Exhibit 10.11.1

 

EXECUTION VERSION

 

JOINDER, AMENDMENT, RATIFICATION AND CONSENT TO

AMENDED AND RESTATED LOAN AGREEMENT

 

among

 

SUNSTONE SH HOTELS L.L.C.

SUNSTONE OP PROPERTIES L.L.C.

SUN MANHATTAN, LLC

SUNSTONE HARTSFIELD, LLC

SUNSTONE BROADHOLLOW, LLC

jointly and severally, as the Borrowers

 

The Lenders Party Hereto

as Lenders

 

and

 

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

as Administrative Agent

 

Substitution of Collateral and Payoff of Existing Floating Notes

 

Dated as of December 22, 2005

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JOINDER, AMENDMENT, RATIFICATION AND CONSENT TO

AMENDED AND RESTATED LOAN AGREEMENT

 

This Joinder, Amendment, Ratification and Consent to Amended and Restated Loan
Agreement (this “Agreement”) is entered into as of December 22, 2005 among
SUNSTONE SH HOTELS L.L.C. (“Sunstone SH”), SUNSTONE OP PROPERTIES L.L.C.
(“Sunstone OP” and, jointly, severally and collectively with Sunstone SH, the
“Existing Borrowers”), SUN MANHATTAN, LLC (“Sun Manhattan”), SUNSTONE
HARTSFIELD, LLC (“Sunstone Hartsfield”), and SUNSTONE BROADHOLLOW, LLC
(“Sunstone Broadhollow” and, jointly, severally and collectively with Sun
Manhattan and Sunstone Hartsfield, the “New Borrowers”), each a Delaware limited
liability company (each of Sunstone SH, Sunstone OP, Sun Manhattan, Sunstone
Hartsfield, and Sunstone Broadhollow being referred to herein as a “Borrower”
and, jointly, severally and collectively, as the “Borrowers”); each of the
lenders that is a signatory hereto identified under the caption “LENDERS” on the
signature pages hereof together with any successor thereto as registered owner
of all or any portion of such lender’s promissory note pursuant to the terms
hereof (individually, a “Lender” and, collectively, the “Lenders”); and
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a corporation organized under the
laws of the Commonwealth of Massachusetts, as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the
“Administrative Agent”).

 

RECITALS

 

A. The Existing Borrowers and two affiliates of the Existing Borrowers, SHP
Ogden LLC (“SHP Ogden”) and Sunstone Chandler, LLC (“Sunstone Chandler”), were
parties to that certain Amended and Restated Loan Agreement dated as of
October 26, 2004 (as modified, amended, restated, renewed or replaced as of the
date hereof, the “Existing Loan Agreement”), by and among such parties, the
Lenders, and the Administrative Agent. Capitalized terms used herein and not
otherwise defined herein have the respective meanings set forth in the Loan
Agreement. As used herein, the term “Loan Agreement” means the Existing Loan
Agreement, as amended by this Agreement.

 

B. Pursuant to the terms of the Loan Agreement, the Lenders have made a mortgage
loan (the “Loan”) to the Existing Borrowers, to SHP Ogden and to Sunstone
Chandler. The Loan includes Fixed Loans and Floating Loans, and such Loans are
evidenced by Fixed Notes and Floating Notes, respectively.

 

C. Prior to the date of this Agreement, and pursuant to the terms and provisions
of the Loan Agreement:

 

1. the Individual Property owned by Sunstone Chandler was released by the
Administrative Agent from the collateral securing the Loan and a portion of the
Loan was prepaid in connection therewith, and

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2. certain other Individual Properties owned by the Existing Borrowers were
released by the Administrative Agent from the collateral securing the Loan and a
portion of the Loan was prepaid in connection therewith.

 

D. As of the date of this Agreement, and immediately prior to giving effect to
the terms and provisions set forth herein, the Loan was secured, in part, by
mortgages or deeds of trust encumbering twenty-six (26) Individual Properties
owned or ground-leased by the Existing Borrowers and SHP Ogden. All of such
Individual Properties are identified on Annex A attached hereto

 

E. The Existing Borrowers and SHP Ogden desire to obtain the release of twelve
(12) of the twenty-six (26) Individual Properties currently securing the Loan
(the “Released Properties”), and to substitute in lieu thereof mortgages or
deeds of trust, as applicable, on three (3) properties owned or ground-leased,
as applicable, by the New Borrowers (the “New Properties”). The Released
Properties are identified on Annex B attached hereto, and the New Properties are
identified on Annex C attached hereto.

 

F. The Released Properties include the sole Individual Property owned by SHP
Ogden and, after giving effect to the terms and provisions set forth herein, SHP
Ogden shall no longer be a borrower under the Loan.

 

G. The New Borrowers desire to become parties to the Loan Agreement and to
become liable, jointly and severally, for all of the obligations of the Existing
Borrowers set forth therein and in each and every other Loan Document, as
amended in connection with this Agreement.

 

H. The Administrative Agent and the Lenders are willing to permit the foregoing
transactions on the condition that the Existing Borrowers, contemporaneously
with the execution and delivery of this Agreement, pay off the total outstanding
principal amount of the Floating Loans, together with all accrued interest
thereon and any and all other amounts due and payable in connection therewith.

 

I. In conjunction with the payoff of the entire indebtedness evidenced by the
Floating Notes, the parties desire to evidence their agreement that the
Borrowers shall no longer be required to obtain or maintain any Interest Rate
Cap Agreement.

 

J. Each of the Existing Borrowers, each of the New Borrowers, each of the
Lenders, and the Administrative Agent desire to amend the Loan Agreement to
reflect their agreements with respect to the foregoing issues and in certain
other particulars, as more fully set forth herein.

 

NOW, THEREFORE, in consideration of the covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and agreed, the parties hereby agree to be bound as follows:

 

1. Incorporation of Recitals, Annexes, Exhibits, and Schedules. Each of the
recitals set forth above, and any and all annexes, exhibits and schedules
attached hereto, are hereby incorporated by reference into this Agreement.

 

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2. Replacement of Certain Definitions in Existing Loan Agreement. The following
defined terms set forth in the Loan Agreement are hereby deleted in their
entirety and replaced by the following terms which shall have the meanings set
forth below:

 

a. “Assignments of Leases and Rents” means each of those certain Assignments of
Leases and Rents, dated as of August 28, 2003, or December 22, 2005, as
applicable, by each Borrower and Operator in favor of the Administrative Agent
(on behalf of the Lenders), in each case as the same may be joined in, amended,
ratified, confirmed, or consented to from time to time.

 

b. “Assignments of Licenses” means that certain Amended and Restated Assignment
of Licenses, Permits and Approvals and Contracts, Agreements and Equipment
Leases, dated the date hereof, by each Borrower, and each Operator in favor of
the Administrative Agent (on behalf of the Lenders), as the same may be joined
in, amended, ratified, confirmed, or consented to from time to time.

 

c. “Borrower” means each of Sunstone SH Hotels L.L.C.; Sunstone OP Properties
L.L.C.; Sun Manhattan, LLC; Sunstone Hartsfield, LLC; and Sunstone Broadhollow,
LLC, together with any of their respective permitted successors and/or assigns
from time to time, provided that such defined term is subject to the rules of
interpretation set forth in Section 1.3 hereof.

 

d. “Borrower Party” means each of the Borrowers; each of the Operators;
Sunstone; Sunstone Holdco; Sunstone Hotel TRS; and WHP PPE Owner-1, L.L.C. and
any of their respective successors or permitted assigns from time to time.

 

e. “Fixed Notes” means the amended and restated promissory notes evidencing the
Fixed Loans dated as of December 22, 2005 and substantially in the form of
Exhibit B-1 attached hereto, and all promissory notes delivered in substitution
or exchange therefor, in each case as the same may be joined in, amended,
ratified, confirmed, or consented to from time to time.

 

f. “Ground Leases” means, collectively, the ground leases listed on Schedule 10
attached hereto (each of the Ground Leases, individually, a “Ground Lease”).

 

g. “Letter Agreement” means that certain Side Letter Agreement Regarding
Continued Ownership of Properties After Closing dated as of December 22, 2005 by
and among the Borrowers, Sunstone, Sunstone Holdco and Administrative Lender (on
behalf of the Lenders).

 

h. “Limited Guaranty” means that certain Limited Guaranty and Indemnity
Agreement, dated October 26, 2004, as amended by that certain First Amendment to
Limited Guaranty and Indemnity Agreement dated as of December 22, 2005, in each
case by Sunstone and Sunstone Holdco in favor of the Administrative Agent (on
behalf of the Lenders), as the same may be joined in, amended, ratified,
confirmed, or consented to from time to time.

 

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i. “Loan Documents” means: (a) this Agreement, (b) the Notes, (c) the Mortgages,
(d) the Assignments of Leases and Rents, (e) the Assignments of Licenses,
(f) the Security Agreement, (g) the Limited Guaranty, (h) the Hazardous
Materials Indemnity Agreement, (i) the Subordination of Management Agreements,
(j) the Stock Pledge, (k) the Membership Pledges, (l) the Uniform Commercial
Code Financing Statements naming any of the Borrowers or Operators as debtor and
the Administrative Agent as secured party, (m) the Multi-Party Agreement,
(n) the Letter Agreement, (o) all other documents now or hereafter executed by
any of the Borrowers, Operators or Manager or any other Person to evidence or
secure the payment of the Indebtedness or the performance of the Borrowers or
otherwise executed by a Person affiliated with any of the Borrowers in
connection with this Agreement, the Notes, or the Mortgages, and (p) all
amendments, modifications, restatements, extensions, renewals and replacements
of the foregoing.

 

j. “Management Agreement” means, collectively, (a) the Master Management
Agreement and (b) each of those certain Hotel Management Agreements dated as of
October 26, 2004 between an Operator and Manager as specified on Schedule 5A
hereto, and (c) each other hotel management agreement specified on Schedule 5A
hereto.

 

k. “Manager” means (a) with respect to all of the Properties except for the
Property located in Atlanta, Georgia, Sunstone Hotel Properties, Inc., a
Colorado corporation, and its successors and permitted assigns, and (b) with
respect to the Property located in Atlanta, Georgia, Renaissance Hotel Operating
Company, a Delaware corporation.

 

l. “Master Management Agreement” means that certain Master Agreement dated as of
October 26, 2004 by and among Manager (of all of the Properties other than the
Individual Property located in Atlanta, Georgia), the Operators (of all of the
Properties other than the Individual Property located in Atlanta, Georgia) and
certain other Affiliates of Sunstone.

 

m. “Maturity Date” means May 1, 2011, or any earlier date on which all of the
Fixed Loans are required to be paid in full, by Acceleration or otherwise, under
the Loan Agreement or any of the other Loan Documents.

 

n. “Membership Pledge” means each of those certain Limited Liability Company
Interest Pledge and Security Agreements or Amended and Restated Limited
Liability Company Interest Pledge and Security Agreements (together with the
attachments thereto and consents, certificates, powers and other materials
referred to therein), dated the date hereof, relating to the pledges of
membership interests to the Administrative Agent (on behalf of the Lenders) from
(a) Sunstone as pledgor regarding its pledge of its 100% equity interest in
Sunstone Holdco, (b) Sunstone Holdco as pledgor regarding its pledges of its
100% equity interests in each Borrower, and (c) from Sunstone Broadhollow as
pledgor regarding its pledge of its 100% equity interests in WHP PPE Owner-1,
L.L.C., as any of the same may be joined in, amended, ratified, confirmed, or
consented to from time to time.

 

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o. “Mortgage” means with respect to each Individual Property, the Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing;
Consolidated, Amended and Restated Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Filing; the Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing; the Deed to Secure Debt,
Assignment of Leases and Rents, Security Agreement and Fixture Filing; or the
Leasehold Deed to Secure Debt, Assignment of Leases and Rents and Security
Agreement, as applicable, (a) dated as of August 28, 2003 and executed by each
of the applicable Borrowers in favor of the Administrative Agent (on behalf of
the Lenders), covering such Individual Property, as amended by a certain
modification agreement dated as of October 26, 2004 by each of the applicable
Borrowers and the Administrative Agent, or (b) dated as of December 22, 2005,
and executed by each of the applicable Borrowers in favor of the Administrative
Agent (on behalf of the Lenders), covering such Individual Property, as any of
the same may be joined in, amended, ratified, confirmed, or consented to from
time to time. “Mortgages” means all of the Mortgages on all of the Properties
listed in Schedule A hereto, which Mortgages secure the Loans on a
cross-defaulted, cross-collateralized basis.

 

p. “Multi-Party Agreement” means that certain Amended and Restated Multi-Party
Agreement, dated as of October 26, 2004, among the Borrowers, the Operators, and
the Administrative Agent, as the same may be joined in, amended, ratified,
confirmed, or consented to from time to time.

 

q. “Operator” means each of SHP Lessee Corp., SHP Lessee II Corp., Sunstone/WB
Manhattan Beach Lessee, Inc., Sunstone Broadhollow Lessee, Inc., and Sunstone
Hartsfield Lessee, Inc.

 

r. “Security Agreement” means that certain Amended and Restated Security
Agreement dated as of December 22, 2005 by and among the Borrowers, the
Operators and WHP PPE Owner-1, L.L.C., a Delaware limited liability company,
collectively as the debtors thereunder, to and for the benefit of the
Administrative Agent (on behalf of the Lenders), as secured party, as the same
may be joined in, amended, ratified, confirmed, or consented to from time to
time.

 

s. “Stock Pledge” means each of those certain Amended and Restated Stock Pledge
and Security Agreements (together with the attachments thereto and consents,
certificates, powers and other materials referred to therein) dated as of
December 22, 2005 and relating to the pledges of stock to the Administrative
Agent (on behalf of the Lenders) from Sunstone Hotel TRS as pledgor regarding
its pledges of its 100% equity interests in each of the Operators, as any of the
same may be joined in, amended, ratified, confirmed, or consented to from time
to time.

 

t. “Subordination of Management Agreement” means (a) with respect to all of the
Properties except for the Individual Property located in Atlanta, Georgia, that
certain Assignment of Management Agreements and Guaranty of Management
Agreements, Subordination of Management Agreements and Consent to Assignment and
Subordination, dated October 26, 2004, by and among Sunstone Hotel Investors,
Inc. and

 

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certain of the Operators in favor of the Administrative Agent (on behalf of the
Lenders), and consented and agreed to by Manager and Interstate Management
Company, L.L.C., , as the same may be joined in, amended, ratified, confirmed,
or consented to from time to time and (b) with respect to the Individual
Property located in Atlanta, Georgia, that certain Assignment of Management
Agreement, Subordination and Attornment Agreement, dated December 22, 2005, from
Sunstone Hartsfield Lessee, Inc., in favor of the Administrative Agent (on
behalf of the Lenders), and consented to by Renaissance Hotel Operating Company.

 

3. Amendment of Certain Attachments to Existing Loan Agreement.

 

a. Exhibit A of the Existing Loan Agreement is hereby amended (i) to delete the
legal description of each of the Released Properties and (ii) to add and
incorporate therein the legal descriptions of each of the New Properties that
are set forth on Exhibit A attached to this Agreement.

 

b. Schedule 3 of the Existing Loan Agreement is hereby amended (i) to delete the
descriptions of the hotel accommodations, room numbers and types and other
information with respect to each of the Released Properties and (ii) to add and
incorporate therein the descriptions of the hotel accommodations, room numbers
and types and other information with respect to each of the New Properties that
are more fully described on Schedule 3 attached to this Agreement.

 

c. Schedule 5A of the Existing Loan Agreement is hereby amended (i) to delete
the descriptions of the Management Agreements and Managers with respect to each
of the Released Properties and (ii) to add and incorporate therein the
descriptions of the Management Agreements and Managers with respect to each of
the New Properties that are more fully described on Schedule 5A attached to this
Agreement.

 

d. Schedule 5B of the Existing Loan Agreement is hereby amended (i) to delete
the descriptions of the Franchise Agreements with respect to each of the
Released Properties and (ii) to add and incorporate therein the descriptions of
the Franchise Agreements with respect to each of the New Properties that are
more fully described on Schedule 5B attached to this Agreement.

 

e. Schedule 10 of the Existing Loan Agreement is hereby replaced and superseded
in its entirety by Schedule 10 attached hereto.

 

f. Schedule 11 of the Existing Loan Agreement is hereby amended (i) to delete
the descriptions of the Operating Leases, Material Leases and other Leases
affecting each of the Released Properties and (ii) to add and incorporate
therein the descriptions of the Operating Leases, Material Leases and other
Leases affecting each of the New Properties that are more fully described on
Schedule 11 attached to this Agreement.

 

4. Addition to Article IX of the Existing Loan Agreement. Article IX of the
Existing Loan Agreement is hereby amended by adding the following new
Section 9.15:

 

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“Section 9.15. Letter Agreement. The occurrence of a Default, Event of Default,
or any other failure to comply with the terms or conditions of the Letter
Agreement on the part of any Sunstone Party (as defined therein).”

 

5. Replacement of Certain Attachments to Existing Loan Agreement. The following
exhibits and schedules attached to the Existing Loan Agreement are hereby
deleted in their entirety and replaced by the substitute exhibits and schedules
which are attached to this Agreement:

 

  a. Exhibit B-1 (Form of Fixed Note).

 

  b. Exhibit D (Organizational Chart Of Borrower).

 

  c. Exhibit E (Allocated Loan Amounts And Percentages).

 

  d. Schedule 13 (Entities Filing Consolidated Tax Returns).

 

6. Payment in Full of Floating Loans; No Reborrowing.

 

a. Contemporaneously with the execution and delivery of this Agreement, the
Borrowers have repaid in full the entire outstanding principal amount of the
Floating Loans, together with all accrued interest thereon and any and all other
amounts due and payable in connection therewith. The Lenders hereby consent to
such prepayment.

 

b. The Borrowers acknowledge and agree that they shall have no further right to
reborrow any portion of the Floating Loans on or after the date hereof.

 

c. Any references in the Loan Agreement or any of the other Loan Documents to
Floating Notes or Floating Loans, and to the obligations of the Lenders to make
Floating Loans or advance proceeds thereof from time to time, are hereby deleted
and rendered of no further force or effect.

 

7. Interest Rate Cap Agreement. The Borrowers are hereby relieved of their
obligation to purchase or maintain an Interest Rate Cap Agreement. Any
references in the Loan Agreement or any of the other Loan Documents to an
Interest Rate Cap Agreement or a Replacement Interest Rate Cap Agreement, or of
the obligations of the Borrowers to purchase or maintain any such agreements,
are hereby deleted and rendered of no further force or effect.

 

8. Operating Accounts. Section 5.7(1) of the Loan Agreement is hereby deleted in
its entirety and the following is substituted in lieu thereof:

 

  (1) Operating Accounts.

 

(a) For each Individual Property other than the Individual Property located in
Atlanta, Georgia, each Borrower shall establish and maintain (or cause the
Manager or applicable Operator to establish and maintain) a segregated
Depository Account into which such Borrower shall deposit (or shall cause to be
deposited) on a daily basis all Operating Revenue from the applicable Individual
Property (the

 

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“Operating Account”). All Operating Revenues shall be billed and collected in
the name of the applicable Borrower, Operator or Manager or its or their
respective names which are trademarks and in no other names.

 

(b) For the Individual Property located in Atlanta, Georgia, each Borrower
shall, in accordance with all of the terms and provisions of the Management
Agreement affecting such Individual Property:

 

(i) cause the Manager of such Individual Property to collect all Operating
Revenue from such Individual Property and to deposit all such Operating Revenue
on a daily basis into an account maintained by such Manager as required by the
terms of such Management Agreement,

 

(ii) cause the Manager of such Individual Property, not less frequently than 13
times per year, to transfer all Owner’s Priority and net Operating Profit (as
such terms are defined in the Management Agreement) from the operation of such
Individual Property to an Operating Account or to a Concentration Account, and

 

(iii) not later than the date hereof, obtain the written agreement of the
Manager of such Individual Property that it shall transfer the funds described
in subsection (ii) above only to such Operating Account or Concentration
Account, as applicable, and that such Manager shall not redirect such funds to
any other account or to any other payee without obtaining the prior written
consent of the Agent on behalf of the Lenders.

 

9. Reserves; Certain Work. Each of the Borrowers acknowledges and agrees that
the funds currently on deposit in each of the Reserves is a fair and reasonable
estimate of the costs and expenses like to be associated with the New Properties
as collateral accepted in substitution for the Released Properties. Accordingly,
and notwithstanding any other term or provision to the contrary that may be
contained in the Loan Agreement or in any other Loan Document, each of the
Borrowers (a) acknowledges and agrees that the Agent shall not be required to
release or return to the Borrowers any portion of the funds currently held or
maintained in any of the Reserves to the Borrowers as a result of the release of
the Released Properties, even if all or a portion of such funds may have been
deposited into such Reserves in connection with the Borrowers’ ownership and/or
leasing of the Released Properties, (b) authorizes and directs the Agent to
continue to hold and maintain all of such funds in all of such Reserves on and
after the date hereof in accordance with the terms and provisions of the Loan
Agreement, and (c) agrees that such funds shall be applied to costs and expenses
for the work described set forth on the PIP Budget for the New Property
ground-leased by Sunstone Hartsfield, as set forth on Annex D attached hereto,
which the Borrowers covenant and agree to complete on or before December 31,
2006.

 

10. Notices. For purposes of Section 11.1 of the Existing Loan Agreement, the
addresses of the New Borrowers are set forth on the signature pages of such New
Borrowers attached to this Agreement.

 

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11. No Other Modifications. The parties hereto hereby acknowledge and agree
that, except as provided in this Agreement, the Loan Agreement has not been
modified, amended, canceled, terminated, released, superseded or otherwise
rendered of no force or effect.

 

12. Confirmation and Ratification. The Loan Agreement as hereby amended is
hereby ratified and confirmed by all of the parties hereto, and every provision,
covenant, condition, obligation, right, term and power contained in and under
the Loan Agreement, as hereby amended, shall continue in full force and effect.

 

13. Governing Law; Incorporation by Reference. This Agreement and the
obligations arising hereunder shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts. Additionally, the terms and
provisions of Section 11.19 of the Existing Loan Agreement are hereby
incorporated by reference as if fully set forth herein.

 

14. Borrower; Joint and Several Liability; Suretyship Waivers. It is intended by
the parties hereto that each Borrower shall be liable, jointly and severally,
for all of the obligations of the Borrowers hereunder and under the Loan
Agreement. Accordingly, each of Sunstone SH, Sunstone OP, Sun Manhattan,
Sunstone Hartsfield, and Sunstone Broadhollow expressly agrees and acknowledges
with each Lender and the Administrative Agent that:

 

a. It understands that the Lenders would not have made the Loans or entered into
this Agreement but for the agreement of each Borrower to be jointly and
severally liable for each and every obligation of the Borrowers set forth herein
and in the Loan Agreement, and it agrees that it has received sufficient
consideration for its agreement to be bound by and to the extent of the terms
hereof. In particular, each Borrower is of the view that the financial
accommodations offered to each Borrower under this Agreement and the Loan
Agreement will enhance the aggregate borrowing powers of the Borrowers, and that
each Borrower and Borrower Party will receive substantial direct and/or indirect
benefits by reason of the making of the Loans and other financial accommodations
provided in the Loan Agreement, and by reason of the execution and delivery of
this Agreement.

 

b. In any provision of this Agreement or the Loan Agreement where any Borrower
makes a representation or warranty, such representation or warranty shall
constitute a separate representation or warranty made by each Borrower as to the
content and substance thereof.

 

c. In any provision of this Agreement or the Loan Agreement where any Borrower
makes an agreement or covenant, such agreement or covenant shall be a separate
agreement or covenant of each Borrower, and each such entity shall be jointly
and severally liable with each other such entity for the full and faithful
performance thereof, without regard to whether (i) any Borrower shall have
better rights to control or assure the performance of such agreement or covenant
or (ii) such agreement or covenant affects an Individual Property in which any
Borrower does not have a direct interest.

 

d. An Event of Default may occur under the Loan Agreement and the Administrative
Agent and Lenders shall be permitted to exercise their remedies as stated

 

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in the Loan Agreement if any Borrower by its action or inaction causes an Event
of Default to occur, and the lack of fault or breach by any other Borrower shall
neither serve nor be deemed to halt such Event of Default nor prevent, delay or
impair any such exercise of remedies.

 

e. In exercising any remedies set forth in the Loan Agreement after an Event of
Default, the Administrative Agent and Lenders shall be permitted to exercise
their remedies as stated in the Loan Agreement against any or all of the
Borrowers, or none of them, as the Administrative Agent and Lenders shall
determine in their sole and absolute discretion, and any lack of fault or lack
of breach by any Borrower shall not prevent, delay or impair the pursuit or
implementation of any such remedies against them.

 

f. The obligations, covenants, agreements and duties of each Borrower under the
Loan Documents shall in no way be discharged, affected or impaired by any of the
following:

 

i. the waiver by Administrative Agent of the performance or observance by
Borrower or any other party of any of the agreements, covenants, terms or
conditions contained in the Loan Agreement;

 

ii. the extension, in whole or in part, of the time for payment by any Borrower
of any sums owing or payable under any Loan Document;

 

iii. any assumption by any person of any or all of any Borrower’s obligations
under any Loan Document;

 

iv. the waiver or release or modification or amendment (whether material or
otherwise) of any provision of any Loan Document;

 

v. any failure, omission or delay on the part of Administrative Agent to
enforce, assert or exercise any right, power or remedy conferred on or available
to Administrative Agent under any of the Loan Documents, or any action on the
part of Administrative Agent granting indulgence or extension in any form
whatsoever;

 

vi. the voluntary or involuntary liquidation, dissolution, sale of all or
substantially all of the assets, marshaling of assets and liabilities,
receivership, conservatorship, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization or other similar proceeding affecting any
Borrower or any of its assets or any impairment, modification, release or
limitation of liability of any Borrower or any of their estates in bankruptcy or
of any remedy for the enforcement of such liability resulting from the operation
of any present or future provision of the Federal Bankruptcy Code or other
similar statute or from the decision of any court;

 

vii. the release of any Borrower from the performance or observance of any of
the agreements, covenants, terms or conditions contained in any of the Loan
Documents by operation of law;

 

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viii. the power or authority or lack thereof of any Borrower to execute,
acknowledge or deliver any of the Loan Documents;

 

ix. the legality, validity or invalidity of any Loan Document;

 

x. any defenses whatsoever that Borrower may or might have to the payment of any
portion of the Indebtedness except for the payment thereof;

 

xi. the existence or non-existence of any Borrower as a legal entity;

 

xii. any right of setoff, counterclaim or defense (other than payment in full of
the Indebtedness in accordance with the terms of the Loan Documents) that any
Borrower may or might have to its respective undertakings, liabilities and
obligations hereunder, each and every such defense being hereby waived by each
Borrower; or

 

xiii. any other cause, whether similar or dissimilar to any of the foregoing,
that might constitute a legal or equitable discharge of any Borrower (whether or
not such Borrower shall have knowledge or notice thereof) other than payment in
full of the Indebtedness.

 

g. To the extent notwithstanding the above and the express intent of the
parties, if any Borrower is deemed to be a surety or guarantor of another
Borrower, then the following shall apply:

 

i. Each Borrower understands and further acknowledges that if the Administrative
Agent forecloses judicially or nonjudicially against any real property securing
the Loans, that foreclosure could impair or destroy any ability that such
Borrower may have to seek reimbursement, contribution or indemnification from
another Borrower or others based on any right such Borrower may have of
subrogation, reimbursement, contribution or indemnification for any amounts paid
by such Borrower hereunder. Each Borrower further understands and acknowledges
that in the absence of this provision, the potential impairment or destruction
of such Borrower’s rights, if any, may entitle such Borrower to assert a defense
based on California Code of Civil Procedure (“CCP”) § 580d as interpreted in
Union Bank v. Gradsky, to the extent applicable. Each Borrower freely,
irrevocably and unconditionally: (a) waives and relinquishes that defense, and
agrees that such Borrower will be fully liable hereunder, even though the
Administrative Agent may foreclose judicially or nonjudicially against the real
property securing the Loans; (b) agrees that such Borrower will not assert that
defense in any action or proceeding that the Administrative Agent may commence
to enforce the terms of the Loan Documents; (c) acknowledges and agrees that the
rights and defenses waived by such Borrower hereunder include any right or
defense that such Borrower may have or be entitled to assert based upon or
arising out of any one or more of the following (to the extent applicable):
(i) CCP § 580a (which, if such Borrower had not given this waiver, would
otherwise limit such Borrower’s liability after any nonjudicial foreclosure sale
to the difference between the obligations for which such Borrower is liable and
the fair market value of the property or interests sold at such nonjudicial
foreclosure sale rather than the actual proceeds of such sale), (ii) CCP § 580b

 

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and CCP § 580d (which, if such Borrower had not given this waiver, would
otherwise limit the Administrative Agent’s right to recover a deficiency
judgment with respect to purchase money obligations and after any nonjudicial
foreclosure sale, respectively), (iii) CCP § 726 (which, if such Borrower had
not given this waiver, among other things, would otherwise require the
Administrative Agent to exhaust all of its security before a personal judgment
may be obtained for a deficiency), or (iv) California Civil Code § 2848 (which,
if Borrower had not given this waiver, among other things, would entitle
Borrower to enforce every remedy the Administrative Agent may have against the
Borrower for its payments hereunder); and (d) acknowledges and agrees that the
Administrative Agent is relying on this waiver in making the Loans, and that
this waiver is a material part of the consideration that the Administrative
Agent is receiving for making the Loans.

 

h. WITHOUT LIMITING THE FOREGOING, EACH BORROWER WAIVES ALL RIGHTS AND DEFENSES
THAT SUCH BORROWER MAY HAVE IN CONNECTION WITH THE FOREGOING TERMS. THIS MEANS,
AMONG OTHER THINGS:

 

i. THE ADMINISTRATIVE AGENT MAY COLLECT FROM SUCH BORROWER WITHOUT FIRST
FORECLOSING ON ANY REAL OR PERSONAL PROPERTY COLLATERAL PLEDGED BY THE BORROWER
OR ANY OTHER BORROWER; AND

 

ii. IF THE ADMINISTRATIVE AGENT FORECLOSES ON ANY REAL PROPERTY COLLATERAL
PLEDGED BY THE BORROWER OR ANY OTHER BORROWER:

 

a. THE AMOUNT OF THE ADMINISTRATIVE AGENT’S CLAIM HEREUNDER MAY BE REDUCED ONLY
BY THE PRICE FOR WHICH THAT COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN IF
THE COLLATERAL IS WORTH MORE THAN THE SALE PRICE; AND

 

b. THE ADMINISTRATIVE AGENT MAY COLLECT FROM SUCH BORROWER EVEN IF THE
ADMINISTRATIVE AGENT, BY FORECLOSING ON THE REAL PROPERTY COLLATERAL, HAS
DESTROYED ANY RIGHT SUCH BORROWER MAY HAVE TO COLLECT FROM ANY OTHER BORROWER.

 

i. THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND DEFENSES
THE BORROWERS MAY HAVE IN CONNECTION WITH THE LOANS. THESE RIGHTS AND DEFENSES
INCLUDE, BUT ARE NOT LIMITED TO, ANY RIGHTS OR DEFENSES BASED UPON CCP §§ 580a,
580b, 580d, OR 726 (TO THE EXTENT APPLICABLE).

 

15. No Waiver of Remedies. Subject to the terms and agreements contained in this
Agreement, the Loan Agreement remains unmodified and in full force and effect,
and this

 

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Agreement shall not be deemed to be a waiver by the Administrative Agent or any
Lender of any default or Event of Default under the Loan Agreement or a waiver
by the Administrative Agent or any Lender any of its rights or remedies under
the under the Loan Agreement or any Loan Document or under applicable law.

 

16. Amendment of Section 2.7 of Loan Agreement. The second sentence of
Section 2.7(2)(viii) of the Loan Agreement is hereby deleted, and the following
is substituted in lieu thereof:

 

If the outstanding principal balance of the Loans following such prepayment is
less than $30,000,000 or if there are four or fewer Individual Properties then
owned by the Borrowers and encumbered by the Mortgages securing the Loans, the
Administrative Agent (on behalf of the Lenders) may, in its sole and absolute
discretion, accelerate the Loans and require the Borrowers to repay the Loans in
full, together with all applicable Prepayment Fees as a condition to the release
of the Mortgage encumbering the Release Property being sold by any Borrower.
Furthermore, if the Administrative Agent (on behalf of the Lenders) elect not to
accelerate the Loans in accordance with the preceding sentence and if one of
such remaining Individual Properties is the Individual Property located in
Huntington, New York, the Administrative Agent shall have the right to (and, at
the request of any Lender, shall) reallocate the Allocated Loan Amounts among
such remaining Individual Properties, and the Borrowers and Administrative Agent
agree to execute any amendments, agreements and any other documents reasonably
necessary or appropriate to effect such reallocation.

 

[NO FURTHER TEXT ON THIS PAGE]

 

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EXECUTED as an instrument under seal as of the date first written above.

 

LENDER: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By:

 

Babson Capital Management LLC

Its Authorized Agent

     

By:

 

/s/ Richard M. McKeever

Name:

 

Richard M. McKeever

Title:

 

Managing Director

 

[Signatures continue on the following page]

 

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LENDER: GENERAL ELECTRIC CAPITAL CORPORATION

By:

 

/s/ Maria Pugh

   

Name:

 

Maria Pugh

   

Title:

 

Operations Manager

 

[Signatures continue on the following page]

 

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LENDER: HARTFORD ACCIDENT AND INDEMNITY COMPANY

By:

 

Hartford Investment Services, Inc.

Its Agent and Attorney-in-Fact

             

By:

 

/s/ Steven Kalmin

   

Name:

 

Steven Kalmin

   

Title:

 

Vice President

 

[Signatures continue on the following page]

 

S-16

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EXISTING BORROWERS: SUNSTONE SH HOTELS L.L.C.

By:

 

/s/ Jon Kline

   

Jon Kline

   

Vice President

SUNSTONE OP PROPERTIES L.L.C.

By:

 

/s/ Jon Kline

   

Jon Kline

   

Vice President

 

[Signatures continue on the following page]

 

S-17

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NEW BORROWERS: SUN MANHATTAN, LLC

By:

 

/s/ Jon Kline

   

Jon Kline

   

Vice President

SUNSTONE HARTSFIELD, LLC

By:

 

/s/ Jon Kline

   

Jon Kline

   

Vice President

SUNSTONE BROADHOLLOW, LLC

By:

 

/s/ Jon Kline

   

Jon Kline

   

Vice President

Principal place of business and chief executive office

for all of the foregoing:

903 Calle Amanecer, Suite 100

San Clemente, CA 92673

Address for notices for all of the foregoing:

c/o Sunstone Hotel Partnership, LLC

903 Calle Amanecer, Suite 100

San Clemente, CA 92673

 

[Signatures continue on the following page]

 

S-18

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ADMINISTRATIVE AGENT: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By:

 

Babson Capital Management LLC

Its Authorized Agent

     

By:

 

/s/ Richard M. McKeever

Name:

 

Richard M. McKeever

Title:

 

Managing Director

 

[Signatures continue on the following page]

 

S-19

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CONSENTED AND AGREED TO:

SHP OGDEN LLC

By:

 

/s/ Jon Kline

   

Jon Kline

   

Vice President

 

S-20