execution
of this Loan Agreement.  Lenders may be required by the Patriot Act to verify
and record any Documentation provided by Loan Parties to validate Loan Parties’
identity.  Documentation that may be requested from Loan Parties may include,
but is not limited to, a Federal Employer Identification Number (FEIN), a
Certificate of Good Standing to validate Loan Parties’ corporate, partnership or
limited liability company existence, a Certificate of Incumbency to authenticate
the management of Loan Parties, and other government issued certified documents
to validate Loan Parties’ authorization to conduct business.

 

Section 10.25       Confidentiality.  Agent, each Lender and their respective
Affiliates shall hold all information and materials at any time submitted by or
on behalf of Loan Parties or Guarantor and/or received by Agent or any Lender in
connection with the Loan or pursuant to any Loan Document in accordance with
reasonable, customary procedures for handling confidential information, and
Agent, each Lender and their respective Affiliates shall

 

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not disclose or permit their respective Affiliates, directors, officers,
employees, agents or advisors (the “Lender Representatives”) to disclose such
information to any Person, except that Agent or any Lender may (i) disclose
information which is or becomes generally available to the public other than as
a result of a disclosure by Lender Representatives or which becomes available
from a Person who is not actually known by Agent or Lenders to be bound by a
confidentiality agreement, (ii) disclose that portion of such information that
is reasonably required by any bona fide potential Assignee or Participant in
connection with an assignment or participation or a proposed assignment or
participation in accordance with Article VIII, provided that such potential
Assignee or Participant enters into a confidentiality agreement as required by
Section 8.3; (iii) disclose such information to the extent permitted by, and in
compliance with, Section 8.8; (iv) disclose such information to examiners,
auditors and regulators of Agent and/or Lenders in the ordinary course of any
applicable audit or examination; or (v) disclose such information as may be
required by law, regulation or other applicable judicial or governmental order,
provided that with respect to this clause (v), Agent or such Lender, as
applicable, will, to the extent permitted by law, provide Loan Parties with
prompt written notice of any request pursuant to such requirement so that Loan
Parties may seek a protective order or other remedy, provided, further, that
with respect to this clause (v) Agent or such Lender, as applicable, shall, at
Loan Parties’ expense, cooperate with Loan Parties in a commercially reasonable
manner in obtaining any such protective order or other remedy, and provided,
further, that with respect to this clause (v), if no such protective order or
other remedy is obtained, Agent or such Lender, as applicable, may disclose only
that portion of such information that its legal counsel reasonably advises is
legally required to be disclosed, and will exercise all commercially reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded to that portion of such information that is disclosed.  This paragraph
shall run to the benefit of, and be enforceable by, Loan Parties and
Guarantors.  The provisions of this Section 10.25 shall survive the repayment of
the Loan and the termination of this Loan Agreement.

 

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

 

 

LOAN PARTIES:

 

 

 

 

 

 

 

ONE PARK BOULEVARD, LLC, a Delaware limited liability company

 

 

 

 

 

 

 

By:

 

 

 

Name: Kenneth E. Cruse

 

 

Title: Authorized Signatory

 

 

 

 

SUNSTONE PARK LESSEE, LLC, a Delaware limited liability company

 

 

 

 

 

 

By:

 

 

 

Name: Kenneth E. Cruse

 

 

Title: Authorized Signatory

 

[Remainder of Page Intentionally Left Blank; Additional Signature Pages Follow]

 

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AGENT:

 

 

 

 

AAREAL CAPITAL CORPORATION

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Remainder of Page Intentionally Left Blank; Signatures Continue on the
Following Page]

 

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LENDER:

 

 

 

 

AAREAL CAPITAL CORPORATION

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Commitment: $240,000,000

 

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EXHIBIT A

 

The Land

 

The land referred to herein is situated in the State of California, County of
San Diego, and described as follows:

 

ALL THAT PORTION OF THE LAND CONVEYED TO THE SAN DIEGO UNIFIED PORT DISTRICT BY
THAT CERTAIN ACT OF THE LEGISLATURE OF THESTATE OF CALIFORNIA PURSUANT TO
CHAPTER 67, STATUTES OF 1962, FIRST EXTRAORDINARY SESSION, AS AMENDED, AND
DELINEATED ON THAT CERTAIN MISCELLANEOUS MAP NO. 564, FILED IN THE OFFICE OF THE
SAN DIEGO COUNTY RECORDER ON MAY 28, 1976 AS FILE NO. 1976-164686 OF OFFICIAL
RECORDS, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA AND
MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 

PARCEL NO. 1:

 

COMMENCING AT A 3” DIAMETER BRASS DISK MONUMENT STAMPED “SDUPD-015” AS SHOWN ON
RECORD OF SURVEY 16668, FILED IN THE OFFICE OF THE SAN DIEGO COUNTY RECORDER ON
JULY 25, 2000; THENCE LEAVING SAID MONUMENT NORTH 59° 46’ 30” EAST A DISTANCE OF
1,051.93 FEET (CALCULATED) TO THE TRUE POINT OF BEGINNING OF PARCEL NO. 1, SAID
POINT BEING ON A LINE OFFSET 1.00 FOOT SOUTHWESTERLY OF AND PARALLEL WITH THE
U.S. BULKHEAD LINE, AS SAID U.S. BULKHEAD IS SHOWN ON MAP ENTITLED “HARBOR
LINES, SAN DIEGO BAY, CALIFORNIA, FILE NO. (D.O. SERIES) 426”, APPROVED BY THE
SECRETARY OF THE ARMY, APRIL 29, 1964 AND FILED IN THE OFFICE OF THE DISTRICT
ENGINEER, LOS ANGELES, CALIFORNIA; THENCE ALONG SAID 1.00 FOOT OFFSET LINE NORTH
50° 19’ 08” WEST A DISTANCE OF 992.68 FEET; THENCE LEAVING SAID 1.00 FOOT OFFSET
LINE NORTH 39° 40’ 52” EAST A DISTANCE OF 186.00 FEET; THENCE SOUTH 50° 19’ 08”
EAST A DISTANCE OF 166.26 FEET; THENCE NORTH 74° 55’ 08” EAST A DISTANCE OF
271.54 FEET TO A POINT HEREINAFTER KNOWN AS POINT “A”; THENCE SOUTH 50° 19’ 08”
EAST A DISTANCE OF 669.75 FEET TO A POINT ON THE NORTHWESTERLY BOUNDARY OF THE
DOLE FRESH FRUIT COMPANY LEASEHOLD, SAID DOLE FRESH FRUIT COMPANY LEASEHOLD WAS
RECORDED IN THE OFFICE OF THE SAN DIEGO COUNTY RECORDER MAY 25, 2001 AS DOCUMENT
NO. 2001-0338693 AND ON FILE WITH THE SAN DIEGO UNIFIED PORT DISTRICT AS
DOCUMENT NO. 42183; THENCE ALONG SAID DOLE FRESH FRUIT COMPANY LEASEHOLD
NORTHWESTERLY BOUNDARY LINE SOUTH 39° 40’ 52” WEST A DISTANCE OF 407.78 FEET TO
THE TRUE POINT OF BEGINNING OF PARCEL NO. 1, CONTAINING 350,552 SQUARE FEET OR
8.05 ACRES OF TIDELANDS AREA.

 

Ex. A - 1

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

 

PARCEL 2:

 

COMMENCING AT THE ABOVE DESCRIBED POINT “A”, SAID POINT ALSO BEING THE TRUE
POINT OF BEGINNING OF PARCEL NO. 2; THENCE NORTH 74° 55’ 08” EAST A DISTANCE OF
191.09 FEET TO THE BEGINNING OF A 60.00 FOOT RADIUS CURVE CONCAVE SOUTHERLY;
THENCE EASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 8° 22’
34” AN ARC DISTANCE OF 8.77 FEET; THENCE NORTH 83° 17’ 42” EAST A DISTANCE OF
53.65 FEET TO THE BEGINNING OF A 60.00 FOOT RADIUS CURVE CONCAVE NORTHERLY;
THENCE EASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 11° 53’
08” AN ARC DISTANCE OF 12.45 FEET; THENCE NORTH 71° 24’ 34” EAST A DISTANCE OF
73.59 FEET TO THE BEGINNING OF A 256.00 FOOT RADIUS CURVE CONCAVE TO THE
NORTHWEST; THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL
ANGLE OF 26° 00’ 29” AN ARC DISTANCE OF 116.20 FEET; THENCE NORTH 45° 24’ 05”
EAST A DISTANCE OF 49.01 FEET TO THE BEGINNING OF A 40.00 FOOT RADIUS CURVE
CONCAVE TO THE SOUTHEAST; THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE
THROUGH A CENTRAL ANGLE OF 35° 38’ 00” AN ARC DISTANCE OF 24.88 FEET TO A POINT
OF NON-TANGENCY WHICH BEARS NORTH 8° 57’ 56” WEST FROM THE CENTER OF SAID CURVE,
SAID POINT ALSO LIES ON THE SOUTHWESTERLY RIGHT OF WAY LINE OF HARBOR DRIVE IN
THE CITY OF SAN DIEGO, AS SAID HARBOR DRIVE IS DESCRIBED IN THE DOCUMENTS OF
CONVEYANCE OF LAND FROM THE CITY OF SAN DIEGO TO THE SAN DIEGO UNIFIED PORT
DISTRICT AND FILED IN THE OFFICE OF THE DISTRICT CLERK AS DOCUMENT NO. 75 AND
DELINEATED ON DISTRICT CLERK DOCUMENT NO. 71; THENCE ALONG SAID SOUTHWESTERLY
RIGHT OF WAY LINE OF HARBOR DRIVE SOUTH 51° 35’ 39” EAST A DISTANCE OF 230.61
FEET; THENCE CONTINUING ALONG SAID SOUTHWESTERLY RIGHT OF WAY LINE OF HARBOR
DRIVE SOUTH 52° 22’ 06” EAST A DISTANCE OF 113.52 FEET; THENCE LEAVING SAID
SOUTHWESTERLY RIGHT OF WAY LINE OF HARBOR DRIVE SOUTH 39° 40’ 52” WEST A
DISTANCE OF 97.46 FEET TO THE NORTHWESTERLY CORNER OF THE ABOVE DESCRIBED DOLE
FRESH FRUIT COMPANY LEASEHOLD; THENCE CONTINUING ALONG SAID DOLE FRESH FRUIT
COMPANY LEASEHOLD BOUNDARY LINE SOUTH 39° 40’ 52” WEST A DISTANCE OF 297.93
FEET; THENCE SOUTH 50° 19’ 08” EAST A DISTANCE OF 75.00 FEET; THENCE SOUTH 39°
40’ 52” WEST A DISTANCE OF 68.22 FEET; THENCE LEAVING SAID DOLE FRESH FRUIT
COMPANY LEASEHOLD BOUNDARY LINE NORTH 50° 19’ 08” WEST A DISTANCE OF 669.75 FEET
TO THE TRUE POINT OF BEGINNING, CONTAINING 116,555 SQUARE FEET OR 2.68 ACRES OF
TIDELANDS AREA AFTER EXCLUDING THE FOLLOWING DESCRIBED BUILDING FOOTPRINT
EXCLUSION AREA:

 

BUILDING FOOTPRINT EXCLUSION AREA (PARCEL NO. 2)

 

COMMENCING AT THE ABOVE DESCRIBED POINT “A”; THENCE SOUTH

 

Ex. A - 2

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

 

50° 19’ 08” EAST A DISTANCE OF 291.07 FEET; THENCE NORTH 39° 40’ 52” EAST A
DISTANCE OF 42.90 FEET TO THE TRUE POINT OF BEGINNING OF THE BUILDING FOOTPRINT
EXCLUSION AREA; THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF 23.50 FEET; THENCE
NORTH 50° 19’ 08” WEST A DISTANCE OF 12.20 FEET; THENCE NORTH 39° 40’ 52” EAST A
DISTANCE OF 44.50 FEET; THENCE NORTH 50° 19’ 08” WEST A DISTANCE OF 15.10 FEET;
THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF 13.30 FEET; THENCE SOUTH 50° 19’ 08”
EAST A DISTANCE OF 15.10 FEET; THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF
186.80 FEET; THENCE NORTH 50° 19’ 08” WEST A DISTANCE OF 15.10 FEET; THENCE
NORTH 39° 40’ 52” EAST A DISTANCE OF 13.30 FEET; THENCE SOUTH 50° 19’ 08” EAST A
DISTANCE OF 15.10 FEET; THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF 41.00 FEET;
THENCE SOUTH 50° 19’ 08” EAST A DISTANCE OF 17.60 FEET; THENCE NORTH 5° 19’ 08”
WEST A DISTANCE OF 19.80 FEET; THENCE NORTH 84° 40’ 52” EAST A DISTANCE OF 23.00
FEET; THENCE SOUTH 5° 19’ 08” EAST A DISTANCE OF 19.71 FEET; THENCE NORTH 39°
40’ 52” EAST A DISTANCE OF 13.47 FEET; THENCE SOUTH 50° 19’ 08” EAST A DISTANCE
OF 206.50 FEET; THENCE SOUTH 39° 40’ 52” WEST A DISTANCE OF 3.00 FEET; THENCE
SOUTH 50° 19’ 08” EAST A DISTANCE OF 20.50 FEET; THENCE SOUTH 39° 40’ 52” WEST A
DISTANCE OF 349.20 FEET; THENCE NORTH 50° 19’ 08” WEST A DISTANCE OF 248.60 FEET
TO THE TRUE POINT OF BEGINNING OF THE BUILDING FOOTPRINT EXCLUSION AREA,
CONTAINING 91,487 SQUARE FEET OR 2.10 ACRES OF TIDELANDS AREA.

 

ALSO: RESERVING FROM PARCELS 1 AND 2 ABOVE, AS APPLICABLE, THE FOLLOWING
EASEMENTS:

 

A GENERAL UTILITY EASEMENT AT THE CORNER OF 8TH AVENUE AND HARBOR DRIVE
DELINEATED AS “EASEMENT NO. 1” ON SDUPD DRAWING NO. 019-044, DATED OCTOBER 11,
2005;

 

A WATER EASEMENT 30 FEET IN WIDTH IN THE NORTHWESTERLY PORTION OF PARCEL NO. 1
DELINEATED AS “EASEMENT NO. 2” ON SDUPD DRAWING NO. 019-044, DATED OCTOBER 11,
2005;

 

A WATER EASEMENT, 15 FEET IN WIDTH, IN THE NORTHERLY PORTION OF PARCEL NO. 1
DELINEATED AS “EASEMENT NO. 3” ON SDUPD DRAWING NO. 019-044, DATED OCTOBER 11,
2005;

 

A PUBLIC PEDESTRIAN AND LANDSCAPING EASEMENT IN THE NORTHWESTERLY PORTION OF
PARCEL NO. 1 ALONG CONVENTION WAY DELINEATED AS “EASEMENT NO. 4” ON SDUPD
DRAWING NO. 019-044, DATED OCTOBER 11, 2005;

 

A LANDSCAPING EASEMENT WITHIN PARCELS 1 AND 2, 12 FEET IN

 

Ex. A - 3

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

 

WIDTH, ADJACENT TO 8TH AVENUE DELINEATED AS “EASEMENT NO. 5” ON SDUPD DRAWING
019-044, DATED OCTOBER 11, 2005;

 

A PUBLIC PEDESTRIAN ACCESS EASEMENT, 20 FEET IN WIDTH, WITHIN PARCELS 1 AND 2
ADJACENT TO THE ABOVE DESCRIBED LANDSCAPING EASEMENT, DELINEATED AS “EASEMENT
NO. 6” ON SDUPD DRAWING NO. 019-044, DATED OCTOBER 11, 2005;

 

AN EASEMENT FOR SDUPD/PUBLIC ACCESS, UTILITIES, LANDSCAPING, AND SIGNAGE OVER
THE ENTIRE ABOVE DESCRIBED PARCEL NO. 2 DELINEATED AS “EASEMENT NO. 7” ON SDUPD
DRAWING 019-044, DATED OCTOBER 11, 2005;

 

A VIEW CORRIDOR EASEMENT, 120 FEET IN WIDTH ACROSS PARCELS 1 AND 2, CENTERED ON
THE PROLONGATION OF THE CENTER LINE OF PARK BOULEVARD EXTENDING TO THE SAN DIEGO
BAY DELINEATED AS “EASEMENT NO. 8” ON SDUPD DRAWING 019-044, DATED OCTOBER 11,
2005;

 

A WATER EASEMENT, 15 FEET IN WIDTH WITHIN PARCEL NO. 2, ADJACENT TO HARBOR DRIVE
DELINEATED AS “EASEMENT NO. 9” ON SDUPD DRAWING 019-044, DATED OCTOBER 11, 2005;

 

AN EASEMENT FOR A PEDESTRIAN BRIDGE ADJACENT TO HARBOR DRIVE WITHIN PARCEL 2
DELINEATED AS “EASEMENT NO. 10” ON SDUPD DRAWING 019-044, DATED OCTOBER 11,
2005;

 

A S.D.G.& E. CO. ELECTRICAL EASEMENT, ADJACENT TO HARBOR DRIVE WITHIN PARCEL 2
DELINEATED AS “EASEMENT NO. 11” ON SDUPD DRAWING NO. 019-044, DATED OCTOBER 11,
2005;

 

A S.D.G.& E. CO. ELECTRICAL EASEMENT, ADJACENT TO 8TH AVENUE WITHIN PARCEL 2
DELINEATED AS “EASEMENT NO. 12” ON SDUPD DRAWING 019-044, DATED OCTOBER 11,
2005;

 

A 36 FOOT PUBLIC PEDESTRIAN ACCESS EASEMENT ALONG THE SOUTHEASTERLY LINE OF
PARCEL NO. 1 ADJACENT TO SAN DIEGO BAY DELINEATED AS “EASEMENT NO. 13” ON SDUPD
DRAWING 019-044, DATED OCTOBER 11, 2005;

 

THE ABOVE DESCRIBED EASEMENTS AND RESERVATIONS ARE DELINEATED ON DRAWING NO.
019-044 DATED OCTOBER 11, 2005.

 

ALL BEARINGS AND DISTANCES IN THE ABOVE LEGAL DESCRIPTION ARE GRID, AND BASED
UPON THE CALIFORNIA COORDINGATE SYSTEM, ZONE 6, N.A.D. 83, EPOCH 1991.35.

 

Ex. A - 4

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PARCEL 3:

 

(OPTION PARCEL NO. 1, LAND/PIER AREA)

 

ALL THAT CERTAIN PORTION OF LAND CONVEYED TO THE SAN DIEGO UNIFIED PORT DISTRICT
BY THAT CERTAIN ACT OF LEGISLATURE OF THE STATE OF CALIFORNIA PURSUANT TO
CHAPTER 67, STATUTES OF 1962, FIRST EXTRAORDINARY SESSION, AS AMENDED, AND
DELINEATED ON THAT CERTAIN MISCELLANEOUS MAP NO. 564, FILED IN THE OFFICE OF THE
SAN DIEGO COUNTY RECORDER ON MAY 28, 1976, FILE NO. 1976-164686, IN THE CITY OF
SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

 

COMMENCING AT A 3” BRASS DISK MONUMENT STAMPED SDUPD-015 AS SHOWN ON RECORD OF
SURVEY NO. 16668, FILED IN THE OFFICE OF THE SAN DIEGO COUNTY RECORDER ON JULY
25, 2000; THENCE NORTH 59° 46’ 28” EAST A DISTANCE OF 1,051.93 FEET A POINT
DISTANT 1.00 FOOT SOUTHWESTERLY FROM THE U.S. BULKHEAD LINE AS SAID U.S.
BULKHEAD IS SHOWN ON MAP ENTITLED “HARBOR LINES, SAN DIEGO BAY, CALIFORNIA, FILE
NO. (D.O. SERIES) 426”, APPROVED BY THE SECRETARY OF THE ARMY, APRIL 29, 1964
AND FILED IN THE OFFICE OF THE DISTRICT ENGINEER LOS ANGELES, CALIFORNIA, SAID
POINT ALSO BEING THE SOUTHWESTERLY CORNER OF AN AREA CURRENTLY LEASED TO HILTON
SAN DIEGO CONVENTION CENTER, LLC; THENCE ALONG A LINE PARALLEL WITH SAID U.S.
BULKHEAD LINE NORTH 50° 19’ 08” WEST A DISTANCE OF 540.05 FEET TO THE TRUE POINT
OF BEGINNING; THENCE SOUTH 39° 50’ 02” WEST A DISTANCE OF 173.31 FEET; THENCE
NORTH 52° 08’ 03” WEST A DISTANCE OF 53.00 FEET; THENCE NORTH 40° 15’ 57” EAST A
DISTANCE OF 175.00 FEET; THENCE SOUTH 50° 19’ 08” EAST A DISTANCE OF 51.65 FEET
TO THE TRUE POINT OF BEGINNING OF SAID PARCEL, CONTAINING 9,109 SQUARE FEET OR
0.21 ACRE OF TIDELANDS AREA.

 

PARCEL 4:

 

(OPTION PARCEL NO. 2, WATER AREA)

 

ALL THAT CERTAIN PORTION OF LAND CONVEYED TO THE SAN DIEGO UNIFIED PORT DISTRICT
BY THAT CERTAIN ACT OF LEGISLATURE OF THE STATE OF CALIFORNIA PURSUANT TO
CHAPTER 67, STATUTES OF 1962, FIRST EXTRAORDINARY SESSION, AS AMENDED, AND
DELINEATED ON THAT CERTAIN MISCELLANEOUS MAP NO. 564, FILED IN THE OFFICE OF THE
SAN DIEGO COUNTY RECORDER ON MAY 28, 1976, FILE NO. 1976-164686, IN THE CITY OF
SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

 

Ex. A - 5

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

 

BEGINNING AT THE TRUE POINT OF BEGINNING OF THE ABOVE DESCRIBED OPTION PARCEL
NO. 1 (PARCEL 3), SAID POINT ALSO BEING THE TRUE POINT OF BEGINNING; THENCE
ALONG A LINE PARALLEL WITH SAID U.S. BULKHEAD LINE SOUTH 50° 19’ 08” EAST A
DISTANCE OF 540.05 FEET; THENCE SOUTH 39° 40’ 50” WEST A DISTANCE OF 15.37 FEET;
THENCE SOUTH 71° 20’ 52” WEST A DISTANCE OF 122.45 FEET; THENCE NORTH 78° 35’
51” WEST A DISTANCE OF 843.06 FEET; THENCE NORTH 50° 19’ 08” WEST A DISTANCE OF
20.95 FEET; THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF 519.00 FEET; THENCE
SOUTH 50° 19’ 08” EAST A DISTANCE OF 235.98 FEET; THENCE SOUTH 40° 15’ 57” WEST
A DISTANCE OF 175.00 FEET; THENCE SOUTH 52° 08’ 03” EAST A DISTANCE OF 53.00
FEET; THENCE NORTH 39° 50’ 02” EAST A DISTANCE OF 173.31 FEET TO THE TRUE POINT
OF BEGINNING OF SAID PARCEL, CONTAINING 243,161 SQUARE FEET OR 5.58 ACRES OF
WATER COVERED TIDELANDS AREA.

 

PARCEL 5:

 

(PARKING PARCEL)

 

A LICENSE FOR THE RIGHT TO PARK 894 CARS OVER THE FOLLOWING DESCRIBED PROPERTY,
AS SUCH RIGHTS ARE MORE PARTICULARLY SET FORTH IN THE LEASE RECORDED JANUARY 12,
2006 AS FILE NO. 2006-0028175 OF OFFICIAL RECORDS AND GRANTED IN THE ADDENDUM TO
LEASE RECORDED JANUARY 12, 2006 AS FILE NO. 2006-0028175 OF OFFICIAL RECORDS,
AND DESCRIBED AS FOLLOWS:

 

COMMENCING AT A 3” DIAMETER BRASS DISK MONUMENT STAMPED “SDUPD-015” AS SHOWN ON
RECORD OF SURVEY 16668, FILED IN THE OFFICE OF THE SAN DIEGO COUNTY RECORDER ON
JULY 25, 2000; THENCE LEAVING SAID MONUMENT NORTH 59° 46’ 30” EAST A DISTANCE OF
1,051.93 FEET (CALCULATED), SAID POINT BEING ON A LINE OFFSET 1.00 FOOT
SOUTHWESTERLY OF AND PARALLEL WITH THE U.S. BULKHEAD LINE, AS SAID U.S. BULKHEAD
IS SHOWN ON MAP ENTITLED “HARBOR LINES, SAN DIEGO BAY, CALIFORNIA, FILE NO.
(D.O. SERIES) 426”, APPROVED BY THE SECRETARY OF THE ARMY, APRIL 29, 1964 AND
FILED IN THE OFFICE OF THE DISTRICT ENGINEER, LOS ANGELES, CALIFORNIA; THENCE
ALONG SAID 1.00 FOOT OFFSET LINE NORTH 50° 19’ 08” WEST A DISTANCE OF 992.68
FEET; THENCE LEAVING SAID 1.00 FOOT OFFSET LINE NORTH 39° 40’ 52” EAST A
DISTANCE OF 186.00 FEET; THENCE SOUTH 50° 19’ 08” EAST A DISTANCE OF 166.26
FEET; THENCE NORTH 74° 55’ 08” EAST A DISTANCE OF 271.54 FEET; THENCE SOUTH 50°
19’ 08” EAST A DISTANCE OF 291.07 FEET; THENCE NORTH 39° 40’ 52” EAST A DISTANCE
OF 42.90 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 39° 40’ 52” EAST A
DISTANCE OF 23.50 FEET; THENCE NORTH 50° 19’ 08” WEST A DISTANCE OF 12.20 FEET;

 

Ex. A - 6

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

 

THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF 44.50 FEET; THENCE NORTH 50° 19’ 08”
WEST A DISTANCE OF 15.10 FEET; THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF 13.30
FEET; THENCE SOUTH 50° 19’ 08” EAST A DISTANCE OF 15.10 FEET; THENCE NORTH 39°
40’ 52” EAST A DISTANCE OF 186.80 FEET; THENCE NORTH 50° 19’ 08” WEST A DISTANCE
OF 15.10 FEET; THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF 13.30 FEET; THENCE
SOUTH 50° 19’ 08” EAST A DISTANCE OF 15.10 FEET; THENCE NORTH 39° 40’ 52” EAST A
DISTANCE OF 41.00 FEET; THENCE SOUTH 50° 19’ 08” EAST A DISTANCE OF 17.60 FEET;
THENCE NORTH 5° 19’ 08” WEST A DISTANCE OF 19.80 FEET; THENCE NORTH 84° 40’ 52”
EAST A DISTANCE OF 23.00 FEET; THENCE SOUTH 5° 19’ 08” EAST A DISTANCE OF 19.71
FEET; THENCE NORTH 39° 40’ 52” EAST A DISTANCE OF 13.47 FEET; THENCE SOUTH 50°
19’ 08” EAST A DISTANCE OF 206.50 FEET; THENCE SOUTH 39° 40’ 52” WEST A DISTANCE
OF 3.00 FEET; THENCE SOUTH 50° 19’ 08” EAST A DISTANCE OF 20.50 FEET; THENCE
SOUTH 39° 40’ 52” WEST A DISTANCE OF 349.20 FEET; THENCE NORTH 50° 19’ 08” WEST
A DISTANCE OF 248.60 FEET TO THE TRUE POINT OF BEGINNING, CONTAINING 91,487
SQUARE FEET OR 2.10 ACRES OF TIDELANDS AREA.

 

APN:  760-017-35 and 760-018-49

 

(End of Legal Description)

 

Ex. A - 7

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EXHIBIT B

 

Definition of Single Purpose Entity

 

“Single Purpose Entity” means a corporation, limited partnership or limited
liability company that:

 

(i)            is organized solely for the purpose of:  (A)(1)  intentionally
omitted  (2) acquiring, owning, constructing improvements on, holding, managing,
developing, financing, maintaining, marketing, selling, exchanging, assigning,
transferring, operating, entitling, improving, rehabilitating, leasing,
mortgaging, pledging and otherwise using, dealing with and disposing of the
Premises, together with any additional land becoming part of the Premises
pursuant to the exercise any option under the Ground Lease and (3) borrowing
money and issuing evidence of indebtedness in furtherance of any or all of the
objectives of its business and securing the same by mortgage, pledge or other
liens; or (B) acting as a general partner of the limited partnership that owns
the Premises or member of the limited liability company that owns the Premises,
and in the case of either clause (A) or (B) above, doing any and all other acts
or things that may be incidental or necessary to carry on its business as
described in such clause;

 

(ii)           will not engage in any business unrelated to (A) the purposes
described in clause (i)(A) above (including incidental personal property
necessary therefor) (B) acting as general partner of the limited partnership
that owns the Premises or (C) acting as a member of the limited liability
company that owns the Premises, as applicable;

 

(iii)          will not have any assets other than those related to the
Premises, together with any additional land becoming part of the Premises
pursuant to the exercise any option under the Ground Lease and any incidental
personal property necessary for the purposes described in clause (i)(A) above,
or its partnership or member interest in the limited partnership or limited
liability company that owns the Premises, as applicable;

 

(iv)          will not engage in, seek or consent to any dissolution, winding
up, liquidation, consolidation, merger or asset sale (except as expressly
permitted by this Loan Agreement), transfer of partnership or membership
interests in violation of the Loan Documents, or amendment of its limited
partnership agreement, articles of incorporation, articles of organization,
certificate of formation or operating agreement which will adversely affect its
status as a Single Purpose Entity, as applicable;

 

(v)           if such entity is a limited partnership, has and will have, as its
only general partners, Single Purpose Entities;

 

(vi)          will maintain its accounts, books and records separate from any
other Person and, to the extent required, will file its own tax returns (except
to the extent that such entity is permitted or required to file a consolidated
tax return under applicable Legal Requirements or is a tax disregarded entity
which is not required to file a tax return under applicable Legal Requirements);

 

Ex. B - 1

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

 

(vii)         will not commingle its funds or assets with those of any other
Person (other than Agent and other than as provided in the Management
Agreement);

 

(viii)        will hold its assets in its own name;

 

(ix)           will conduct its business in its name except for services
rendered under a management, franchise, license or similar agreement;

 

(x)            will maintain its financial statements, accounting records and
other entity documents separate from any other Person except where consolidated
financial statements are permitted or required under applicable Legal
Requirements or Applicable Accounting Standards;

 

(xi)           will pay its own liabilities, including the salaries of its own
employees (if any), out of its own funds and assets, provided, however, that the
foregoing shall not require any parent or member of such entity to make any
additional capital contributions or advance any other funds to such entity;

 

(xii)          Intentionally omitted;

 

(xiii)         will have no Indebtedness other than Permitted Indebtedness;

 

(xiv)        will not assume or guarantee or become obligated for the debts of
any other Person or hold out its credit as being available to satisfy the
obligations of any other Person except for the Loan;

 

(xv)         will not acquire obligations or securities of its owners;

 

(xvi)        will allocate fairly and reasonably shared expenses, including
shared office space, and uses separate stationery, invoices and checks;

 

(xvii)       except in connection with the Loan or Permitted Equipment
Financing, has not pledged and will not pledge its assets for the benefit of any
other Person;

 

(xviii)      will hold itself out and identify itself as a separate and distinct
entity under its own name and not as a division or part of any other Person
subject to the right to indentify the Premises as the San Diego Bayfront Hilton
in accordance with the Property Management Agreement or with any other
management, franchise or license agreement as may be entered into in accordance
with this Loan Agreement;

 

(xxviii)     except as permitted under any Loan Document, will not make loans to
any Person;

 

(xix)         will not identify its owners, or any Affiliate of any of them, as
a division or part of it;

 

(xx)          will not enter into or be a party to, any transaction with its
owners or Affiliates except (a) in connection with the Loan or as permitted
under any Loan

 

Ex. B - 2

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

 

Document, (b) in the ordinary course of its business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arm’s-length transaction with an unrelated third party and (c) with
respect to capital contributions and distributions permitted under its
organizational documents; and

 

(xxi)         will have no obligation to indemnify its partners, officers,
directors, members, as the case may be, unless such an obligation is
subordinated to the Obligations and will not constitute a claim against it if
cash flow in excess of the amount required to pay the then owing Obligations is
insufficient to pay the then owing Obligations.

 

Ex. B - 3

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EXHIBIT C

 

Required Amortization Payments

 

Month

 

Beginning
Balance

 

Monthly
Payment

 

Interest

 

Principal
Reduction

 

Ending Balance

 

Yearly
Reduction

 

%
Amortized

 

Annual
Payment

 

Constant

 

5/1/2011

 

240,000,000.00

 

1,438,921.26

 

1,200,000.00

 

238,921.26

 

239,761,078.74

 

 

 

 

 

 

 

 

 

6/1/2011

 

239,761,078.74

 

1,438,921.26

 

1,198,805.39

 

240,115.87

 

239,520,962.87

 

 

 

 

 

 

 

 

 

7/1/2011

 

239,520,962.87

 

1,438,921.26

 

1,197,604.81

 

241,316.45

 

239,279,646.43

 

 

 

 

 

 

 

 

 

8/1/2011

 

239,279,646.43

 

1,438,921.26

 

1,196,398.23

 

242,523.03

 

239,037,123.40

 

 

 

 

 

 

 

 

 

9/1/2011

 

239,037,123.40

 

1,438,921.26

 

1,195,185.62

 

243,735.64

 

238,793,387.76

 

 

 

 

 

 

 

 

 

10/1/2011

 

238,793,387.76

 

1,438,921.26

 

1,193,966.94

 

244,954.32

 

238,548,433.43

 

 

 

 

 

 

 

 

 

11/1/2011

 

238,548,433.43

 

1,438,921.26

 

1,192,742.17

 

246,179.09

 

238,302,254.34

 

 

 

 

 

 

 

 

 

12/1/2011

 

238,302,254.34

 

1,438,921.26

 

1,191,511.27

 

247,409.99

 

238,054,844.35

 

 

 

 

 

 

 

 

 

1/1/2012

 

238,054,844.35

 

1,438,921.26

 

1,190,274.22

 

248,647.04

 

237,806,197.31

 

 

 

 

 

 

 

 

 

2/1/2012

 

237,806,197.31

 

1,438,921.26

 

1,189,030.99

 

249,890.27

 

237,556,307.04

 

 

 

 

 

 

 

 

 

3/1/2012

 

237,556,307.04

 

1,438,921.26

 

1,187,781.54

 

251,139.73

 

237,305,167.31

 

 

 

 

 

 

 

 

 

4/1/2012

 

237,305,167.31

 

1,438,921.26

 

1,186,525.84

 

252,395.42

 

237,052,771.89

 

2,947,228.11

 

1.2

%

17,267,055.12

 

7.2

%

5/1/2012

 

237,052,771.89

 

1,438,921.26

 

1,185,263.86

 

253,657.40

 

236,799,114.49

 

 

 

 

 

 

 

 

 

6/1/2012

 

236,799,114.49

 

1,438,921.26

 

1,183,995.57

 

254,925.69

 

236,544,188.80

 

 

 

 

 

 

 

 

 

7/1/2012

 

236,544,188.80

 

1,438,921.26

 

1,182,720.94

 

256,200.32

 

236,287,988.49

 

 

 

 

 

 

 

 

 

8/1/2012

 

236,287,988.49

 

1,438,921.26

 

1,181,439.94

 

257,481.32

 

236,030,507.17

 

 

 

 

 

 

 

 

 

9/1/2012

 

236,030,507.17

 

1,438,921.26

 

1,180,152.54

 

258,768.72

 

235,771,738.44

 

 

 

 

 

 

 

 

 

10/1/2012

 

235,771,738.44

 

1,438,921.26

 

1,178,858.69

 

260,062.57

 

235,511,675.87

 

 

 

 

 

 

 

 

 

11/1/2012

 

235,511,675.87

 

1,438,921.26

 

1,177,558.38

 

261,362.88

 

235,250,312.99

 

 

 

 

 

 

 

 

 

12/1/2012

 

235,250,312.99

 

1,438,921.26

 

1,176,251.56

 

262,669.70

 

234,987,643.30

 

 

 

 

 

 

 

 

 

1/1/2013

 

234,987,643.30

 

1,438,921.26

 

1,174,938.22

 

263,983.04

 

234,723,660.25

 

 

 

 

 

 

 

 

 

2/1/2013

 

234,723,660.25

 

1,438,921.26

 

1,173,618.30

 

265,302.96

 

234,458,357.30

 

 

 

 

 

 

 

 

 

3/1/2013

 

234,458,357.30

 

1,438,921.26

 

1,172,291.79

 

266,629.47

 

234,191,727.82

 

 

 

 

 

 

 

 

 

4/1/2013

 

234,191,727.82

 

1,438,921.26

 

1,170,958.64

 

267,962.62

 

233,923,765.20

 

3,129,006.69

 

1.3

%

17,267,055.12

 

7.3

%

5/1/2013

 

233,923,765.20

 

1,438,921.26

 

1,169,618.83

 

269,302.43

 

233,654,462.77

 

 

 

 

 

 

 

 

 

6/1/2013

 

233,654,462.77

 

1,438,921.26

 

1,168,272.31

 

270,648.95

 

233,383,813.82

 

 

 

 

 

 

 

 

 

7/1/2013

 

233,383,813.82

 

1,438,921.26

 

1,166,919.07

 

272,002.19

 

233,111,811.63

 

 

 

 

 

 

 

 

 

8/1/2013

 

233,111,811.63

 

1,438,921.26

 

1,165,559.06

 

273,362.20

 

232,838,449.43

 

 

 

 

 

 

 

 

 

9/1/2013

 

232,838,449.43

 

1,438,921.26

 

1,164,192.25

 

274,729.01

 

232,563,720.41

 

 

 

 

 

 

 

 

 

10/1/2013

 

232,563,720.41

 

1,438,921.26

 

1,162,818.60

 

276,102.66

 

232,287,617.75

 

 

 

 

 

 

 

 

 

 

Ex. C - 1

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

 

Month

 

Beginning
Balance

 

Monthly
Payment

 

Interest

 

Principal
Reduction

 

Ending Balance

 

Yearly
Reduction

 

%
Amortized

 

Annual
Payment

 

Constant

 

11/1/2013

 

232,287,617.75

 

1,438,921.26

 

1,161,438.09

 

277,483.17

 

232,010,134.58

 

 

 

 

 

 

 

 

 

12/1/2013

 

232,010,134.58

 

1,438,921.26

 

1,160,050.67

 

278,870.59

 

231,731,264.00

 

 

 

 

 

 

 

 

 

1/1/2014

 

231,731,264.00

 

1,438,921.26

 

1,158,656.32

 

280,264.94

 

231,450,999.05

 

 

 

 

 

 

 

 

 

2/1/2014

 

231,450,999.05

 

1,438,921.26

 

1,157,255.00

 

281,666.27

 

231,169,332.79

 

 

 

 

 

 

 

 

 

3/1/2014

 

231,169,332.79

 

1,438,921.26

 

1,155,846.66

 

283,074.60

 

230,886,258.19

 

 

 

 

 

 

 

 

 

4/1/2014

 

230,886,258.19

 

1,438,921.26

 

1,154,431.29

 

284,489.97

 

230,601,768.22

 

3,321,996.98

 

1.4

%

17,267,055.12

 

7.4

%

5/1/2014

 

230,601,768.22

 

1,438,921.26

 

1,153,008.84

 

285,912.42

 

230,315,855.80

 

 

 

 

 

 

 

 

 

6/1/2014

 

230,315,855.80

 

1,438,921.26

 

1,151,579.28

 

287,341.98

 

230,028,513.82

 

 

 

 

 

 

 

 

 

7/1/2014

 

230,028,513.82

 

1,438,921.26

 

1,150,142.57

 

288,778.69

 

229,739,735.13

 

 

 

 

 

 

 

 

 

8/1/2014

 

229,739,735.13

 

1,438,921.26

 

1,148,698.68

 

290,222.58

 

229,449,512.55

 

 

 

 

 

 

 

 

 

9/1/2014

 

229,449,512.55

 

1,438,921.26

 

1,147,247.56

 

291,673.70

 

229,157,838.85

 

 

 

 

 

 

 

 

 

10/1/2014

 

229,157,838.85

 

1,438,921.26

 

1,145,789.19

 

293,132.07

 

228,864,706.78

 

 

 

 

 

 

 

 

 

11/1/2014

 

228,864,706.78

 

1,438,921.26

 

1,144,323.53

 

294,597.73

 

228,570,109.06

 

 

 

 

 

 

 

 

 

12/1/2014

 

228,570,109.06

 

1,438,921.26

 

1,142,850.55

 

296,070.72

 

228,274,038.34

 

 

 

 

 

 

 

 

 

1/1/2015

 

228,274,038.34

 

1,438,921.26

 

1,141,370.19

 

297,551.07

 

227,976,487.27

 

 

 

 

 

 

 

 

 

2/1/2015

 

227,976,487.27

 

1,438,921.26

 

1,139,882.44

 

299,038.82

 

227,677,448.45

 

 

 

 

 

 

 

 

 

3/1/2015

 

227,677,448.45

 

1,438,921.26

 

1,138,387.24

 

300,534.02

 

227,376,914.43

 

 

 

 

 

 

 

 

 

4/1/2015

 

227,376,914.43

 

1,438,921.26

 

1,136,884.57

 

302,036.69

 

227,074,877.74

 

3,526,890.48

 

1.5

%

17,267,055.12

 

7.5

%

5/1/2015

 

227,074,877.74

 

1,438,921.26

 

1,135,374.39

 

303,546.87

 

226,771,330.87

 

 

 

 

 

 

 

 

 

6/1/2015

 

226,771,330.87

 

1,438,921.26

 

1,133,856.65

 

305,064.61

 

226,466,266.27

 

 

 

 

 

 

 

 

 

7/1/2015

 

226,466,266.27

 

1,438,921.26

 

1,132,331.33

 

306,589.93

 

226,159,676.34

 

 

 

 

 

 

 

 

 

8/1/2015

 

226,159,676.34

 

1,438,921.26

 

1,130,798.38

 

308,122.88

 

225,851,553.46

 

 

 

 

 

 

 

 

 

9/1/2015

 

225,851,553.46

 

1,438,921.26

 

1,129,257.77

 

309,663.49

 

225,541,889.96

 

 

 

 

 

 

 

 

 

10/1/2015

 

225,541,889.96

 

1,438,921.26

 

1,127,709.45

 

311,211.81

 

225,230,678.15

 

 

 

 

 

 

 

 

 

11/1/2015

 

225,230,678.15

 

1,438,921.26

 

1,126,153.39

 

312,767.87

 

224,917,910.28

 

 

 

 

 

 

 

 

 

12/1/2015

 

224,917,910.28

 

1,438,921.26

 

1,124,589.55

 

314,331.71

 

224,603,578.58

 

 

 

 

 

 

 

 

 

1/1/2016

 

224,603,578.58

 

1,438,921.26

 

1,123,017.89

 

315,903.37

 

224,287,675.21

 

 

 

 

 

 

 

 

 

2/1/2016

 

224,287,675.21

 

1,438,921.26

 

1,121,438.38

 

317,482.88

 

223,970,192.32

 

 

 

 

 

 

 

 

 

3/1/2016

 

223,970,192.32

 

1,438,921.26

 

1,119,850.96

 

319,070.30

 

223,651,122.03

 

 

 

 

 

 

 

 

 

4/1/2016

 

223,651,122.03

 

1,438,921.26

 

1,118,255.61

 

320,665.65

 

223,330,456.37

 

3,744,421.37

 

1.6

%

17,267,055.12

 

7.6

%

 

Ex. C - 2

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

 

SCHEDULE 2.7(a)

 

Form of Interest Rate Protection Agreement Acknowledgment

 

[Letterhead of Issuer]

 

[Date]

 

[                            ] (“Counterparty”) has entered into a Confirmation
(Reference No.:  [                ]) (“Interest Rate Protection Agreement”),
dated as of [                  ], 20[    ], between the Counterparty and [One
Park Boulevard, LLC, a Delaware limited liability company] (“Assignor”). 
Attached hereto as Exhibit A is a true, correct and complete copy of the
Interest Rate Protection Agreement confirmation.  Counterparty acknowledges that
it has been informed that Assignor has pledged and collaterally assigned all of
its rights, title and interests in, to and under the Interest Rate Protection
Agreement to Aareal Capital Corporation, as agent for the various lenders from
time to time (together with its successors and assigns, in such capacity, the
“Agent”).  Counterparty hereby consents to said pledge and collateral
assignment, agrees that it will make any payments to become payable under or
pursuant to the Interest Rate Protection Agreement directly to or as otherwise
directed in writing by Agent and agrees that all rights of Assignor under the
Interest Rate Protection Agreement, including all rights to consent to any
termination or modification of same or grant any other consent thereunder, shall
be exercisable by Agent.  Counterparty acknowledges that in the event it shall
fail to make such payments directly to or as otherwise directed in writing by
Agent, it shall be deemed to have not made such payment pursuant to the Interest
Rate Protection Agreement.  Counterparty’s address for notices hereunder is:

 

[                                          ]

[                                          ]

[                                          ]

Attention: [                                          ]

Telephone: [                                          ]

Facsimile No.:   [                                          ]

Reference No.:  [                                          ]

 

Agent’s payment instructions as of the date hereof are as follows, provided that
Agent may change same at any time upon notice to Counterparty:
[                                                    ], ABA
#[                  ], Account #[                        ], Reference: Loan #
[          /          ], Account Name: 
[                                                                    ].

 

Counterparty shall be entitled to conclusively rely (without any independent
investigation) on any notice or instructions from Agent in respect of the
Interest Rate Protection Agreement.  In the event of any inconsistency between
any notice or instructions from Assignor and any notice or instructions from
Agent, Counterparty shall be entitled to conclusively rely (without any
independent investigation) on the notice or instruction from Agent.  Assignor
releases Counterparty from all liability in connection with Counterparty’s
compliance with Agent’s written instructions.  Assignor hereby agrees to
indemnify, defend and hold

 

Sch. 2.7(a) - 1

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

 

Counterparty harmless from and against any and all claims, other than those
ultimately determined to be proximately caused by the gross negligence or
willful misconduct of Counterparty, and from and against any damages, penalties,
judgments, liabilities, losses or expenses (including reasonable attorneys’ fees
and disbursements) incurred by Counterparty as a result of the assertion of any
claim by any person or entity arising out of, or otherwise related to, any
actions taken or omitted to be taken by Counterparty in reliance upon any
instructions or notice provided by Agent.

 

Delivery of an executed counterpart of a signature page of this acknowledgment
by telecopy or mail shall be effective as delivery of a manually executed
original counterpart of this acknowledgment.  This acknowledgment may be
executed in one or more counterparts, each of which shall be deemed an original,
and it shall not be necessary in making proof of this acknowledgment to produce
or account for more than one such counterpart.

 

 

ISSUER:

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Dated:

 

 

 

 

Sch. 2.7(a) - 2

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

 

 

AGENT:

 

 

 

AAREAL CAPITAL CORPORATION,

 

as Agent for Lenders

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Dated:

 

 

 

 

 

 

 

 

 

 

ACKNOWLEDGED AND AGREED:

 

 

 

 

 

 

 

PURCHASER:

 

 

 

 

 

Dated:

 

 

 

 

Sch. 2.7(a) - 3

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

 

EXHIBIT A

 

Interest Rate Protection Agreement Confirmation

 

(see attached)

 

Sch. 2.7(a) - 4

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

 

SCHEDULE 5

 

Exceptions to Representations and Warranties

 

1.               Exceptions to the representations and warranties contained in
Section 5.20.

 

2.               Hodges Ward Elliot, as East Harbor Property, Inc.’s broker with
respect to Sunstone’s acquisition of its ownership interests in Loan Parties.

 

Sch. 5- 1

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

 

SCHEDULE 5.11

 

Accounts

 

1.               Operating Account:  One Park Boulevard, LLC; Wells Fargo Bank,
National Association Account No. 4121689186

 

2.               Operating Account:  Sunstone Park Lessee, LLC; Wells Fargo
Bank, National Association Account No. 4122175292

 

3.               Capital/FF&E Reserve Account:  Sunstone Park Lessee, LLC;
Compass Bank Account No. 2530641123

 

Sch. 5.11- 1

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

 

SCHEDULE 5.17

 

Material Operating Agreements

 

Agreements with the following Persons, in each case providing for to the type of
service or otherwise related to the subject matter listed next to the Person’s
name:

 

Counterparty:

 

Service/Subject Matter:

 

 

 

(a)

Spectrasite Communications, LLC/American Tower

 

DAS System

 

Sch. 5.17 - 1

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

 

SCHEDULE 6.11

 

Insurance Requirements

 

(a)           Loan Parties shall obtain and maintain, or cause to be maintained,
insurance for Loan Parties and/or the Premises (as applicable) providing at
least the following coverages:

 

(i)            so called “All Risk” or “Special Perils” property insurance, as
is available in the insurance marketplace as of the closing date, on the
Improvements and the Personal Property (as such term is defined in the Deed of
Trust) (A) in an amount equal to one hundred percent (100%) of the “Full
Replacement Cost,” which for purposes of this Loan Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground
utilities and footings) without depreciation; (B) containing an agreed amount
endorsement with respect to the Improvements and Personal Property waiving all
co insurance provisions; (C) providing for no deductible in excess of
Twenty-Five Thousand Dollars ($25,000) (the “Required Deductible”) for all such
“All Risk” or “Special Perils” property insurance coverage or such higher
deductible if Loan Parties provide Agent with cash or a Letter of Credit in an
amount equal to the difference between the actual deductible and the Required
Deductible; (D) covering at least the following perils or causes of loss: 
building collapse, fire, flood, back-up of sewers and drains, water damage,
windstorm, earthquake, earth movement, acts of terrorism impact of vehicles and
aircraft, lightning, malicious mischief, and vandalism (earthquake, earth
movement, flood, and other perils that may be specified by Agent may have a sub
limit of such amount as is acceptable to Agent, coverage for these perils to be
provided irrespective of the Improvement’s location in either a “High Hazard
flood area, or in an area of high seismic activity); and (E) containing an
“Ordinance or Law Coverage” endorsement covering “Demolition Expense” of and the
replacement value for the “Undamaged Portion” as well as the increased cost to
reconstruct following a loss due to enforcement of laws and building regulations
or ordinances regulating construction following a loss, with a limit reasonably
acceptable to the Agent.  In addition, Loan Parties shall obtain: (x) if any
portion of the Improvements is currently or at any time in the future located in
a federally designated “special flood hazard area,” flood hazard insurance in an
amount equal to the greater of (1) the amount determined by a probable maximum
loss study or other acceptable assessment of expected maximum loss, not to
exceed the outstanding principal amount of the Note or (2) the maximum amount of
such insurance available under the National Flood Insurance Act of 1968, the
Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act
of 1994, as each may be amended; (y) Earthquake insurance in form and substance
reasonably satisfactory to Agent in the event the Premises is located in an area
with a high degree of seismic activity and (z) Coastal Windstorm insurance if
the Improvements are located in a “Tier 1” designated area and if not covered in
the “Special Perils” policy required hereunder, in form and substance reasonably
satisfactory to Agent, all of which shall be provided in amounts and with
deductibles as are customary in the market for insurance of commercial
properties similar to the Premises, but in no event shall the deductible for the
insurance required pursuant to clause (x), (y) or (z) be greater than five
percent (5%) of the location insurable values;

 

Sch. 6.11 - 1

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

 

(ii)           Commercial General Liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Premises, such insurance (A) to be on the so called “occurrence” form
with a combined limit of not less than One Million and No/100 Dollars
($1,000,000) per occurrence and Two Million and No/100 Dollars ($2,000,000) in
the aggregate, per location; (B) to continue at not less than the aforesaid
limit until required to be changed by Agent in writing by reason of changed
economic conditions making such protection inadequate; and (C) to cover at least
the following hazards:  (1) premises and operations; (2) products and completed
operations; (3) independent contractors; (4) blanket contractual liability for
all legal contracts; and (5) contractual liability covering the indemnities
(with regard to occurrences for property damage, bodily injury, personal injury
and death for so called “insured” contracts as defined in the commercial general
liability policy) to the extent the same is available.  Such insurance shall
name the Agent as an Additional Insured, on a form reasonably acceptable to the
Agent;

 

(iii)          Hotel Operations Specific Insurance.  Loan Parties shall include
coverage for liquor liability, Garagekeeper’s liability, Innkeeper’s liability,
safe deposit box liability and crime insurance, all in amounts reasonably
satisfactory to Agent;

 

(iv)          business income or rental income insurance on an actual loss
sustained basis (A) with a “Lenders Loss Payable” endorsement making all losses
payable to Agent, except as provided elsewhere in this Loan Agreement;
(B) covering all risks required to be covered by the insurance provided for in
subsection (i) above; (C) containing an “Extended Period of Indemnity”
endorsement which provides that after the physical loss to the Improvements and
Personal Property has been repaired, the continued loss of income will be
insured until such income either returns to the same level it was at prior to
the loss, or three hundred sixty five (365) days from the date that the Premises
is repaired or replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period; and
(D) in an amount equal to one hundred percent (100%) of the projected gross
income from the Premises for a period of twelve (12) months from the date of
such Casualty (assuming such Casualty had not occurred) notwithstanding that the
policy may expire at the end of such period.  The amount of such business income
insurance shall be determined prior to the date hereof and at least once each
year thereafter based on Loan Parties’ reasonable estimate of the gross income
from the Premises for the succeeding twelve (12) month period.  All proceeds
payable to Agent pursuant to this subsection shall be held and applied by Agent
in accordance with Section 6.12; provided, however, that nothing herein
contained shall be deemed to relieve Loan Parties of their obligations to pay
the obligations secured by the Loan Documents on the respective dates of payment
provided for in this Loan Agreement and the other Loan Documents except to the
extent such amounts are actually paid out of the proceeds of such business
income or rental income insurance;

 

(v)           at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if the
Premises coverage form does not otherwise apply, the insurance provided for in
subsection (i) above written in a so called “Builder’s Risk Completed Value”
form (1) on a non reporting basis, (2) against

 

Sch. 6.11 - 2

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all risks insured against pursuant to subsection (i) above, (3) including
permission to occupy the Premises, and (4) with an agreed amount endorsement
waiving co insurance provisions.  Loan Parties shall also ensure that the
General Contractor shall provide for liability insurance that complies with the
requirements of subsections (ii), (vi) and (ix) herein.  All terms and
conditions of such policies shall be reasonably acceptable to the Agent;

 

(vi)          Worker’s Compensation insurance with respect to any employees of
Loan Parties, as required by any Governmental Authority or Legal Requirement;

 

(vii)         if applicable, Comprehensive Boiler and Machinery insurance
covering all pressure vessels and steam boilers (if any), mechanical equipment
and electrical systems at the Premises, in amounts not less than Twenty Million
and No/100 Dollars ($20,000,000) per accident or as shall otherwise be
reasonably required by Agent, including, coverage extensions as required and
keeping with terms consistent with the commercial property insurance policy
required under subsections (i) and (iv) above;

 

(viii)        Umbrella Liability insurance in an amount not less than
Seventy-Five Million and No/100 Dollars ($75,000,000) per occurrence, and in the
aggregate, per location.  If the Umbrella Liability aggregate is shared with
other locations, then the umbrella liability minimum limit shall be increased to
one hundred million and no100 Dollars ($100,000,000);

 

(ix)           Motor Vehicle Liability coverage for all owned and non owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence of One Million and No/100 Dollars ($1,000,000);

 

(x)            the Policies (as defined herein) will not contain an exclusion
for acts of terrorism or if TRIPRA (which term shall mean the Terrorism Risk
Insurance Program Reauthorization Act of 2007, as the same may be amended,
restated, supplemented or otherwise modified from time to time) is not in effect
and such Policies contain an exclusion for acts of terrorism, Loan Parties shall
be required to obtain a standalone policy that provides the same coverage as the
Policies would have if such exclusion did not exist; provided, however, that
such stand-alone policy may have a deductible that is reasonable for such
stand-alone policies with respect to properties similar to the Premises and
reasonable for the geographic region where the Premises is located, so long as
in no event shall such deductible exceed $25,000; and

 

(b)           upon sixty (60) days’ notice, such other insurance and in such
reasonable amounts as Agent from time to time may reasonably and in good faith
request against such other insurable hazards which at the time are commonly
insured against for property similar to the Premises located in or around the
region in which the Premises is located if such other insurance is recommended
by an independent, third party insurance consultant commissioned by Agent. Loan
Parties agree that they shall be responsible for all reasonable and documented
out-of-pocket fees and expenses incurred in connection with the aforementioned
insurance consultant.

 

Sch. 6.11 - 3

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SCHEDULE 6.34

 

Required Repairs

 

1.               None.

 

Sch. 6.34 - 1

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SCHEDULE 8.5

 

Form of Assignment and Acceptance

 

This ASSIGNMENT AND ACCEPTANCE (this “Assignment”) made as of
                  , 20     by and between
                                                     (“Assignor”), as a Lender
(as defined in the Loan Agreement (as defined below)), and
                                                     (together with its
successors and assigns permitted under the Loan Agreement, “Assignee”). 
Capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Loan Agreement (as hereinafter defined).

 

WHEREAS, One Park Boulevard, LLC, a Delaware limited liability company
(“Borrower”), Sunstone Park Lessee, LLC (“Operating Lessee”; Borrower and
Operating Lessee are each sometimes referred to as a “Loan Party” and as “Loan
Parties”), Aareal Capital Corporation, a Delaware corporation, as agent for the
Lenders (as defined in the Loan Agreement) (in such capacity, “Agent”) and the
Lenders party thereto, are parties to that certain Loan Agreement dated as of
[April     ], 2011 (as the same may have been or may hereafter be amended,
restated, extended or otherwise modified from time to time pursuant to the terms
thereof, the “Loan Agreement”), pursuant to which Lenders have agreed to make,
and Agent has agreed to administer, a loan to Borrower in the original principal
amount of $[240,000,000.00] (the “Loan”);

 

WHEREAS, Assignor is one of the “Lenders” under the Loan Agreement; and

 

WHEREAS, Assignor wishes to sell and assign to Assignee all of Assignor’s right,
title and interest in and to a portion of the Loan in an amount equal to
$[          ], which constitutes         percent (      %) of Assignor’s
interest in the entire Loan, together with all of Assignor’s right, title, and
interest in and to the Loan Agreement and, the other Loan Documents in respect
of such portion (the “Assigned Interest”).

 

NOW, THEREFORE, in consideration of ($[                  ]) paid by Assignee to
Assignor with respect to the Assigned Interest, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Assignor and Assignee hereby agree as follows:

 

1.             As of the date hereof, Assignor hereby sells, assigns, transfers
and grants to Assignee the Assigned Interest.  As of the date hereof, Assignee
hereby purchases the Assigned Interest and assumes all obligations and
liabilities of Assignor under the Loan Documents in respect of the Assigned
Interest.

 

2.             Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any other Loan Documents, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Agreement or any other Loan Documents, or any other instrument
or document furnished pursuant thereto, or any collateral security granted in
connection therewith, if any, other than that there is no adverse claim upon the
Assigned Interest and that the Assigned Interest is free and clear of any
adverse claim; and (b) makes no representation or warranty and assumes no
responsibility with respect to

 

Sch. 8.5 - 1

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the financial condition of Borrower, any Guarantor, any of their respective
Affiliates or any other obligor for the performance or the observance by
Borrower, any Guarantor, any of their respective Affiliates or any other obligor
of any of their respective obligations under the Loan Agreement, any other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto.

 

3.             Assignee (a) represents and warrants to Agent and Lenders that it
is legally authorized to enter into this Assignment and is an Eligible Assignee;
(b) confirms that it has received copies of the Loan Agreement, together with
copies of the financial statements delivered pursuant thereto and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment; (c) agrees that it will,
independently and without reliance upon Agent, Assignor or any other Lender,
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in granting or withholding any
consent or approval under the Loan Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (d) confirms
that Agent shall act as agent for Assignee and the other Lenders and shall take
such action as agent on its behalf and to exercise such powers and discretion
under the Loan Agreement, the other Loan Documents or other instruments or
documents furnished pursuant hereto or thereto as are delegated to Agent by the
terms thereof; and (e) agrees that it will be bound by the provisions of the
Loan Documents and will perform in accordance with their respective terms all
the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.

 

4.             Assignor represents and warrants that (a) the current outstanding
principal amount of the Loan is                            Dollars
($                      ), (b) Assignor has not previously assigned, pledged,
transferred or hypothecated all or any portion of the Assigned Interest and
(c) it is legally authorized to enter into this Assignment.

 

5.             From and after the date hereof, (a) Assignee shall be a party to
the Loan Agreement and, to the extent of the Assigned Interest, shall have the
rights and obligations of a Lender thereunder and under the other Loan Documents
and shall be bound by the provisions thereof and (b) Assignor shall relinquish
its rights as a Lender and be released from its obligations as a Lender under
the Loan Documents and to the Loan with respect to the Assigned Interest. 
Exhibit A attached hereto sets forth Assignor’s and Assignee’s respective
Commitments after giving effect to this Assignment [(and, in the case of
Assignor, any other Assignments that Assignor is entering simultaneously
herewith)].

 

6.             The address of Assignee to which notices under the Loan Documents
shall be sent is:

 

 

 

Attn:

Telephone:

 

Sch. 8.5 - 2

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Facsimile:

 

with copies similarly delivered to:

 

 

Attn:

Telephone:

Facsimile:

 

7.             This Assignment shall be governed by and construed in accordance
with the laws of the State of New York.

 

8.             This Assignment may be executed in any number of counterparts,
with the same effect as if all of the parties had signed the same document.  All
counterparts shall be construed together and constitute one agreement.(1)

 

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(1)                                  With respect to an assignment from Aareal
Capital Corporation to Aareal Bank AG, the following shall be added as a
Section 9:  “Notwithstanding anything to the contrary contained in this
Assignment, Assignor, Assignee and Agent hereby acknowledge and agree that
(i) the Required Amortization Payments made in accordance with Section 2.4(b) of
the Loan Agreement which are otherwise allocable to Aareal Bank AG shall be paid
to Assignor and applied towards the outstanding principal balance of Assignor’s
proportionate interest in the Loan until such outstanding principal balance is
paid in full, in which event, the remainder of the Required Amortization
Payments otherwise allocable to Aareal Bank AG shall be paid to Aareal Bank AG,
and (ii) the foregoing clause (i) shall be for the benefit of Borrower and shall
not result in any increase in Borrower’s obligations or the effective interest
rate under the Loan Documents.”

 

Sch. 8.5 - 3

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IN WITNESS WHEREOF, the parties have duly executed this Assignment as of the day
and the year first above written.

 

 

ASSIGNOR:

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

ASSIGNEE:

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

, as agent for Lenders
signs below for the sole purpose of consenting to
this Assignment.  Such consent is not, and shall
not be construed to be, a consent or waiver to any
other assignment or any other provision of any
Loan Document.  Agent shall retain all of its respective
rights under the Loan Documents.

 

, as agent for Lenders

 

By:

 

 

Name:

 

Title:

 

 

Sch. 8.5 - 4

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EXHIBIT A [to Schedule 8.5]

 

Assignor’s Commitment (following this Assignment [and the other assignments by
Assignor being executed contemporaneously herewith]):

 

$                                                            .

 

Assignee’s Commitment - $                                                      .

 

Sch. 8.5 - 5

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