Exhibit 10.1

 

Execution Copy

 

 

 

 

LOAN AGREEMENT

 

Dated as of October 7, 2011

 

among

 

TIMES SQUARE HOTEL OWNER, LLC,
as Borrower,

 

TIMES SQUARE HOTEL OPERATING LESSEE, LLC,

as Operating Lessee,

 

EUROHYPO AG, NEW YORK BRANCH,
as Agent for the Lenders,

 

EUROHYPO AG, NEW YORK BRANCH,
as Lender,

 

AAREAL CAPITAL CORPORATION,

as Lender

 

and

 

EUROHYPO AG, NEW YORK BRANCH,
and
AAREAL CAPITAL CORPORATION,

 

as Joint Lead Arrangers

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

DEFINITIONS

1

Section 1.1

Definitions

1

Section 1.2

Other Definitional Provisions

31

 

 

 

ARTICLE II

THE LOAN

32

Section 2.1

The Loan; Use of Funds; Several Obligations

32

Section 2.2

Interest

32

Section 2.3

Determination of Applicable Interest Rate

33

Section 2.4

Principal Payments

35

Section 2.5

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

37

Section 2.6

Usury

39

Section 2.7

Interest Rate Protection Agreement

39

Section 2.8

Breakage

44

Section 2.9

“Additional Interest” under Lender Interest Rate Protection Agreements

45

Section 2.10

No Withholdings

45

Section 2.11

Unavailability; Illegality of LIBOR

46

Section 2.12

Increased Costs and Capital Adequacy

47

Section 2.13

Obligation to Mitigate

50

Section 2.14

Fees

50

 

 

 

ARTICLE III

ACCOUNTS; RESERVES; LETTERS OF CREDIT

50

Section 3.1

Cash Management

50

Section 3.2

Additional Cash Collateral Account; Cash Sweep Letter of Credit

51

Section 3.3

Tenant Security Account

52

Section 3.4

Capital/FF&E Reserve Account/Funding the Capital/FF&E Reserve Account

54

Section 3.5

Security Interest in Accounts

55

Section 3.6

Letters of Credit

55

Section 3.7

Real Estate Tax and Insurance Reserve Fund

57

 

 

 

ARTICLE IV

CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS LOAN AGREEMENT

58

 

 

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

62

Section 5.1

Due Organization

63

Section 5.2

Due Execution

63

Section 5.3

Enforceability

63

Section 5.4

No Violation

63

Section 5.5

No Litigation

63

Section 5.6

No Default or Event of Default

63

 

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Section 5.7

Offsets, Defenses, Etc

64

Section 5.8

Consents

64

Section 5.9

Financial Statements and Other Information

64

Section 5.10

Full Disclosure

64

Section 5.11

Accounts

64

Section 5.12

Indebtedness

64

Section 5.13

Insurance Policies

65

Section 5.14

Availability of Utilities and Access

65

Section 5.15

No Liens

65

Section 5.16

Compliance with Legal Requirements

65

Section 5.17

Certain Agreements

65

Section 5.18

Security Documents

66

Section 5.19

Casualty and Taking

66

Section 5.20

Brokerage

66

Section 5.21

Encroachments

67

Section 5.22

Foreign Person

67

Section 5.23

Control Person

67

Section 5.24

Government Regulation

67

Section 5.25

ERISA

67

Section 5.26

Labor Relations

67

Section 5.27

Name; Principal Place of Business

68

Section 5.28

Intellectual Property

68

Section 5.29

Flood Zone

68

Section 5.30

Taxes

68

Section 5.31

Title

68

Section 5.32

Creditworthiness

69

Section 5.33

Patriot Act

69

Section 5.34

Leases

69

Section 5.35

Special Purpose Entity

70

Section 5.36

Ground Leases; Recording; Modification

70

Section 5.37

Operating Lease

71

Section 5.38

Own Behalf; For Own Account

71

 

 

 

ARTICLE VI

GENERAL AND OPERATIONAL COVENANTS

72

Section 6.1

Financial Statements, Reports and Documents of Loan Parties

72

Section 6.2

Marketing, Management, Franchise, Maintenance and Repairs

79

Section 6.3

Inspection of Premises and Books and Records

81

Section 6.4

Compliance with Legal, Insurance and Contractual Requirements

82

Section 6.5

Appraisals

83

Section 6.6

Payment of Impositions

84

Section 6.7

Liens and Encumbrances; Ownership of Collateral

84

Section 6.8

Permitted Contests

84

Section 6.9

Alterations

85

Section 6.10

Leases

87

Section 6.11

Required Insurance

90

Section 6.12

Damage or Destruction

93

 

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Section 6.13

Taking of the Mortgaged Property

97

Section 6.14

Costs and Expenses

99

Section 6.15

Transfers

100

Section 6.16

Defense of Title

103

Section 6.17

Recordation and Certain Taxes

103

Section 6.18

Name, Fiscal Year and Accounting Method

104

Section 6.19

Consolidation, Merger, Conveyance, Transfer or Lease

104

Section 6.20

Organization Restrictions

104

Section 6.21

Changes in Zoning

104

Section 6.22

Distributions, Dividends and Affiliate Payments

104

Section 6.23

ERISA

105

Section 6.24

Maintenance of Existence

105

Section 6.25

Subsidiaries and Joint Ventures

105

Section 6.26

Patriot Act

105

Section 6.27

Utilities

105

Section 6.28

Margin Stock

106

Section 6.29

Compliance with Anti-Money Laundering and OFAC Laws

106

Section 6.30

Limitation on Indebtedness

107

Section 6.31

Loans to Members, Etc

107

Section 6.32

Transactions with Affiliates

107

Section 6.33

Debt Service Coverage Ratio

107

Section 6.34

Required Repairs

107

Section 6.35

Ground Leases

108

Section 6.36

Operating Leases

112

Section 6.37

Hotel Rebranding and Renovation

113

Section 6.38

Post-Closing Deliverables

114

 

 

 

ARTICLE VII

EVENTS OF DEFAULT

114

Section 7.1

Events of Default

114

Section 7.2

Acceleration of Loan

117

Section 7.3

Agent’s Right to Perform; Protective Advances

118

Section 7.4

Assignment of Funds

119

Section 7.5

Accounts

119

Section 7.6

No Liability of Agent or Lenders

120

Section 7.7

Management Agreement and Hotel Franchise Agreement

120

Section 7.8

Right of Offset

121

Section 7.9

Termination of Loan Agreement

121

 

 

 

ARTICLE VIII

ASSIGNMENTS AND PARTICIPATIONS

122

Section 8.1

Assignment and Participations

122

Section 8.2

Participation

125

Section 8.3

Availability of Records

125

Section 8.4

Loan Parties’ Facilitation of Transfer

126

Section 8.5

Notice; Registration Requirement

127

Section 8.6

Registry

128

Section 8.7

Lender Interest Rate Protection Agreements

128

Section 8.8

Disclosure by Agent or Lender

128

 

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ARTICLE IX

AGENT AND LENDERS

129

Section 9.1

Scope of Article IX

129

Section 9.2

Agent

129

Section 9.3

Distributions

130

Section 9.4

Authority, No Reliance; Binding Effect

131

Section 9.5

Loan

131

Section 9.6

Equitable Adjustments

134

Section 9.7

Other Transactions

134

Section 9.8

Obligations Absolute

135

Section 9.9

Indemnification

135

Section 9.10

Taxes

136

Section 9.11

Return of Payments

136

Section 9.12

No Partnership

136

Section 9.13

Resignation and Removal of Agent; Successor Agent

137

Section 9.14

Defaults by any Lender

138

Section 9.15

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

139

Section 9.16

Defaults; Enforcement Action Plan

139

 

 

 

ARTICLE X

GENERAL CONDITIONS

144

Section 10.1

Indemnity

144

Section 10.2

No Waivers

146

Section 10.3

Submission of Evidence

147

Section 10.4

Loan

147

Section 10.5

Contractors

147

Section 10.6

Entire Agreement

147

Section 10.7

Assignment

147

Section 10.8

Further Assurances; Filing of Financing Statements

147

Section 10.9

Cumulative Remedies

148

Section 10.10

Amendments, Consents, Waivers, Approvals, Etc

148

Section 10.11

Notices

148

Section 10.12

Limitation on Liability

151

Section 10.13

Binding Effect

151

Section 10.14

Severability of Provisions

151

Section 10.15

Governing Law and Consent to Jurisdiction

152

Section 10.16

Waiver of Jury Trial

152

Section 10.17

No Joint Venture

152

Section 10.18

Determinations and Consents of Agent and Lenders

152

Section 10.19

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

152

Section 10.20

Headings, Etc

153

Section 10.21

Incorporation by Reference

153

Section 10.22

Counterparts

153

Section 10.23

Attorneys’ Fees

153

Section 10.24

Employer Identification Number Etc

153

Section 10.25

Confidentiality

153

 

iv

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ARTICLE XI

SIGNAGE COLLATERAL RELEASE

154

Section 11.1

Signage Collateral Release

154

 

Exhibits and Schedules

 

Exhibit A:

The Land

Exhibit B:

Form of Note

Exhibit C:

Definition of Single Purpose Entity

Exhibit D:

Required Amortization Payments

Schedule 1.1

Example of Net Operating Income

Schedule 2.7(a):

Interest Rate Protection Agreement Acknowledgement

Schedule 5:

Exceptions to Representations and Warranties

Schedule 5.11:

Accounts

Schedule 5.17A:

Agreements Containing Option to Purchase or Right of First Refusal

Schedule 5.17B:

Material Operating Agreements

Schedule 5.17C:

Amendments to Certain Agreements

Schedule 5.26

Collective Bargaining Agreements

Schedule 6.11:

Insurance Requirements

Schedule 6.20

Organizational Chart

Schedule 6.34

Required Repairs

Schedule 6.38

Post-Closing Deliverables

Schedule 8.5:

Assignment and Acceptance

 

v

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LOAN AGREEMENT

 

This LOAN AGREEMENT (this “Loan Agreement”) dated as of October 7, 2011 by and
among TIMES SQUARE HOTEL OWNER, LLC, a Delaware limited liability company,
having offices at 120 Vantis, Suite 350, Aliso Viejo, California 92656
(“Borrower”), TIMES SQUARE HOTEL OPERATING 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 collectively as “Loan Parties”),
EUROHYPO AG, NEW YORK BRANCH, having offices at 1114 Avenue of the Americas, New
York, New York 10036, as agent for the Lenders (in its capacity as agent,
together with its permitted successors and assigns, “Agent”), as Joint Lead
Arranger and as “Lender”, AAREAL CAPITAL CORPORATION, a Delaware corporation,
having offices at 250 Park Avenue, Suite 820, New York, New York 10177, as Joint
Lead Arranger and as “Lender”, and the other lenders party to this Loan
Agreement from time to time (Eurohypo, Aareal and 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 fee and leasehold interest in certain
real property and (b) the improvements constructed thereon, which are
collectively known as “The Doubletree Guest Suites Times Square” located in New
York, New York, 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 December 28, 2006, as amended by that
certain First Amendment of Operating Lease Agreement dated September 16, 2009
(the “Operating Lease;”); and

 

WHEREAS, Borrower wishes to borrow $180,000,000.00 (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.

 

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“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.

 

“Account(s)” means, collectively, the Tenant Security Account (if any), the
Additional Cash Collateral Account, the Capital/FF&E Reserve Account, the Cap
Extension Fee Reserve Account, the Cash Management Account, the Casualty/Taking
Account, the Clearing Account, Debt Service Account, the Tax and Insurance
Reserve Account and the Operating Account.

 

“Additional Cash Collateral Account” has the meaning set forth in the Cash
Management Agreement.

 

“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.

 

“Additional Transfer” has the meaning set forth in Section 8.1(b).

 

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

 

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

 

(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 trailing twelve (12)
month period ending on the Testing Determination Date to (ii) the Adjusted Debt
Service applicable to such twelve (12) month period.

 

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

 

“Advance Date” has the meaning set forth in Section 2.5(f).

 

2

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

 

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

 

(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.

 

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

 

“Agent Parties” has the meaning set forth in Section 6.1(l).

 

“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.

 

3

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“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 requirements of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, 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.

 

“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 senior unsecured debt obligations of which are rated at least “A”
by Standard & Poor’s or equivalent rating by Moody’s or 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.

 

“Authorized Agent Representative” means Annabelle Librojo, with a copy to
portfoliooperations-us@ehus.com, 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.

 

4

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“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 Code” means Title 11 of the United States Code, as in effect from
time to time.

 

“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 highest
of (i) the prime rate announced from time to time by Eurohypo, (ii) the Federal
Funds Rate plus one-half of one percent (0.50%) per annum, or (iii) the sum of
(X) the LIBOR Rate (for a three (3) month Interest Period) plus (Y) 2.86222%
(which is the difference between LIBOR, as of the Closing Date, and the prime
rate announced by Eurohypo, as of the Closing Date).  Each change in any
interest rate provided for herein based upon the Base Rate resulting from a
change in the Base Rate shall take effect at the time of such change in the Base
Rate.  For purposes of this definition, the LIBOR Rate referred to above shall
be the London Interbank Offered Rate for a three (3) month period, as determined
by Agent based on quotes or other information available to it, and shall not be
required to be determined strictly in accordance with the requirements of the
definition of “LIBOR Rate” and the notice and other provisions applicable
thereto as set forth herein, 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.

 

“Borrower Materials” has the meaning set forth in Section 6.1(l).

 

“Breakage Costs” has 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.

 

5

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“Cap Extension Fee” has the meaning set forth in Section 2.7(h).

 

“Cap Extension Fee Reserve Account” has the meaning set forth in the Cash
Management Agreement.

 

“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).

 

“Capital/FF&E Reserve Account” has the meaning set forth in the Cash Management
Agreement.

 

“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 November 1, 2011 will be four percent (4%) of FF&E Gross Revenues for
September, 2011.

 

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

 

“Cash Collateral Payment Amount” has the meaning assigned in the Cash Management
Agreement.

 

“Cash Management Account” has the meaning assigned in the Cash Management
Agreement.

 

“Cash Management Agreement” means that certain Cash Management and Security
Agreement among Borrower, Operating Lessee, Agent (on behalf of the Lenders),
and the Depository Bank, dated as of the Closing Date, as the same may be
modified, amended and/or supplemented and in effect from time to time.

 

“Cash Sweep Condition” shall exist:

 

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

 

with respect to each Testing Determination Date (i) from the thirtieth (30th)
day after the delivery of a 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 1.25:1.00 (the “Minimum DSCR”)
or (ii) if the 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 within such thirty (30) day period (y) made a
partial prepayment of the Loan in an amount such that, after giving effect
thereto as though such prepayment was made on the first

 

6

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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 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; 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 the Adjusted Debt Service Coverage Ratio shall be equal to or
greater than 1.35:1.00 for two (2) consecutive Testing Determination Dates. 
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 Compliance Statement then required to be delivered to Agent
pursuant to Section 6.1(c), if such 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
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 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/Taking Account” has the meaning assigned in the Cash Management
Agreement.

 

“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(a).

 

“Clearing Account” has the meaning assigned in the Cash Management Agreement.

 

“Clearing Account Agreement” means the Cash Management and Multi Party Lockbox
Operating Agreement among Borrower, Operating Lessee, Agent, and the Clearing
Bank pertaining to the Clearing Account, dated as of the Closing Date, as the
same may be modified, amended and/or supplemented and in effect from time to
time.

 

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“Clearing Bank” has the meaning assigned in the Cash Management Agreement.

 

“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.

 

“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 3.5 star hotels in the Borough of Manhattan, New York which are
comparable to the Premises in size, facilities, amenities, quality and nature.

 

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

 

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

 

“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 Guarantor nor the change in the identity of any officer of
Guarantor shall be deemed to constitute a change of Control.

 

“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

 

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(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.  All of such
calculations shall be subject to the reasonable approval of Agent.

 

“Debt Service Account” has the meaning assigned in the Cash Management Account.

 

“Debt Service Coverage Ratio” means as of any Testing Determination Date, the
ratio of (i) the Net Operating Income for the trailing twelve (12) month period
ending on the Testing Determination Date to (ii) (A) during the period from the
Closing Date to the date which is two (2) years after the Closing Date, 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)
and (B) thereafter, the greater of (1) the Debt Service as of the applicable
Testing Determination Date and (2) the product of (I) the outstanding principal
amount of the Loan as of the Testing Determination Date multiplied by (II) six
percent (6%).  The Debt Service Coverage Ratio shall be as determined by Agent
based upon the most recent Compliance Statements required to have been submitted
(or, if no such reports have been so submitted, such other information as Agent
shall determine in its sole and absolute discretion), which determination shall
be conclusive in the absence of manifest error.

 

“Debt Yield” means the ratio expressed as a percentage of (a) Net Operating
Income for the applicable period to (b) the outstanding principal amount of the
Loan as of the date of determination.  The Debt Yield shall be as determined by
Agent, and based upon the most recent reports submitted by Loan Parties pursuant
to Section 6.1 or more recent monthly information submitted by Loan Parties (or,
if the most recent report or more recent monthly information has not been
submitted pursuant to such section or otherwise, based on such other information
as Agent shall determine in its reasonable discretion), which determination
shall be conclusive in the absence of manifest error.

 

“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 Cash Deposit” means a cash deposit 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.  At Borrower’s election, the Default DSCR Cash Deposit may
be applied to the Obligations without any Prepayment Fee.

 

“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)

 

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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 a rate per annum equal to five percent (5%) plus the Base
Rate as in effect from time to time; provided, however, that in no event shall
the Default Rate exceed the maximum rate allowed by applicable law.

 

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

 

“Disclosure Documents” has the meaning set forth in Section 8.4(a).

 

“Depository Bank” means at any time Agent (or its designee) or any other
depository bank approved by Agent which is party to the Cash Management
Agreement.  If required by Agent, Agent shall be the Depository Bank under the
Cash Management Agreement.

 

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

 

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

 

“Eligibility Requirements” means, with respect to any Person in connection with
a Pfandbrief Transfer, 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 Guarantor:

 

(a)                                  a Lender;

 

(b)                                 Agent;

 

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

 

(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

 

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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;

 

(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;

 

(h)                                 a nationally recognized investment banking
company or other financial institution in the business of making loans, or an
Affiliate thereof (other than any Person which is directly or indirectly a Loan
Party or directly or indirectly an Affiliate of a Loan Party) 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 and having (1) total assets of at
least $2,500,000,000 and (2) a net worth of at least $500,000,000; provided,
however, that as long as no Event of Default exists, Borrower’s consent shall be
required (which consent shall not be unreasonably withheld, conditioned or
delayed) for any such nationally recognized investment banking company or other
financial institution (including, without limitation, any private equity fund)
that has previously made a direct or indirect debt or equity investment in the
Premises or is in the business of owning and operating hotels;

 

(i)                                     any Person (other than a natural person)
that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender; or

 

(j)                                     (1) any other Person into which, or with
which, Eurohypo is merged, consolidated or reorganized, or which is otherwise a
successor to Eurohypo by operation of law, or which acquires all or
substantially all of the assets of Eurohypo; (2) any other Person which is a
successor to the business operations of Eurohypo and engages in substantially
the same activities; or (3) any Affiliate of the Persons described in clauses
(2) and (3) of this definition.

 

“Enforcement Action Plan” has the meaning set forth in Section 9.16(f).

 

“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.

 

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“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
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.

 

“Eurohypo” means Eurohypo AG, New York Branch, 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.

 

“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 New York and
any political subdivision thereof, it being agreed that income taxes payable by
any Lender in the State of New York 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

 

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office) and (c) Taxes imposed by reason of the failure of 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).

 

“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.

 

“FF&E” has the meaning set forth in the Mortgage.

 

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

 

“Franchisor Warning Notice” means the receipt by Agent of written notice from a
franchisor under a Franchise Agreement that the Premises is not being maintained
in accordance with the requirements of such Franchise Agreement (which condition
could, after expiration of all applicable notice and cure periods, result in a
default under the Franchise Agreement) or that a default by the franchisee
otherwise exists under the terms of such Franchise Agreement.

 

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

 

“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.

 

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“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), including, but not limited
to, revenues from the rental of guest rooms, whether to individuals, groups or
transients; revenues from the sale of food and beverages, whether from
restaurants, room service, catering or otherwise; revenues from vending
machines, honor bar, movie rental, telephone, concessions and similar services;
revenues from fitness centers, recreational and other facilities and equipment
rentals related to any of the foregoing; revenues from business centers,
internet kiosks, fax stations and similar services; revenues from parking and
guest transportation services or facilities; revenues from retail sales; rents
and other revenues (including any common area maintenance revenues and other
items denominated as additional rent) received from tenants, lessees, licensees
or concessionaires (but not including their gross receipts); concession fees and
charges and other miscellaneous operating revenues, proceeds from rental or
business interruption insurance; and withdrawals from cash reserves (except to
the extent any operating expenses paid therewith are excluded from Operating
Expenses);

 

excluding, without duplication, for the purpose of determining the Cash
Collateral Payment Amount on the date such amount is due, 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; and

 

excluding, without duplication, for the purpose of determining Net Operating
Income 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); (e) unapplied Security Deposits, (f)
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; (g) any
gain arising from any write-up of assets or other non-cash items; (h) proceeds
from the sale of FF&E and all other non-recurring extraordinary items of income;
(i) Rent payable under any Lease with a Lessee which is the subject of a
Bankruptcy Proceeding at any time during the applicable period unless such Lease
shall have been affirmed; (j) Rent payable under any Lease where there exists at
any time during the applicable period a rent default and such rent default has
continued for a period in excess of sixty (60) days; (k) lease termination
payments; (l) interest income; (m) any refunds, rebates, discounts and credits
of a similar nature, given, paid or returned in the course of obtaining Gross
Revenues or components thereof; (n) proceeds of casualty insurance and
condemnation awards (other than business interruption or other loss of income
insurance related to business interruption or loss of income for the period in
question); and (o) any disbursements to Loan Parties from the Reserve Funds.

 

For purposes of calculating guest room revenues only, if on a trailing twelve
(12) month basis occupancy of the Premises exceeds 95% (or 159,505 room nights
(95% x 460 rooms x 365

 

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days)) on any Testing Determination Date, then actual guest room revenues for
such 12-month period will be reduced by an amount (the “Room Revenue Reduction
Amount”) equal to the actual guest room revenues for such period minus the
product of the average daily rate for such period and 159,505; provided,
however, that if the number of guest rooms at the Premises shall change at any
time (to the extent permitted hereunder), Agent and Borrower shall agree upon a
new calculation of the Room Revenue Reduction Amount based on such revised guest
room number.  Schedule 1.1 sets forth, for purposes of an example only, a list
of items included as Gross Revenues.

 

“Ground Lease” or “Ground Leases” has the meaning set forth in the Mortgage.

 

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

 

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

 

“Guarantor” means, individually and collectively, Sunstone Hotel Partnership,
LLC, a Delaware limited liability company, or any other Person that now or
hereafter guarantees any of Loan Parties’ obligations under the Loan Documents.

 

“Highgate” means Highgate Hotels, Inc., a Texas corporation.

 

“Hotel Franchise Agreement” means that certain Amended and Restated Franchise
License Agreement, dated as of October 1, 2011, between Hotel Franchisor and
Operating Lessee, with such modifications, together with any replacement Hotel
Franchise Agreement entered into with another Hotel Franchisor, as shall be
entered into in accordance with the terms of this Loan Agreement.

 

“Hotel Franchisor” means (i) as of the date hereof, Doubletree Franchise LLC and
(ii) at any time after the date hereof, any other hotel franchisor of the
Premises that is hereafter approved in the reasonable discretion of Agent in
accordance with this Loan Agreement.

 

“Hotel Rebranding” has the meaning set forth in Section 6.37.

 

“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.

 

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“Improvements” has the meaning set forth in the Mortgage.

 

“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 Leases, the Hotel Franchise
Agreement and the Management Agreement, the policies of insurance required to be
maintained pursuant to Section 6.11.

 

“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.

 

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“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 Mortgage, but shall be limited to
commercial leases and licenses (including the Signage Licenses) entered into by
a Loan Party from time to time with a Lessee and shall specifically exclude the
Ground Leases 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 the Collateral or any part thereof,
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.

 

“Lender Interest Rate Protection Agreement” means any Interest Rate Protection
Agreement to which Borrower and Eurohypo or Aareal or any Affiliate of either of
them are parties in the event that Loan Parties and Eurohypo or Aareal or any
Affiliate of either of them 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.

 

“Lender Representatives” has the meaning set forth in Section 10.24.

 

“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 Leases and Operating Lessee as lessee under
the Operating Lease.

 

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“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 a Loan Party.

 

“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.  In no event, however, shall LIBOR be less than 0%.

 

“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 and New York City.

 

“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.

 

“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).  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

 

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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 Notes, the
Mortgage, 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, the
Clearing Account Agreement, the Cash Management Agreement, the Standstill and
Subordination Agreement, 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.

 

“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” means Pension Holding Corporation, a Delaware corporation,
the sole member of Borrower.

 

“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

 

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any Loan Portion shall be at least equal to $1,000,000 and in additional
incremental amounts of at least $100,000.

 

“Loan-to-Value Ratio” means 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.

 

“Management Agreement” means that certain Hotel Management Agreement, dated as
of December 28, 2006, as amended by First Amendment to Hotel Management
Agreement dated July 6, 2007, Second Amendment to Hotel Management Agreement
dated November 9, 2007, and Third Amendment to Hotel Management Agreement dated
January, 2008 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.

 

“Manager SNDA” means that certain Conditional Assignment and Subordination of
Management 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.

 

“Margin” means three and 25/100 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 or Guarantor 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 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; (iii) any work
to be performed under an Approved Capital/FF&E Expenditures Budget, (iv) any
work to be performed in connection with the Hotel Rebranding, or (v) any work to
be performed in connection with a modification of the building signage as more
particularly set forth in, and as required by, Section 6.10(a)(D).

 

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“Material Lease” means (i) all Leases which individually or in the aggregate
with respect to the same Lessee and its Affiliates (A) demise 5,000 square feet
or more of space in the Improvements or (B) with annual aggregate rentals
greater than $300,000 or (ii) any Lease which by its terms requires the
performance of a Material Alteration or (iii) any Lease entered into while an
Event of Default exists.

 

“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 October 7, 2018, 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.”

 

“Minimum Signage Release Prepayment Amount” has the meaning set forth in Section
11.1(a)(i).

 

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

 

“Mortgage” means that certain Consolidated, Amended and Restated Fee and
Leasehold and Subleasehold Mortgage, Security Agreement, Financing Statement,
Fixture Filing and Assignment of Rents dated as of the Closing Date made by Loan
Parties for the benefit of Agent.

 

“Mortgaged Property” has the meaning set forth in the Mortgage.

 

“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.  Schedule 1.1
sets forth, for purposes of an example only, a calculation of Net Operating
Income.

 

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“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” or “Notes” means each Splitter Note dated as of the date hereof executed
by Borrower and payable to the order of each Lender in the amount of each
Lender’s Commitment and collectively in the maximum principal amount of the
Loan, substantially in the form of Exhibit B as amended, modified, replaced,
restated, extended or renewed from time to time.

 

“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 Notes, 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 account number HSBC 048-76074-9 (Times Square Hotel
Oper Lessee LLC) with the Clearing Account Bank established pursuant to the
Operating Account Agreement.

 

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“Operating Account Agreement” means the Deposit Account Control Agreement
(Operating Account) Borrower, Operating Lessee, Agent, Manager and the Clearing
Bank pertaining to the Operating Account, dated as of the Closing Date, as the
same may be modified, amended and/or supplemented and in effect from time to
time.

 

“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 Leases, the
Operating Lease, any Management Agreement, the Hotel Franchise 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 clause (ii) of the definition of Applicable Accounting Standards,
including, (i) Ground Rent, (ii) management fees payable under the Management
Agreement, (iii) franchise fees payable under the Hotel Franchise Agreement,
(iv) annualized insurance premiums divided by the applicable period, (v)
annualized real estate taxes and assessments divided by the applicable period,
and (vi) except during the Hotel Rebranding, the Capital/FF&E Expenditures;

 

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 (including,
without limitation, Ground Lease 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.

 

For purposes of determining Operating Expenses in connection with the
determination of the Debt Service Coverage Ratio (but not for purposes of Loan
Parties’ obligations under the Loan Documents to use Gross Revenues to pay
certain costs), (1) management fees shall be deemed to be the greater of (y)
management fees actually paid during the applicable period and (z) an

 

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imputed rate of 3.00% of annualized Gross Revenues (excluding any signage
revenue) divided by the applicable period and (2) except during the Hotel
Rebranding, the Capital/FF&E Expenditures at an imputed rate of 4.00% of
annualized Gross Revenues divided by the applicable period.  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.  In the event that the occupancy of the Premises as of any
Testing Determination Date is above 95% on a trailing twelve (12) month basis,
Operating Expenses for such twelve (12) month period will be reduced by an
amount equal to 55% of such period’s Room Revenue Reduction Amount (as defined
in the definition of “Gross Revenues”)  .Schedule 1.1 sets three forth, for
purposes of an example only, a list of Operating Expenses.

 

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

 

“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.

 

“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.

 

“Payor” has the meaning set forth in Section 2.5(f).

 

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

 

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“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-II 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, and (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 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 7, 2013.

 

“Permitted Transfer” means

 

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

 

(b)                                 a Transfer, directly or indirectly, of any
interests in Borrower (other than the interest owned by the Loan Party Member)
provided that:

 

(i)                                     after giving effect to such Transfer (1)
Sunstone REIT shall directly or indirectly retain (beneficially and of record)
not less than fifty-one percent (51%) of the interests in (A) Borrower in the
aggregate and (B) Guarantor in the aggregate (subject to subsection (e) below),
(2) Sunstone REIT shall, directly or indirectly, continue to Control Borrower,
Operating Lessee and Guarantor (subject to subsection (e) below), (3) Sunstone
REIT shall directly or indirectly retain (beneficially and of record) one
hundred (100%) of the interests in the Operating Lessee, and (4) the
representation set forth in Section 5.33 of this Loan Agreement shall be true;
and

 

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

 

(c)                                  a Transfer and/or issuance of any publicly
traded shares in Sunstone REIT or a Transfer and/or issuance of any operating
partnerships units in Guarantor; provided that, after giving effect to such
Transfer, Sunstone REIT shall (1) directly or indirectly retain (beneficially
and of record) not less than fifty-one percent (51%) of the interests in (A)
Borrower in the aggregate and (B) Guarantor in the aggregate (subject to
subsection (e) below), (2) directly or indirectly, continue to Control Borrower,
Operating Lessee and Guarantor (subject to subsection (e) below), and (3)
directly or indirectly retain (beneficially and of record) one hundred (100%) of
the interests in the Operating Lessee;

 

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

 

(e)                                  a REIT Merger which is permitted pursuant
to, and in accordance with, Section 6.15(c), including obtaining the consent of
each Lender as required pursuant to Section 6.15(c); and

 

(f)                                    a Lease entered into in accordance with
the Loan Documents.

 

“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 Mortgage.

 

“Pfandbrief Transfer” has the meaning set forth in Section 8.1(b).

 

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

 

“Platform” has the meaning set forth in Section 6.1(l).

 

“Premises” has the meaning set forth in the Mortgage.

 

“Premises Documents” has the meaning set forth in the Mortgage.

 

“Prepayment Fee” has the meaning set forth in Section 2.4(d).  For the avoidance
of doubt, it is agreed that notwithstanding anything contained herein to the
contrary, no Prepayment Fee shall be payable in connection with any prepayment
made by Borrower in order to meet the Default DSCR or the Minimum DSCR, made
with funds drawn under the any Cash Sweep Letter of Credit or funded with
amounts drawn from the Additional Cash Collateral Account by Agent pursuant to
Section 3.2.

 

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“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, 1568 Broadway Hotel
Management LLC, a Delaware limited liability company, and (ii) at any time after
the date hereof, Highgate, an entity wholly owned and Controlled by Highgate or
a Qualified Manager.

 

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

 

“Public Lender” has the meaning set forth in Section 6.1(l).

 

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

 

“Qualified Carrier” has the meaning set forth in Section 6.11(h).

 

“Qualified Counterparty” means a financial institution which is reasonably
acceptable to Agent in its sole discretion and whose senior long term debt is
rated not less than “A” by Standard & Poor’s.

 

“Qualified Franchisor” means Marriott International, Inc., Hilton Worldwide,
Hyatt Hotels Corporate, Starwood Hotels & Resorts, Inc. or InterContinental
Hotels Group plc, in each case provided that such entity has not experienced a
significant reputational or financial downgrade after the Closing Date, as
reasonably determined by Agent or (ii) in the reasonable judgment of Agent, a
reputable and experienced franchisor unaffiliated with Loan Parties possessing
experience in flagging hotel properties similar in size, scope, sue and value to
the Premises reasonably acceptable to Agent.

 

“Qualified Manager” means, at the time such manager is appointed, (i) Marriott
International, Inc., Hilton Worldwide, Hyatt Hotels Corporate, Starwood Hotels &
Resorts, Inc. or InterContinental Hotels Group plc, in each case provided that
such entity has not experienced a significant reputational or financial
downgrade after the Closing Date, as reasonably determined by Agent or (ii) a
reputable and experienced management organization possessing experience (or
having principals possessing experience) of not less than ten (10) years
managing full service hotels which are similar in size, scope, class, use and
value to the Premises and is (or has principals currently) managing at least
five (5) full service hotels similar in size, scope, class, use and value to the
Premises reasonably acceptable to Agent.

 

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

 

“Reference Banks” means Eurohypo AG, 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.

 

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

 

“REIT Merger” has the meaning set forth in Section 6.15(c).

 

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

 

“Rents” has the meaning set forth in the Mortgage.

 

“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
commencing with the Payment Date in November, 2013, the amortization payment in
the amount set forth on Exhibit D attached hereto, required to be made pursuant
to Section 2.4(b); provided, that upon a Signage Release Prepayment, Exhibit D
shall be revised to reflect the new outstanding principal amount of the Loan
after giving effect to such Signage Release Prepayment, and shall be calculated
based on a hypothetical 30-year fully amortizing loan equal to such new
outstanding principal amount of the Loan with an interest rate equal to six
percent (6%) per annum.

 

“Required Payment” has the meaning set forth in Section 2.5(f).

 

“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.

 

“Reserve Funds” means, collectively, the Tax and Insurance Reserve Fund and the
Capital/FF&E Reserve Fund, and all other funds in the Accounts.

 

“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 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.

 

“RevPAR” means revenues per available room.

 

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“RevPAR Yield Index” means the percentage amount determined by dividing the
RevPAR of the Premises by the RevPAR of the Premises’ competitive set as
reported by Smith Travel Research or if Smith Travel Research is no longer
publishing, a successor reasonably acceptable to Agent.

 

“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).

 

“Securities Certification” has the meaning set forth in Section 8.4(a).

 

“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 Mortgage, the
Assignment of Agreements, the Assignment of Leases and Rents, the Clearing
Account Agreement, the Cash Management Agreement, the UCC Financing Statements
and any other Loan Document entered into to secure the Obligations.

 

“Security Trustee” has the meaning set forth in Section 8.1(b).

 

“Signage Collateral” has the meaning set forth in Section 11.1(a).

 

“Signage License” means all present and future leases, subleases, licenses,
permits, concessions or other agreements or arrangements, whether oral or
written, and all present and future agreements for the use or occupancy of all
or any portion of the exterior portion of the Improvements used for signage,
together with any and all extensions or renewals thereof.

 

“Signage Release Prepayment” has the meaning set forth in Section 11.1(a)(i).

 

“Signage Sale” has the meaning set forth in Section 11.1(a).

 

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

 

“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).

 

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“Standard & Poor’s” means Standard & Poor’s Rating Group.

 

“Successor REIT” has the meaning set forth in Section 6.15(c).

 

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

 

“Survey” means that certain survey prepared by Douglas R. Lehr, Registration No.
49223 of Lehr Land Surveyors, field work completed on September 14, 2011, plat
or map dated October 3, 2011, Computer #10-L-41A.

 

“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.

 

“Tax and Insurance Reserve Account” has the meaning assigned in the Cash
Management Agreement.

 

“Tax and Insurance Reserve Fund” has the meaning set forth in Section 3.7(a).

 

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

 

“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.

 

“Terrorism Insurance Cap” has the meaning set forth in Schedule 6.11(a)(i).

 

“Testing Determination Date” means the date which is the last day of the
Calendar Quarter.

 

“Title Company” means First American Title Insurance Company.

 

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

 

“Transferred Interest” has the meaning set forth in Section 8.1(b).

 

“Transferring Lender” has the meaning set forth in Section 8.1(b).

 

“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

 

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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, 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.

 

“TRIPRA” has the meaning set forth in Section 6.11(h).

 

“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 Notes 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.

 

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(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; Several
Obligations.  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
Notes.  Interest and Additional Interest, if any, shall be payable in accordance
with the Notes 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 Notes, the Mortgage and the other Loan Documents. 
Principal 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. 
The failure of any Lender to make any Loan to be made by it on the date
specified therefore shall not relieve any other Lender of its obligation to make
its Loan, but neither any Lender nor Agent shall be responsible for the failure
of any other Lender to make a Loan to be made by such other Lender.  For
avoidance of doubt, the Operating Lessee is not (nor shall be deemed to be) a
borrower hereunder, nor liable for the repayment of the Loan in any respect, and
joins this Agreement solely with respect to the representations, warranties and
covenants set forth herein which are applicable to the Operating Lessee.

 

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”).

 

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(b)                                 Interest Payments.

 

(i)                                     , Borrower shall pay Interest on the
unpaid outstanding principal amount of the Loan from the date hereof through and
including November 1, 2011.

 

(ii)                                  On December 1, 2011 (i.e., the second
Payment Date) 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.

 

(d)                                 Late Fee.  In addition to any sums due under
this Section 2.2, Borrower shall pay to Agent for the account of the Lenders a
late payment premium in the amount of four percent (4)% of any principal not
paid on the due date thereof (excluding any payment of principal due on the
Maturity Date), or of any interest and/or other sums due under the Loan
Documents not paid within five (5) days after the due date thereof, which late
payment premium shall be due with any such late payment or upon demand by
Agent.  Such late payment charge represents the reasonable estimate of Borrower
and the Lenders of a fair average compensation for the loss that may be
sustained by the Lenders due to the failure of Borrower to make timely
payments.  Such late charge shall be paid without prejudice to the right of
Agent and the Lenders to collect any other amounts provided herein or in the
other Loan Documents to be paid or to exercise any other rights or remedies
under the Loan Documents.

 

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 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).

 

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(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 three (3) 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,
three (3).  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 12:00 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.  Notwithstanding the
foregoing, and without limiting the rights and remedies of Agent and the Lenders
under Sections 7.2 through 7.9, inclusive, in the event that any Event of
Default exists, Agent may (and at the request of the Requisite Lenders shall)
for so long as such Event of Default exists, suspend the right of Borrower to
convert any Loan Portion into a LIBOR Rate Loan Portion, or to continue any Loan
Portion as a LIBOR Rate Loan Portion, in which event (x) all Loan Portions
subject to the LIBOR Rate shall be converted to the Base Rate on the last day(s)
of the respective LIBOR Rate Period therefor (and no such LIBOR Rate Loan
Portion shall be subject to earlier conversion) and (y) all Loan Portions
subject to the Base Rate shall be continued as Base Rate Loan Portions.  In
connection with any such conversion, on the last day(s) of the respective LIBOR
Rate Period therefor, a Lender may (at its sole and absolute discretion)
transfer a Loan Portion from one applicable lending office to another.

 

(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

 

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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 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.  Commencing on the
Payment Date in November, 2013 and on each Payment Date thereafter, 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 (other than a Signage Release Prepayment) 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 Additional 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 other than as permitted pursuant to Article XI or in connection
with any Debt Service Coverage Ratio cure effected hereunder.  From and after
the Permitted Prepayment Date, Borrower, upon three (3) Business Days’ prior
written notice to Agent, may prepay the Loan, in whole or in part in $1,000,000
increments, in accordance with this Section 2.4(d) and subject to the following
prepayment fees (the “Prepayment Fee”):

 

Prepayment Dates

 

Prepayment Fee

From and after the Permitted

 

1.50% of the principal amount of the

 

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Prepayment Dates

 

Prepayment Fee

Prepayment Date to the date immediately preceding the 24th Payment Date after
the Closing Date

 

Loan being prepaid

From the 24th Payment Date to the date immediately preceding the 36th Payment
Date after the Closing Date

 

1.20% of the principal amount of the Loan being prepaid

From the 36th Payment Date to the date immediately preceding the 48th Payment
Date after the Closing Date

 

0.9% of the principal amount of the Loan being prepaid

From the 48th Payment Date to the date immediately preceding the 60th Payment
Date after the Closing Date

 

0.7% of the principal amount of the Loan being prepaid

From the 60th Payment Date to the date immediately preceding the 72nd Payment
Date after the Closing Date

 

0.5% of the principal amount of the Loan being prepaid

From the 72nd Payment Date to the date immediately preceding the 83rd Payment
Date after the Closing Date

 

0.2% of the principal amount of the Loan being prepaid

Thereafter

 

None

 

Any such prepayment notice shall specify the date (which shall be a Payment
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 and any Lender 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 (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

 

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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 Notes, the Mortgage 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 83rd Payment 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 Commerzbank AG New York, ABA #
026008044, Account # 150-9409269-00USD, Account Name:  Eurohypo AG New York,
Reference:  Sunstone Doubletree Times Square, 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.

 

(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.

 

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(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 Notes, this Loan Agreement, the Mortgage or the other Loan
Documents in the manner set forth in the Notes.

 

(e)                                  No Set-offs.  All sums payable by Borrower
under the Notes, 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.

 

(f)                                    Non-Receipt of Funds Agent.  Unless Agent
shall have been notified by a Lender or Borrower (in either case, the “Payor”)
prior to the date on which the Payor is to make payment to Agent of (in the case
of a Lender) the proceeds of a Loan to be made by such Lender hereunder or (in
the case of Borrower) a payment to Agent for account of any Lender hereunder (in
either case, such payment being herein called the “Required Payment”), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to Agent, Agent may assume that the Required Payment has
been made and may, in reliance upon such assumption (but shall not be required
to), make the amount thereof available to the intended recipient(s) on such
date; and, if the Payor has not in fact made the Required Payment to Agent, the
recipient(s) of such payment shall, on demand, repay to Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date (the “Advance Date”) such amount was so made
available by Agent until the date Agent recovers such amount at a rate per annum
equal to (a) the Federal Funds Rate for such day in the case of payments
returned to Agent by any of the Lenders or (b) the applicable interest rate due
hereunder with respect to payments returned by Borrower to Agent and, if such
recipient(s) shall fail promptly to make such payment, Agent shall be entitled
to recover such amount, on demand, from the Payor, together with interest as
aforesaid; provided that if neither the recipient(s) nor the Payor shall return
or make, as the case may be, the Required Payment to Agent within three (3)
Business Days of the Advance Date, then,

 

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retroactively to the Advance Date, the Payor and the recipient(s) shall each be
obligated to pay interest on the Required Payment as follows:

 

(i)                                     if the Required Payment shall represent
a payment to be made by Borrower to the Lenders, Borrower and the recipient(s)
shall each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the Default Rate (without duplication of the
obligation of Borrower under Section 2.5 to pay interest on the Required Payment
at the Default Rate; it being understood that Borrower shall not be required to
pay more than the late fee pursuant to Section 2.2(d) and the Default Rate on
such payments), it being understood that the return by the recipient(s) of the
Required Payment to Agent shall not limit such obligation of Borrower under
Section 2.5 to pay interest at the Default Rate in respect of the Required
Payment, and

 

(ii)                                  if the Required Payment shall represent
proceeds of a Loan to be made by the Lenders to Borrower, the Payor and Borrower
shall each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment pursuant to whichever of the rates specified in
Section 2.2 is applicable to the type of such Loan, it being understood that the
return by Borrower of the Required Payment to Agent shall not limit any claim
Borrower may have against the Payor in respect of such Required Payment.

 

Section 2.6                                   Usury.  The Notes, this Loan
Agreement, the Mortgage, 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 Notes, this Loan Agreement, the Mortgage 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.

 

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 four percent (4%) per annum for a minimum term
of four (4) years in the notional amounts corresponding to the

 

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then applicable principal amount of the Loan as set forth in the Required
Amortization Payments attached hereto as Exhibit D,;

 

(ii)                                  The Interest Rate Protection Agreement
shall be entered into between Borrower and (x) a Qualified Counterparty or (y)
Eurohypo or Aareal or its respective Affiliate;

 

(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 Mortgage 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) and each supplemental Interest Rate Protection
Agreement thereafter described in this Section 2.7(b), Borrower shall enter into
an Interest Rate Protection Agreement with a one year term commencing
immediately after the expiration of the Interest Rate Protection Agreement
described in Section 2.7(a) or such supplemental Interest Rate Protection
Agreement in the notional amounts corresponding to the then applicable principal
amount of the Loan as set forth in the Required Amortization Payments attached
hereto as Exhibit D, the effect of which shall be to protect Borrower against,
at Borrower’s election, (i) 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 or six (6) months in excess of four percent (4%)
annum or (ii) the Adjusted Debt Service Coverage Ratio from falling below
1.40:1.00 based on the most recent Compliance Certificate required to have been
delivered pursuant to Section 6.1(c) or, at Borrower’s option, an updated
certificate delivered by the Loan Parties in accordance with the requirements of
Section 6.1(c), and in either case which otherwise satisfies the requirements of
Section 2.7(a) and shall thereafter maintain such Interest Rate Protection
Agreement in full force and effect throughout the term of such agreement.

 

(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)

 

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Business Days after Borrower’s receipt of notice from Agent, in addition to
Agent’s and 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) or 2.7(b), as
applicable.  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) or 2.7(b), as applicable 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 Notes 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) or 2.7(b), as applicable.

 

(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

 

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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 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 addition, upon the occurrence and continuation of an Event of Default, Agent
shall have the right (but not the obligation) to secure or otherwise enter into
one or more Interest Rate Protection Agreements with a Lender for and on behalf
of Borrower (but only to the extent that Borrower has failed to secure such
Interest Rate Protection Agreement(s) pursuant to Section 2.7(a)-(b), as
applicable, and for the same term) without such action constituting a cure of
such Event of Default and without waiving Agent’s or Lenders’ rights arising out
of or in connection with such Event of Default.  If Agent shall enter into an
Interest Rate Protection Agreement with a Lender in accordance with its right to
do so pursuant to this subsection (f), then (i) the terms and provisions of any
such Interest Rate Protection Agreement, including the term thereof, shall be
determined by Agent in its sole and absolute discretion and (ii) Borrower shall
pay all of Agent’s costs and expenses in connection therewith, including any
fees charged by the applicable counterparty, attorneys’ fees and disbursements,
and the cost of additional title insurance in an amount determined by Agent to
be necessary to protect Agent and the Lenders from potential funding losses
under any Interest Rate Protection Agreement provided by Agent.  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, in which case such Lender Interest
Rate Protection Agreement shall be secured by the Mortgage and other Security
Documents but on a subordinated basis to the other Obligations.  Any Interest
Rate Protection Agreement which is not a Lender Interest Rate Protection
Agreement shall be non-recourse to Borrower.

 

(h)                                 Extension.  Eighteen (18) months prior to
the expiration of the Interest Rate Protection Agreement described in Section
2.7(a) and six (6) months prior to the expiration of any supplemental Interest
Rate Protection Agreement described in Section 2.7(b), Agent shall estimate the
cost of extending the applicable Interest Rate Protection Agreement (assuming
for such purpose that the Interest Rate Protection Agreement effecting such
extension will be a Lender Interest Rate Protection Agreement in the form of an
interest rate cap) for a further one year period (the “Cap Extension Fee”),
which estimate shall be conclusive absent manifest error; provided, however, if
Borrower objects to such estimate, it may, within two (2) Business Days after
receipt of a notice of the amount of the Cap Extension Fee, obtain an estimate
from Chatham Financial or another similar entity reasonably satisfactory to
Agent and the Cap Extension Fee shall be the average of the two estimates. 
Within five (5) Business Days after receipt by Borrower of a notice of the
amount of the Cap Extension Fee, Borrower shall notify Agent that it elects to
do one of the following:  (i) provided no Event of Default exists, have any
excess cash funded immediately, on a monthly basis, into the Cap Extension Fee
Reserve

 

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Account in an amount equal to 1/18 of the cost of the estimated cap during the
term of the Interest Rate Protection Agreement described in Section 2.7(a) and
1/6 of the cost of the estimated cap during the term of any Interest Rate
Protection Agreement described in Section 2.7(b); (ii) make a cash deposit into
the Cap Extension Fee Reserve Account in an amount equal to the Cap Extension
Fee, in which event Borrower shall deliver such cash deposit at least thirty
(30) days prior to the expiration of the applicable Interest Rate Protection
Agreement or (iii) deliver to Agent a Letter of Credit in an amount equal to the
Cap Extension Fee, in which event Borrower shall deliver such Letter of Credit
at least thirty (30) days prior to the expiration of the Interest Rate
Protection Agreement.  The amounts described in clauses (i) and (ii) shall be
applied to extend the applicable Interest Rate Protection Agreement, if such
Interest Rate Protection Agreement is a Lender Interest Rate Protection
Agreement, or to enter into a Lender Interest Rate Protection Agreement if such
Interest Rate Protection Agreement is not a Lender Interest Rate Protection
Agreement.  In the event option (iii) is elected by Borrower, and Borrower does
not pay the cost of extending the applicable Interest Rate Protection Agreement,
Agent may, but shall not be obligated to, draw on such Letter of Credit and
apply the proceeds thereof to such payment.  Borrower shall be liable for any
difference between the actual cost of extending the applicable Interest Rate
Protection Agreement and the Cap Extension Fee.  In the event the Letter of
Credit is delivered but is not drawn upon by Agent to extend the applicable
Interest Rate Protection Agreement, Agent shall return such Letter of Credit to
Borrower, it being understood that in the event the conditions set forth in this
subsection (h) require that Borrower again deliver a Letter of Credit at a later
date, that Borrower shall be obligated to do so.  In the event Borrower enters
into an Interest Rate Protection Agreement in the form of a swap (as opposed to
extending the Interest Rate Protection Agreement or any supplemental Interest
Rate Protection Agreement in the form of a cap), at Borrower’s option, provided
no Event of Default shall have occurred and be existing, the funds in the Cap
Extension Fee Reserve Account shall continue to be held in such Account and
credited toward the next succeeding Cap Extension Fee or returned to Borrower.

 

(i)                                     Downgrade.  In the event of any
downgrade, withdrawal or qualification of the rating of the a Qualified
Counterparty below “A” by S&P, Borrower shall replace the Interest Rate
Protection Agreement with a replacement Interest Rate Protection Agreement
meeting the requirements of this Section 2.7 not later than thirty (30) calendar
days after learning of such downgrade, withdrawal or qualification.

 

(j)                                     Title Insurance.  If and to the extent
that the Interest Rate Protection Agreement is secured by the Premises, Borrower
shall, at its sole cost and expense, provide Agent with such commercially
available additional title insurance coverage and endorsements to the title
policy (or, if such additional title insurance is not available by endorsement,
Borrower shall provide separate title insurance policies with respect thereto)
as Agent shall reasonably require in connection with any Interest Rate
Protection Agreement provided by Agent under Section 2.7(f).

 

(k)                                  Third Party Interest Rate Protection
Agreement.  In connection with an Interest Rate Protection Agreement which is
not a Lender Interest Rate Protection Agreement, Borrower shall obtain and
deliver to Agent an opinion from counsel (which counsel may be in-house counsel
for the Qualified Counterparty) for the Qualified Counterparty (in form
reasonably

 

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satisfactory to Agent and upon which Agent, the Lenders and their respective
successors and assigns may rely) which shall provide, in relevant part, that:

 

(i)                                     the Qualified Counterparty is duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or organization and has the organizational power
and authority to execute and deliver, and to perform its obligations under, the
Interest Rate Protection Agreement;

 

(ii)                                  the execution and delivery of the Interest
Rate Protection Agreement by the Qualified Counterparty, and any other agreement
which the Qualified Counterparty has executed and delivered pursuant thereto,
and the performance of its obligations thereunder have been and remain duly
authorized by all necessary action and do not contravene any provision of its
certificate of incorporation or by-laws (or equivalent organizational documents)
or any law, regulation or contractual restriction binding on or affecting it or
its property;

 

(iii)                               all consents, authorizations and approvals
required for the execution and delivery by the Qualified Counterparty of the
Interest Rate Protection Agreement, and any other agreement which the Qualified
Counterparty has executed and delivered pursuant thereto, and the performance of
its obligations thereunder have been obtained and remain in full force and
effect, all conditions thereof have been duly complied with, and no other action
by, and no notice to or filing with any Governmental Authority or regulatory
body is required for such execution, delivery or performance; and

 

(iv)                              the Interest Rate Protection Agreement, and
any other agreement which the Qualified Counterparty has executed and delivered
pursuant thereto, has been duly executed and delivered by the Qualified
Counterparty and constitutes the legal, valid and binding obligation of the
Qualified Counterparty, enforceable against the Qualified Counterparty in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

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

 

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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.  For purposes
of clarification, Breakage Costs shall not be deemed to be a prepayment premium
or fee.

 

Section 2.9                                   “Additional Interest” under Lender
Interest Rate Protection 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)
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 Notes, 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 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

 

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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.

 

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 three (3) 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 three (3) 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

 

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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
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 Notes 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

 

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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.

 

(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

 

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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, 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

 

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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 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                            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                                   Cash Management.

 

(a)                                  The Loan Parties shall, and shall cause the
Property Manager to, deposit all Gross Revenues into the Clearing Account within
one (1) Business Day of receipt thereof.  Without limiting the foregoing, Loan
Parties shall, and shall cause the Property Manager to, (a) deliver written
instructions to all tenants under leases to deliver all rents payable thereunder
directly into the Clearing Account (which instructions shall be irrevocable for
so long as the Loan is outstanding), (b) deliver written instructions to credit,
debit and charge card companies to deliver all payments directly to the Clearing
Account (which instructions shall be irrevocable for so long as the Loan is
outstanding), and (c) deposit all amounts received by Loan Parties or Property
Manager constituting rents or other revenue of any kind from the Premises into
the Clearing Account.  Disbursements from the Clearing Account will be made in
accordance with the terms and conditions of this Agreement, the Clearing Account
Agreement and the Cash Management Agreement.  Disbursements from the Operating
Account will be made in accordance with the terms and conditions of this
Agreement, the Operating Account Agreement and the Cash Management Agreement. 
Subject to the terms and conditions of this Agreement,

 

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the Cash Management Agreement, the Clearing Account Agreement, and the Operating
Account Agreement, Agent shall have sole dominion and control over the Cash
Management Account, the Clearing Account and the Operating Account, and Loan
Parties shall have no rights to make withdrawals therefrom except as provided in
the Cash Management Agreement, the Clearing Account Agreement, and the Operating
Account Agreement.

 

(b)                                 Notwithstanding anything to the contrary
contained in this Loan Agreement or the other Loan Documents, and provided no
Event of Default exists, Borrower’s obligations with respect to the monthly
payment of interest and principal (if any) and the deposits to be made into the
Accounts and any other payment due pursuant to this Loan Agreement or any other
Loan Document shall be deemed satisfied to the extent sufficient amounts are
deposited in the Cash Management Account and are unconditionally available to
Agent (on behalf of the Lenders) to satisfy such obligations in accordance with
the terms of this Loan Agreement and the Cash Management Agreement on the dates
each such payment is required, regardless of whether any of such amounts are so
applied by Agent.

 

(c)                                  The insufficiency of funds on deposit in
the Clearing Account or the Cash Management Account (or any sub-account
thereunder) shall not absolve Loan Parties of the obligation to make any
payments as and when due pursuant to this Loan Agreement and the other Loan
Documents, and such obligations shall be separate and independent, and not
conditioned on any event or circumstance whatsoever.

 

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

 

(a)                                  Intentionally omitted.

 

(b)                                 Intentionally omitted.

 

(c)                                  Prior to the occurrence of an Event of
Default and only during the existence of a Cash Sweep Condition, on or before
the twentieth (20th) day of each calendar month from and after the date hereof,
Loan Parties shall (or shall cause Property Manager to) deposit the Cash
Collateral Payment Amount into the Additional Cash Collateral Account as
additional, cash collateral for the Obligations, in the manner set forth and in
accordance with the terms of the Cash Management Agreement.  Provided that no
Event of Default or monetary Default shall then be continuing, amounts in the
Additional Cash Collateral Account then remaining shall be disbursed to the Loan
Parties, or upon the request of Borrower, applied to the Obligations, 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 Additional 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 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

 

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in the Additional 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.

 

(d)                                 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).

 

(e)                                  In addition, Agent shall have the rights
with respect to any Cash Sweep Letter of Credit set forth in Section 3.5.

 

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 Leases 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, 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

 

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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 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

 

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such Loan Party’s sole cost and expense, provided that such new or amended Lease
Letter of Credit names Agent as a beneficiary thereunder for so long as the Loan
is outstanding.  In addition to complying the requirements set forth in Section
6.10, in the event any Lease entered into after the date hereof permits the
tenant thereunder to post a Lease Letter of Credit, such Lease Letter of Credit
shall name Agent as beneficiary thereunder for so long as the Loan is
outstanding.

 

Section 3.4                                   Capital/FF&E Reserve
Account/Funding the Capital/FF&E Reserve Account.

 

(a)                                  Deposits.  On each Payment Date (other than
during a Hotel Rebranding) 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”) as more particularly set forth in the Cash
Management Agreement.  All amounts deposited into the Capital/FF&E Reserve
Account (the “Capital/FF&E Reserve Funds”) by or on account of Loan Parties
shall be held and applied in accordance with the terms of this Loan Agreement
and the Cash Management Agreement.  Subject to the restrictions on disbursements
from the Capital/FF&E Reserve Account contained in this Section 3.4, any
interest the Capital/FF&E Reserve Funds 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.  Agent shall cause the
Depository Bank to transfer the Capital/FF&E Reserve Funds to Borrower’s account
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 Event of Default 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 as
reasonably determined by Loan Parties; and

 

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

 

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Except in the case of an emergency as reasonably determined by Loan Parties,
Agent shall not be required to make disbursements from the Capital/FF&E
Expenditures Account unless such requested disbursement is in an amount greater
than $25,000 (or a lesser amount if the total amount in the Capital/FF&E
Expenditures is less than $25,000, in which case only one disbursement of the
amount remaining in the account shall be made) and such disbursement shall be
made only upon satisfaction of each condition contained in this Section 3.4.

 

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 Reserve
Funds and 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 account control agreements with respect
to such Reserve Funds and Accounts in form and substance satisfactory to Agent. 
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 Clearing
Account Agreement and the Cash Management Agreement.  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 control agreement
with respect to such Account in form and substance satisfactory to Agent.  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 Clearing Account Agreement and the Cash Management
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.

 

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(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 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 (i) which occurs prior to
the Permitted Prepayment Date shall be subject to the Spread Maintenance Premium
and (ii) which occurs on or after the Permitted Prepayment Date shall be subject
to the Prepayment Fee, to the extent of the principal reduction and further,
with respect to clause (ii), only to the extent that in such circumstances the
Prepayment Fee 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

 

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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.

 

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

 

Section 3.7            Real Estate Tax and Insurance Reserve Fund.

 

(a)           Deposits.  On the Closing Date, Borrower shall deposit
$2,069,284.25 with Agent, which amount shall be deposited by Agent in the Tax
and Insurance Reserve Account.  In addition, on each Payment Date, Borrower
shall deposit with Agent, for deposit in the Tax and Insurance Reserve Account,
(i) a monthly amount, as determined by Agent, which will be sufficient to
accumulate with Agent thirty (30) days prior to each due date therefor
sufficient funds to pay all real estate taxes which Agent estimates will be
payable during the next ensuing twelve (12) months, and (ii) a monthly amount,
as determined by Agent, which will be sufficient to accumulate with Agent thirty
(30) days prior to the expiration of the insurance policies which Agent
estimates will be payable for the renewal of the coverage afforded by the
insurance policies during the next ensuing twelve (12) months (said amounts in
clauses (i) and (ii) above, together with the amount set forth in the first
sentence of this Section 3.7(a), being, collectively, the “Tax and Insurance
Reserve Fund”).  If at any time Agent reasonably determines that the Tax and
Insurance Reserve Fund is not or will not be sufficient to pay real estate taxes
and insurance premiums by the dates set forth in clauses (i) and (ii) above,
Agent shall notify Borrower of such determination and Borrower shall increase
its monthly payments to Agent by the amount that Agent estimates is sufficient
to make up the deficiency thirty (30) days prior to delinquency of the real
estate taxes and/or thirty (30) days prior to expiration of the insurance
policies, as the case may be.

 

(b)           Disbursements.  Borrower shall furnish Agent with (i) bills for
the charges for which such deposits are required and (ii) a disbursement request
(in a form reasonably satisfactory to Agent), executed by an authorized officer
of Borrower, at least thirty (30) days prior to the “total amount due by” date
as stated on the New York City Finance Quarterly Statement of Account.  Provided
that no Event of Default exists, Agent will, or will direct the Depository Bank
to, apply the Tax and Insurance Reserve Fund to payments of insurance premiums
and real estate taxes required to be made by Borrower pursuant to Sections 6.6
and 6.11, respectively, and under the Mortgage but not, in any event, earlier
than ten (10) days prior to the due dates thereof.  In making any payment
relating to the Tax and Insurance Reserve Fund, Agent or the Depository Bank may
do so according to any bill, statement or estimate procured from the appropriate
public office (with respect to real estate taxes) or insurer or agent (with
respect to insurance premiums), without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof unless said bill, statement or
estimate is obviously incorrect.  If the amount of the Tax and Insurance Reserve
Fund shall exceed the amounts due for real estate taxes and insurance premiums
pursuant to Sections 6.6 and 6.11, respectively, Agent shall either return any
excess to Borrower or credit such excess against future payments to be made to
the Tax and Insurance

 

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Reserve Fund.  Provided that on the date that said real estate taxes are due and
payable, no Event of Default exists and sufficient funds are on deposit in the
Tax and Insurance Reserve Fund to pay real estate taxes, Borrower shall not be
liable to pay and shall not be charged with any late charges, interest and/or
penalties imposed by or payable to any Governmental Authority as a result of
Agent’s or the Depository Bank’s failure to pay real estate taxes prior to the
date that same become delinquent.

 

(c)           Notwithstanding the foregoing, Agent shall not require monthly
deposits for insurance in accordance with subsection (a) above during any time
in which (i) no Event of Default exists; and (ii) Borrower provides Agent with
paid receipts and/or other evidence reasonably satisfactory to Agent that all
such insurance premiums have been fully and timely paid, to the extent the
required insurance is carried under blanket policies, which blanket policies are
in form and substance satisfactory to Agent.

 

ARTICLE IV

 

CONDITIONS PRECEDENT TO THE
EFFECTIVENESS OF THIS LOAN AGREEMENT

 

This Loan Agreement shall not be effective until Agent’s receipt, review and
approval and/or confirmation of the following, at Loan Parties’ cost and
expenses, each in form and content satisfactory to Agent in their reasonable
discretion, 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:

 

1.             The representations and warranties made by the 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.

 

2.             The Loan Documents and all other documents, agreements (including
the Interest Rate Protection Agreement), 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), executed by Borrower, Operating Lessee,
Guarantor, as applicable.

 

3.             Payment to Agent (on behalf of the Lenders) of the commitment fee
of $2,250,000 in cash or by wire transfer of immediately available funds.

 

4.             An ALTA (or equivalent) mortgagee policy of title insurance in
the maximum amount of the Loan, with reinsurance and endorsements as Agent may
require, containing no exceptions to title (printed or otherwise) which are
unacceptable to Agent, and insuring that the Mortgage is a first-priority Lien
on the Premises and related collateral.  Without limitation, such policy shall
(a) be in the 1970 ALTA (revised 10-17-84) form or, if not available, ALTA 1992
form (deleting arbitration and creditors’ rights, if permissible) or, if not
available, the form commonly used in the state where the property is located,
insuring Agent (on behalf of the Lenders) or/ and its successors and assigns;
and (b) include the following endorsements and/or affirmative coverages, if
available in the State where the Land is located:

 

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(1) Comprehensive endorsement, (2) Survey, (3) Zoning (with additional coverage
for number and type of parking spaces), (4) Usury, (5) Doing Business,
(6) Access, (7) Separate Tax Lot, (8) Environmental Protection Lien, 
(9) Subdivision, (10) Contiguity, (11) Tax Deed (as applicable), and (12)
Mortgage Recording Tax (as applicable), and such endorsements and/or affirmative
coverages as Agent may require in its sole and absolute discretion.

 

5.             All documents evidencing the formation, organization, valid
existence, good standing, and due authorization of and for Loan Parties and
Guarantor for the execution, delivery, and performance of the Loan Documents by
Loan Parties and Guarantor.

 

6.             Legal opinions issued by counsel for Loan Parties and Guarantor,
opining as to the due organization, valid existence and good standing of Loan
Parties and Guarantor, and the due authorization, execution, delivery,
enforceability and validity of the Loan Documents with respect to, Loan Parties
and Guarantor; that the Loan, as reflected in the Loan Documents, is not
usurious; and as to such other matters as Agent and Agent’s counsel reasonably
may specify.

 

7.             Current Uniform Commercial Code searches, and litigation,
bankruptcy and judgment reports as requested by Agent, with respect to
Guarantor, Loan Parties, Loan Parties’ partners and members, and principals, and
the immediately preceding owner of the Premises.

 

8.             Evidence of insurance as required by this Loam Agreement, and
conforming in all respects to the requirements of Agent.

 

9.             A current ALTA survey of the Premises, dated or updated to a date
not earlier than thirty (30) days prior to the date hereof, certified to Agent
(on behalf of the Lenders) and the Title Company, prepared by a licensed
surveyor acceptable to Agent and the Title Company, and conforming to Agent’s
current standard survey requirements, which may include certification to
additional participants, co-lenders and/or investors.  Without limitation, the
minimum requirements for the survey shall be as set forth in the 2011 Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys, “Urban Survey”
classification, with the following additional items from Table A, “Optional
Survey Responsibilities and Specifications”: “3” (flood zone designation), “4”
(land area), “6” (zoning classification, setbacks, height and bulk
restrictions), “7” (exterior dimensions), “8” (other visible improvements), “9”
(parking areas), “10” (access to public way, driveway and curb cuts), “11”
(utilities), “13” (adjoining owners), “16” (observations regarding building
construction), “18” (observations regarding site use) and “21” (professional
liability insurance of surveyor).

 

10.           A current engineering report or architect’s certificate with
respect to the Premises, covering, among other matters, inspection of heating
and cooling systems, roof and structural details, showing no failure of
compliance with building plans and specifications, applicable legal requirements
(including requirements of the Americans with Disabilities Act) and fire, safety
and health standards and reviewing and approving, among other matters, soil
tests, plans and specifications (including heating, ventilation and cooling
systems, roof and structural details, mechanical and electrical systems), and
compliance with local, state or federal laws, regulations, codes, etc., and
containing a declaration satisfactory to Agent that there will be

 

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no asbestos in the Premises.  The engineer/architect preparing such report or
certificate must be satisfied that the Premises is in compliance with fire,
safety and health standards which such engineer/architect deems reasonable, in
addition to standards imposed by law, regulation or codes.

 

11.           A current an environmental engineering report for the Premises
prepared by an engineer engaged by Agent at Loan Parties’ expense, and in a
manner satisfactory to Agent, based upon an investigation relating to and making
appropriate inquiries concerning the existence of hazardous materials on or
about the Premises, and the past or present discharge, disposal, release or
escape of any such substances, all consistent with good customary and commercial
practice, and if necessary, a current Phase II.

 

12.           All appraisals, environmental reports and building condition
reports delivered to Agent prior to the execution of this Loan Agreement shall
be certified to Agent (on behalf of the Lenders and their successors and
assigns) without modification or change thereto in the form reasonably requested
by Agent which may include certification to additional participants, co-lenders
and/or investors.

 

13.           A current rent roll of the Premises, certified by Loan Parties. 
Such rent roll shall include the following information: (a) tenant names;
(b) unit/suite numbers; (c) area of each demised premises and total area of the
Premises (stated in net rentable square feet); (d) rental rate (including
escalations) (stated in gross amount and in amount per net rentable square foot
per year); (e) lease term (commencement, expiration and renewal options);
(f) expense pass-throughs; (g) cancellation/termination provisions; (h) security
deposit; and (i) material operating covenants and co-tenancy clauses.  In
addition, Loan Parties shall provide Agent, at Agent’s request, true and correct
copies of all leases of the Premises.

 

14.           A copy of the Ground Leases, the Operating Agreement, the
Management Agreement, and the Hotel Franchise Agreement, certified by Loan
Parties as being true, correct and complete.

 

15.           The Ground Lease estoppels, the Manager SNDA and the “comfort
letter.”

 

16.           Borrower’s deposit into the applicable Reserve Account of the
amount required by Agent to impound for taxes and assessments under Article 3
and to fund any other required escrows or reserves.

 

17.           Evidence reasonably acceptable to Agent that (a) the Premises and
the operation thereof comply with all legal requirements, including that all
requisite certificates of occupancy, building permits, and other licenses,
certificates, approvals or consents required by any Governmental Authority have
been issued without variance or condition, (b) following any casualty, the
improvements which form a part of the Premises may be reconstructed and the
current use thereof restored, and (c) that there is no litigation, action,
citation, injunctive proceedings, or like matter pending or threatened with
respect to the validity of such matters.

 

18.           No change shall have occurred in the financial condition of either
Loan Party or Guarantor or in the Net Operating Income of the Premises, or in
the financial condition of any major or anchor tenant, which would have, in
Agent’s or any Lender’s reasonable

 

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judgment, a Material Adverse Effect.  Further, there shall not exist any
material default (taking into account applicable notice and cure periods) by
Loan Parties or any principal in Loan Parties (or any entity owned or controlled
by any of them) under any loan, financing or similar arrangement with any
lender.

 

19.           No condemnation or adverse zoning or usage change proceeding shall
have occurred or shall have been threatened in writing by the applicable
Governmental Authority against the Premises; the Premises shall not have
suffered any material damage by fire or other casualty which has not been
repaired; no structural change to the Premises shall have occurred or to any of
the Improvements thereon except as previously disclosed to Agent in any writing
with respect to any ongoing construction or repair work; no law, regulation,
ordinance, moratorium, injunctive proceeding, restriction, litigation, action,
citation or similar proceeding or matter shall have been enacted, adopted, or
threatened by any third party or Governmental Authority, in any of the foregoing
cases in this subparagraph 19, which would have, in Agent’s or any Lender’s
reasonable judgment, a Material Adverse Effect.

 

20.           The Adjusted Debt Service Coverage Ratio shall not be less than
1.357:1.00.

 

21.           The Loan-to-Value Ratio shall not exceed sixty-five percent (65%).

 

22.           Evidence of equity contribution to the Premises by Borrower of no
less than $150,000,000 which shall have been invested as a cash contribution by
Borrower.

 

23.           [Intentionally omitted.]

 

24.           The sources and uses budget showing total costs relating to
closing of the proposed transaction, all uses of the initial advance, and
amounts allocated for future advances (if any).

 

25.           Payment of Agent’s reasonable costs and expenses in underwriting,
documenting, and closing the transaction, including reasonable fees and expenses
of Agent’s inspecting engineers, consultants, and outside counsel.

 

26.           Estoppel certificates from Intercity, MC Networks, The Body Shop,
Wells Fargo, Grayline Concierge and Hilton Resort Corporate and subordination,
non-disturbance and attornment agreements from Intercity, MC Networks and The
Body Shop.

 

27.           Service contracts, licenses and permits, applicable to the
operation or use of the Premises.

 

28.           [Intentionally omitted.]

 

29.           [Intentionally omitted.]

 

30.           [Intentionally omitted.]

 

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31.           Evidence satisfactory to Agent of compliance with all applicable
zoning, which evidence shall consist of a PZR Report (or similar product from a
zoning consultant acceptable to Agent).

 

32.           A certified organizational chart showing all beneficial ownership
interests in the Loan Parties and Guarantor.

 

33.           [Intentionally omitted.]

 

34.           Operating Budgets for the past three (3) years and other cash flow
projections for the Property as previously approved by Agent.

 

35.           An opening Balance Sheet for Borrower.

 

36.           Satisfactory financial review and background checks (including
such background checks as deemed necessary by Agent and Lenders to comply with
the Patriot Act) of Loan Parties and Guarantor, including, for each of the above
parties, such information described in the “Notification Provided to Eurohypo
Borrowers/Clients Requesting Information to Verify Their Identities” provided to
Borrower prior to closing.

 

37.           Payment of any unpaid real estate taxes and assessments for the
Premises or any portion thereof due and payable as of the closing of this
transaction.

 

38.           ROFO Certification executed by Whitehall Street Global Real Estate
Limited Partnership 2005, Whitehall Street Global Employee Fund 2005, L.P. and
1568 Broadway Hotel Investor LLC (which, with respect to 1568 Broadway Hotel
Investor LLC, may be incorporated in the Managers SNDA).

 

39.           Such other documents or items as Agent or its counsel reasonably
may require.

 

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:

 

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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.

 

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 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.

 

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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 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 Guarantor 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, Guarantor, 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.

 

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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 than to the extent of Liens which constitute
Permitted Encumbrances and/or Permitted Transfers.

 

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, the Hotel Franchise Agreement, and the Premises
Documents.  No default or failure of performance in any material respect by Loan
Parties exists under the Management Agreement, the Hotel Franchise 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
Hotel Franchise 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 Hotel
Franchise 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.  Except as set forth on Schedule 5.17A, no Material
Operating Agreement, Premises Document or unrecorded Permitted Encumbrance
contains any option to

 

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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 5.17B attached hereto.  The
Management Agreement and the Hotel Franchise Agreement are each in full force
and effect and are valid and enforceable.  Except as set forth on Schedule
5.17C, the Premises Documents, the Hotel Franchise Agreement, 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, the
Management Agreement or the Hotel Franchise 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 or the
Hotel Franchise Agreement, if any.  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.  The Hotel Franchise Agreement and
the “comfort letter”, taken together, represent the entire agreement between the
Loan Parties and the Hotel Franchisor with respect to the licensing of the hotel
brand for the Premises, and there are no other agreements or representations,
written or oral, between Loan Parties and Hotel Franchisor with respect to
thereto.  The Hotel Franchise Agreement, if any, does not contain any option to
purchase or right of first refusal to purchase the Mortgaged Property or any
part thereof.

 

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.

 

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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
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.  Set forth on Schedule 5.26 is a list of
all collective bargaining agreements to which a Loan Party is a party.  Neither
Loan Party as received any written notice of any pending material grievances,
disputes or controversies with any union or any other organization of employees
at the Premises, including employees of Loan Parties, or written threats of
strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization.

 

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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 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
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
fee title in certain real property more particularly described in the “Parcel I”
section of Exhibit A attached hereto and a good, marketable and indefeasible
leasehold estate in certain real property and air rights more particularly
described in the “Parcel II” and “Parcel III” sections of Exhibit A

 

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attached hereto, 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 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”).  Each Loan Party has delivered to Agent true, correct and complete
copies of the Leases.  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 delivered to Agent:  (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

 

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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 Leases or Operating Lease.

 

Section 5.35         Special Purpose Entity.  Each Loan Party and the Loan Party
Member are Single Purpose Entities.

 

Section 5.36         Ground Leases; Recording; Modification.

 

(a)           True and Correct Copies.  The Ground Lease estoppels delivered to
Agent by Ground Lessors in connection with the Ground Leases contain a true,
correct and complete copy of the Ground Leases (including all modifications and
supplements thereto).  The Ground Leases constitute the entire agreement between
the applicable Ground Lessor and Borrower with respect to the subject matter
thereof.  Each Ground Lease is the valid, binding and enforceable obligation of
Borrower and, to Borrower’s actual knowledge, the applicable Ground Lessor
thereunder.  To Loan Parties’ knowledge, neither Ground Lessor 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.

 

(b)           Memorandum of Ground Leases.  Memoranda of the Ground Leases have
been duly recorded.  Each Ground Lease permits the interest of Borrower and
Operating Lessee thereunder to be encumbered by a mortgage.  There have been no
amendments or modifications to the terms of the Ground Leases since their
recordation (or a memoranda thereof), with the exception of written instruments
which have been recorded or as have been attached to the estoppels delivered to
Lender by Ground Lessors in respect of the Ground Leases.  The Ground Leases may
not be terminated, surrendered or amended without the prior written consent of
Agent.  Borrower has delivered to Agent in writing (or there is included in the
applicable estoppel delivered to Agent) (i) the current address for notices,
demands and

 

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communications to each lessor and payments due under the Ground Leases; and
(ii) true and correct information as to the current rent payable under the
Ground Leases.

 

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

 

(d)           Default.  As of the date hereof, each 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 either Ground Lease.  As of the date hereof, all rents, additional
rent and other sums due and payable under the Ground Leases have been paid in
full.  Neither Borrower nor any Ground Lessor has commenced any action or given
or received any notice for the purpose of terminating the Ground Leases.

 

Section 5.37         Operating Lease.

 

(a)           True and Correct Copies.  Loan Parties have delivered a true,
correct and complete copy of the Operating Lease (including all modifications
and supplements thereto) to Agent.  The Operating Lease constitutes the entire
agreement between the Loan Parties with respect to the subject matter thereof. 
The Operating Lease is the valid, binding and enforceable obligation of Loan
Parties and, to Borrower’s actual knowledge, the applicable Ground Lessor
thereunder.  As of the date hereof, there does not exist any “Working Capital
Note” as defined in the Operating Lease.

 

(b)           No Liens.  Except for the Permitted Encumbrances, Loan Parties’
interest in the Operating Lease is not subject to any Liens or encumbrances
superior to, of equal priority with, or subordinate to the Mortgage.

 

(c)           Default.  As of the date hereof, (i) the Operating Lease is in
full force and effect, (ii) there is no default on the part of Loan Parties
thereunder, and (iii) there is no existing condition which, but for the passage
of time or the giving of notice, would result in a default by a Loan Party under
the terms of the Operating Lease.  As of the date hereof, all rents, additional
rent and other sums due and payable under the Operating Lease have been paid in
full.  Neither Loan Party has commenced any action or given or received any
notice for the purpose of terminating the Operating Lease.

 

Section 5.38         Own Behalf; For Own Account.  Borrower confirms that
Borrower is acting on its own behalf and for its own benefit.  The Loan has been
requested by Borrower, and the proceeds of the Loan shall be utilized by
Borrower, for its own account.

 

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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 ninety (90) 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 Guarantor’s annual financial statements
and (ii) the annual financial statements of Guarantor are delivered to Agent
within ninety (90) days after the close of its fiscal year).

 

(b)           Monthly and Quarterly Financial Statements.

 

(i)            During the period from the Closing Date to December 31, 2013, as
soon as practical, but in any event no later than thirty (30) days after the end
of each calendar month, and from and after January 1, 2014, within forty five
(45) days after the end of each Calendar Quarter (other than the Calendar
Quarter ending December 31st of any year other than with respect to the items
described in clauses (A) and (E)), Loan Parties shall deliver (or shall cause
Property Manager to deliver) to Agent:

 

(A)          a leasing report (which shall be delivered monthly for the first
twelve (12) months of the Term and quarterly thereafter), and 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;

 

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(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 applicable month or Calendar Quarter, as applicable, of the then previous
year.

 

Each of the foregoing items shall be certified by Loan Parties 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 “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 as applicable (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, Guarantor, Hotel Franchisor, the Premises, the Collateral, Loan
Parties’ rights under any Permitted Encumbrance, any Operating Permit obtained
by Loan Parties, or the Liens securing the Obligations 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)           Intentionally Omitted.

 

(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, Tax and Insurance 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,
including average daily rate, advance booking information, occupancy levels and
RevPAR Yield Index and RevPAR for the Premises and its competitive set and
(y) the monthly Ground Leases rent calculation prepared by Property Manager for
such calendar month.

 

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(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 or the Hotel Franchise 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 or the Hotel Franchise 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, Property Manager, Hotel Franchisor, the
Premises, the Collateral, Loan Parties’ rights under any Permitted Encumbrance,
or any Operating Permit obtained by Loan Parties, 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 Material Operating Agreement, the Management Agreement, the
Hotel Franchise Agreement, the Ground Leases, 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;

 

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(viii)                        promptly upon Loan Parties’ learning thereof, any
material adverse claim against or affecting Loan Parties, the Guarantor, the
Premises, the Collateral, Loan Parties’ rights under any Permitted Encumbrance
or any Operating Permit 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(g),
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 or the Hotel Franchise Agreement and any
material notice or other material written communication given under, pursuant to
or in connection with the Management Agreement or the Hotel Franchise Agreement;
and

 

(xi)                                within ten (10) days of a Loan Party’s
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
or a Signage License, such notice under this clause (i) shall not be required
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)

 

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notify Agent if any such contracts are not renewed or replaced with similar
agreements upon their expiration or termination.

 

(j)                                     Annual Capital/FF&E Expenditures Budget
and Annual Operating Budget.  As soon as available, but in any event no later
than November 1 of each calendar year, Loan Parties shall deliver (y) a copy of
the preliminary Capital/FF&E Expenditures Budget and (z) a copy of the
preliminary operating budget, each for the next fiscal year of Loan Parties for
review and approval by Agent, which approval shall not be unreasonably withheld,
conditioned or delayed.  If Agent reasonably objects to such proposed
Capital/FF&E Expenditures Budget and/or operating budget, Agent shall advise
Borrower of such objections (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall within ten (10) days after
receipt of notice of any such objections revise such Capital/FF&E Expenditures
Budget and/or operating budget and resubmit the same to Agent, such procedure to
be repeated until such time as Agents shall have approved such Capital/FF&E
Expenditures Budget and/or operating budget; provided, however, that until such
time as a new Capital/FF&E Expenditures Budget and/or operating budget is
approved, the previously approved Capital/FF&E Expenditures Budget and/or
operating budget shall control.  Loan Parties shall not approve any Capital/FF&E
Expenditures Budget or operating budget without Agent’s approval, which approval
shall not be unreasonably withheld, conditioned or delayed, provided no Event of
Default exists.  Provided no Event of Default or Cash Sweep Condition exists,
Agent’s failure to approve or disapprove any Capital/FF&E Expenditures Budget or
operating 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 or operating budget shall be
materially amended or modified without the prior consent of Agent, which consent
shall not be unreasonably withheld, conditioned or delayed, provided no Event of
Default or Cash Sweep Condition exists; provided, however, that Agent agrees
that variances from such Approved Capital/FF&E Budget 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, shall not be deemed
material amendments or modifications of such budget and shall not require
Agent’s prior approval as long as no Event of Default or Cash Sweep Condition
exists.  In addition, no Capital/FF&E Expenditures Budget or operating budget
shall be materially amended or modified without delivering a copy of such
amendment or modification to Agent at least ten (10) days prior to the
effectiveness thereof.  No later than the last day of the first Calendar Quarter
of the each fiscal year of Loan Parties, Loan Parties shall deliver to Agent a
copy of the final operating and capital expense budget for the Premises for such
fiscal year.  Subject to Agent’s prior reasonable consent, Loan Parties may
apply savings from one Capital/FF&E budget line item to cost overruns in another
Capital/FF&E budget line item provided (a) there are no Event of Default or Cash
Sweep Condition exists, (b) all costs to be paid out of such budget line item
from which funds are being re-allocated have been paid or sufficient sums remain
in said line item to pay such costs when the same become due, (c) said savings
are actual savings and are documented to the satisfaction of Agent in its
reasonable discretion, (d) such reallocation will not violate the provisions of
the Lien Law or affect the priority of the Mortgage on the Premises, and (e) the
total budgeted amount set forth in the Capital/FF&E Expenditure Budget does not
change.  Agent has reviewed and approved the Capital/FF&E Expenditure Budgets
for the balance of fiscal year 2011 and for fiscal year 2012; provided, however,
if, in Agent’s reasonable determination, there occurs a condition or event which
could be reasonably in good faith expected to materially impact the Capital/FF&E
Expenditures, Agent shall have the right to

 

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review the Capital/FF&E Expenditure Budget for fiscal year 2012 and require that
appropriate revisions be made thereto.  Notwithstanding the foregoing, Borrower
is not required to receive Agent’s approval for any Capital/FF&E Expenditures
that are not funded through the Capital/FF&E Reserve Account, it being
understood that any Capital/FF&E Expenditures that are not funded through the
Capital/FF&E Reserve Account shall be funded by Guarantor or the Sunstone REIT
and not by Borrower.

 

(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 Notes 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 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 (such request not to be made
more than once every twelve (12) months), Agent will deliver to Loan Parties a
certificate executed by Agent, stating (1) the amount due under the Notes 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; The Platform;
Electronic Communications.

 

(i)                                     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.

 

(ii)                                  Loan Parties hereby acknowledge that (a)
Agent will make available to the Lenders materials and/or information provided
by or on behalf of Borrower or any subsidiary thereof hereunder (collectively,
“Borrower Materials”) by posting Borrower Materials on Syndtrak, IntraLinks or
another similar electronic system (the “Platform”) and (b) certain of the
Lenders (each, a “Public Lender”) may have personnel who do not wish to receive
material non-public information with respect to Loan Parties or their
Affiliates, or the respective securities of any of the foregoing, and

 

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who may be engaged in investment and other market-related activities with
respect to such Persons’ securities.  Loan Parties hereby agree that (w) all
Borrower Materials that are to be made available to Public Lenders shall be
clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that
the word “PUBLIC” shall appear prominently on the first page thereof; (x) by
marking Borrower Materials “PUBLIC,” Loan Parties shall be deemed to have
authorized Agent and the Lenders to treat such Borrower Materials as not
containing any material non-public information with respect to Loan Parties or
any Affiliate thereof or their respective securities for purposes of United
States Federal and state securities laws; (y) all Borrower Materials marked
“PUBLIC” are permitted to be made available through the Platform; and (z) Agent
shall be entitled to treat any Borrower Materials that are not marked “PUBLIC”
as being suitable only for posting on a portion of the Platform designated as
“Non-Public Information.”

 

(iii)                               Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites or via the Platform)
pursuant to procedures approved by Agent, provided that the foregoing shall not
apply to notices to any Lender if such Lender has notified Agent that it is
incapable of receiving notices by electronic communication.  Agent or Loan
Parties may, in its discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures approved by
it, provided that approval of such procedures may be limited to particular
notices or communications.

 

(iv)                              Unless Agent otherwise prescribes, (A) notices
and other communications sent to an e-mail address shall be deemed received upon
the sender’s receipt of an acknowledgement from the intended recipient (such as
by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (B) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

 

(v)                                 THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM BORROWER
MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING
ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH BORROWER MATERIALS OR THE
PLATFORM.  In no event shall Agent or any of its Affiliates (collectively, the
“Agent Parties”) have any liability to Loan Parties, any Lender or any

 

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other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of Loan Parties’ or Agent’s
transmission or posting of Borrower Materials through the internet, except to
the extent that such losses, claims, damages, liabilities or expenses are
determined by a court of competent jurisdiction by a final and non-appealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided, however, that in no event shall any Agent Party have
any liability to Loan Parties, any Lender or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or
actual damages).

 

(m)                               Audits.  Agent shall have the right to choose
and appoint a certified public accountant to perform financial audits as it
deems necessary, which, if a monetary Event of Default or an Event of Default
described in Section 7.1(o) or (p) exists, shall be at Borrower’s expense.  Loan
Parties shall permit Agent to examine such records, books and papers of Loan
Parties which reflect upon its financial condition and the income and expense
relative to the Premises.

 

Section 6.2                                   Marketing, Management, Franchise,
Maintenance and Repairs.  Subject to the Loan Parties’ rights in connection with
a Hotel Rebranding pursuant to Section 6.37, the Loan Parties agree as follows
(including after a Hotel Rebranding):

 

(a)                                  Management.

 

(i)                                     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.  Agent
acknowledges and agrees (i) that the Doubletree Guest Suites Times Square is a
“3.5 Star” hotel brand and (ii) that the Premises satisfy the Comparable
Standards as of the date hereof.  Operating Lessee shall (a) promptly perform
and observe all of the material covenants required to be performed and observed
by it under the Management Agreement and do all things necessary to preserve and
to keep unimpaired its material rights thereunder; (b) promptly notify Agent of
any default under the Management Agreement of which it is aware; (c) promptly
deliver to Agent a copy of any notice of default or other material notice
received by either Loan Party under the Management Agreement; (d) promptly give
notice to Agent of any notice or information that either Loan Party receives
which indicates that the Property Manager is terminating the Management
Agreement; and (e) promptly enforce the performance and observance of all of the
material covenants required to be performed and observed by the Property Manager
under the Management Agreement.  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, shall comply with the Management Agreement in
all material respects at all times.  Subject to the terms of the Manager SNDA,
the Property Manager shall be entitled to receive a management fee of not more
than four percent (4.00%) of the total operating revenues as defined in the
applicable Management Agreement.  The Property Manager shall, prior to the
Closing Date, deliver an executed Manager SNDA, which shall provide, among other
things that the Management Agreement is subordinate to Agent’s lien on the
Mortgage and all of Agent’s rights with respect to the Premises and the Loan
Documents and that Agent may

 

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cause the Operating Lessee to terminate and replace the Property Manager with a
Qualified Manager in compliance with this Agreement if: (i) an Event of Default
has occurred and is continuing, (ii) the Property Manager is in default of its
obligations under the Management Agreement, (iii) the Property Manager becomes
insolvent or the subject of any bankruptcy proceeding or (iv) there is a change
of ownership or control of the Property Manager.  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 materially 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.  The Property Manager shall covenant to manage the
Premises in such a manner as to not cause the Loan Parties to fail to maintain
their status as Single Purpose Entities.

 

(ii)                                  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 Mortgage and the other Loan
Documents to the extent set forth in the Manager SNDA.

 

(iii)                               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 as modified by the Manager SNDA (without giving
effect to any subsequent amendment thereof) and the consent of Ground Lessor is
not required under the Ground Leases (without giving effect to any subsequent
amendment thereof).

 

(b)                                 Hotel Franchise.  Operating Lessee shall (1)
promptly perform and observe all of the material covenants required to be
performed and observed by it under the Hotel Franchise Agreement and do all
things necessary to preserve and to keep unimpaired its material rights
thereunder; (2) promptly notify Agent of any default under the Hotel Franchise
Agreement of which it is aware; (3) promptly deliver to Agent a copy of any
notice of default or other material notice received by either Loan Party under
the Hotel Franchise Agreement (including any Franchisor Warning Notice); (4)
promptly give notice to Agent of any notice or information that either Loan
Party receives which indicates that the franchisor thereunder is terminating the
Hotel Franchise Agreement; and (5) promptly enforce the performance and
observance of all of the covenants required to be performed and observed by the
franchisor under the Hotel Franchise Agreement.  If, at any time, a default has
occurred and is continuing under the Hotel Franchise Agreement, Operating Lessee
shall, at the request of Agent, terminate such Hotel Franchise

 

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Agreement upon thirty (30) days prior notice to the franchisor and replace the
franchisor with a Qualified Franchisor approved by Agent on terms and conditions
satisfactory to Agent.  Subject to Section 6.37, Loan Parties will not, without
the prior written approval of Agent, (i) replace any franchise or enter into any
new Hotel Franchise Agreement; (ii) terminate or reduce or consent to the
reduction of the term of any Hotel Franchise Agreement; (iii) increase or
consent to the increase of the amount of any charges under any Hotel Franchise
Agreement; (iv) otherwise modify, change, supplement, alter or amend (or waive
or release any of its rights and remedies under) any Franchise Agreement in any
material respect; or (v) consent to, approve or agree to any assignment or
transfer by or with respect to the franchisor thereunder (including transfers of
beneficial interests in the franchisor or assignments or transfers by the
franchisor of any or all of its rights under any Hotel Franchise Agreement). 
Any change in ownership or control of the franchisor under the Hotel Franchise
Agreement other than as specifically set forth herein shall be cause for Agent
to re-approve such franchisor and Hotel Franchise Agreement.  If at any time
Agent consents to the appointment of a new Qualified Franchisor, such new
Qualified Franchisor shall, as a condition of Agent’s consent, execute a
“comfort letter” to Agent in form and substance satisfactory to Agent.  The
franchisor under the Hotel Franchise Agreement shall hold and maintain all
necessary licenses, certifications and permits required by Applicable Law.  At
all times prior to the repayment in full of the Loan, Loan Parties shall
maintain in full force and effect a “comfort letter” with respect to the Hotel
Franchise Agreement for the Premises, which comfort letter shall be on terms
satisfactory to Agent.

 

(c)                                  Repair 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 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 the 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.

 

(d)                                 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 Hotel Franchise Agreement and the Management Agreement
(including all marketing, advertising, promotional and reservation programs in
all material respects), but in no event below Comparable Standards.

 

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.

 

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(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 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 their 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.  In furtherance of the foregoing, but subject to Loan Parties’ right to
contest as set forth in Section 6.8, Loan Parties, at their sole cost and
expense, shall cause all of the property violations existing on the date hereof
to be remedied and/or satisfied on or before the date which is three (3) months
from the Closing Date and shall provide to Agent copies of updated property
violation searches which shall show no open violations at the Premises;
provided, further, that such three (3) month period shall be deemed extended for
so long as shall be required by Loan Parties in the exercise of due diligence to
cure such violations, but in no event shall such three (3) month period be so
extended to be a period in excess of six (6) months from the Closing Date with
respect to any material violations.  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.

 

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(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 not more than annually unless one or more of the following
circumstances apply:

 

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

 

(ii)                                  in connection with the foreclosure of the
Mortgage 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)(G) of this Loan Agreement; and

 

(v)                                 there is, in Agent’s reasonable judgment, a
material adverse change in the Premises or the market conditions relating to the
Premises; provided, that, as long as an Event of Default shall not exist, 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 Guarantor upon a request from any of them, provided
that Loan Parties and Guarantor shall first deliver to Agent

 

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an agreement whereby Loan Parties and Guarantor agree to release Agent from any
claims arising from or relating to any such Appraisal or Appraisal Update, which
release shall be in form and substance satisfactory to Agent.  Loan Parties and
Guarantor acknowledge and agree that Agent makes no representation or warranty
as to any such Appraisal or Appraisal Update.

 

(d)                                 Notwithstanding the foregoing, as long as an
Event of Default shall not exist, Loan Parties shall not be required to pay for
more than three (3) Appraisals or Appraisal Updates during the Term.

 

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 indefeasible fee and 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 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;

 

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(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 Imposition 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;

 

(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

 

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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)                                  if 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 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

 

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(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 (i) through
(iv) and (vi) through (viii) 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, unless
in the event of an emergency or an Event of Default shall exist, 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.

 

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, 6.13 or
6.37.

 

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, any Signage License (subject to specific
provisions regarding Signage Licenses in this sub-paragraph below, and Article
XI hereof) or any guaranty thereof or subject to Section 6.10(b), any Minor
Lease or any guaranty thereof (each, a “Material Lease Action”) without Agent’s
prior consent or enter into a Material Lease, a

 

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Signage License or any Minor Lease that does not satisfy the requirements of
clause (ii) of Section 6.10(b) without Agent’s prior consent, which consent
shall not be unreasonably withheld, conditioned or delayed.  Prior to seeking
Agent’s consent to enter into any Material Lease or Signage License (subject to
specific provisions regarding Signage Licenses in this sub-paragraph below, and
Article XI hereof), Loan Parties shall deliver to Agent a copy of such proposed
lease or license (a “Proposed Material Lease”) which Proposed Material Lease
shall be in form and substance reasonably acceptable to Agent.  All Leases shall
provide for (y) automatic self-operative subordination to the Mortgage and, at
Agent’s option, (1) attornment to Agent and (2) the unilateral right by Agent,
at the option of Agent, to subordinate the Lien of the Mortgage to the Lease and
(z) state that any cancellation, surrender, or amendment of any such Lease
without the prior written consent of Agent shall be voidable by Agent. 
Notwithstanding anything to the contrary in this Agreement with respect to a
Proposed Material Lease which is a Signage License or a Material Lease Action
with respect to a Signage License, Agent shall approve the same provided (A) the
conditions set forth in the preceding sentence are satisfied, (B) such Proposed
Material Lease or a Material Lease Action results in increased cash flow to
Borrower, (C) the terms of such modified Proposed Material Lease or Material
Lease Action are not materially less favorable, in Agent’s reasonable
determination, as the Signage License in effect on the Closing Date, and (D) if
any such Proposed Material Lease or Material Lease Action requires capital
improvements to the signs, such improvements shall be at the sole cost and
expense of the licensee under such Signage Lease or of Guarantor and such
improvements shall be done in a good and workmanlike manner and shall be
completed in accordance with all Legal Requirements in all materials 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.  Subject to clause (h) below, Agent
shall approve or disapprove each Proposed Material Lease or Material Lease
Action (in each case other than a Signage License) for which Agent’s approval is
required under this Loan Agreement within ten (10) Business Days of the
submission by Loan Parties to Agent 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 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 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 or additional material terms are added that had not
previously been considered and approved by Agent 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
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 Signage License 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 is not a Signage License and would

 

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be a Minor Lease or the 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 as reasonably determined by Agent and
(B) shall provide for automatic self-operative subordination to the Mortgage
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 Mortgage 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 Signage License 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 Mortgage 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 or Signage License, 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 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 TIMES
SQUARE HOTEL OWNER, LLC, TIMES SQUARE HOTEL OPERATING LESSEE, LLC AND EUROHYPO
AG, NEW YORK BRANCH 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)                                  In addition to any insurance required to be
maintained by Loan Parties pursuant to the Management Agreement, the Hotel
Franchise Agreement, the Ground Leases, 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)                                 All insurance provided for in Section
6.11(a) shall be obtained under valid and enforceable policies and shall be
subject to the approval of Agent as to form and substance including deductibles,
loss payees and insureds.  Not less than ten (10) days before the expiration
dates of the Insurance Policies theretofore furnished to Agent, certificates of
insurance acceptable to Agent evidencing the Insurance Policies, accompanied by
evidence satisfactory to Agent of payment of the Insurance Premiums, shall be
delivered by Loan Parties to Agent.

 

(c)                                  Any blanket Insurance Policy shall be
subject to Agent’s approval and shall otherwise provide the same protection as
would a separate Insurance Policy insuring only the Premises in compliance with
the provisions of Section 6.11(a).  Agent shall have determined,

 

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based on evidence of exposure conditions at the subject property as well as
other properties insured under the blanket policy, as required by Agent that the
amount of such coverage is sufficient in light of the other risks and properties
insured under the blanket policy.  Any changes to the blanket policy during the
course of the Term that materially impact the risk exposure at the Premises
shall require prior approval by Agent.

 

(d)                                 All Insurance Policies provided for or
contemplated by Section 6.11(a), shall be primary and shall name Loan Parties as
a named insured and, in the case of liability coverages, except for the
Insurance Policy referenced in Schedule 6.11(a)(v) and (viii), shall name Agent
and its successors and/or assigns as the additional insured, as its interests
may appear, and in the case of property coverages, including but not limited to
boiler and machinery, terrorism, flood and earthquake insurance, shall name
Agent as mortgagee and loss payee by a standard non-contributing mortgagee
clause or its equivalent in favor of Agent providing that the loss thereunder
shall be payable to Agent.  Additionally, if Loan Parties obtain property
insurance coverage in addition to or in excess of that required by Section
6.11(a), then such insurance policies shall also contain a standard
non-contributing mortgagee clause or its equivalent in favor of Agent providing
that the loss thereunder shall be payable to Agent.

 

(e)                                  All Insurance Policies provided for in
Section 6.11(a), except for the Insurance Policies referenced in Schedule
6.11(a)(v) and (viii) shall provide that:

 

(i)                                     no act or negligence of Loan Parties, or
anyone acting for Loan Parties, or of any tenant or other occupant of the
Premises, or failure to comply with the provisions of any Insurance Policy,
which might otherwise result in a forfeiture of the insurance or any part
thereof, shall in any way affect the validity or enforceability of the insurance
insofar as Agent is concerned;

 

(ii)                                  the Insurance Policy shall not be canceled
without at least thirty (30) days’ (except as a result of non-payment of the
policy premium which shall be at least ten (10) days’), written notice to Agent
and any other party named therein as an additional insured and, if obtainable by
Loan Parties using commercially reasonable efforts, shall not be materially
changed (other than to increase the coverage provided thereby) without such a
thirty (30) day (or ten (10) day, applicable) notice; and

 

(iii)                               Agent shall not be liable for any Insurance
Premiums thereon or subject to any assessments thereunder.

 

(f)                                    If at any time Agent is not in receipt of
written evidence that all insurance required hereunder is in full force and
effect, Agent shall have the right, (i) without notice to Loan Parties, to take
such action as Agent deems necessary to protect its interest in the Premises,
and (ii) with fifteen (15) days’ prior notice to Loan Parties, to obtain such
insurance coverage as Agent in its sole discretion deems appropriate (in which
case, all premiums incurred by Agent in connection with such action or in
obtaining such insurance and keeping it in effect shall be paid by Loan Parties
to Agent upon demand and until paid shall be secured by the Mortgage and shall
bear interest at the Default Rate.

 

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(g)                                 In the event of foreclosure of the Mortgage
or other transfer of title to the Premises in extinguishment in whole or in part
of the Obligations, all right, title and interest of Loan Parties in and to the
Insurance Policies that are not blanket Insurance Policies then in force
concerning the Premises and all proceeds payable thereunder shall thereupon vest
in the purchaser at such foreclosure or Agent or other transferee in the event
of such other transfer of title.

 

(h)                                 The property, business income, general
liability and umbrella Insurance Policies shall not contain exclusions for loss,
cost, damage or liability caused by “terrorism” or “terrorist acts.”  However,
if the property and business income Insurance Policies include any such
terrorism exclusion(s), Loan Parties shall obtain and maintain a separate
terrorism coverage amounts no less then an amount equal to the total insurable
value of the Improvements and the personal property as specified in Schedule
6.11(a)(i) from a carrier which otherwise satisfies the rating criteria
specified in Section 6.11(i) (a “Qualified Carrier”) or, in the event that such
terrorism coverage is not available from a Qualified Carrier, Loan Parties shall
obtain such terrorism coverage from the highest rated insurance company
providing such terrorism coverage.  As used herein, “terrorism coverage” shall
mean coverage against acts of terror or similar acts of sabotage; provided,
that, for so long as the Terrorism Risk Insurance Program Authorization Act of
2007 (“TRIPRA”) (i) remains in full force and effect and (ii) continues to cover
both foreign and domestic acts of terror, the provisions of TRIPRA shall
determine what is deemed to be included within the definition of “terrorism
coverage.”

 

(i)                                     All Insurance Policies required pursuant
to Section 6.11 (i) shall be issued by companies authorized to do business in
the state where the Premises is located, with a financial strength and claims
paying ability rating of “A” or better by Standard & Poor’s (or “Api” for
Affiliated FM Insurance Company); provided, however, that if the Loan Parties
elect to have the Insurance Policies provided by a syndicate of insurers, then,
if such syndicate consists of five (5) or more members, (A) at least sixty
percent (60%) of the insurance coverage (or seventy-five percent (75%) if such
syndicate consists of four (4) or fewer members) and one hundred (100%) of the
first layer of such insurance coverage shall be provided by insurance companies
having a claims paying ability rating of “A” or better by Standard & Poor’s and
(B) the remaining forty percent (40%) of the insurance coverage (or the
remaining twenty-five percent (25%) if such syndicate consists of four (4) or
fewer members) shall be provided by insurance companies having a claims paying
ability rating of “BBB” or better by Standard & Poor’s; provided, further,
however, that notwithstanding the foregoing, the Liberty Mutual companies shall
be an acceptable carrier under the Insurance Policies provided they maintain
their rating of “A-” with Standard & Poor’s as of the date hereof.; (ii) shall,
with respect to all property insurance policies, name Agent and its successors
and/or assigns as their interest may appear as Agent and Mortgagee; (iii) shall,
with respect to all property insurance policies and rental loss and/or business
interruption insurance policies, contain a Standard Mortgagee Clause and a
Lender’s Loss Payable Endorsement, or their equivalents, naming Agent as the
person to which all payments made by such insurance company shall be paid; (iv)
shall, with respect to all liability policies, name Agent and its successors
and/or assigns as an additional insured; (v) shall contain a waiver of
subrogation in favor of Agent; (vi) shall contain such provisions as Agent deems
reasonably necessary or desirable to protect its interest including endorsements
providing that neither Loan Parties, Agent nor any other party shall be a
co-insurer under said Policies and that Agent shall receive at least thirty (30)
days prior written notice of cancellation; and (vii)

 

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shall be satisfactory in form and substance to Agent and shall be approved by
Agent as to amounts, form, risk coverage, deductibles, loss payees and insureds.
 Certified copies of the Policies shall be delivered to Agent, on the date
hereof with respect to the current Policies, and within thirty (30) days after
the effective date thereof with respect to all renewal Policies.  Loan Parties
shall pay the Insurance Premiums annually in advance as the same become due and
payable and shall furnish to Agent evidence of the renewal of each of the
Policies with receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Agent (provided, however,
that Loan Parties shall not be required to pay such Insurance Premiums nor
furnish such evidence of payment to Agent in the event that the amounts required
to pay such Insurance Premiums have been deposited into the Tax and Insurance
Reserve Account pursuant to Section 3.7 hereof).  In addition to the insurance
coverages described in Section 6.11) above, Loan Parties shall obtain such other
insurance as may from time to time be reasonably required by Agent in order to
protect its interests.  Within thirty (30) days after request by Agent, Loan
Parties shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Agent, taking into consideration
changes in the value of money over time, changes in liability laws, changes in
prudent customs and practices, and the like.

 

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 $1,000,000.  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 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 Leases, 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

 

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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 in the Casualty/Taking Account in accordance
with the Cash Management Agreement and shall be applied by Agent as follows:

 

(i)                                     Subject to the terms of the Ground
Leases, 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);

 

(C)                                the Ground Leases 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

 

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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)                                 if at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the reasonable opinion of Agent be
sufficient to pay in full the balance of the costs which are estimated by Agent
to be incurred in connection with the completion of the Restoration, either
Borrower shall, in Borrower’s sole election, deposit the deficiency, either in
cash or a Letter of Credit, with Agent or Guarantor shall provide a guaranty for
the costs of completion of such Restoration, in form and substance reasonably
satisfactory to Agent, in each case before any further disbursement of the Net
Proceeds shall be made;

 

(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

 

(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 Sections 6.12(d), 6.12(e),
6.12(f) and 6.12(i).

 

(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).

 

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(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 the Casualty/Taking Account and
shall be disbursed to Loan Parties each month in the amount equal to the
proceeds allocable to such month.

 

(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

 

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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 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)                                     Any deposits made pursuant to subsection
(d)(i)(F) above shall be held by Agent in the Casualty/Taking Account in
accordance with the Cash Management Agreement and shall be disbursed for costs
actually incurred in connection with the Restoration on the same conditions
applicable to the disbursement of the Net Proceeds, and until so disbursed
pursuant to Section 6.12 hereof shall constitute additional security for the
Loans and other obligations under the Loan Documents.

 

(k)                                  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 Leases with respect to the
payment or application of Net Proceeds, the provisions of the Ground Leases
shall control.

 

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

 

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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 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 in the Casualty/Taking Account in accordance
with the Cash Management Agreement.  All such Net Restoration Awards shall be
applied as follows:

 

(i)                                     If the Release Conditions are satisfied,
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 Leases, 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

 

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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, 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 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).

 

For purposes of clarification, the Release Conditions set forth in Section
6.12(d) shall apply to a release of Net Restoration Awards, except as otherwise
specified in this Section 6.13(c); provided, however, that references to
“Casualty” and “Net Proceeds” in Section 6.12(d) shall be deemed references to
“Taking” and “Net Restoration Awards.”

 

(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 Leases with respect to the
payment or application of any Net Restoration Award, the provisions of the
Ground Leases shall control.

 

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

 

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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;

 

(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 (1) as permitted pursuant to Section 6.15(c) or
(2) for a Permitted Transfer; provided, that, in the case of a Permitted
Transfer:

 

(i)                                     Except with respect to a Permitted
Transfer described in clauses (c) or (d) 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 (c), (d), or (f) 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

 

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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);

 

(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;

 

(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; and

 

(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)                                 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 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.

 

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(c)                                  Notwithstanding anything to the contrary
herein, a transfer, merger or other business combination of Sunstone REIT to or
with another publically traded REIT (a “REIT Merger”) shall be permitted,
provided no Event of Default shall exist and subject to the prior approval of
each Lender in its sole discretion; provided, however, that in the event the
entity which will remain following any such REIT Merger (“Successor REIT”) has
financial wherewithal and creditworthiness which is equal to or superior to that
of Sunstone REIT prior to such proposed REIT Merger (as determined by the
Lenders in their sole discretion), the Lenders shall not unreasonably withhold
their approval to any such proposed REIT Merger.  Any assumption of the Loan by
the Successor REIT shall be subject to the prior approval of each Lender in its
sole discretion, unless such resulting entity meets the criteria set forth above
in the proviso clause, in which case such approval shall not be unreasonably
withheld.

 

(d)                                 If, as a result of any Transfer pursuant to
Section 6.15(c) above, Sunstone REIT 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 Tangible Net Worth and Unencumbered Cash or
Cash Equivalents (as defined below) 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 a Transfer pursuant to Section 6.15(c)
above, 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 a Transfer pursuant
to Section 6.15(c) above (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).  In addition, the Successor REIT shall be
subject to the restrictions on Transfer set forth in this Section 6.15, provided
that references to “Sunstone REIT” in this Section 6.15 and in the definition of
Permitted Transfer shall be deemed to refer to the Successor REIT.  For purposes
of this Section 6.15(d), the following terms are defined as follows:

 

(i)                                     “Cash or Cash Equivalents” means (i)
cash, (ii) marketable securities issued or directly and fully guaranteed or
insured by the United States or any agency or instrumentality thereof (provided,
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than one (1) year from the date of
acquisition, (iii) time deposits and certificates of deposit of any commercial
bank having, or which is the principal banking subsidiary of a bank holding
company organized under the laws of the United States or any State thereof
having, capital, surplus and undivided profits aggregating in excess of
$500,000,000, with maturities of not more than one (1) year from the date of
acquisition by such replacement guarantor, (iv) commercial paper issued by any
Person incorporated in the United States rated at least A-1 or the equivalent
thereof by Standard & Poor’s or at least P-1 or the equivalent thereof by
Moody’s Investors Service, Inc. and in each case maturing not more than one (1)
year after the date of acquisition by such replacement guarantor and (v)
investments in money market or mutual funds substantially all of whose assets
are comprised of securities of the types described in clauses (i) through (iv)
above, in each case, which are owned by such

 

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replacement guarantor on an individual basis (as opposed to being owned jointly
with any other Person).  In addition, notwithstanding anything to the contrary
set forth herein, undrawn proceeds under a line of credit with respect to such
replacement guarantor shall be deemed to constitute Cash or Cash Equivalents
(but shall not constitute an asset for the purpose of determining such
replacement guarantor’s Tangible Net Worth) to the extent of such undrawn
amounts.

 

(ii)                                  “Tangible Net Worth” means, as of any
date, (i) the aggregate amount of (y) all assets of such replacement guarantor
which would be reflected on a balance sheet or personal financial statements,
plus (z) accumulated depreciation (but excluding therefrom (A) capitalized
interest, debt discount and expense, goodwill, patents, trademarks, service
marks, tradenames, copyrights, franchises, licenses, amounts due from Affiliates
and any other items which would be treated as intangibles under Applicable
Accounting Standards, (B) assets owned jointly with another Person and (C)
assets owned by a trust with respect to which such replacement guarantor is not
the sole, one hundred percent (100%) beneficiary, or with respect to which such
replacement guarantor is not the sole, one hundred percent (100%) controlling
party, less (ii) the aggregate amount of all liabilities of such replacement
guarantor, including contingent liabilities, which would be reflected on a
balance sheet, in each case prepared in accordance with Applicable Accounting
Standards.

 

(iii)                               “Unencumbered Cash or Cash Equivalents”
means Cash or Cash Equivalents that have not been pledged to any Person as
security for any obligation of such guarantor or any other Person.

 

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 fee and 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.

 

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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.

 

(a)                                  Each Loan Party and Loan Party Member 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.

 

(b)                                 Borrower has heretofore delivered to Agent a
true and complete copy of the organizational documents of Loan Parties and
Guarantor.  The only member of Operating Lessee on the date hereof is Borrower. 
The only member of Borrower is the Loan Party Member.  As of the date hereof,
there are no outstanding equity rights with respect to Borrower or Loan Party
Member.

 

(c)                                  Schedule 6.20 contains a true and accurate
chart reflecting the ownership of all of the direct and indirect equity
interests in Loan Parties, including the percentage of ownership interest of the
Persons shown thereon.

 

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 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 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).

 

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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                            Patriot Act.  The Patriot Act requires
all financial institutions to obtain, verify and record certain information that
identifies individuals or business entities which open an “account” with such
financial institution.  Consequently, each Lender (for itself and/or as Agent
for all Lenders hereunder) may from time-to-time request, and Loan Parties shall
provide to such Lender or Agent, Loan Parties’ names, address, tax
identification numbers and/or such other identification information as shall be
necessary for Lender to comply with federal law.  An “account” for this purpose
may include, without limitation, a deposit account, cash management service, a
transaction or asset account, a credit account, a loan or other extension of
credit, and/or other financial services product.

 

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.

 

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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).

 

(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.

 

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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.  Except in connection with a Permitted Transfer, no
direct or indirect interest in Borrower may be pledged as collateral for any
financing or otherwise, except as may be permitted under this Loan Agreement or
expressly approved by Agent and Requisite Lenders in their discretion.

 

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.  Excepting
the Operating Lease, 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.

 

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 1.00:1.00 (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 ten (10) Business Days
after the delivery of the 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 or (z)
Borrower delivers to Agent a Default DSCR Letter of Credit or a Default DSCR
Cash Deposit.  Any such Letter(s) of Credit or Default DSCR Cash Deposit
delivered to Agent shall be held in accordance with Section 3.6.  Provided no
Default or Event of Default exists, Agent shall return each Default DSCR Letter
of Credit or the Default DSCR Cash Deposit, as applicable, then being held by
Agent at such time as the Adjusted Debt Service Coverage Ratio shall have been
equal to or greater than 1.10:1.00 for two (2) consecutive Testing Determination
Dates; provided that, if the Adjusted Debt Service Coverage Ratio is less than
1.10:1.00 for two (2) 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 or apply the Default DSCR Cash Deposit to the
Obligations in such order as 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

 

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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 Leases.

 

(a)                                  Borrower shall:

 

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

 

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

 

(iii)                               observe and perform all other terms,
covenants and conditions of the Ground Leases prior to the expiration of any
applicable grace period provided therein following the delivery of the notice,
if any, required under the Ground Leases to commence such grace period and do
everything necessary to preserve and to keep unimpaired and in full force and
effect the Ground Leases;

 

(iv)                              upon request of Agent, deliver to Agent
satisfactory evidence that all such rents and other sums payable, pursuant to
the Ground Leases, which are then due and payable, have been paid; and

 

(v)                                 shall promptly notify Agent of the giving of
any notice by the Ground Lessor under the Ground Leases to Borrower or Operating
Lessee of any default by Borrower, as lessee thereunder, or Operating Lessee, as
sublessee thereunder, or any other material matter, and promptly deliver to
Agent a true copy of each such notice.

 

(b)                                 Borrower shall not:

 

(i)                                     cause or permit the occurrence of any
event that would cause either 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 Leases;

 

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

 

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

 

(c)                                  If Borrower shall be in default beyond
applicable cure periods under any Ground Lease, then, subject to the terms of
such Ground Lease, Agent on behalf of the Lenders shall have the right (but not
the obligation), to cause such default or defaults under such the

 

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Ground Lease to be remedied and otherwise exercise any and all rights of
Borrower under such Ground Lease, as may be necessary to prevent or cure any
default, and Agent shall have the right to enter all or any portion of the
Premises at such times and in such manner as Agent deems necessary, to prevent
or to cure any such default; provided, that if a cure or grace period remains
available to Borrower with respect to such default under the terms of such
Ground Lease, and if Borrower has commenced and is diligently pursuing the cure
of such default, and provided no Event of Default or Default then exists, Agent
shall defer the commencement of its own activities with respect to such cure
unless Agent determines in its sole and absolute discretion that either (i) the
remaining period of time available for such cure under the terms of such Ground
Lease is adequate (but not more than adequate) to afford Agent a reasonable
opportunity for the cure of such default (which determination may be based on
the assumption that Borrower shall have discontinued its efforts to cure such
default, regardless of whether that assumption is true); (ii) Borrower shall
have ceased to pursue diligently the cure of such default or shall have
communicated its intention to do so; or (iii) immediate steps are required to be
taken in order to cure such default so as to preserve, maintain or protect the
Premises as collateral for the Loan or to prevent any material adverse effect
thereon.  Without limiting the foregoing, upon any such default, Borrower shall
promptly execute, acknowledge and deliver to Agent such instruments as may
reasonably be required to permit Agent to cure any default under the Ground
Leases or permit Agent to take such other action required to enable Agent to
cure or remedy the matter in default and preserve the security interest of Agent
under the Loan Documents with respect to the Premises.  Borrower irrevocably
appoints Agent as its true and lawful attorney-in-fact to do, in its name or
otherwise, any and all acts and to execute any and all documents that are
necessary to preserve any rights of Borrower under or with respect to the Ground
Leases, including, without limitation, the right to effectuate any extension or
renewal of the Ground Leases, or to preserve any rights of Borrower whatsoever
in respect of any part of the Ground Leases (and the above powers granted to
Agent are coupled with an interest and shall be irrevocable).  The actions or
payments of Agent to cure any default by Borrower under the Ground Leases shall
not remove or waive, as between Borrower and the Lenders, the default that
occurred under this Loan Agreement by virtue of the default by Borrower under
the Ground Leases.  All sums expended by Agent to cure any such default shall be
paid by Borrower to Agent, upon demand, with interest on such sum, at the
Default Rate if applicable, from the date such sum is expended to and including
the date the reimbursement payment is made to Agent.  All such indebtedness
shall be deemed to be secured by the Mortgage.  The provisions of this
subsection (c) shall be in furtherance of any rights Agent may have under the
Ground Leases.

 

(d)                                 Borrower shall use commercially reasonable
efforts to enforce each material covenant or obligation of the Ground Leases in
accordance with their terms.  Within ten (10) days after receipt of written
demand by Agent, Borrower shall use reasonable efforts to obtain from the Ground
Lessors and furnish to Agent the estoppel certificates of Ground Lessors setting
for the matters contained in the estoppel certificate delivered in connection
with the closing of the Loan.

 

(e)                                  Borrower shall deliver to the Ground
Lessors, if requested by Agent or any successor, written notice of the identity
of each successor to Agent.

 

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(f)                                    Borrower shall furnish to Agent all
information that Agent may reasonably request from time to time concerning the
Ground Leases and Borrower’s compliance with the Ground Leases.

 

(g)                                 Borrower, promptly upon learning that a
Ground Lessor has failed to perform the material terms and provisions under its
Ground Lease and immediately upon learning of a rejection or disaffirmance or
purported rejection or disaffirmance of a Ground Lease pursuant to any state or
federal bankruptcy law, shall notify Agent thereof.  Promptly after execution of
any amendment to the Mortgage covering the Premises, Borrower shall notify the
Ground Lessors in a form satisfactory to Agent of the execution and delivery of
the Mortgage or such amendment.  Agent shall have the right, but not the
obligation, to give Ground Lessors at any time any notice described in this
subsection or otherwise relating to the Loan.

 

(h)                                 Borrower shall promptly notify Agent of any
request that any party to the Ground Leases makes for arbitration or other
dispute resolution procedure pursuant to the such Ground Lease and of the
institution of any such arbitration or dispute resolution.  Borrower hereby
authorizes Agent to participate in any such arbitration or dispute resolution
but such participation shall not, unless an Event of Default exists, be to the
exclusion of Borrower.  Borrower shall promptly deliver to Agent a copy of the
determination of each such arbitration or dispute resolution mechanism.

 

(i)                                     If Agent or its designee shall acquire
or obtain a new ground lease following a termination of a Ground Lease, then
Borrower shall have no right, title or interest whatsoever in or to such new
Ground Lease, or any proceeds or income arising from the estate arising under
any such new Ground Lease, including from any sale or other disposition
thereof.  Agent or its designee shall hold such new ground lease free and clear
of any right or claim of Borrower.

 

(j)                                     Notwithstanding anything to the contrary
contained in this Loan Agreement with respect to the Ground Leases:

 

(i)                                     The lien of the Mortgage attaches to all
of Borrower’s rights and remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, including, without limitation, all of
Borrower’s rights, as debtor, to remain in possession of the Premises.

 

(ii)                                  Borrower shall not, without Agent’s prior
written consent, elect to treat the Ground Leases as terminated under subsection
365(h)(l) of the Bankruptcy Code.  Any such election made without Agent’s prior
written consent shall be void.

 

(iii)                               As security for the Loan, Borrower
unconditionally assigns, transfers and sets over to Agent for the benefit of the
Lenders all of Borrower’s claims and rights to the payment of damages arising
from any rejection by a Ground Lessor under its Ground Lease under the
Bankruptcy Code, including, without limitation, the right to file and prosecute
any proofs of claim, complaints, motions, applications, notices and other
documents in any case in respect of the Ground Lessor under the Bankruptcy
Code.  This assignment constitutes a present, irrevocable and unconditional
assignment

 

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of the foregoing claims, rights and remedies, and shall continue in effect until
all of the Loan shall have been satisfied and discharged in full.  Any amounts
received by Agent or Borrower as damages arising out of the rejection of a
Ground Lease as aforesaid shall be applied to all costs and expenses of and
Agent and the Lenders (including, without limitation, attorney’s fees and costs)
incurred in connection with the exercise of any of their rights or remedies in
accordance with the applicable provisions of this Loan Agreement.

 

(iv)                              If, pursuant to subsection 365(h) of the
Bankruptcy Code, Borrower seeks to offset, against the rent reserved in the
Ground Leases, the amount of any damages caused by the nonperformance by a
Ground Lessor of any of its obligations thereunder after the rejection by Ground
Lessor of its Ground Lease under the Bankruptcy Code, then Borrower shall not
affect any offset of any amounts objected to by Agent.

 

(v)                                 If any action, proceeding, motion or notice
shall be commenced or filed in respect of any Ground Lessor of all or any part
of the Property in connection with any case under the Bankruptcy Code, Borrower
shall conduct any such litigation with counsel approved by Agent.  Borrower
shall, upon demand, pay to Agent all costs and expenses (including reasonable
attorneys’ fees and costs) actually paid or actually incurred by Agent in
connection with the prosecution or conduct of any such proceedings.  All such
costs and expenses shall be secured by the lien of the Mortgage.

 

(vi)                              Borrower shall promptly, after obtaining
knowledge of such filing notify Agent orally of any filing by or against any
Ground Lessor of a petition under the Bankruptcy Code.  Borrower shall
thereafter promptly give written notice of such filing to Agent, setting forth
any information available to Borrower as to the date of such filing, the court
in which such petition was filed, and the relief sought in such filing. 
Borrower shall promptly deliver to Agent any and all notices, summonses,
pleadings, applications and other documents received by Borrower in connection
with any such petition and any proceedings relating to such petition.

 

(vii)                           Borrower shall promptly notify Agent upon
obtaining notice or knowledge that any Ground Lessor has filed a motion or
sought other relief to sell or otherwise dispose of such Ground Lessor’s
interest in the Property free and clear of its Ground Lease pursuant to Section
363(f) of the Bankruptcy Code, and Borrower shall not consent to or fail to
object to any such sale or other disposition.

 

(viii)                        Borrower shall not, without Agent’s prior written
consent, exercise any option to purchase under the Ground Leases.

 

(ix)                                Borrower shall not, without Agent’s prior
written consent, fail to exercise any option or right to renew or extend the
term of the Ground Leases in accordance with its terms (provided that the
foregoing shall not obligate Borrower to extend the term of the Ground Lease
beyond the Maturity Date), and shall give immediate written notice to Agent and
shall execute, acknowledge, deliver and record any document requested by Agent
to evidence the Lien of the Mortgage on such extended

 

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or renewed lease term.  If Borrower shall fail to exercise any such option or
right as aforesaid, Agent may exercise the option or right as Borrower’s agent
and attorney-in-fact as provided above in Agent’s own name or in the name of and
on behalf of a nominee of Agent, as Agent may determine in the exercise of its
sole and absolute discretion.

 

(x)                                   Borrower shall not waive, excuse, condone
or in any way release or discharge the Ground Lessors of or from their material
obligations, covenant and/or conditions under the Ground Leases, without the
prior written consent of Agent.

 

(xi)                                Borrower shall not, without Agent’s prior
written consent, surrender, terminate, forfeit, or suffer or permit the
surrender, termination or forfeiture of, or change, modify or amend the Ground
Leases.  Consent to one amendment, change, agreement or modification shall not
be deemed to be a waiver of the right to require consent to other, future or
successive amendments, changes, agreements or modifications.  Any acquisition of
any Ground Lessor’s interest in the applicable Ground Lease by Borrower or any
Affiliate of Borrower shall be accomplished by Borrower in such a manner so as
to avoid a merger of the interests of such Ground Lessor and lessee in such
Ground Lease unless consent to such merger is granted by Agent.

 

(xii)                             Borrower shall not, without Agent’s prior
written consent, cause, agree to, or permit to occur any subordination, or
consent to the subordination of, the Ground Leases to any mortgage, deed of
trust or other Lien encumbering (or that may in the future encumber) the estate
of the lessor under the Ground Leases in any premise(s) demised to Borrower
thereunder (other than a subordination or consent to subordination expressly
required by the terms of the Ground Leases, in which Borrower obtains rights of
non-disturbance for so long as Borrower is not in default under the Ground
Leases after applicable notice or cure periods).

 

Section 6.36                            Operating Leases.

 

(a)                                  Each Loan Party shall (i) perform and
observe as and when required thereunder all of the material 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.

 

(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)                                  Except in connection with the Hotel
Rebranding, Loan Parties shall not, without the prior written consent of Agent,
which consent shall not be unreasonably withheld: (i)

 

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modify, amend, 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.

 

Section 6.37                            Hotel Rebranding and Renovation.

 

(a)                                  Provided no Default, Event of Default or
Cash Sweep Condition shall exist, Borrower may undertake a rebranding of the
Premises from a Doubletree Guest Suites to a Hilton Suites-branded hotel (or
such other replacement Property Manager and Hotel Franchisor as Agent may
approve, such approval not to be unreasonably withheld or delayed) and undertake
a mandated property improvement plan of the Premises (such rebranding and
renovation being referred to herein as the “Hotel Rebranding”) at the sole
expense of Loan Parties and Guarantor, provided the following conditions are
satisfied, which conditions shall be subject to Agent’s approval, not to be
unreasonably withheld or delayed:

 

(i)                                     satisfaction of the conditions set forth
in Section 6.9(c)(i), (ii), (iii), (iv), (vi) and (vii) with respect to the
Hotel Rebranding;

 

(ii)                                  prior to commencing such Hotel Rebranding,
Guarantor or another entity reasonably satisfactory to Agent and the Lenders
shall have furnished Agent with either a guaranty for the costs of completion of
the Hotel Rebranding, in form and substance satisfactory to Agent, including a
covenant by Guarantor or such other guarantor to maintain a minimum Tangible Net
Worth and minimum Unencumbered Cash or Cash Equivalents (as such terms are
defined in Section 6.15(d)) of $75,000,000 and $15,000,000, respectively, or
other collateral satisfactory to Agent;

 

(iii)                               Agent’s reasonable approval of any new
management agreement or franchise agreement or other agreements with respect to
the operation of the Premises as a Hilton Suites (or such other brand and
franchisor as approved by Agent as set forth above) hotel (including a manager’s
consent and subordination agreement acceptable to Agent); and

 

(iv)                              such other conditions and deliveries
reasonably required by Agent based upon the proposed Hotel Rebranding.

 

Lenders and Agent acknowledge that provided the guaranty described in Section
6.37(a)(ii) is delivered, Agent will approve rebranding to a Hilton, Marriott,
Hyatt, Sheraton, or InterContinental hotel provided that none of these entities
have experienced a significant reputational or financial downgrade prior to such
rebranding, as determined by Agent in its sole and absolute discretion.

 

(b)                                 All repairs and alterations in connection
with the Hotel Rebranding shall be done in a good and workmanlike manner and
shall be completed in accordance with all Legal

 

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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.  After completion of the Hotel Rebranding, Loan Parties shall provide
Agent with a copy of the as-built plans and specifications for same, if
available.

 

(c)                                  From time to time and upon not less than
two (2) Business Days’ prior notice to Loan Parties, unless in the event of an
emergency or an Event of Default shall exist, 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 the Hotel Rebranding,
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
all the items set forth in Section 6.9(d) with respect to the Hotel Rebranding. 
In addition, upon Agent’s reasonable request, Borrower shall provide periodic
progress reports with respect to the Hotel Rebranding in form and substance
reasonably satisfactory to Agent (including, without limitation, satisfactory
lien waivers and updated title reports).

 

Section 6.38                            Post-Closing Deliverables.  Loan Parties
shall deliver to Agent each of the items described in Schedule 6.38 attached
hereto, in form and substance satisfactory to Agent, within the applicable time
period that is described on such Schedule.

 

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 Notes;

 

(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;

 

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(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 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 monthly or 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 monthly or 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;

 

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(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 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 Borrower’s receipt of notice that the applicable
certification, representation or warranty was incorrect or misleading;

 

(l)            Loan Parties use, or permit the use of, funds from the Accounts
for any purpose other than the purpose for which such funds were disbursed from
the Accounts;

 

(m)          the Management Agreement or the Hotel Franchise 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 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 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 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;

 

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(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;

 

(s)           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 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;

 

(t)            The liquor license for the Premises is revoked or, for any
reason, the applicable Governmental Authorities, or any of them, require the
cessation of the sale of alcoholic beverages at the Improvements (but not at any
other hotel in the Times Square area) for a period of more than thirty (30)
consecutive days; or

 

(u)           Borrower and/or Operating Lessee ceases to do business as a hotel
at the Premises or terminates such business for any reason whatsoever (other
than a temporary cessation in connection with any renovation or restoration, of
the Premises in compliance with this Agreement following a casualty or
condemnation).

 

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, (1) by notice to Loan Parties, declare the indebtedness evidenced by
the Notes, 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,
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) without presentment, demand,
protest, notice of protest or dishonor, notice of intent to accelerate the
maturity hereof, notice of acceleration of the maturity thereof, or other notice
of default of any kind, all of which are hereby expressly waived by Loan
Parties, (2) terminate the obligation if any, of the Lenders to advance amounts
hereunder, and (3) 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.

 

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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,
including the Ground Leases, the Property Management Agreement, and the Hotel
Franchise Agreement,(iii) satisfy liens, claims and judgments against the
Collateral, (iv) pay Impositions, 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 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, Ground Leases,
Management Agreement, Franchise 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 to:

 

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(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 or otherwise,
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 within ten (10) Business Days of receipt by
Loan Parties of written notice from Agent of the payment of the same with
interest at the Default Rate from the time incurred by Agent or any Lender to
the date of payment to Agent, and all of the foregoing sums, including such
interest at the Default Rate, shall be deemed and shall constitute disbursements
of Loan proceeds under this Loan Agreement and be evidenced by the Notes 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 Notes 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

 

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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 Cash Management 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.

 

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, the Hotel Franchise Agreement 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, the Ground Leases, the Hotel
Franchise Agreement, 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 and Hotel Franchise 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

 

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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.  Except as set forth in the Hotel Franchise Agreement or the Comfort
Letter, 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 Hotel Franchise Agreement entered into with any Affiliate of Loan
Parties and/or may require that Loan Parties terminate the Hotel Franchise
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 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 or
cash deposit 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.

 

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ARTICLE VIII

 

ASSIGNMENTS AND PARTICIPATIONS

 

Section 8.1            Assignment and Participations.

 

(a)           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) without the consent of Borrower (not to be unreasonably
withheld, delayed or conditioned), which consent shall be required solely as
long as no Event of Default shall exist and solely to the extent that the
proposed transfer is to an Assignee which is not an Eligible Assignee; 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 to grant a security interest
in all or any portion of such Lender’s interest in the Notes or the Loan 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”) or a Pfandbrief Transfer (as defined
below).  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 Pfandbrief Transfer, a
Lender making any such assignment shall notify Borrower and to the extent
required under the Ground Leases, the Ground Lessors 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.

 

(b)           Pfandbrief Transfer.  Notwithstanding anything to the contrary
contained herein, the pledge or assignment by a Lender, including, without
limitation, Eurohypo or any successor Agent (the “Transferring Lender”) of all
or any part of its interest in the Loan

 

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(the “Transferred Interest”) to a trustee, administrator or receiver or their
respective nominees, collateral agents or collateral trustees (a “Security
Trustee”) of a mortgage pool securing covered mortgage bonds issued by an
eligible German bank (Pfandbriefbanken) permitted to issue covered mortgage
bonds (Hypothekenpfandbriefe) under German bond law (Pfandbriefgesetz 2005, as
the same may be amended or modified and in effect from time to time, and/or any
substitute or successor legislation thereto) (any such pledge or assignment, a
“Pfandbrief Transfer”) shall be permitted.  Any such Pfandbrief Transfer shall
be subject to the following terms and conditions:

 

(i)            Any further pledge or assignment by the Security Trustee of the
Transferred Interest or any acquisition of the Transferred Interest by any
Person other than the Security Trustee (each, an “Additional Transfer”) shall be
subject to the other requirements set forth in this Section 8.1 and shall
require the prior written consent of Agent and Borrower in accordance with this
Agreement.

 

(ii)           Neither the Pfandbrief Transfer, nor any foreclosure on the
Transferred Interest, nor any Additional Transfer, shall result in the release
of the Transferring Lender from any of its obligations under this Loan Agreement
or the other Loan Documents (and the Transferring Lender shall remain
responsible for all of the obligations originally incurred by it under this Loan
Agreement and the other Loan Documents with respect to the Transferred
Interest), except, in the case of any such Additional Transfer that complies
with the terms and provisions of the Loan Documents pursuant to which the
Transferring Lender would be released from its obligations accruing from and
after the Additional Transfer (including any required consent of Borrower to
such transfer), for the obligations accruing from and after such Additional
Transfer.  Consequently, notwithstanding the Pfandbrief Transfer, nor any
foreclosure on the Transferred Interest, nor any Additional Transfer, the
Transferring Lender shall remain obligated to fund its share of all advances of
the Loan, all expense reimbursements, all indemnification payments, and all
other amounts originally required to be funded by the Transferring Lender under
the Loan Documents to the same extent as if no Pfandbrief Transfer, foreclosure
on the Transferred Interest, or any Additional Transfer had occurred (except if
such Additional Transfer complies with the terms and provisions of the Loan
Documents pursuant to which the Transferring Lender would be released from its
obligations accruing from and after the Additional Transfer (including any
required consent of Borrower to such transfer), in which case the Transferring
Lender shall be released from any such obligations accruing from and after such
Additional Transfer in accordance with the terms of the Loan Documents).

 

(iii)          Notwithstanding the Pfandbrief Transfer, or any foreclosure on
the Transferred Interest, or any Additional Transfer, the Transferring Lender
(and not the Security Trustee or any other transferee or assignee) shall have
the sole and exclusive right and power to exercise any and all rights of a
Lender (whether contractual or otherwise) under, pursuant to or contemplated by
the Loan Documents with respect to the Transferred Interest including without
limitation, the right to grant any and all discretionary approvals, consents and
voting rights under the Loan Documents that relate to the Transferred Interest,
except that, in the case of an Additional Transfer that complies with the terms
and provisions of the Loan Documents pursuant to which the

 

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Transferring Lender would be released from its obligations accruing from and
after the Additional Transfer (including any required consent of Borrower to
such transfer), the transferee or assignee shall succeed to the rights and
powers originally held by the Transferring Lender to exercise any and all
approval, consent and voting rights under the Loan Documents with respect to the
Transferred Interest.

 

(iv)          The interest acquired by the Security Trustee pursuant to the
Pfandbrief Transfer or any foreclosure on the Transferred Interest, and the
interest acquired by any other Person pursuant to any Additional Transfer, shall
remain subject to all rights, defenses, offsets, claims and counterclaims which
Agent, any Lender or Borrower may have against the Transferring Lender, except,
in the case of an Additional Transfer that complies with the terms and
provisions of the Loan Documents pursuant to which the Transferring Lender would
be released from its obligations accruing from and after the Additional Transfer
(including any required consent of Borrower to such transfer), for any rights,
defenses, offsets, claims and counterclaims which Agent, any Lender or Borrower
may have against the Transferring Lender as a result of any acts or occurrences
from and after the date of such Additional Transfer.

 

(v)           Notwithstanding the Pfandbrief Transfer, or any foreclosure on the
Transferred Interest, or any Additional Transfer, Agent, any Lender and Borrower
shall be entitled to deal exclusively with the Transferring Lender as the
“Lender” with respect to the Transferred Interest, except in the case of an
Additional Transfer which complies with the terms and provisions of the Loan
Documents pursuant to which the Transferring Lender would be released from its
obligations accruing from and after the Additional Transfer (including any
required consent of Borrower to such transfer), in which case Agent, any Lender
or Borrower shall be entitled to deal with the transferee or assignee of the
Transferred Interest.  Borrower, Agent and the Lenders also hereby confirm and
agree, with respect to any Pfandbrief Transfer or Additional Transfer, that
(i) all notices and other communications to the Lenders shall be made to Agent
in the manner and at the address for Agent specified in or pursuant to the Loan
Agreement and (ii) Borrower and Agent shall be entitled to exclusively rely upon
any certification, notice, document, authorization, instruction or other
communication (including any thereof by telephone, telecopy, telegram or cable)
made or given by Agent notwithstanding any contrary or conflicting
certification, notice, document, authorization, instruction or other
communication made or give by the assignee of the Pfandbrief Transfer or
Additional Transfer.

 

(vi)          No Pfandbrief Transfer, nor any foreclosure on the Transferred
Interest, nor any Additional Transfer shall affect or change in any way any of
the rights or obligations with respect to the Transferred Interest.  Without
limiting the foregoing, any rights or claims of the pledgee or transferee of the
Transferred Interest against Agent shall be subject to the same limitations and
exculpations as are set forth with respect to the rights and claims of a
“Lender” against Agent contained herein, and shall not in any event be greater
than the rights or claims that could have been asserted by the Transferring
Lender in accordance with the Loan Documents with respect to the Transferred
Interest had such Pfandbrief Transfer, foreclosure on the Transferred Interest
or Additional Transfer not occurred.

 

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(vii)         Borrower, Agent and Eurohypo also hereby confirm and agree that,
notwithstanding any Pfandbrief Transfer, any foreclosure on the Transferred
Interest, or any Additional Transfer involving the interest of Eurohypo as a
Lender, nothing herein is intended to, or shall, modify or affect the rights,
duties or obligations of Eurohypo AG, New York Branch, in its capacity as Agent
for the Lenders, and any assignment, resignation, removal and/or replacement of
Agent shall continue to be governed by, and subject to the terms and conditions
set forth in, Section 9.13 (and other applicable provisions, if any) of this
Loan Agreement.  Furthermore, nothing herein shall constitute Borrower’s consent
to, or approval of, the appointment of any Security Trustee or any other Person
as a successor Agent, or constitute a waiver of any of the conditions or other
provisions of this Loan Agreement applicable to the appointment of such a
successor.

 

(viii)        The pledgee or transferee of any interest pursuant to the
Pfandbrief Transfer, any foreclosure on the Transferred Interest or any
Additional Transfer shall be bound by the provisions of this Loan Agreement as
if it were a “Lender” hereunder.

 

(ix)           Any Pfandbrief Transfer or Additional Transfer shall be at no
cost or expense to Borrower, shall not increase Borrower’s obligations under the
Loan other than in a de minimus fashion, and shall be in accordance with all
material applicable law.  The Transferring Lender shall promptly reimburse Agent
for any and all out-of-pocket costs and expenses incurred by Agent in connection
with Agent’s consideration of the request for the consent set forth herein and
in connection with the negotiation and documentation of the same, including,
without limitation, reasonable 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.  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

 

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by Agent or any Lender in connection with the Loan; provided, however, that any
disclosure regarding Guarantor or Sunstone REIT shall be limited to publically
available information.  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, 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.  In the event
the Loan is securitized, Loan Parties shall (i) certify that the Loan Parties
have examined those specific portions of the public offering document issued in
such syndication (“Disclosure Documents”) identified in writing by Agent as
specially applying to Borrower, Operating Lessee, Guarantor, Manager, Hotel
Franchisor or the Premises and that such portions do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading (the “Securities Certification”) and (ii) provide market
standard indemnities with respect to the information provided or certified by
the Loan Parties and included in the Disclosure Documents insofar as Agent or
any Lender becomes subject to any losses, claims, actual damages or liabilities
attributable to any inaccuracy in the Securities Certification (and then, only
to the extent that Agent or such Lender did not have actual knowledge, at the
time that public offering documents were published, of such inaccuracy).

 

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(b)           Agent shall, with the approval or at the direction of all the
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 all the Lenders, (i) cause the Notes, the Mortgage and the other Loan
Documents to be split into one or more senior and one or more junior loans
(which loans may be secured by mortgages) in whatever proportion Agent deems
appropriate, (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 , individually or in the
aggregate, 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, individually or in the
aggregate would alter the economic terms 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.  Lenders 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

 

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the names, addresses and interests of Lenders.  This Section 8.5 shall not apply
to any Central Bank Pledge or Pfandbrief Transfer.

 

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 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
Eurohypo 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 Guarantor or
any direct or indirect owner of Loan Parties.

 

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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 or any Loan Party.

 

(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

 

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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 Eurohypo’ s
ownership interest in the Loan as a Lender, Eurohypo 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 Eurohypo in its individual capacity for so long as
Eurohypo 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 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,
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transfer its interest in the Loan to Aareal Bank AG, it is acknowledged and
agreed that all repayments of principal 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.

 

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 Notes, 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 Mortgage 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
Agent hereunder, shall require the consent of Agent.

 

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(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 Notes, 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 (provided that no such increase shall be deemed to result from the
operation of the provisions of this Loan Agreement which contain indemnification
obligations of such Lender obligations of such Lender with respect to protective
advances as more fully provided in Sections 9.9 and 9.14 hereof; (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; or
(9) 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

 

(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 Notes, 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,” “Default DSCR
Cash Deposit,” “Cash Sweep Letter of Credit,” “Casualty Threshold,”
“Condemnation Threshold,” “Debt Service Coverage Ratio,” “Default DSCR Letter of
Credit,” “Material Adverse Effect,” “Material Lease Action,” “Material Operating
Agreement,” “Material Taking,” “Single Purpose Entity,” “Spread Maintenance
Premium,” “Permitted Indebtedness,” “Permitted Transfer,” or “Transfer;

 

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(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)          amend or modify Section 8.1;

 

(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;

 

(G)           in connection with an Event of Default which is continuing:
(1) consummate a foreclosure or accept a deed in lieu of foreclosure (provided,
however, in the event the Event of Default is a monetary Event of Default and
the Loan has been accelerated or the Event of Default is a result of a failure
by Borrower to pay the Obligations in full on the Maturity Date, and the
Requisite Lenders have failed to agree on an enforcement action within ninety
(90) days after such Event of Default, Agent shall proceed to consummate a
foreclosure or accept a deed in lieu of foreclosure without obtaining the
consent of the Requisite Lenders); (2) 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 Agent hereunder; (3) 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 Agent hereunder; or (4) approve of any 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; or

 

(H)          permit the pledge of any direct or indirect interest in Borrower as
collateral for any financing or otherwise, approve the lender of such financing
or the terms of such financing.

 

(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

 

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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 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.

 

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

 

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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 Notes, 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 Notes, 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 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.

 

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(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 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.

 

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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
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 (C) the interest in the Loan being held by Agent and/or
its Affiliates as a Lender shall be less than twenty-five percent (25%) 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).  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 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.

 

(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.

 

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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 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,

 

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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         Defaults; Enforcement Action Plan.

 

(a)           Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default unless Agent has received notice
from a Lender or a Loan Party specifying such Default or Event of Default and
stating that such notice is a “Notice of Default”.  In the event that Agent
receives such a notice of the occurrence of a Default or an Event of Default, or
has actual knowledge of the occurrence of a Default or Event of Default, Agent
shall give prompt notice thereof to the Lenders.  Within ten (10) Business Days
of delivery of such notice of Default or Event of Default from Agent to the
Lenders (or such shorter period of time as Agent determines is necessary), Agent
and the Lenders shall consult with each other to determine a proposed course of
action.  Agent shall (subject to Section 9.9(b)) take such action with respect
to such Event of Default as shall be directed by the Requisite Lenders, provided
that, (A) unless and until Agent shall have received such directions, Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, including decisions (1) to make protective advances that Agent
determines are necessary to protect or maintain the Premises and (2) to commence
foreclosure on the Mortgage Property or any other Collateral or exercise any
other remedy, with respect to such Event of Default as it shall deem advisable
in the interest of the Lenders except to the extent that this Loan Agreement
expressly requires that such action be taken, or not be taken, only with the
consent or upon the authorization of all of the

 

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Lenders or the Requisite Lenders and (B) no actions approved by the Requisite
Lenders shall violate the Loan Documents or Applicable Law.  Each of the Lenders
acknowledges and agrees that no individual Lender may separately enforce or
exercise any of the provisions of any of the Loan Documents (including the
Notes) other than through Agent.  Agent shall advise the Lenders of all material
actions which Agent takes in accordance with the provisions of this
Section 9.16(a) and shall continue to consult with the Lenders with respect to
all of such actions.  Notwithstanding the foregoing, if the Requite Lenders
shall at any time direct that a different or additional remedial action be taken
from that already undertaken by Agent, including the commencement of foreclosure
proceedings, such different or additional remedial action shall be taken in lieu
of or in addition to, the prosecution of such action taken by Agent; provided
that all actions already taken by Agent pursuant to this Section 9.16(b) shall
be valid and binding on each Lender.  All money (other than money subject to the
provisions of Section 9.9(b)) received from any enforcement actions, including
the proceeds of a foreclosure sale of the Premises, shall be applied, first, to
the payment or reimbursement of Agent for expenses incurred in accordance with
the provisions of Sections 9.16(b), (c) and (d) and 9.9 and to the payment of
the fees required under the Administrative Fee Letter to the extent not paid by
Borrower pursuant to Section 9.17, second, to the payment or reimbursement of
the Lenders for expenses incurred in accordance with the provisions of Sections
9.16(b), (c) and (d) and 9.17; third, to the payment or reimbursement of the
Lenders for any advances made pursuant to Section 9.16(b); and fourth, pari
passu to the Lenders in accordance with their respective Pro Rata Shares, unless
an unpaid amount is owed pursuant to Section 9.14, in which event such unpaid
amount shall be deducted from the portion of such proceeds of the Defaulting
Lender and be applied to payment of such unpaid amount to the Lender which
advanced such sums pursuant to Section 9.14(b).; and fifth, to the Lender or, if
more than one Lender, pari passu to the Lenders party to any Lender Interest
Rate Protection Agreement for Obligations related thereto.

 

(b)           All losses with respect to interest (including interest at the
Default Rate) and other sums payable pursuant to the Notes or incurred in
connection with the Loan shall be borne by the Lenders in accordance with their
respective Pro Rata Share of the Loan.  All losses incurred in connection with
the Loan, the enforcement thereof or the realization of the security therefor,
shall be borne by the Lenders in accordance with their respective Pro Rata Share
of the Loan, and the Lenders shall promptly, upon request, remit to Agent their
respective Pro Rata Share of (i) any expenses incurred by Agent in connection
with any Default to the extent any expenses have not been paid by Loan Parties,
(ii) any advances made to pay taxes or insurance or otherwise to preserve the
Lien of the Security Documents or to preserve and protect the Premises, whether
or not the amount necessary to be advanced for such purposes exceeds the amount
of the Mortgage, (iii) any other expenses incurred in connection with the
enforcement of the Mortgage or other Loan Documents, and (iv) any expenses
incurred in connection with the consummation of the Loans not paid or provided
for by Loan Parties.  To the extent any such advances are recovered in
connection with the enforcement of the Mortgage or the other Loan Documents,
each Lender shall be paid its Pro Rata Share of such recovery after deduction of
the expenses of Agent and the Lenders.

 

(c)           If, at the direction of the Lenders or otherwise as provided in
Section 9.16(a), any action(s) is brought to collect on the Notes or enforce the
Security Documents or any other Loan Document, such action shall (to the extent
permitted under applicable law and the decisions of the court in which such
action is brought) be an action brought by Agent and the

 

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Lenders, collectively, to collect on all or a portion of the Notes or enforce
the Security Documents or any other Loan Document and counsel selected by Agent
shall prosecute any such action on behalf of Agent and the Lenders, and Agent
and the Lenders shall consult and cooperate with each other in the prosecution
thereof.  All decisions concerning the appointment of a receiver while such
action is pending, the conduct of such receivership, the conduct of such action,
the collection of any judgment entered in such action and the settlement of such
action shall be made by Agent.  The costs and expenses of any such action shall
be borne by the Lenders in accordance with each of their respective Pro Rata
Shares.

 

(d)           If, at the direction of the Requisite Lenders or otherwise as
provided in Section 9.16(a), any action(s) is brought to foreclose the Mortgage,
such action shall (to the extent permitted under applicable law and the
decisions of the court in which such action is brought) be an action brought by
Agent and the  Lenders, collectively, to foreclose all or a portion of the
Mortgage and collect on the Notes.  Counsel selected by Agent shall prosecute
any such foreclosure on behalf of Agent and the Lenders and Agent and the
Lenders shall consult and cooperate with each other in the prosecution thereof. 
All decisions concerning the appointment of a receiver, the conduct of such
foreclosure, the acceptance of a deed in lieu of foreclosure, the bid on behalf
of Agent and the Lenders at the foreclosure sale of the Mortgaged Property, the
manner of taking and holding title to the Premises (other than as set forth in
subsection (e) below), the sale of the Premises after foreclosure, and the
commencement and conduct of any deficiency judgment proceeding shall be made by
Agent.  The costs and expenses of foreclosure will be borne by the Lenders in
accordance with their respective Pro Rata Shares.

 

(e)           If the Premises (or any part thereof) is acquired by Agent or its
nominee as a result of a foreclosure or the acceptance of a deed or assignment
in lieu of foreclosure, or is retained in satisfaction of all or any part of the
Obligations, the title to the Premises shall be held as required by the
Requisite Lenders provided title is held in an entity which limits liability of
the Lenders, or, in the absence of such direction of the Requisite Lenders, at
the sole option of Agent, be held in the name of Agent, or a nominee or
subsidiary of Agent, as administrative agent, for the ratable benefit of the
Lenders, or a limited liability company of which Agent (or a nominee or
subsidiary of Agent, as administrative agent, for the ratable benefit of the
Lenders) is the manager and the Lenders (or their permitted assignees) are the
members in proportion to their Pro Rata Shares, which shall be formed pursuant
to a form of limited liability company agreement approved by the Requisite
Lenders prior to the completion of such foreclosure, which agreement shall
include provisions in all material respects similar to this Section 9.16 and
Article IX in relation to the duties, rights and immunities of Agent (or a
nominee or subsidiary of Agent, in its capacity as the manager thereunder), and
provided that such agreement is approved by the Requisite Lenders.  In the event
any Lender fails to execute and deliver such agreement in accordance with and
after written request therefor from Agent, each such Lender hereby grants to
Agent a power of attorney to execute and deliver such agreement on its behalf
and to take on its behalf any other actions as may reasonably be required to
form and qualify such company, which power of attorney is coupled with an
interest and irrevocable.  The Lenders agree that, upon acquisition of the
Premises as provided in this Article IX, Agent shall (subject to Section 9.9(b))
take such action with respect to the Premises as shall be directed by the
Requisite Lenders, provided no such action required by the Requisite Lenders
shall violate the Loan Documents or applicable law.

 

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(f)            Agent shall prepare for the approval of the Requisite Lenders a
recommended course of action for the Premises (an “Enforcement Action Plan”). 
Subject to its standard of care contained herein, Agent (or a nominee or
subsidiary of Agent, as administrative agent, for the ratable benefit of the
Lenders) shall manage, operate, repair, administer, complete, construct, restore
or otherwise deal with the Premises acquired, and shall administer all
transactions relating thereto, substantially in accordance with the Enforcement
Acton Plan, including, without limitation, employing a management agent, leasing
agent and other agents, contractors and employees, including agents for the sale
of the Premises, and the collecting of rents and other sums from the Premises
and paying the expenses of the Premises.  Once approved by the Requisite
Lenders, Agent shall use commercially reasonable efforts to operate and maintain
the Premises in accordance with the Enforcement Action Plan in all material
respects (subject to the effect of force majeure events, fire, earthquake,
floods, explosion, actions of the elements, other accidents or casualty,
declared or undeclared war, riots, mob violence, acts of terrorism, inability to
procure or a general shortage of labor, equipment, facilities, energy, materials
or supplies in the open market, the effect of orders of Governmental
Authorities, laws, rules, regulations or other cause beyond the reasonable
control of Agent) and shall be authorized to make expenditures and pay expenses
in accordance with the Enforcement Action Plan.  If the Requisite Lenders shall
fail to approve of proposed Enforcement Action Plan, however, the following
shall apply: (i) if the proposed Enforcement Action Plan is the initial
Enforcement Action Plan, then Agent, on behalf of the Lenders, may approve an
interim plan to govern the operations of the Premises until the Requisite
Lenders approve the first plan; and, (ii) if the proposed Enforcement Action
Plan is other than the plan referred to in the preceding clause (i), then the
Premises shall be operated under the most recent Enforcement Action Plan until a
new Enforcement Action Plan shall be approved by the Requisite Lenders, subject
to adjustments as Agent shall deem appropriate to take into account emergency or
serious maintenance situations at the Premises, any tenant improvement costs and
leasing commissions for leases executed after approval of the most recently
approved budget and any expenditures for the Premises required by Applicable
Law, which, if not made, may result in the imposition of a fine or penalty or
other sanction against the Lenders, Agent or entity that holds title to the
Premises for the benefit of the Lenders.  Agent shall not make any material
changes to the approved Enforcement Action Plan without the consent of the
Requisite Lenders.

 

(g)           Upon demand therefor from time to time, each Lender shall
contribute its share (based on its Pro Rata Share) of all reasonable costs and
expenses incurred by Agent pursuant to the approved Enforcement Action Plan in
connection with the construction, operation, management, maintenance, leasing
and sale of the Premises.  In addition, Agent shall render or cause to be
rendered to each Lender, on a periodic basis (but in any event once per calendar
quarter), an income and expense statement for the Premises, and each Lender
shall promptly contribute its Pro Rata Share of any operating loss for the
Premises, and such other expenses and operating reserves as Agent shall deem
reasonably necessary pursuant to and in accordance with the approved Enforcement
Action Plan.

 

(h)           To the extent there is net operating income from the Premises,
Agent shall, in accordance with the approved Enforcement Action Plan, determine
the amount and timing of distributions to the Lenders.

 

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(i)            The Lenders acknowledge and agree that if title to the Premises
is obtained by Agent or its nominee or limited liability company as provided
above, the Premises will not be held as a permanent investment but will be
liquidated and the proceeds of such liquidation will be distributed in
accordance with the Enforcement Action Plan as soon as practicable.  Agent shall
undertake to sell the Premises, at such price and upon such terms and conditions
as the Requisite Lenders reasonably shall determine to be most advantageous to
the Lenders.  Any purchase money mortgage or deed of trust taken in connection
with the disposition of the Premises in accordance with the immediately
preceding sentence shall name Agent, as agent for the Lenders, as the
beneficiary or mortgagee; provided, however, that purchase money financing shall
not be provided in connection with the disposition of the Premises without the
prior consent of each Lender.  If purchase money financing is so provided, then,
Agent and the Lenders shall enter into an agreement with respect to such
purchase money mortgage or deed of trust defining the rights of the Lenders in
the same Pro Rata Shares as provided hereunder, which agreement shall be in all
material respects similar to this Article insofar as the same is appropriate or
applicable and shall contain such other terms and conditions as may be
satisfactory to each of the Lenders.

 

(j)            All income or other money received after so acquiring title to or
taking possession of the Premises with respect to the Premises, including income
from the operation and management of the Premises and the proceeds of a sale of
the Premises, shall be applied, first, to the payment or reimbursement of Agent
for expenses incurred in accordance with the provisions of this Article IX or
for any other sums then due to Agent hereunder; second, to the payment of
operating expenses with respect to the Premises; third, to the establishment of
reasonable reserves for the operation of the Premises, including, without
limitation, to fund any capital improvement, leasing and other reserves; fourth,
to the payment or reimbursement of the Lenders for any advances made pursuant to
Section 9.16(d) or (g); fifth, in accordance with clauses first through third of
Section 9.16(a); sixth, pari passu to the Lenders in accordance with their
respective Pro Rata Shares on account of all sums due and unpaid under the Loan
Documents, unless an unpaid amount is owed pursuant to Section 9.14, in which
event such unpaid amount shall be deducted from the portion of such proceeds of
the Defaulting Lender and be applied to payment of such unpaid amount to the
Lender which advanced such sums pursuant to Section 9.14(b); and seventh, to the
Lender or, if more than one Lender, pari passu to the Lenders party to any
Lender Interest Rate Protection Agreement for Obligations related thereto.

 

(k)           (i)            Notwithstanding anything to the contrary herein,
Agent may resign as Agent hereunder unless, within thirty (30) days after the
occurrence of a Special Servicing Event (as hereinafter defined), Agent and the
Lenders have reached an agreement with respect to certain fees (collectively,
the “Servicing Fees”) that would be payable to Agent for servicing, special
servicing and administering the Loan after such Event of Default and during the
continuation thereof and for managing the Premises during any period of time
that the Premises is owned by Agent or its nominee as a result of a foreclosure
or the acceptance of a deed or assignment in lieu of foreclosure.  Such
Servicing Fees shall be payable in accordance with a separate agreement to be
entered into by Agent and the Lenders.

 

(ii)           In the event Agent resigns as permitted above, then the Requisite
Lenders shall have the right to appoint a successor Agent which (A) satisfies
the requirements of Section 9.13 or (B) is a Qualified Special Servicer (as
hereinafter defined), within thirty (30)

 

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days after such resignation.  If the Requisite Lenders have not appointed such a
successor Agent within such thirty (30) day period, then the resigning Agent may
(on behalf of the Lenders) appoint a successor Agent that satisfies the
requirements of Section 9.13 or is a Qualified Special Servicer.  Whether the
Qualified Special Servicer is appointed by the Requisite Lenders or by the
resigning Agent, the Lenders shall pay the Servicing Fees required by such
successor Agent in accordance with a separate agreement with such successor
Agent.

 

(iii)          The time periods within which Agent is required to act in this
Section 9.16 shall be tolled, commencing on the thirtieth (30th) day after the
occurrence of a Special Servicing Event, and continuing until ten (10) Business
Days after a replacement Agent has been appointed pursuant to this
Section 9.16(k) or Agent and the Lenders have reached an agreement regarding the
Servicing Fees.

 

(iv)          As used in this Section 9.16(k), the following terms have the
meanings assigned below:

 

(i)            “Qualified Special Servicer” means a nationally recognized
commercial mortgage loan servicer which (i) has the minimum rating required of a
special servicer in the case of Fitch, (ii) is on the Standard & Poor’s list of
approved special servicers in the case of Standard & Poor’s and (iii) in the
case of Moody’s, such special servicer is acting as special servicer in a
commercial mortgage loan securitization that was rated by Moody’s within the
twelve (12) month period prior to the date of determination, and Moody’s has not
downgraded or withdrawn the then-current rating on any class of commercial
mortgage securities or placed any class of commercial mortgage securities on
watch citing the continuation of such special servicer as special servicer of
such commercial mortgage securities.

 

(ii)           “Special Servicing Event” means (i) the occurrence of any Event
of Default of which Agent has given notice thereof to the Lenders pursuant to
Section 9.16(a) or (ii) the receipt by Agent of a notice of an Event of Default
from any Lender pursuant to Section 9.16(a).

 

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

 

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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, 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 Notes, 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
Mortgage 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 Mortgage, collect the Obligations or enforce Agent’s
rights under this Loan Agreement, the Notes 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
Notes, 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 Mortgage, this Loan Agreement or the other Loan Documents or
Agent’s and Lenders’ rights under the Notes 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

 

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(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 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

 

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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 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, and any such
assignment shall be void ab initio.

 

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

 

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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.

 

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 Sunstone Hotel Investors, Inc.

120 Vantis, Suite 350

Aliso Viejo, California 92656

Attention:  Finance Department

 

with copies similarly delivered to:

 

Gibson, Dunn & Crutcher LLP

323 South Grand Avenue

Los Angeles, California 90071-3197

Attention:  Michael F. Sfregola, Esq.

 

If to Agent, prior to November 1, 2011, to:

 

Eurohypo AG, New York Branch

 

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1114 Avenue of the Americas

New York, New York 10036

Attention:  Legal Director

 

with copies similarly delivered to:

 

Eurohypo AG, New York Branch

1114 Avenue of the Americas

New York, New York 10036

Attention:  Head of Portfolio Operations

 

with copies similarly delivered to:

 

Morrison & Foerster LLP

555 West Fifth Street, Suite 3500

Los Angeles, California 90013-1024

Attention:  Marc D. Young

 

If to Eurohypo, as Lender, prior to November 1, 2011:

 

Eurohypo AG, New York Branch

1114 Avenue of the Americas

New York, New York 10036

Attention:  Legal Director

 

with copies similarly delivered to:

 

Eurohypo AG, New York Branch

1114 Avenue of the Americas

New York, New York 10036

Attention:  Head of Portfolio Operations

 

with copies similarly delivered to:

 

Morrison & Foerster LLP

555 West Fifth Street, Suite 3500

Los Angeles, California 90013-1024

Attention:  Marc D. Young

 

If to Agent, from and after November 1, 2011, to:

 

Eurohypo AG, New York Branch

1301 Avenue of the Americas, 35th Floor

New York, New York 10019

Attention:  Legal Director

 

with copies similarly delivered to:

 

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Eurohypo AG, New York Branch

1301 Avenue of the Americas, 35th Floor

New York, New York 10019

Attention:  Head of Portfolio Operations

 

with copies similarly delivered to:

 

Morrison & Foerster LLP

555 West Fifth Street, Suite 3500

Los Angeles, California 90013-1024

Attention:  Marc D. Young

 

If to Eurohypo, as Lender, from and after November 1, 2011:

 

Eurohypo AG, New York Branch

1301 Avenue of the Americas, 35th Floor

New York, New York 10019

Attention:  Legal Director

 

with copies similarly delivered to:

 

Eurohypo AG, New York Branch

1301 Avenue of the Americas, 35th Floor

New York, New York 10019

Attention:  Head of Portfolio Operations

 

with copies similarly delivered to:

 

Morrison & Foerster LLP

555 West Fifth Street, Suite 3500

Los Angeles, California 90013-1024

Attention:  Marc D. Young

 

If to Aareal Capital Corporation:

 

Aareal Capital Corporation

250 Park Avenue, Suite 820

New York, New York 10177

Attention:  Daniel de Roo, Credit Management

 

with copies similarly delivered to:

 

Aareal Capital Corporation

250 Park Avenue, Suite 820

New York, New York 10177

Attention:  Alan Griffin, Esq.

 

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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 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 Notes, the Mortgage 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 Notes or the other Loan Documents, or for any claim based on this Loan
Agreement, the Notes 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 Notes or the other Loan Documents shall constitute a
waiver of any of Borrower’s obligations herein, under the Notes 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 Notes 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 Notes 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

 

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invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.

 

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 Notes 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 Notes 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 Mortgage, 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

 

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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 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
Notes 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 Notes 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

 

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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 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.

 

ARTICLE XI

 

SIGNAGE COLLATERAL RELEASE

 

Section 11.1         Signage Collateral Release.

 

(a)           Conditions.  Borrower shall be permitted to sell and assign (the
“Signage Sale”) all of the signage rights (the “Signage Collateral”) at the
Premises during the period from the Closing Date to the date which is the third
(3rd) anniversary of the Closing Date, provided all of the following conditions
have been satisfied:

 

(i)            no Event of Default or Default exists and is continuing at the
time of the Signage Sale notice or on the date of the Signage Sale;

 

(ii)           Agent shall have received from Borrower at least thirty (30) days
prior written notice of the date proposed for the Signage Sale, which date shall
be a Payment Date;

 

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(iii)          Borrower shall remit to Agent an amount (the “Signage Release
Prepayment”) which is not less than $50,000,000 (“Minimum Signage Release
Prepayment Amount”);

 

(iv)          Borrower shall pay to Agent all sums then due and payable under
the Notes, this Loan Agreement, the Mortgage and the other Loan Documents;

 

(v)           Borrower shall submit to Agent, not less than fifteen (15)
Business Days prior to the date of such Signage Sale, a partial release of Lien
(and related Loan Documents) for the Signage Collateral for execution by Agent. 
Such release shall be in a form appropriate in the jurisdiction in which the
Signage Collateral is located and reasonably satisfactory to Agent.  In
addition, Borrower shall provide all other documentation Agent reasonably
requires to be delivered by Borrower in connection with such release, including
evidence (including such endorsement to the title policies obtained in
connection with the Mortgage at the Closing as Agent may require) that such
documentation (A) is in compliance with all applicable legal requirements,
(B) will effect such partial release in accordance with the terms of this Loan
Agreement, and (C) will not impair or otherwise adversely affect the Liens,
security interests and other rights of Agent or the Lenders under the Loan
Documents and (D) after giving effect to such Signage Sale, the representations
set forth in Sections 5.14, 5.16, 5.18 and 5.31, are true and correct with
respect the Premises not subject to the Signage Sale;

 

(vi)          After giving effect to such Signage Sale and application of the
proceeds thereof as set forth in subsection (c) below, the Debt Yield following
any release of the Signage Collateral shall not be less than the greater of
(i) the Debt Yield immediately prior to such release, as reasonably determined
by Agent, or (ii) 11%;

 

(vii)         After giving effect to such Signage Sale and application of the
proceeds thereof as set forth in subsection (c) below, the Loan-to-Value Ratio
for the Premises then remaining, based on an Appraisal or Appraisal Update dated
within ninety (90) days prior the Signage Sale, shall not be greater than be the
lesser of (i) the Loan-to-Value Ratio immediately prior to such Signage Sale, or
(ii) 60%;

 

(viii)        Agent shall have received from Borrower with respect to the
matters referred to in clauses (v) and (vi) (y) statements of the net operating
income and debt service (both on a consolidated basis and separately for the
applicable Signage Collateral to be released for the applicable measuring period
and (z) based on the foregoing statements of net operating income and debt
service, calculations of the Debt Service Coverage Ratio, Loan to Value Ratio
and Debt Yield both with and without giving effect to the proposed Signage Sale,
accompanied by an authorized officer’s certificate of Borrower that such
statements, calculations and information are true, correct and complete in all
material respects;

 

(ix)           Borrower, at its sole cost and expense, shall have delivered to
Agent one or more endorsements to the Title Policy delivered to Agent on the
date hereof in connection with the Mortgage insuring that, after giving effect
to such Signage Sale, (x) the Lien created by the Mortgage and insured thereby
is a first priority Lien on the

 

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remaining Mortgaged Property subject only to the Permitted Exceptions applicable
to the remaining Mortgaged Property and (y) that the Title Policy is in full
force and effect and unaffected by such Signage Sale;

 

(x)            Borrower shall pay all reasonable costs and expenses of Agent in
connection with the Signage Sale;

 

(xi)           the proposed Signage Sale shall not constitute a default under
the Ground Leases, and the prior consent of the Ground Lessors shall be obtained
in connection with the Signage Sale; and

 

(xii)          Borrower shall have delivered to Agent an officer’s certificate
confirming the matters referred to in clause (x) above and certifying that all
conditions precedent for such Partial Release contained in this Agreement have
been satisfied.

 

(b)           Prepayment.  Notwithstanding anything to the contrary in
Section 2.4(d), any Signage Release Prepayment shall be subject only to the
following prepayment penalty schedules:

 

Year 1

 

With respect to Loan Portions having (or which had, immediately prior to such
prepayment) a LIBOR Rate Period of 3 Months or a Base Rate: 1.68% on the amount
prepaid

 

 

 

 

 

With respect to Loan Portions having (or which had, immediately prior to such
prepayment) a LIBOR Rate Period of 6 Months: 1.38% on the amount prepaid

 

 

 

Year 2

 

With respect to Loan Portions having (or which had, immediately prior to such
prepayment) a LIBOR Rate Period of 3 Months or a Base Rate: 1.40% on the amount
prepaid

 

 

 

 

 

With respect to Loan Portions having (or which had, immediately prior to such
prepayment) a LIBOR Rate Period of 6 Months: 1.15% on the amount prepaid

 

 

 

Year 3

 

With respect to Loan Portions having (or which had, immediately prior to such
prepayment) a LIBOR Rate Period of 3 Months or a Base Rate: 1.12% on the amount
prepaid

 

 

 

 

 

With respect to Loan Portions having (or which had, immediately prior to such
prepayment) LIBOR Rate Period of 6 Months: 0.92% on the amount prepaid.

 

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(c)           Payment of Proceeds.

 

(i)            All net sales proceeds from the sale of the Signage Collateral
(with a maximum deduction of 4% for closing costs which shall also include any
associated prepayment penalties, including the prepayment fees set forth in
subsection (b) above, any Breakage Costs and Additional Interest) up to the
Minimum Signage Release Prepayment Amount shall be applied against the
Obligations.

 

(ii)           In the event net sales proceeds from the sale of the Signage
Collateral (with a maximum deduction of 4% for closing costs which shall also
include any associated prepayment penalties, including the prepayment fees set
forth in subsection (b) above, any Breakage Costs and Additional Interest) are
greater than the Minimum Signage Release Prepayment Amount, then up to the next
$10 million of net sales proceeds will be distributed to the Borrower.

 

(iii)          82.5% of all net proceeds from the sale of the Signage Collateral
(with a maximum deduction of 4% for closing costs which shall also include any
associated prepayment penalties, including the prepayment fees set forth in
subsection (b) above, any Breakage Costs and Additional Interest) in excess of
$60 million shall be applied against the Obligations.

 

[The remainder of this page is intentionally left blank.]

 

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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:

 

 

 

BORROWER:

 

 

 

TIMES SQUARE HOTEL OWNER, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

/s/ John V. Arabia

 

 

Name: John V. Arabia

 

 

Title: CFO

 

 

 

 

 

OPERATING LESSEE:

 

 

 

Acknowledged and agreed to solely with respect to the representations,
warranties and covenants set forth herein which are applicable to the Operating
Lessee:

 

 

 

TIMES SQUARE HOTEL OPERATING LESSEE, LLC, a Delaware limited liability company

 

 

 

 

 

By:

/s/ John V. Arabia

 

 

Name: John V. Arabia

 

 

Title: CFO

 

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

 

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

 

 

AGENT:

 

 

 

EUROHYPO AG, NEW YORK BRANCH

 

 

 

 

 

By:

/s/ Jeffrey A. Altenau

 

 

Name: Jeffrey A. Altenau

 

 

Title: Executive Director

 

 

 

 

By:

/s/ Stephen Cox

 

 

Name: Stephen Cox

 

 

Title: Executive Director

 

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

 

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

 

 

LENDER:

 

 

 

EUROHYPO AG, NEW YORK BRANCH

 

 

 

 

 

By:

/s/ Jeffrey A. Altenau

 

 

Name: Jeffrey A. Altenau

 

 

Title: Executive Director

 

 

 

 

By:

/s/ Stephen Cox

 

 

Name: Stephen Cox

 

 

Title: Executive Director

 

 

 

Commitment: $90,000,000

 

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

 

 

LENDER:

 

 

 

AAREAL CAPITAL CORPORATION

 

 

 

 

 

By:

/s/ Ralph C. Marra, Jr.

 

 

Name: Ralph C. Marra, Jr.

 

 

Title: Executive Director

 

 

 

 

By:

/s/ Alan L. Griffin

 

 

Name: Alan L. Griffin

 

 

Title: Counsel

 

 

 

Commitment: $90,000,000

 

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

 

EXHIBIT A

 

The Land

 

REAL PROPERTY IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, STATE OF NEW YORK,
DESCRIBED AS FOLLOWS:

 

PARCEL I (PRESENT LOT 61)(FEE PARCEL)

 

ALL THAT CERTAIN PLOT, PIECE OR PARCEL OF LAND, SITUATE, LYING AND BEING IN THE
BOROUGH OF MANHATTAN, CITY OF NEW YORK, COUNTY OF NEW YORK, STATE OF NEW YORK,
BOUNDED AND DESCRIBED AS FOLLOWS:

 

BEGINNING AT THE CORNER FORMED BY THE INTERSECTION OF THE SOUTHERLY SIDE OF WEST
47TH STREET WITH THE EASTERLY SIDE OF BROADWAY;

 

RUNNING THENCE EASTERLY ALONG THE SAID SOUTHERLY SIDE OF 47TH STREET, 80 FEET;

 

THENCE SOUTHERLY PARALLEL WITH THE EASTERLY SIDE OF BROADWAY, 40 FEET 5 INCHES;

 

THENCE WESTERLY PARALLEL WITH THE SOUTHERLY SIDE OF 47TH STREET AND FOR THE
PART OF THE WAY THROUGH A PARTY WALL, 80 FEET TO THE EASTERLY SIDE OF BROADWAY;

 

THENCE NORTHERLY ALONG THE SAID EASTERLY SIDE OF BROADWAY, 40 FEET 5 INCHES TO
THE CORNER AFORESAID AT THE POINT OR PLACE OF BEGINNING.

 

PARCEL II (PRESENT AIR RIGHTS LOT 9062 AND SUBTERRANEAN LOT 8062/LEASEHOLD)

 

ALL THAT CERTAIN LOT, PIECE OR PARCEL OF LAND, SITUATE, LYING AND BEING IN THE
BOROUGH OF MANHATTAN, COUNTY, CITY AND STATE OF NEW YORK, BOUNDED AND DESCRIBED
AS FOLLOWS:

 

ALL THAT PORTION OF THE BELOW DESCRIBED PARCEL LYING ABOVE A HORIZONTAL PLANE
DRAWN AT ELEVATION 46.67 BOUNDED AND DESCRIBED AS FOLLOWS:

 

BEGINNING AT A POINT IN THE EASTERLY LINE OF SEVENTH AVENUE, DISTANT 40’-5”
SOUTH OF THE CORNER FORMED BY THE INTERSECTION OF THE SOUTHERLY LINE OF WEST
47TH STREET WITH THE EASTERLY LINE OF SEVENTH AVENUE:

 

1) RUNNING THENCE EASTERLY PARALLEL WITH THE SOUTHERLY LINE OF WEST

 

Ex. A - 1

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

 

47TH STREET, 80’-0”;

2) THENCE SOUTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 40’-0”;
3) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 80’-0”
TO A POINT IN THE EASTERLY LINE OF SEVENTH AVENUE;
4) THENCE NORTHERLY, ALONG THE EASTERLY LINE OF SEVENTH AVENUE, 40’-0” TO THE
POINT OR PLACE OF BEGINNING.

 

EXCEPTING THEREFROM ALL THAT PORTION OF THE BELOW DESCRIBED PARCEL LYING BETWEEN
A LOWER HORIZONTAL PLANE DRAWN AT ELEVATION 46.67 FEET AND AN UPPER HORIZONTAL
PLANE DRAWN AT ELEVATION 68.50, FEET BOUNDED AND DESCRIBED AS FOLLOWS:

 

BEGINNING AT A POINT IN THE EASTERLY LINE OF SEVENTH AVENUE, DISTANT 52’-6 ¾”
SOUTH OF THE CORNER FORMED BY THE INTERSECTION OF THE SOUTHERLY LINE OF WEST
47TH STREET WITH THE EASTERLY LINE OF SEVENTH AVENUE:

 

1) RUNNING THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH
STREET, 6’-3”;
2) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 3’-9 ¾”
TO A POINT OF CURVATURE;
3) THENCE NORTHEASTERLY, ALONG THE ARC OF A CIRCLE CURVING TO THE RIGHT, HAVING
A RADIUS OF 2’-3” AND AN INCLUDED ANGLE OF 90°-00’-00”, 3’-6 3/8” TO A POINT OF
TANGENCY;
4) THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 2’-9”;
5) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 4’-11
¾”;
6) THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 4’-1”;
7) THENCE SOUTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 3’-4 ½”;
8) THENCE SOUTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 135°-00’-00” ON ITS
NORTHEASTERLY SIDE WITH THE PRECEDING COURSE, 3’-2 ¼”;
9) THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 12’-9
½”;
10) THENCE SOUTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 5’-5”;
11) THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 17’-7
½”;
12) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 8’-2”;
13) THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET,
8’-0”;
14) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH

 

Ex. A - 2

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

 

AVENUE, 1’-3”;

15) THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET,
24’-0”;
16) THENCE SOUTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 34’-9
¼”;
17) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 1’-1
½”;
18) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 1’-10
½”;
19) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET,
3’-1”;
20) THENCE SOUTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 4’-4
½”;
21) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 8’-10
½”;
22) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 0’-8”;
23) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET,
3’-10”;
24) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 0’-2”;
25) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET,
63’-1” TO A POINT IN THE EASTERLY LINE OF SEVENTH AVENUE;
26) THENCE NORTHERLY, ALONG THE EASTERLY LINE OF SEVENTH AVENUE, 27’-0 ¼” TO THE
POINT OR PLACE OF BEGINNING.

 

ELEVATIONS REFER TO DATUM USED BY THE TOPOGRAPHICAL BUREAU, BOROUGH OF
MANHATTAN, WHICH IS 2.75 FEET ABOVE NATIONAL GEODETIC SURVEY VERTICAL DATUM OF
1929 (UNITED STATES COAST AND GEODETIC SURVEY DATUM) MEAN SEA LEVEL, SANDY HOOK,
NEW JERSEY.

 

PARCEL IIA: (PRESENT AIR RIGHTS LOT 9062 AND SUBTERRANEAN LOT 8062)

 

ALL THAT PORTION OF THE BELOW DESCRIBED PARCEL LYING BELOW A HORIZONTAL PLANE
DRAWN AT ELEVATION 46.67 BOUNDED AND DESCRIBED AS FOLLOWS: BEGINNING AT A POINT
IN THE EASTERLY LINE OF SEVENTH AVENUE, DISTANT 40’-5” SOUTH OF THE CORNER
FORMED BY THE INTERSECTION OF THE SOUTHERLY LINE OF WEST 47TH STREET WITH THE
EASTERLY LINE OF SEVENTH AVENUE:

 

1) RUNNING THENCE EASTERLY PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET,
80’-0”;
2) THENCE SOUTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 40’-0”;
3) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 80’-0”
TO A POINT IN THE EASTERLY LINE OF SEVENTH AVENUE;

 

Ex. A - 3

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

 

4) THENCE NORTHERLY, ALONG THE EASTERLY LINE OF SEVENTH AVENUE, 40’-0” TO THE
POINT OR PLACE OF BEGINNING.

 

ELEVATIONS REFER TO DATUM USED BY THE TOPOGRAPHICAL BUREAU, BOROUGH OF
MANHATTAN, WHICH IS 2.75 FEET ABOVE NATIONAL GEODETIC SURVEY VERTICAL DATUM OF
1929 (UNITED STATES COAST AND GEODETIC SURVEY DATUM) MEAN SEA LEVEL, SANDY HOOK,
NEW JERSEY.

 

PARCEL IIB:

 

BEGINNING AT A POINT IN THE SOUTHERLY LINE OF WEST 47TH STREET, DISTANT 80’-0”
EAST OF THE CORNER FORMED BY THE INTERSECTION OF THE EASTERLY LINE OF SEVENTH
AVENUE WITH THE SOUTHERLY LINE OF WEST 47TH STREET:

 

1) RUNNING THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF WEST 47TH STREET, 5’-10
¼”;
2) THENCE SOUTHERLY, ALONG A LINE FORMING AN ANGLE OF 90’-18’-00” ON ITS
WESTERLY SIDE WITH THE PRECEDING COURSE, 19’-1”; 3) THENCE WESTERLY, PARALLEL
WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 5’-11 ½”;
4) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 19’-1”
TO THE POINT OR PLACE OF BEGINNING.

 

PARCEL IIC:

 

ALL THAT PORTION OF THE BELOW PARCEL LYING ABOVE A HORIZONTAL PLANE DRAWN AT
ELEVATION 124.36 FEET BOUNDED AND DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN
THE SOUTHERLY LINE OF WEST 47TH STREET DISTANT 85’-10 ¼” EAST OF THE CORNER
FORMED BY THE INTERSECTION OF THE EASTERLY LINE OF SEVENTH AVENUE WITH THE
SOUTHERLY LINE OF WEST 47TH STREET:

 

1) RUNNING THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF WEST 47TH STREET, 83’-5
¾”;
2) THENCE SOUTHERLY, ALONG A LINE FORMING AN ANGLE OF 89°-57’-00” ON ITS
WESTERLY SIDE WITH THE PRECEDING COURSE, 88’-5”;
3) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET,
89’-3”;
4) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 69’-4”;
5) THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 5’-11
½”;
6) THENCE NORTHERLY, ALONG A LINE FORMING AN ANGLE OF 89°-42’-00” ON ITS
WESTERLY SIDE WITH THE PRECEDING COURSE, 19’-1” TO THE POINT OR PLACE OF
BEGINNING.

 

Ex. A - 4

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

 

ELEVATIONS REFER TO DATUM USED BY THE TOPOGRAPHICAL BUREAU, BOROUGH OF
MANHATTAN, WHICH IS 2.75 FEET ABOVE NATIONAL GEODETIC SURVEY VERTICAL DATUM OF
1929 (UNITED STATES COAST AND GEODETIC SURVEY VERTICAL DATUM) MEAN SEA LEVEL,
SANDY HOOK, NEW JERSEY.

 

PARCEL IID:

 

ALL THAT PORTION OF THE BELOW DESCRIBED PARCEL LYING ABOVE A HORIZONTAL PLANE
DRAWN AT ELEVATION 144.85 FEET BOUNDED AND DESCRIBED AS FOLLOWS: BEGINNING AT A
POINT IN THE SOUTHERLY LINE OF WEST 47TH STREET DISTANT 169’-4” EAST OF THE
CORNER FORMED BY THE INTERSECTION OF THE EASTERLY LINE OF SEVENTH AVENUE WITH
THE SOUTHERLY LINE OF WEST 47TH STREET:

 

1) RUNNING THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF WEST 47TH STREET, 35’-4
½”;

 

2) THENCE SOUTHERLY, ALONG A LINE FORMING AN ANGLE OF 89°-57’-00” ON ITS
WESTERLY SIDE WITH THE PRECEDING COURSE, 88’-5”;

 

3) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 35’-4
½”;

 

4) THENCE NORTHERLY, ALONG A LINE FORMING AN ANGLE OF 89°-57’-00” ON ITS
EASTERLY SIDE WITH THE PRECEDING COURSE, 88’-5” TO THE POINT OR PLACE OF
BEGINNING.

 

ELEVATIONS REFER TO DATUM USED BY THE TOPOGRAPHICAL BUREAU, BOROUGH OF
MANHATTAN, WHICH IS 2.75 FEET ABOVE NATIONAL GEODETIC SURVEY VERTICAL DATUM OF
1929 (UNITED STATES COAST AND GEODETIC SURVEY DATUM) MEAN SEA LEVEL, SANDY HOOK,
NEW JERSEY.

 

PARCEL IIE:

 

BEGINNING AT A POINT IN THE SOUTHERLY LINE OF WEST 47TH STREET, DISTANT 204’-8
½” EAST OF THE CORNER FORMED BY THE INTERSECTION OF THE EASTERLY LINE OF SEVENTH
AVENUE WITH THE SOUTHERLY LINE OF WEST 47TH STREET:

 

1) RUNNING THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF WEST 47TH STREET, 11’-11
1/2”;
2) THENCE SOUTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 100’-5”
TO A POINT IN THE CENTER LINE OF BLOCK;
3) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET AND
ALONG THE CENTER LINE OF BLOCK; 12’-0 ¾”;
4) THENCE NORTHERLY, ALONG A LINE FORMING AN ANGLE OF 89°-57’-00” ON ITS

 

Ex. A - 5

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

 

EASTERLY SIDE WITH THE PRECEDING COURSE, 100’-5” TO THE POINT OR PLACE OF
BEGINNING.

 

PARCEL IIF:

 

BEGINNING AT A POINT 80’-0” EAST OF THE EASTERLY LINE OF SEVENTH AVENUE AND
88’-5” SOUTH OF THE SOUTHERLY LINE OF WEST 47TH STREET:

 

1) RUNNING THENCE EASTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH
STREET, 124’-7 ½”;
2) THENCE SOUTHERLY, ALONG A LINE FORMING AN ANGLE OF 89°-57’-00” ON ITS
WESTERLY SIDE, 12’-0” TO A POINT IN THE CENTER LINE OF BLOCK;
3) THENCE WESTERLY, ALONG THE CENTER LINE OF BLOCK, PARALLEL WITH THE SOUTHERLY
LINE OF WEST 47TH STREET, 17’-1 ¼”;
4) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 0’-1”;
5) THENCE WESTERLY, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET,
87’-6”;
6) THENCE SOUTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 0’-1” TO
A POINT IN THE CENTER LINE OF BLOCK; 7) THENCE WESTERLY, ALONG THE CENTER LINE
OF BLOCK, PARALLEL WITH THE SOUTHERLY LINE OF WEST 47TH STREET, 20’-0”;
8) THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SEVENTH AVENUE, 12’-0”
TO THE POINT OR PLACE OF BEGINNING.

 

PARCEL III (PRESENT LOT 65 F/K/A LOT 64)(GROUND LEASE PARCEL)

 

ALL THAT CERTAIN PLOT, PIECE OR PARCEL OF LAND, SITUATE, LYING AND BEING IN THE
BOROUGH OF MANHATTAN, CITY OF NEW YORK, COUNTY OF NEW YORK, STATE OF NEW YORK,
BOUNDED AND DESCRIBED AS FOLLOWS:

 

BEGINNING AT A POINT ON THE EASTERLY SIDE OF BROADWAY DISTANT 80 FEET 5 INCHES
SOUTHERLY FROM THE SOUTHERLY SIDE OF 47TH STREET; AND

 

RUNNING THENCE EASTERLY PARALLEL WITH 47TH STREET AND PARTLY THROUGH A PARTY
WALL, 80 FEET;

 

THENCE SOUTHERLY PARALLEL WITH BROADWAY, 20 FEET;

THENCE WESTERLY PARALLEL WITH 47TH STREET AND PARTLY THROUGH A PARTY WALL, 80
FEET TO THE EASTERLY SIDE OF BROADWAY; AND

 

THENCE NORTHERLY ALONG THE WESTERLY SIDE OF BROADWAY, 20 FEET TO THE POINT OR
PLACE OF BEGINNING.

 

Ex. A - 6

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

 

EXHIBIT B

 

Form of Note

 

PROMISSORY NOTE

 

$

, 2011

 

This PROMISSORY NOTE (this “Note”) is executed as of                   , 2011 by
TIMES SQUARE HOTEL OWNER, LLC, a Delaware limited liability company, having an
address at 120 Vantis, Suite 350, Aliso Viejo, California 92656 (“Borrower”), in
favor of                                                   , having offices at
                                       (“Lender”).  All capitalized terms used
but not otherwise defined in this Note shall have the respective meanings
assigned to such terms in the Loan Agreement (as defined below).

 

Borrower hereby unconditionally promises to pay pursuant to the terms of this
Note and the Loan Agreement, to the order of Lender or its registered assigns
permitted under the Loan Agreement, by paying same to Lender, to the account or
at the address set forth in Section 2.5(a) of the Loan Agreement, or at such
other place as the holder of this Note may from time to time designate in
writing, the sum of                      DOLLARS AND 00/100
($                  ), in lawful money of the United States of America in
immediately available funds, or such lesser amount as shall be outstanding
hereunder from time to time, together with accrued and unpaid Interest,
Additional Interest and all other sums due under this Note, the Loan Agreement
and the other Loan Documents.

 

1.             Principal, Interest and other Payments.

 

(a)           The unpaid principal amount of the Loan shall be payable in
accordance with the terms of Article II of the Loan Agreement.

 

(b)           The unpaid principal amount of the Loan shall bear interest
(including Additional Interest) from the date hereof until paid in accordance
with Article II of the Loan Agreement, and such interest (including any
Additional Interest) shall be payable in accordance with Article II of the Loan
Agreement.

 

(c)           (i)            Subject to the terms and conditions of the Loan
Agreement and provided that no Event of Default shall have occurred and be
continuing, all payments received by Agent with respect to the Loan shall be
applied in the following order of priority:

 

first, to the payment of all amounts due and then owing pursuant to this Note,
the Loan Agreement or the other Loan Documents (other than any Lender Interest
Rate Protection Agreement) which do not constitute either principal or Interest;

 

second, to the payment of Interest due and then owing;

 

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

 

third, to any payment of principal due and then owing;

 

fourth, to any regularly scheduled payment due and the owing under any Lender
Interest Rate Protection Agreement;

 

fifth, to the unpaid principal balance of the Loan;

 

sixth, to any payment (other than any regularly scheduled payment) due and then
owing under any Lender Interest Rate Protection Agreement (whether a termination
payment or other payment due in connection with any prepayment of the Loan or
otherwise); and

 

seventh, any remaining amount to Borrower.

 

(ii)           During the continuance of an Event of Default, all payments
received by Agent with respect to the Loan, including sums received by Agent in
connection with Agent’s exercise of any remedies pursuant to the Loan Documents
or otherwise at law or in equity, shall be applied to the Loan in such order and
manner as Agent shall determine in its sole discretion, except as otherwise
expressly provided in the Loan Agreement.

 

2.             Loan Agreement.  This Note has been executed and delivered
pursuant to that certain Loan Agreement dated as of October 7, 2011, by and
among Borrower, as borrower, Times Square Hotel Operating Lessee, LLC, a
Delaware limited liability company, as operating lessee (the “Operating
Lessee”), Lender and the other lenders from time to time party thereto, and
Agent (the “Loan Agreement”).  The holder of this Note and Borrower shall be
entitled to the benefits provided in and the provisions of the Loan Agreement
and the other Loan Documents.  Reference is hereby made to the Loan Agreement
for, among other things, a statement of (a) the prepayment rights and
obligations of Borrower, (b) the Maturity Date of this Note and the events upon
which the maturity of this Note may be accelerated, (c) the Collateral and other
security for this Note, and (d) the maximum interest rate chargeable under this
note.  All of the provisions of the Loan Agreement are hereby incorporated
herein by reference.  The obligations of Borrower under this Note are secured by
inter alia, (i) the Mortgage and (ii) any Liens created by the other Loan
Documents.

 

3.             Waivers.  Borrower and all sureties, endorsers, guarantors and
other parties ever liable for payment of any sums payable pursuant to the terms
of this Note, jointly and severally waive demand, presentment for payment,
protest and demand, notice of protest, notice of acceleration, notice of intent
to accelerate, diligence in collection, the bringing of any suit against any
party, and any notice of or defense on account of any extensions, renewals,
partial payment or changes in this Note or in any of its terms, provisions, and
covenants, or any releases or substitutions of any security, or any delay,
indulgence, or other act of any trustee or any holder hereof, whether before or
after maturity, except for any demands or notices required to be provided
pursuant to any of the Loan Documents.

 

4.             Limitation of Liability.  Recourse for the obligations under this
Note shall be limited as set forth in Section 10.12 of the Loan Agreement.

 

5.             Governing Law; Waiver of Jury Trial.  This Note shall be governed
by, and construed in accordance with, the substantive laws of the State of New
York.  BORROWER

 

2

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

 

AND LENDER EACH HEREBY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
BROUGHT IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, WHICH
WAIVER IS INFORMED AND VOLUNTARY.

 

[Remainder of Page Intentionally Left Blank; Signature to Follow]

 

3

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

 

IN WITNESS WHEREOF, Borrower has executed this Note as of the date first set
forth above.

 

 

BORROWER:

 

 

 

TIMES SQUARE HOTEL OWNER, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Ex. B - 1

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

 

EXHIBIT C

 

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 Leases 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 Leases 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. C - 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 identify the Premises as the Doubletree Guest Suites
Times Square (or any approved replacement brand) in accordance with the Hotel
Franchise 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;

 

Ex. C - 2

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

 

(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 Document (the Operating lease being specifically approved by
Agent), (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;

 

(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;

 

(xxii)        if such entity is (i) a limited liability company, has articles of
organization, a certificate of formation and/or an operating agreement, as
applicable, (ii) a limited partnership, has a certificate of limited partnership
and limited partnership agreement, or (ii) a corporation, has a certificate of
incorporation or articles of incorporation, that in each case provide that such
entity (a) will not dissolve, merge, liquidate or consolidate; (b) will not sell
all or substantially all of its assets or the assets of any other entity in
which it has a direct or indirect legal or beneficial ownership interest;
(c) will not engage in any other business activity, other than as permitted
pursuant to the Loan Documents, or amend its organizational documents with
respect to the matters set forth in this definition without the consent of
Agent; and (d) shall not file a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings with respect to itself or to any other entity
in which it has a direct or indirect legal or beneficial ownership interest or
is the direct or indirect general partner or manager; without the affirmative
vote of all of the directors, general partners or managers of the entity,
including its Independent Directors and Independent Managers; and

 

(xxiii)       shall cause at least two duly appointed directors or managers
(each, an “Independent Director” or “Independent Manager”, as applicable)
reasonably satisfactory to Agent who shall not have been at the time of such
individual’s appointment or at any time while serving as a director or manager
of such entity, and may not have been at any time during the preceding five
(5) years (i) a stockholder, director, manager (other than as an Independent
Manager in the case of Borrower), officer, employee, partner, attorney or
counsel of such entity or any Affiliate of such entity, (ii) a creditor,
customer, supplier or other Person who derives any of its purchases or revenues
from its activities with such entity or any Affiliate of such entity (other than
its fees and charges for serving as an Independent Director or Independent
Manager of such entity), (iii) a Person or other entity controlling or under
common control with any such stockholder, partner, customer, supplier or other
Person prohibited by clause (i) or (ii) above, or (iv) a member of the immediate
family of any such stockholder, director, manager, officer, employee, partner,
customer, supplier or other Person prohibited by clause (i) or (ii) above.  (For
purposes of this subclause (xxiii), the term “Affiliate” means any person
controlling, under common control with, or controlled by the person in question;
and the term “control” means the possession, directly or indirectly, of the
power to direct or cause the direction of management, policies or activities of
a person or entity, whether through ownership of voting securities, by contract
or otherwise).

 

Ex. C - 3

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

 

EXHIBIT D

 

Required Amortization Payments

 

No.

 

Due Date

 

Interest

 

Principal

 

Balance

 

 

 

 

 

 

 

 

 

$

180,000,000.00

 

1

 

11/1/2011

 

900,000.00

 

 

 

180,000,000.00

 

2

 

12/1/2011

 

900,000.00

 

 

 

180,000,000.00

 

3

 

1/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

4

 

2/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

5

 

3/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

6

 

4/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

7

 

5/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

8

 

6/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

9

 

7/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

10

 

8/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

11

 

9/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

12

 

10/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

13

 

11/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

14

 

12/1/2012

 

900,000.00

 

 

 

180,000,000.00

 

15

 

1/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

16

 

2/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

17

 

3/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

18

 

4/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

19

 

5/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

20

 

6/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

21

 

7/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

22

 

8/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

23

 

9/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

24

 

10/1/2013

 

900,000.00

 

 

 

180,000,000.00

 

25

 

11/1/2013

 

900,000.00

 

179,190.95

 

179,820,809.05

 

26

 

12/1/2013

 

899,104.05

 

180,086.90

 

179,640,722.15

 

27

 

1/1/2014

 

898,203.61

 

180,987.34

 

179,459,734.81

 

28

 

2/1/2014

 

897,298.67

 

181,892.28

 

179,277,842.53

 

29

 

3/1/2014

 

896,389.21

 

182,801.74

 

179,095,040.79

 

30

 

4/1/2014

 

895,475.20

 

183,715.75

 

178,911,325.04

 

31

 

5/1/2014

 

894,556.63

 

184,634.32

 

178,726,690.72

 

32

 

6/1/2014

 

893,633.45

 

185,557.50

 

178,541,133.22

 

33

 

7/1/2014

 

892,705.67

 

186,485.28

 

178,354,647.94

 

34

 

8/1/2014

 

891,773.24

 

187,417.71

 

178,167,230.23

 

35

 

9/1/2014

 

890,836.15

 

188,354.80

 

177,978,875.43

 

36

 

10/1/2014

 

889,894.38

 

189,296.57

 

177,789,578.86

 

37

 

11/1/2014

 

888,947.89

 

190,243.06

 

177,599,335.80

 

38

 

12/1/2014

 

887,996.68

 

191,194.27

 

177,408,141.53

 

39

 

1/1/2015

 

887,040.71

 

192,150.24

 

177,215,991.29

 

40

 

2/1/2015

 

886,079.96

 

193,110.99

 

177,022,880.30

 

41

 

3/1/2015

 

885,114.40

 

194,076.55

 

176,828,803.75

 

42

 

4/1/2015

 

884,144.02

 

195,046.93

 

176,633,756.82

 

43

 

5/1/2015

 

883,168.78

 

196,022.17

 

176,437,734.65

 

44

 

6/1/2015

 

882,188.67

 

197,002.28

 

176,240,732.37

 

45

 

7/1/2015

 

881,203.66

 

197,987.29

 

176,042,745.08

 

46

 

8/1/2015

 

880,213.73

 

198,977.22

 

175,843,767.86

 

47

 

9/1/2015

 

879,218.84

 

199,972.11

 

175,643,795.75

 

48

 

10/1/2015

 

878,218.98

 

200,971.97

 

175,442,823.78

 

49

 

11/1/2015

 

877,214.12

 

201,976.83

 

175,240,846.95

 

50

 

12/1/2015

 

876,204.23

 

202,986.72

 

175,037,860.23

 

51

 

1/1/2016

 

875,189.30

 

204,001.65

 

174,833,858.58

 

52

 

2/1/2016

 

874,169.29

 

205,021.66

 

174,628,836.92

 

53

 

3/1/2016

 

873,144.18

 

206,046.77

 

174,422,790.15

 

54

 

4/1/2016

 

872,113.95

 

207,077.00

 

174,215,713.15

 

55

 

5/1/2016

 

871,078.57

 

208,112.38

 

174,007,600.77

 

56

 

6/1/2016

 

870,038.00

 

209,152.95

 

173,798,447.82

 

 

Ex. D - 1

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

 

No.

 

Due Date

 

Interest

 

Principal

 

Balance

 

57

 

7/1/2016

 

868,992.24

 

210,198.71

 

173,588,249.11

 

58

 

8/1/2016

 

867,941.25

 

211,249.70

 

173,376,999.41

 

59

 

9/1/2016

 

866,885.00

 

212,305.95

 

173,164,693.46

 

60

 

10/1/2016

 

865,823.47

 

213,367.48

 

172,951,325.98

 

61

 

11/1/2016

 

864,756.63

 

214,434.32

 

172,736,891.66

 

62

 

12/1/2016

 

863,684.46

 

215,506.49

 

172,521,385.17

 

63

 

1/1/2017

 

862,606.93

 

216,584.02

 

172,304,801.15

 

64

 

2/1/2017

 

861,524.01

 

217,666.94

 

172,087,134.21

 

65

 

3/1/2017

 

860,435.67

 

218,755.28

 

171,868,378.93

 

66

 

4/1/2017

 

859,341.89

 

219,849.06

 

171,648,529.87

 

67

 

5/1/2017

 

858,242.65

 

220,948.30

 

171,427,581.57

 

68

 

6/1/2017

 

857,137.91

 

222,053.04

 

171,205,528.53

 

69

 

7/1/2017

 

856,027.64

 

223,163.31

 

170,982,365.22

 

70

 

8/1/2017

 

854,911.83

 

224,279.12

 

170,758,086.10

 

71

 

9/1/2017

 

853,790.43

 

225,400.52

 

170,532,685.58

 

72

 

10/1/2017

 

852,663.43

 

226,527.52

 

170,306,158.06

 

73

 

11/1/2017

 

851,530.79

 

227,660.16

 

170,078,497.90

 

74

 

12/1/2017

 

850,392.49

 

228,798.46

 

169,849,699.44

 

75

 

1/1/2018

 

849,248.50

 

229,942.45

 

169,619,756.99

 

76

 

2/1/2018

 

848,098.78

 

231,092.17

 

169,388,664.82

 

77

 

3/1/2018

 

846,943.32

 

232,247.63

 

169,156,417.19

 

78

 

4/1/2018

 

845,782.09

 

233,408.86

 

168,923,008.33

 

79

 

5/1/2018

 

844,615.04

 

234,575.91

 

168,688,432.42

 

80

 

6/1/2018

 

843,442.16

 

235,748.79

 

168,452,683.63

 

81

 

7/1/2018

 

842,263.42

 

236,927.53

 

168,215,756.10

 

82

 

8/1/2018

 

841,078.78

 

238,112.17

 

167,977,643.93

 

83

 

9/1/2018

 

839,888.22

 

239,302.73

 

167,738,341.20

 

84

 

10/1/2018

 

838,691.71

 

240,499.24

 

167,497,841.96

 

 

Ex. D - 2

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

 

SCHEDULE 1.1

 

Example of Net Operating Income

Doubletree Times Square

August 2011 T12

 

 

 

2010
Actual
September

 

2010
Actual
October

 

2010
Actual
November

 

2010
Actual
December

 

2011
Actual
January

 

2011
Actual
February

 

2011
Actual
March

 

2011
Actual
April

 

2011
Actual
May

 

2011
Actual
June

 

2011
Actual
July

 

2011
Actual
August

 

2011 Actual
August T12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy

 

94.3

%

94.4

%

95.4

%

93.3

%

86.8

%

92.6

%

97.6

%

98.6

%

98.0

%

98.4

%

98.4

%

96.0

%

95.3

%

ADR

 

345.74

 

352.42

 

383.23

 

564.57

 

214.01

 

211.96

 

279.60

 

341.67

 

348.21

 

359.55

 

348.13

 

337.75

 

342.23

 

REVPAR

 

325.95

 

332.57

 

365.79

 

526.52

 

185.72

 

196.27

 

272.80

 

336.80

 

341.37

 

353.76

 

342.57

 

324.30

 

326.21

 

GOPAR

 

190.46

 

195.64

 

221.17

 

362.02

 

63.30

 

73.93

 

133.97

 

190.45

 

198.69

 

212.42

 

196.35

 

224.40

 

189.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

4,498,138

 

4,742,464

 

5,047,885

 

7,508,182

 

2,648,414

 

2,527,990

 

3,890,098

 

4,647,801

 

4,867,996

 

4,881,938

 

4,884,996

 

4,624,500

 

54,770,402

 

Food and Beverage

 

309,863

 

324,082

 

308,615

 

424,478

 

322,336

 

313,861

 

326,058

 

275,523

 

327,571

 

274,258

 

304,776

 

724,184

 

4,235,605

 

Other Operating Departments

 

342,788

 

322,539

 

341,220

 

338,635

 

345,715

 

343,693

 

344,869

 

344,810

 

344,467

 

347,902

 

400,170

 

353,749

 

4,170,557

 

Rent and Other Income

 

120,833

 

107,671

 

125,476

 

119,970

 

126,301

 

114,953

 

124,746

 

142,454

 

124,881

 

116,655

 

122,176

 

125,681

 

1,471,797

 

 

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

Total Revenue

 

5,271,622

 

5,496,756

 

5,823,196

 

8,391,265

 

3,442,766

 

3,300,497

 

4,685,771

 

5,410,588

 

5,664,915

 

5,620,753

 

5,712,118

 

5,828,114

 

64,648,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPARTMENTAL EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

1,000,550

 

1,025,032

 

1,071,578

 

1,226,929

 

964,411

 

988,528

 

1,147,134

 

1,117,369

 

1,120,721

 

1,123,324

 

1,164,914

 

1,135,499

 

13,085,989

 

Food and Beverage

 

410,573

 

408,741

 

419,717

 

551,491

 

383,016

 

379,344

 

413,890

 

380,703

 

389,613

 

351,089

 

393,572

 

553,863

 

5,035,612

 

Other Operating Departments

 

97,083

 

88,596

 

62,969

 

62,550

 

66,789

 

67,102

 

67,652

 

64,359

 

51,542

 

61,840

 

64,002

 

64,435

 

818,919

 

 

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

Total Departmental Expenses

 

1,508,206

 

1,522,369

 

1,554,264

 

1,840,970

 

1,414,216

 

1,434,974

 

1,628,676

 

1,562,431

 

1,561,876

 

1,536,253

 

1,622,488

 

1,753,797

 

18,940,520

 

 

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

Total Departmental Income

 

3,763,416

 

3,974,387

 

4,268,932

 

6,550,295

 

2,028,550

 

1,865,523

 

3,057,095

 

3,848,157

 

4,103,039

 

4,084,500

 

4,089,630

 

4,074,317

 

45,707,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNDISTRIBUTED OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative and General

 

341,063

 

315,189

 

349,799

 

291,994

 

313,702

 

250,465

 

354,515

 

319,543

 

319,806

 

361,887

 

334,010

 

306,655

 

3,858,628

 

Sales and Marketing

 

399,132

 

504,265

 

511,732

 

737,016

 

382,068

 

316,031

 

428,381

 

544,842

 

544,446

 

423,328

 

578,909

 

186,247

 

5,556,397

 

Property Operation & Maint.

 

184,771

 

173,442

 

178,611

 

151,146

 

172,637

 

167,386

 

167,276

 

152,564

 

182,066

 

166,908

 

160,223

 

166,736

 

2,023,766

 

Utilities

 

210,084

 

191,624

 

176,601

 

207,788

 

257,451

 

179,394

 

196,516

 

202,990

 

223,399

 

200,972

 

216,509

 

214,674

 

2,478,002

 

 

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

Total Undistributed Expenses

 

1,135,050

 

1,184,520

 

1,216,743

 

1,387,944

 

1,125,858

 

913,276

 

1,146,688

 

1,219,939

 

1,269,717

 

1,153,095

 

1,289,651

 

874,312

 

13,916,793

 

 

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

Gross Operating Profit

 

2,628,366

 

2,789,867

 

3,052,189

 

5,162,351

 

902,692

 

952,247

 

1,910,407

 

2,628,218

 

2,833,322

 

2,931,405

 

2,799,979

 

3,200,005

 

31,791,048

 

 

Ex. D - 1

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

 

Doubletree Times Square

August 2011 T12

 

 

 

2010
Actual
September

 

2010
Actual
October

 

2010
Actual
November

 

2010
Actual
December

 

2011
Actual
January

 

2011
Actual
February

 

2011
Actual
March

 

2011
Actual
April

 

2011
Actual
May

 

2011
Actual
June

 

2011
Actual
July

 

2011
Actual
August

 

2011 Actual
August T12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management Fees

 

145,879

 

153,031

 

161,955

 

239,193

 

90,738

 

86,466

 

127,961

 

149,702

 

157,332

 

155,794

 

157,081

 

162,413

 

1,787,545

 

Rent

 

123,903

 

159,294

 

134,642

 

134,642

 

134,642

 

123,903

 

146,414

 

134,642

 

135,675

 

135,675

 

136,707

 

137,733

 

1,637,872

 

Property and Other Taxes

 

470,966

 

473,664

 

473,059

 

500,765

 

458,490

 

458,452

 

462,417

 

473,760

 

458,367

 

458,335

 

515,970

 

516,035

 

5,720,280

 

Insurance

 

12,264

 

12,264

 

13,889

 

73,828

 

11,721

 

9,680

 

15,238

 

(14,406

)

16,005

 

16,005

 

25,883

 

21,985

 

214,356

 

 

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

Total Other Expenses

 

753,012

 

798,253

 

783,545

 

948,428

 

695,591

 

678,501

 

752,030

 

743,698

 

767,379

 

765,809

 

835,641

 

838,166

 

9,360,053

 

 

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

EBITDA before FF&E Reserve

 

1,875,354

 

1,991,614

 

2,268,644

 

4,213,923

 

207,101

 

273,746

 

1,158,377

 

1,884,520

 

2,065,943

 

2,165,596

 

1,964,338

 

2,361,839

 

22,430,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FF&E Reserve

 

210,865

 

219,870

 

232,928

 

335,651

 

137,711

 

132,020

 

187,431

 

216,424

 

226,597

 

224,830

 

228,485

 

233,125

 

2,585,937

 

 

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

EBITDA after FF&E Reserve

 

1,664,489

 

1,771,744

 

2,035,716

 

3,878,272

 

69,390

 

141,726

 

970,946

 

1,668,096

 

1,839,346

 

1,940,766

 

1,735,853

 

2,128,714

 

19,845,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment to NOI (EBITDA after FF&E Reserve)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

T-12 Occupancy

 

95.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment Necessary

 

yes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Max Occupancy

 

95.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

95.0

%

Rooms

 

460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Days in the year

 

365

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment to Room Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(182,411

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense Adjustment % of Rooms Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55

%

Total Expense Adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(100,326

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total NOI Adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(82,085

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted T-12 NOI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,762,973

 

 

Ex. D - 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 Times
Square Hotel Owner, 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 Eurohypo AG, New York Branch, 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 (including, without
limitation, termination payments) 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, and not by Assignor.  All such payments shall be made without offset
or deduction for any claim by the Counterparty against Assignor, all of which
such claims will be asserted directly or separately against Assignor. 
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

 

Sch. 2.7(a) - 1

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

 

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 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.

 

Counterparty hereby agrees that, in the event of any breach or default by the
Assignor under the Interest Rate Protection Agreement that has not been cured by
Assignor, and in the event of any termination event that could be claimed by
Counterparty under the Interest Rate Protection Agreement as a result of any
act, omission, event or condition attributable to Assignor which could be cured
through the payment of money or otherwise through performance by a person other
than Assignor, that has not been cured by Assignor, Counterparty shall notify
Agent at its address set forth in below of the occurrence of such breach,
default or event.  Counterparty further agrees that Agent shall have the right
to cure any such breach, default or event; that the Counterparty shall accept
any such cure tendered by Agent within the same period for cure of such breach,
default or event set forth in the Assignment of Agreements, which cure period
shall be measured, however, from the date notice of such breach, default or
event is delivered to Agent in accordance herewith) (herein, the “Cure Period”);
and that Counterparty shall not terminate the Interest Rate Protection Agreement
or exercise any remedies on account of such breach, default or event, unless
Agent fails to cure such breach, default or event within the Cure Period. 
Counterparty acknowledges and agrees that Agent shall have the right (but shall
be under no obligation) to cure such breach, default or event, and that neither
the tender of any such cure by or on behalf of Agent, nor this Acknowledgment or
any term or provision of the Assignment of Agreements, shall be deemed to result
in the assumption by Agent of any obligations of Assignor under the Interest
Rate Protection Agreement.

 

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:

 

 

 

 

 

EUROHYPO AG, NEW YORK BRANCH,

 

 

as Agent for Lenders

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

Dated:

 

 

 

 

 

 

 

 

 

ACKNOWLEDGED AND AGREED:

 

 

 

 

 

 

Dated:

 

 

ASSIGNOR:

 

 

 

 

 

 

TIMES SQUARE HOTEL OWNER, LLC, a
Delaware limited liability company

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

 

None.

 

Sch. 5- 1

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

 

SCHEDULE 5.11

 

Accounts

 

Depository Account — HSBC 048-73152-8 (Times Square Hotel Oper Lessee LLC)

Operating Account — HSBC 048-76074-9 (Times Square Hotel Oper Lessee LLC)

Payroll Account — HSBC 048-76005-6 (1568 Broadway Hotel Management LLC)

 

Sch. 5.11- 1

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

 

SCHEDULE 5.17A

 

Option to Purchase or Rights of First Refusal to Purchase

 

None.

 

Sch. 5.17A-1

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

 

SCHEDULE 5.17B

 

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:

 

None.

 

 

 

 

Sch. 5.17B- 1

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

 

SCHEDULE 5.17C

 

Amendments

 

Management Agreement-

 

First Amendment dated July 6, 2007

 

Second Amendment dated November 28, 2007

 

Third Amendment dated January 2008

 

 

Premises Documents-

 

As disclosed on Preliminary Title Report dated September 12, 2011

 

 

Franchise Agreement-

 

Amended and Restated Franchise Agreement dated as October 1, 2011.

 

Sch. 5.17C - 1

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

 

SCHEDULE 5.26

 

Collective Bargaining Agreements

 

Memorandum of Agreement effective February 14, 2001

 

Collective Bargaining Agreement effective July 1, 2001

 

Successor Me-Too Agreement effective June 1, 2006

 

2006 Memorandum of Understanding effective July 1, 2006

 

Medical Pension Benefits Agreement effective December 19, 2007

 

Timekeeping Agreement effective March 5, 2008

 

Housekeeping Attendants Agreement effective September 2, 2008

 

Porterage Fees Agreement effective September 2, 2008

 

Housekeeping Supervisor Agreement effective December 2008

 

Bartenders Agreement effective September 10, 2009

 

Sch. 5.26 - 1

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

 

SCHEDULE 6.11

 

Insurance Requirements

 

(a)           Loan Parties, at their sole cost and expense, shall obtain and
maintain during the entire Term, or cause to be maintained, insurance policies
for Loan Parties and the Premises providing at least the following coverages:

 

(i)            Property insurance against loss or damage by fire, wind
(including named storms), lightning and such other perils as are included in a
standard “all risk” or “special form” policy and including terrorism, in each
case (A) in an amount equal to one hundred percent (100%) of the “Full
Replacement Cost” of the Premises, which for purposes of this Loan Agreement
shall mean actual replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings).  The Full Replacement Cost
must be adjusted annually to reflect increased value due to inflation;
(B) containing an agreed amount endorsement with respect to the Improvements
and, if required, personal property at the Property, waiving all co-insurance
provisions; (C) providing for no deductible in excess of $10,000.00 (except for
deductibles for windstorm and earthquake coverage, which deductibles may be up
to 5% of the total insurable value of the Property set forth in the Policy); and
(D) containing “Law and Ordinance Coverage” if the Property shall at any time be
legal non-conforming, including coverage for Loss to the Undamaged Portion,
Demolition Costs and Increased Cost of Construction, all in amounts acceptable
to Agent.  In addition, Borrower shall obtain: (y) 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 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 or such greater
amount as Agent shall require; and (z) if required by Agent, earthquake
insurance in an amount not exceeding the “Probable Maximum Loss” amount plus
business income, less a deductible of five percent (5%) and in form and
substance satisfactory to Agent, provided that the insurance pursuant to clause
(y) and (z) hereof shall be on terms consistent with the comprehensive all risk
insurance policy required under this subsection (i).  Borrower shall be required
to maintain (a) so long as TRIPRA or a similar or subsequent statute is in
effect, terrorism insurance for Certified and, if requested by Agent,
Non-Certified acts (as such terms are defined in TRIPRA or similar or subsequent
statute) in an amount equal to the full replacement cost of the Premises (plus
twelve (12) months of business interruption coverage), and (b) if TRIPRA or a
similar or subsequent statute is not in effect, then provided that terrorism
insurance is commercially available, Borrower shall be required to carry
terrorism insurance throughout the term of the Loan as required by the first
sentence of this subsection (i), but in such event Borrower shall not be
required to spend on terrorism insurance coverage more than an amount equal to
two (2) times the annual premium paid by Borrower for the coverage in place as
of the date hereof for the comprehensive all risk insurance required under
subsection (i) hereof) in any fiscal year on insurance premiums for terrorism
insurance (the “Terrorism Insurance Cap”) whether such coverage is part of the
Insurance Policies required under Section 6.11 and Schedule 6.11 or is a
separate Insurance Policy of terrorism insurance, and if the cost of

 

Sch. 6.11 - 1

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

 

the terrorism insurance required amount exceeds the Terrorism Insurance Cap,
Borrower shall purchase the maximum amount of terrorism insurance available with
funds equal to the Terrorism Insurance Cap; provided, however, if Agent
reasonably determines that (i) terrorism insurance is customarily maintained by
owners and/or operators of first class hotels in Manhattan or (ii) Borrower or
its Affiliates are obtaining terrorism insurance on any other hotel properties
similar in type and quality to the Premises which Borrower and its Affiliates
own and/or operate in Manhattan, then Borrower shall maintain such terrorism
insurance as a part thereof regardless of the cost of the related insurance
premiums;

 

(ii)           commercial general liability insurance, including coverages
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the Property, and including liquor liability if
required, such insurance (A) to be on the so-called “occurrence” form and
containing minimum limits per occurrence of One Million and 00/100 Dollars
($1,000,000) and Two Million and 00/100 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 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 on an “if
any” basis; (3) independent contractors, (4) contractual liability for all
insured contracts; and (5) contractual liability covering the indemnities
contained in Section 10.1 to the extent the same is available;

 

(iii)          rental loss and/or business income interruption insurance
(A) with loss payable to Agent; (B) covering all risks required to be covered by
the insurance provided for in subsection (i) above, subsection (iv) (if
applicable), subsection (vi), subsection (x) and Section 5.1.1(h) below for a
period commencing at the time of loss and continuing for such length of time as
it takes to repair or replace with the exercise of due diligence and dispatch
but in no event for less than eighteen (18) months (C) containing an extended
period of indemnity endorsement which provides 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 the expiration of twelve (12) months from the date that the
Property 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 Revenue from the Property for a period of eighteen (18) months. 
The amount of such business income insurance shall be determined prior to the
date hereof and at least once each year thereafter based on Borrower’s
reasonable estimate of the Gross Revenue from the Property for the succeeding
twenty-four (24) month period.  All proceeds payable to Agent pursuant to this
subsection shall be held by Agent and, unless otherwise expressly permitted or
required under this Loan Agreement, shall be applied to the Obligations secured
by the Loan Documents from time to time due and payable hereunder and the Notes;
provided, however, that nothing herein contained shall be deemed to relieve
Borrower of its Obligations to pay the Debt on the respective dates of payment
provided for in the Note and the other Loan Documents except to the extent such
amounts are actually paid out of the proceeds of such business income insurance;

 

Sch. 6.11 - 2

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

 

(iv)          at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if the
Property and Liability coverage forms do not otherwise apply, coverage all in
form and substance and with limits, terms and conditions acceptable to Agent
including (A) owner’s contingent or protective liability insurance, or its
equivalent, covering claims not covered by or under the terms or provisions of
the above mentioned commercial general liability insurance policy; and (B) the
insurance provided for in subsection (i) above written in a so-called builder’s
risk completed value form, including coverage for 100% of the total insurable
costs of construction (1) on a non-reporting basis, (2) against all risks
insured against pursuant to subsections (i), (iii), (vi), (x) and
Section 5.1.1(h), (3) including permission to occupy the Property, and (4) with
an agreed amount endorsement waiving co-insurance provisions;

 

(v)           workers’ compensation, subject to the statutory limits of the
state in which the Property is located, and employer’s liability insurance with
limits which are required from time to time by Agent in respect of any work or
operations on or about the Property, or in connection with the Property or its
operation (if applicable);

 

(vi)          comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Agent on terms consistent with the
commercial property insurance policy required under subsection (i) above;

 

(vii)         umbrella liability insurance in addition to primary coverage in an
amount not less than One Hundred Million and 00/100 Dollars ($100,000,000.00)
per occurrence on terms consistent with the commercial general liability
insurance policy required under subsection (ii) and, if required, the employers
liability required in subsection (v) above and motor vehicle liability required
in subsection (viii) below;

 

(viii)        motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence, including umbrella coverage, with limits which are required from
time to time by Agent (if applicable);

 

(ix)           insurance against employee dishonesty in an amount and with
deductibles acceptable to Agent (if applicable);

 

(x)            insurance for liquor liability, Garagekeeper’s
liability, Innkeeper’s liability, safe deposit box liability and crime
insurance, all in amounts reasonably satisfactory to Agent; and

 

(x)            upon sixty (60) days’ notice, such other insurance and in such
amounts as Agent from time to time may request against such other insurable
hazards which at the time are commonly insured against for properties similar to
the Property located in or around the region in which the Property is located.

 

Sch. 6.11 - 3

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

 

SCHEDULE 6.20

 

Organizational Chart

 

Sch. 6.11 - 1

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

 

[g256121kc51i001.jpg]

 

Contracting party: Times Square Hotel Owner, LLC

Partner number:

Contract/Account number:

 

Statement regarding the economic beneficiary pursuant to § 1, section 6 GwG*
- Legal entities/Partnerships -

 

As a bank, Aareal Bank AG is obliged pursuant to German law (§ 3, section 1,
subsection 3 GwG), as are its subsidiaries such as Aareal Capital Corporation,
to ascertain, before establishing a business relationship, whether its
contracting party acts for an economic beneficiary. “Economic beneficiaries” are
individuals in the background, at whose instance actions are actually taken or -
in the case of a legal entity/partnership - individuals, who ultimately control
the contracting party or hold a quasi-owner position.

 

x 1. Contracting party acting in its own interests

 

o 1.1 Shareholding structure (always enclose)

An organisational chart showing the contracting party’s shareholding structure
(including the individuals in the background) is enclosed.

 

o 1.2 Listed company

The contracting party is listed at a “privileged” stock exchange. (No further
clarification required: 1.3 to 1.6 are not applicable.)

 

o 1.3 Shareholders

There exist individuals who, directly or indirectly (through multi-level
shareholding structures), control more than 25% of the shares or voting rights
in the contracting party.

Names and addresses of individuals:

 

o 1.4 Beneficiary of an arrangement for the benefit of a third party

(To be enquired if the shareholding structure includes a trust, a foundation, or
another arrangement for the benefit of a third party) There exist individuals
who are beneficiaries of, or exercise control over, 25% or more of the managed
assets.

Names and addresses of individuals:

 

o 1.5 Factual control

Notwithstanding paragraphs 1.3 and 1.4 above, the contracting party is under the
factual control of the following individuals: Names and addresses of
individuals:

 

x 1.6 No economic beneficiaries

There exist no individuals who exercise control over the contracting party as
per paragraphs 1.3 to 1.5 above.

 

o 2. Acting at the instance of a third party

The business relationship is entered into in the interests of a third party (in
particular, a trustee).

 

o 2.1 The third party/parties is/are the following individual(s) (names and
addresses):

 

o 2.2 The third party is the following legal entity/partnership (name and
address)

 

o A shareholding structure as per paragraph 1.1 above exists.

o Listed company as per paragraph 1.2 above

o The shareholders as per paragraph 1.3 above are the following persons (names
and addresses):

o The beneficiaries as per paragraph 1.4 above are the following persons (names
and addresses):

o Factual control as per paragraph 1.5 above is exercised by the following
persons (names and addresses):

o No economic beneficiaries as per paragraph 1.6 above

 

I am/We are aware that I am/we are required to inform Aareal Capital Corporation
without undue delay of any changes to the information set forth above.

 

 

TIMES SQUARE HOTEL OWNER, LLC

 

 

 

 

 

/s/ John V. Arabia

 

Signature

 

 

 

 

 

Aliso Viejo, CA

 

Place, Date

 

 

 

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

* Geldwäschegesetz, German Money Laundering Act

 

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

 

[g256121kc51i002.gif]

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

 

SCHEDULE 6.34

 

Required Repairs

 

 

 

Item

 

Comments

 

Required
Completion
Schedule

 

 

 

Roofing

 

Replace leaking skylight in Stairwell A

 

Within 60 days of the Closing Date

 

 

 

Plumbing

 

Disinfect House Water Tank

 

Within 60 days of the Closing Date

 

 

 

HVAC

 

Reinsulate Steam Station

 

Within one year of the Closing Date

 

 

 

Fire Life Safety

 

Hire an Expeditor to clear all open violations there are 28 at $500 each

 

Within 180 days of the Closing Date

 

 

 

ADA

 

Provide additional ADA kits 5 at $500 each

 

Within one year of the Closing Date

 

 

 

 

 

Install Braille Signage - rest rooms, elevator, telephone, stairways etc 460 at
$30 each

 

Within eighteen (18) months of the Closing Date

 

 

Sch. 6.11 - 2

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

 

SCHEDULE 6.38

 

Post Closing Deliverables

 

Deliverable

 

Required Completion Schedule

Establish the Lockbox (as defined in the Clearing Account Agreement) pursuant to
the terms of the Clearing Account Agreement

 

Within four (4) weeks of the Closing Date, provided, however, that such period
may be extended for an additional fifteen (15) days if, in Agent’s reasonable
judgment, Loan Parties have commenced and are diligently pursuing the
establishment of the Lockbox.

 

Sch. 6.38 - 1

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

 

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, Times Square Hotel Owner, LLC, a Delaware limited liability company
(“Borrower”), Times Square Hotel Operating Lessee, LLC, a Delaware limited
liability company (“Operating Lessee”; Borrower and Operating Lessee are each
sometimes referred to as a “Loan Party” and as “Loan Parties”), Eurohypo AG, New
York Branch, 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                     , 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 $180,000,000.00 (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 Assignor has not created any
adverse interest in the Assigned Interest; and (b) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower, any

 

Sch. 8.5 - 1

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

 

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:

Facsimile:

 

Sch. 8.5 - 2

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

 

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.

 

Sch. 8.5 - 3

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

 

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:

 

Eurohypo AG, New York Branch, 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.

 

EUROHYPO AG, NEW YORK BRANCH, as agent for Lenders

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

Sch. 8.5 - 4

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

 

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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