Exhibit 10.8





Exhibit 10.8




Hudson Hotel




LOAN AND SECURITY AGREEMENT




THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is made as of the 6th day of
October, 2006, between HENRY HUDSON SENIOR MEZZ LLC, a Delaware limited liability company, having
an address at c/o Morgans Group LLC, 475 Tenth Avenue, New York, New York 10018
(“Borrower”) and WACHOVIA BANK, NATIONAL ASSOCIATION, having an address at Commercial Real
Estate Services, 8739 Research Drive URP 4, NC 1075, Charlotte, North Carolina 28262
(“Lender”).



W I T N E S S E T H:




WHEREAS, Henry Hudson Holdings LLC, a Delaware limited liability company (“Owner”) is
the owner, respectively, of the fee and leasehold estates in the premises described in Exhibit
A attached hereto and all buildings, foundations, structures, and improvements of any kind or
nature now or hereafter located thereon which premises are commonly known as the Hudson Hotel
located in New York, New York (the “Premises”);



WHEREAS, Borrower is the present owner and holder directly or indirectly of one hundred
percent (100%) of the equity in Owner;



WHEREAS, Owner delivered a promissory note (the “ Mortgage Note”) to Wachovia Bank,
National Association (“Mortgage Lender”) which evidences a loan (the “Mortgage
Loan”) in the original principal amount of $217,000,000 which is secured by certain mortgages
which were amended and consolidated pursuant to that certain Agreement of Consolidation and
Modification of Mortgage, Security Agreement, Assignment of Rents and Fixture Filing dated as of
the date hereof by and between Mortgage Lender, as lender, and Owner, as borrower, encumbering the
Premises (the “Mortgage”);



WHEREAS, Lender has agreed to make a loan (the “Loan”) to Borrower, which Loan,
together with interest thereon, shall be evidenced by and payable in accordance with the provisions
of the promissory note issued by Borrower, as maker, to Lender, as holder (the “Note”, and
together with this Agreement and all other documents executed and delivered now or hereafter in
connection with the making of the Loan, collectively, the “Loan Documents”) in the original
principal amount of $32,500,000.00 (the “Loan Amount” and together with interest and all
other sums which may or shall become due under the Note or this Agreement or the other Loan
Documents being hereinafter collectively referred to as the “Debt”); and



WHEREAS, Lender is willing to make the Loan to Borrower only if Borrower grants and assigns to
Lender, as security for the payment of the Debt and the observance and performance by Borrower of
all of the terms, covenants and provisions of the Note and the other Loan Documents on the part of
Borrower to be observed and performed, a security interest in the Collateral (hereinafter defined)
in the manner hereinafter set forth;


 


 









 





NOW, THEREFORE, in consideration of the making of the Loan and other good and valuable
consideration, the receipt of which is hereby acknowledged, Borrower hereby represents and warrants
to and covenants and agrees with Lender as follows:



ARTICLE I. DEFINITIONS




Section 1.01. Defined Terms. Capitalized terms used herein that are not otherwise
defined shall have the respective meanings ascribed thereto in the definitions list on Exhibit
C attached hereto and if not defined therein shall have the meaning set forth in the Mortgage.
Any references to defined terms or provisions of the Mortgage incorporated by reference in the Loan
Documents shall survive the repayment of the Mortgage Loan and termination of the Mortgage unless
expressly agreed to the contrary by the parties hereto. All citations to the Mortgage in this
Agreement shall refer to the Mortgage as it exists as of the date of this Agreement;
provided, however, that in the event the cited provision is amended and such
amendment is approved in writing by Lender, then such citation shall be to the amended provision.
All references to sections and schedules are to sections and schedules in or to this Agreement
unless otherwise specified.



ARTICLE II. REPRESENTATIONS, COVENANTS AND

WARRANTIES OF BORROWER




Section 2.01. Pledge of Collateral. (a) As security for the due and punctual
payment and performance of all of the Debt (whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, including, without limitation, the payment of
amounts that would become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. §362(a), whether allowed or allowable as claims), Borrower hereby
(i) pledges, transfers, hypothecates and assigns to Lender the Collateral in which Borrower now or
hereafter has rights, and (ii) grants to Lender a continuing first priority lien on and security
interest in and to all of the Borrower’s rights, whether now owned or hereafter acquired, in the
Collateral. The inclusion of Proceeds in the definition of “Collateral” does not authorize
Borrower to sell, dispose of or otherwise use the Collateral in any manner not specifically
authorized hereby. Lender is hereby authorized: (i) to transfer to the account of Lender or its
designee any Pledged Interests whether in the possession of, or registered in the name of, The
Depository Trust Company (the “DTC”) or other clearing corporation or held otherwise;
(ii) to transfer to the account of Lender or its designee with any Federal Reserve Bank any Pledged
Interests held in book entry form with any such Federal Reserve Bank; and (iii) to exchange
certificates representing or evidencing the Pledged Interests for certificates of smaller or larger
denominations. To the extent that the Pledged Interests have not already been transferred to
Lender or its designee in a manner sufficient to perfect Lender’s security interest therein,
Borrower shall promptly deliver or cause to be delivered to Lender all certificates or instruments
evidencing the Pledged Interests, together with duly executed transfer powers or other appropriate
endorsements. With respect to any Collateral in the possession of or registered in the name of a
custodian bank or nominee therefor, or any Collateral represented by entries on the books of any
securities intermediary, Borrower agrees to cause such custodian bank or nominee either to enter
into an agreement with Lender satisfactory to Lender in form and content confirming that the
Collateral is held for the account of Lender, or at the discretion of Lender and subject to the
written instructions of Lender, deliver any such Collateral to Lender and/or cause any such
Collateral to be put in bearer form, registered in the name of Lender or its nominee, or
transferred to the account of Lender with any Federal Reserve Bank, DTC, or other clearing
corporation. With respect to any Collateral held in an account maintained by Lender as securities
intermediary, Borrower hereby gives





 


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notice to Lender of Lender’s security interest in
such Collateral. In addition, Borrower agrees that in the event that any Collateral is held by
Lender in a fiduciary capacity for or on behalf of Borrower as the beneficial owner thereof, any
agreements executed by Borrower in connection therewith are hereby amended to authorize and direct
the pledge, hypothecation and/or transfer of such Collateral to Lender, as lender, by Lender, as
fiduciary, in accordance with the terms, covenants and conditions of this Agreement. The rights
granted to Lender pursuant to this Agreement are in addition to the rights granted to Lender
pursuant to any such agreements. In case of conflict between the provisions of this Agreement and
those of any other such agreement, the provisions hereof shall prevail. In the event that Borrower
purchases or otherwise acquires or obtains any additional Equity Interests in any Corporation, LLC
or Partnership, or any rights, or options, subscriptions or warrants to acquire such Equity
Interests, all such Equity Interests, rights, options, subscriptions or warrants shall
automatically be deemed to be a part of the Collateral pledged by Borrower. If any such Equity
Interests are to be evidenced by a certificate, such additional certificates shall be promptly
delivered to Lender, together with Powers related thereto, or other instruments appropriate to a
certificate representing an Equity Interest, duly executed in blank. Borrower shall deliver to
Lender all subscriptions, warrants, options and all such other rights, and upon delivery to Lender,
Lender shall hold such subscriptions, warrants, options and other rights as additional collateral
pledged to secure the Debt; provided, however, that if Lender determines, in its sole discretion,
that the value of any such subscriptions, warrants, options or other rights shall terminate, expire
or be materially reduced in value by holding the same as Collateral, Lender shall have the right
(but not the obligation), in its sole discretion, to sell or exercise the same, and if exercised,
then the monies disbursed by Lender in connection therewith shall become part of the Debt and all
of the stock, securities, evidences of indebtedness and other items so acquired shall be titled in
the name of Borrower and shall become part of the Collateral.



(b) Borrower hereby authorizes Lender to file any financing statements, and
amendments to financing statements, in any jurisdictions and with any filing offices as Lender may
determine, in its sole discretion, are necessary or advisable to perfect the security interest
granted to Lender hereunder. Such financing statements may describe the collateral in the same
manner as described in this Agreement or may contain an indication or description of collateral
that describes such property in any other manner Lender so chooses, including, without limitation,
describing such property as “all assets, whether now owned or hereafter acquired” or “all personal
property, whether now owned or hereafter acquired”.



Section 2.02. Representations of Borrower. Borrower represents and warrants to
Lender:



(a) Organization and Authority. Borrower (i) is a limited liability
company, general partnership, limited partnership or corporation, as the case may be, duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
formation, (ii) has all requisite power and authority and all necessary licenses and permits to
enter into the transactions contemplated by the Note and this Agreement and to carry on its
business as now conducted and as presently proposed to be conducted and (iii) is duly qualified,
authorized to do business and in good standing in each jurisdiction where the conduct of its
business or the nature of its activities makes such qualification necessary. If Borrower is a
limited liability company, limited partnership or general partnership, each general partner or
managing member, as applicable, of Borrower which is a corporation is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its incorporation.






 


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(b) Power. Borrower and, if applicable, each General Partner has full power
and authority to execute, deliver and perform, as applicable, the Loan Documents to which it is a
party, to receive the borrowings thereunder, to execute and deliver the Note and to grant to Lender
a first priority, perfected and continuing lien on and security interest in the Collateral.



(c) Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents to which Borrower is a party, the making of the borrowings thereunder, the
execution and delivery of the Note, the grant of the lien and security interest on and in the
Collateral pursuant to the Loan Documents to which Borrower is a party and the consummation of the
Loan are within the powers of Borrower and have been duly authorized by Borrower and, if
applicable, the General Partners, by all requisite action (and Borrower hereby represents that no
approval or action of any member, limited partner or shareholder, as applicable, of Borrower, which
has not been received or taken, is required to authorize any of the Loan Documents to which
Borrower is a party) and will constitute the legal, valid and binding obligation of Borrower,
enforceable against Borrower in accordance with their terms, except as enforcement may be stayed or
limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity (whether considered in proceedings at law or in
equity) and will not (i) violate any provision of its Organizational Documents, or, to its
knowledge, any law, judgment, order, rule or regulation of any court, arbitration panel or other
Governmental Authority, domestic or foreign, or other Person affecting or binding upon Borrower or
the Collateral, or (ii) violate any provision of any indenture, agreement, mortgage, deed of trust,
contract or other instrument to which Borrower or, if applicable, any General Partner is a party or
by which any of their respective property, assets or revenues are bound, or be in conflict with,
result in an acceleration of any obligation or a breach of or constitute (with notice or lapse of
time or both) a default or require any payment or prepayment under, any such indenture, agreement,
mortgage, deed of trust, contract or other instrument, or (iii) result in the creation or
imposition of any lien, except those in favor of Lender as provided in the Loan Documents to which
it is a party.



(d) Consent. Neither Borrower nor, if applicable, any General Partner, is
required to obtain any consent, approval or authorization from, or to file any declaration or
statement with, any Governmental Authority in connection with or as a condition to the execution,
delivery or performance of this Agreement, the Note or the other Loan Documents which has not been
so obtained or filed.



(e) Interest Rate. To Borrower’s knowledge, the rate of interest paid under
the Note and the method and manner of the calculation thereof do not violate any usury or other law
or applicable Legal Requirement.



(f) Other Agreements. Borrower is not a party to or otherwise bound by any
agreements or instruments which, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect. Neither Borrower nor, if applicable, any General Partner, is in violation
of its organizational documents or other restriction or any agreement or instrument by which it is
bound, or any judgment, decree, writ, injunction, order or award of any arbitrator, court or
Governmental Authority, or any Legal Requirement, in each case, applicable to Borrower or the
Collateral, except for such violations that would not, individually or in the aggregate, have a
Material Adverse Effect.






 


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(g) Maintenance of Existence. (i) Borrower is familiar with the criteria of
the Rating Agency required to qualify as a special-purpose bankruptcy-remote entity and Borrower
and, if applicable, each General Partner at all times since their formation have been duly formed
and existing at all times and at all times has preserved and shall preserve and has kept and shall
keep in full force and effect their existence as a Single Purpose Entity.




(ii) Borrower and, if applicable, each General Partner, at all times since
their organization have complied, and will continue to comply, with the provisions of its
certificate of limited partnership and agreement of limited partnership or certificate of
incorporation and by-laws or articles of organization, certificate of formation and
operating agreement, as applicable, and the laws of its jurisdiction of organization
relating to partnerships, corporations or limited liability companies, as applicable.




(iii) Borrower and, if applicable, each General Partner have done or caused
to be done and will do all things necessary to observe organizational formalities and
preserve their existence and Borrower and, if applicable, each General Partner will not
amend, modify or otherwise change the certificate of limited partnership and agreement of
limited partnership or certificate of incorporation and by-laws or articles of
organization, certificate of formation and operating agreement, as applicable, or other
organizational documents of Borrower and, if applicable, each General Partner except for
immaterial amendments which do not modify the Single Purpose Entity provisions.




(iv) Borrower and, if applicable, each General Partner, have at all times
accurately maintained, and will continue to accurately maintain, their respective financial
statements, accounting records and other partnership, company or corporate documents
separate from those of any other Person and Borrower, have filed and will file its own tax
returns or, if Borrower and/or, if applicable, General Partner is part of a consolidated
group for purposes of filing tax returns, Borrower and, General Partner, as applicable, has
been shown and will be shown as separate members of such group. Borrower and, if
applicable, each General Partner have not at any time since their formation commingled, and
will not commingle, their respective assets with those of any other Person and each has
maintained and will maintain their assets in such a manner such that it will not be costly
or difficult to segregate, ascertain or identify their individual assets from those of any
other Person. Borrower and, if applicable, each General Partner has not permitted and will
not permit any Affiliate independent access to their bank accounts. Borrower and, if
applicable, each General Partner have at all times since their formation accurately
maintained and utilized, and will continue to accurately maintain and utilize, their own
separate bank accounts, payroll and separate books of account, stationery, invoices and
checks.




(v) Borrower and, if applicable, each General Partner, have at all times
paid, and will continue to pay, their own liabilities from their own separate assets and
each has allocated and charged and shall each allocate and charge fairly and reasonably any
overhead which Borrower and, if applicable, any General Partner, shares with any other
Person, including, without limitation, for office space and services performed by any
employee of another Person.






 


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(vi) Borrower and, if applicable, each General Partner, have at all times
identified themselves, and will continue to identify themselves, in all dealings with the
public, under their own names and as separate and distinct entities and shall correct any
known misunderstanding regarding their status as separate and distinct entities. Borrower
and, if applicable, each General Partner, have not at any time identified themselves, and
will not identify themselves, as being a division of any other Person.




(vii) Borrower and, if applicable, each General Partner, have been at all
times, and will continue to be, adequately capitalized in light of the nature of their
respective businesses.




(viii) Borrower and, if applicable, each General Partner, (A) have not owned,
do not own and will not own any assets or property other than the Collateral, and, with
respect to General Partner, if applicable, its interest in Borrower, (B) have not engaged
and will not engage in any business other than the ownership, management and operation of
the Collateral, or with respect to General Partner, if applicable, its interest in
Borrower, (C) have not incurred and will not incur any debt, secured or unsecured, direct
or contingent (including guaranteeing any obligation), other than in connection with the
Loan, (D) have not pledged (other than pledges in connection with loans which have been
paid in full prior to entering into the Loan) and will not pledge their assets for the
benefit of any other Person, and (E) have not made and will not make any loans or advances
to any Person (including any Affiliate).




(ix) Neither Borrower nor, if applicable, any General Partner will change
its name or principal place of business unless thirty (30) days prior written notice
thereof is provided to Lender.




(x) Neither Borrower nor, if applicable, any General Partner has, and
neither of such Persons will have, any subsidiaries other than, with respect to Borrower,
Owner.




(xi) Borrower has preserved and maintained and will preserve and maintain
its existence as a Delaware limited liability company and all material rights, privileges,
trade names, if any, and franchises.




(xii) Neither Borrower, nor, if applicable, any General Partner, will merge
or consolidate with, or sell all or substantially all of its respective assets to any
Person, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution). Neither Borrower, nor, if applicable, any General Partner has acquired nor
will acquire any business or assets from, or capital stock or other ownership interest of,
or be a party to any acquisition of, any Person.


 


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(xiii) Borrower and, if applicable, each General Partner, have not at any time
since their formation assumed, guaranteed or held themselves out to be responsible for, and
will not assume, guarantee or hold themselves out to be responsible for the liabilities or
the decisions or actions respecting the daily business affairs of their partners,
shareholders or members or any predecessor company, corporation or partnership, each as
applicable, any Affiliates, or any other Persons other than in connection with the Loan.
Borrower and, if applicable, each General Partner, have not at any time since their
formation acquired, and will not acquire, obligations or securities of its partners or
shareholders, members or any predecessor company, corporation or partnership, each as
applicable, or any Affiliates (other than, with respect to General Partner, its interest in
Borrower). Borrower and, if applicable, each General Partner, have not at any time since
their formation made, and will not make, loans to its partners, members or shareholders or
any predecessor company, corporation or partnership, each as applicable, or any Affiliates
of any of such Persons. Borrower and, if applicable, each General Partner, have no known
contingent liabilities nor do they have any material financial liabilities under any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to
which such Person is a party or by which it is otherwise bound other than under the Loan
Documents.




(xiv) Borrower and, if applicable, each General Partner, have not at any time
since their formation entered into and was not a party to, and, will not enter into or be a
party to, any transaction with its Affiliates, members, partners or shareholders, as
applicable, or any Affiliates thereof except in the ordinary course of business of such
Person on terms which are no less favorable to such Person than would be obtained in a
comparable arm’s length transaction with an unrelated third party.




(xv) If Borrower is a limited partnership or a limited liability company, the
General Partner shall be a corporation or limited liability company whose sole asset is its
interest in Borrower and the General Partner will at all times comply, and will cause
Borrower to comply with each of the representations, warranties, and covenants contained in
this Section 2.02(g) as if such representation, warranty or covenant was made directly by
such General Partner.




(xvi) Borrower shall at all times cause there to be at least two (2) duly
appointed members of Borrower’s board of directors or board of managers or other governing
board or body, as applicable (each an “Independent Director”), of, if Borrower is a
corporation, Borrower, if Borrower is a limited partnership, of the General Partner, and if
Borrower is a limited liability company, of the General Partner or of Borrower, reasonably
satisfactory to Lender who shall not have been at the time of such individual’s
appointment, and may not be or have been at any time (A) a shareholder, officer, director,
attorney, counsel, partner, member or employee of Borrower or any of the foregoing Persons
or Affiliates thereof, (B) a customer or creditor of, or supplier or service provider to
Borrower or any of its shareholders, partners, members or their Affiliates, (C) a member of
the immediate family of any Person referred to in (A) or (B) above or (D) a Person
Controlling, Controlled by or under common Control with any Person referred to in (A)
through (C) above. A natural person who otherwise satisfies the foregoing definition
except for being the Independent Director of a Single Purpose Entity Affiliated with
Borrower or General Partner shall not be disqualified from serving as an Independent
Director if such individual is at the time of initial appointment, or at any time while
serving as the Independent Director, an Independent Director of a Single Purpose Entity
Affiliated with Borrower or General Partner if such individual is an Independent Director
provided by a nationally-recognized company that provides professional independent
directors.






 


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(xvii) Borrower and, if applicable, each General Partner, shall not cause or
permit the board of directors or board of managers or other governing board or body, as
applicable, of Borrower or, if applicable, each General Partner, to take any action which,
under the terms of any certificate of incorporation, by-laws, certificate of formation,
operating agreement or articles of organization with respect to any common stock, requires
a vote of the board of directors of Borrower, or, if applicable, the General Partner,
unless at the time of such action there shall be at least two (2) members, with respect to
Borrower, who is or are Independent Directors.




(xviii) Borrower and, if applicable, each General Partner has paid and shall pay
the salaries of their own employees and has maintained and shall maintain a sufficient
number of employees in light of their contemplated business operations.




(xix) Borrower shall, and shall cause its Affiliates to, conduct their
business so that the assumptions made with respect to Borrower and, if applicable, each
General Partner, in that certain opinion letter relating to substantive non-consolidation
dated the date hereof (the “Insolvency Opinion”) delivered in connection with the
Loan shall be true and correct in all respects.



Notwithstanding anything to the contrary contained in this Section 2.02(g), provided Borrower is a
Delaware limited liability company which satisfies the single purpose bankruptcy remote entity
requirements of each Rating Agency for a single member limited liability company, the foregoing
provisions of this Section 2.02(g) shall not apply to the General Partner.



(h) No Defaults. No Default or Event of Default has occurred and is
continuing or would occur as a result of the consummation of the transactions contemplated by the
Loan Documents. Borrower is not in default in the payment or performance of any of its Contractual
Obligations in any respect.



(i) Consents and Approvals. Borrower and, if applicable, each General
Partner, have obtained or made all necessary (i) consents, approvals and authorizations, and
registrations and filings of or with all Governmental Authorities and (ii) consents, approvals,
waivers and notifications of partners, stockholders, members, creditors, lessors and other
nongovernmental Persons, in each case, which are required to be obtained or made by Borrower or, if
applicable, the General Partner, in connection with the execution and delivery of, and the
performance by Borrower of its obligations under, the Loan Documents.



(j) Investment Company Act Status, etc. Borrower is not (i) an “investment
company,” or a company “controlled” by an “investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended, (ii) a “holding company” or a “subsidiary company” of a
“holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within
the meaning of the Public Utility Holding Company Act of 1935, as amended, or (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate its ability to
borrow money.






 


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(k) Compliance with Law. Borrower is and shall remain in compliance in all
material respects with all Legal Requirements to which it or the Collateral are subject, including,
without limitation, ERISA.



(l) Transaction Brokerage Fees. Borrower has not dealt with any financial
advisors, brokers, underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Borrower hereby agrees to indemnify and hold Lender
harmless for, from and against any and all claims, liabilities, costs and expenses of any kind in
any way relating to or arising from (i) a claim by any Person that such Person acted on behalf of
Borrower in connection with the transactions contemplated herein or (ii) any breach of the
foregoing representation. The provisions of this subsection (l) shall survive the repayment of the
Debt.



(m) Federal Reserve Regulations. No part of the proceeds of the Loan will be
used for the purpose of “purchasing” or “carrying” any “margin stock” within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System or for any other
purpose which would be inconsistent with such Regulations T, U or X or any other Regulations of
such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and
conditions of the Loan Documents.



(n) Pending Litigation. There are no actions, suits or proceedings pending
or, to the best knowledge of Borrower, threatened against or affecting Borrower, the Premises or
the Collateral in any court or before any Governmental Authority which if adversely determined
either individually or collectively has or is reasonably likely to have a Material Adverse Effect.



(o) Solvency; No Bankruptcy. Borrower and, if applicable, the General
Partner, (i) is and has at all times been Solvent and will remain Solvent immediately upon the
consummation of the transactions contemplated by the Loan Documents and (ii) is free from
bankruptcy, reorganization or arrangement proceedings or a general assignment for the benefit of
creditors and is not contemplating the filing of a petition under any state or federal bankruptcy
or insolvency laws or the liquidation of all or a major portion of such Person’s assets or property
and Borrower has no knowledge of any Person contemplating the filing of any such petition against
it or, if applicable, the General Partner. None of the transactions contemplated hereby will be or
have been made with an intent to hinder, delay or defraud any present or future creditors of
Borrower and Borrower has received reasonably equivalent value in exchange for its obligations
under the Loan Documents. Borrower’s assets do not, and immediately upon consummation of the
transaction contemplated in the Loan Documents will not, constitute unreasonably small capital to
carry out its business as presently conducted or as proposed to be conducted. Borrower does not
intend to, nor believes that it will, incur debts and liabilities beyond its ability to pay such
debts as they may mature.



(p) Use of Proceeds. The proceeds of the Loan shall be applied by Borrower
to, inter alia, (i) satisfy certain loans presently encumbering all or a part of
the Collateral and (ii) pay certain transaction costs incurred by Borrower in connection with the
Loan. No portion of the proceeds of the Loan will be used for family, personal, agricultural or
household use.






 


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(q) Tax Filings. Borrower and, if applicable, each General Partner, have
filed all federal, state and local tax returns required to be filed and have paid or made adequate
provision for the payment of all federal, state and local taxes, charges and assessments payable by
Borrower and, if applicable, the General Partners. Borrower and, if applicable, the General
Partners, believe that their respective tax returns properly reflect the income and taxes of
Borrower and said General Partner, if any, for the periods covered thereby, subject only to
reasonable adjustments required by the Internal Revenue Service or other applicable tax authority
upon audit.



(r) Not Foreign Person. Borrower is not a “foreign person” within the
meaning of §1445(f)(3) of the Code.



(s) ERISA. (i) The assets of Borrower are not and will not become treated
as “plan assets”, whether by operation of law or under regulations promulgated under ERISA. If any
Person having a legal or beneficial ownership interest in Borrower is using (or is deemed under
ERISA to be using) “plan assets”, Borrower will qualify as a “real estate operating company” within
the meaning of 29 C.F.R. §2510.3-101(e) at all times that the Loan is outstanding. Each Plan and
Welfare Plan, and, to the knowledge of Borrower, each Multiemployer Plan, is in compliance in all
material respects with, and has been administered in all material respects in compliance with, its
terms and the applicable provisions of ERISA, the Code and any other applicable Legal Requirement,
and no event or condition has occurred and is continuing as to which Borrower would be under an
obligation to furnish a report to Lender under clause (ii)(A) of this Section. Other than an
application for a favorable determination letter with respect to a Plan, there are no pending
issues or claims before the Internal Revenue Service, the United States Department of Labor or any
court of competent jurisdiction related to any Plan or Welfare Plan under which Borrower or any
ERISA Affiliate, directly or indirectly (through an indemnification agreement or otherwise), could
be subject to any material risk of liability under Section 409 or 502(i) of ERISA or Section 4975
of the Code. No Welfare Plan, other than a Multiemployer Plan, provides or will provide benefits,
including, without limitation, death or medical benefits (whether or not insured) with respect to
any current or former employee of Borrower or any ERISA Affiliate beyond his or her retirement or
other termination of service other than (A) coverage mandated by applicable law, (B) death or
disability benefits that have been fully provided for by fully paid up insurance or (C) severance
benefits.




(ii) Borrower will furnish to Lender as soon as possible, and in any event
within ten (10) days after Borrower knows or has reason to believe that any of the events
or conditions specified below with respect to any Plan, Welfare Plan or Multiemployer Plan
has occurred or exists, an Officer’s Certificate setting forth details respecting such
event or condition and the action, if any, that Borrower or its ERISA Affiliate proposes to
take with respect thereto (and a copy of any report or notice required to be filed with or
given to the PBGC (or any other relevant Governmental Authority)) by Borrower or an ERISA
Affiliate with respect to such event or condition, if such report or notice is required to
be filed with the PBGC or any other relevant Governmental Authority:




(A) any reportable event, as defined in Section 4043 of ERISA and the
regulations issued thereunder, with respect to a Plan, as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty (30) days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the Code and of
Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of
any waivers in accordance with Section 412(d) of the Code), and any request for a
waiver under Section 412(d) of the Code for any Plan;


 


10









 






(B) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by Borrower or an ERISA Affiliate
to terminate any Plan;




(C) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by Borrower or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;




(D) the complete or partial withdrawal from a Multiemployer Plan (or
other employee benefit plan) by Borrower or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt by Borrower
or any ERISA Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it
intends to terminate or has terminated under Section 4041A of ERISA;




(E) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate to enforce Section 515
of ERISA, which proceeding is not dismissed within thirty (30) days;




(F) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if Borrower or an ERISA
Affiliate fails to timely provide security to the Plan in accordance with the
provisions of said Sections; or




(G) the imposition of a lien or a security interest in connection
with a Plan.




(iii) No liability under Title IV of ERISA has been incurred by Borrower or
any ERISA Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to Borrower or any ERISA Affiliate of incurring any liability
under such Title, other than liability for premiums due the PBGC, which payments
have been or will be made when due. To the extent this representation applies to Sections
4064, 4069 or 4204 of Title IV of ERISA, it is made not only with respect to the ERISA
Plans but also with respect to any employee benefit plan, program, agreement or
arrangement subject to Title IV of ERISA to which Borrower or any ERISA Affiliate made, or
was required to make, contributions during the past six years.


 


11









 






(iv) Borrower shall not knowingly engage in or permit any transaction in
connection with which Borrower or any ERISA Affiliate could be reasonably subject to either
a material civil penalty or material tax assessed pursuant to Section 502(i) or 502(l) of
ERISA or Section 4975 of the Code; Borrower shall not permit any Welfare Plan, other than a
Multiemployer Plan, to provide benefits, including without limitation, medical benefits
(whether or not insured), with respect to any current or former employee of Borrower or any
ERISA Affiliate beyond his or her retirement or other termination of service other than
(A) coverage mandated by applicable law, (B) death or disability benefits that have been
fully provided for by paid up insurance or otherwise or (C) severance benefits, permit the
assets of Borrower to become “plan assets”, whether by operation of law or under
regulations promulgated under ERISA; and Borrower shall not adopt, amend (except as may be
required by applicable law) or increase the amount of any benefit or amount payable under,
or permit any ERISA Affiliate to adopt, amend (except as may be required by applicable law)
or increase the amount of any benefit or amount payable under, any employee benefit plan
(including, without limitation, any employee welfare benefit plan that is not a
Multiemployer Plan) or other plan, policy or arrangement, except for normal increases in
the ordinary course of business consistent with past practice that, in the aggregate, do
not result in a material increase in benefits expense to Borrower or any ERISA Affiliate.



(t) Labor Matters. Borrower is not a party to any collective bargaining
agreement and has no employees.



(u) Borrower’s Legal Status. Borrower’s exact legal name that is indicated
on the signature page hereto, organizational identification number and place of business or, if
more than one, its chief executive office, as well as Borrower’s mailing address, if different,
which were identified by Borrower to Lender and contained in this Agreement, are true, accurate and
complete. Borrower (i) will not change its name, its place of business or, if more than one place
of business, its chief executive office, or its mailing address or organizational identification
number if it has one without giving Lender at least thirty (30) days prior written notice of such
change, (ii) if Borrower does not have an organizational identification number and later obtains
one, Borrower shall promptly notify Lender of such organizational identification number and (iii)
Borrower will not change its type of organization, jurisdiction of organization or other legal
structure.



(v) Owner’s Legal Status. (i) The fee owner of the Premises and the maker
of the Mortgage Note is and shall be Owner, (ii) there are no defaults existing under the Mortgage
Loan Documents, and, to the best of Borrower’s knowledge, there is no event which, but for the
passage of time or the giving of notice, or both, would constitute an event of default under the
Mortgage Loan Documents, (iii) the Mortgage Loan Documents and the provisions thereof have not been
amended, modified or altered in any manner whatsoever, (iv) the Mortgage constitutes a valid and
enforceable first lien covering the Premises subject only to items set forth as exceptions to or
subordinate matters in the title insurance policy insuring the lien of the Mortgage, none of which,
individually or in the aggregate,





 


12









 







materially
interfere with the benefits of the security intended to be provided by the Mortgage, materially and adversely affect the value
of the Premises, impair the use or operation of the Premises for the use currently being made
thereof or impair Owner’s or Borrower’s ability to pay its obligations in a timely manner (such
items being the “Permitted Encumbrances”), (v) the Premises are improved and
income-producing and the improvements located thereon have not been damaged by fire or other
casualty, (vi) no condemnation or other eminent domain proceedings have been commenced with respect
to the Premises and Borrower has no knowledge that any such proceedings are contemplated, (vii)
Borrower knows of no fact or circumstance which would affect the enforceability, validity or
priority of the Mortgage Loan Documents, or which would affect the ability or willingness of Owner
and any other Person liable under the Mortgage Loan Documents to continue to perform and observe
the terms, covenants and provisions of the Mortgage Loan Documents, (viii) the unpaid principal
balance of the Mortgage Note as of the date of this Agreement is as set forth on Exhibit B
attached hereto.



(w) Title. Borrower (i) is the record and beneficial owner of, and has good
and marketable title to, (x) the Equity Interests set forth in Schedule 1 attached hereto
and (y) all of the other Collateral owned by Borrower as of the date hereof, and (ii) will have
good and marketable title to the Equity Interests and all other Collateral hereafter acquired, in
any case, free and clear of all claims, liens, options and encumbrances of any kind, and Borrower
has the right and authority to pledge and assign its portion of the Equity Interests and grant a
security interest therein as herein provided.



(x) Securities Laws. The transactions contemplated by this Agreement do
not violate and do not require that any filing, registration or other act be taken with respect to
any and all laws pertaining to the registration or transfer of securities, including without
limitation the Securities Act of 1933, as amended, and the Securities and Exchange Act of 1934, as
amended, and any and all rules and regulations promulgated thereunder (collectively, the
“Securities Laws”), as such laws are amended and in effect from time to time, and none of
the Equity Interests in the Partnerships or LLCs are represented by any “certificated security” as
that term is defined in Section 8-102 of the UCC. Borrower shall at all times comply with the
Securities Laws as the same pertain to all or any portion of the Collateral or any of the
transactions contemplated by this Agreement. Lender agrees not take any action with respect to the
Collateral that, without the consent of Borrower, requires Borrower to file a registration
statement with the SEC or apply to qualify a sale of a security under the securities laws of any
state.



(y) Ownership Structure. The ownership chart attached hereto as
Schedule 2 is true, correct and complete as of the Closing Date. Except as set forth on
Schedule 2, no other Person has any direct or indirect interest in the Owner or Borrower.



(z) Control of Owner. Borrower has the power and authority and the
requisite ownership interests to control the actions of the Owner and at all times during the term
of the Loan shall maintain the power and authority to control the actions of Owner.



(aa) Representations and Warranties of Owner. All of the representations and
warranties of Owner or any Affiliate of Owner under the Mortgage Loan Documents are true, complete
and correct in all material respects.






 


13









 







(bb) Management Agreement. The Management Agreement is in full force and
effect. There is no default, breach or violation existing under the Management Agreement, and no
event has occurred (other than payments due but not yet delinquent) that, with the passage of time
or the giving of notice, or both, would constitute a default, breach or violation thereunder, by
either party thereto.



(cc) Operating Company Status. Borrower qualifies as an “operating company,”
as such term is defined in the regulation issued by the U.S. Department of Labor known as the “plan
assets regulation,” 29 C.F.R. §2510.3-101 and, as long as the Loan is outstanding, Borrower will
remain at all times an operating company, as so defined.



(dd) Affiliation. Borrower is not an Affiliate of Lender.



(ee) Insurance. Borrower has obtained and delivered, or has caused Owner to
obtain and deliver, to Lender certified copies of all insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. Borrower has not, and to
the best of Borrower’s knowledge no other Person has, done by act or omission anything which would
impair the coverage of any such policy.



(ff) Absence of UCC Financing Statements, Etc. Except with respect to the
Mortgage Loan Documents and the Loan Documents, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, that purports to cover, affect or give notice of
any present or possible future lien on, or security interest or security title in the interest in
the Premises or any of the Collateral.



(gg) Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws.
(i) Neither Borrower, General Partner, nor any Person who owns any equity interest in or Controls
Borrower or General Partner currently is identified on the OFAC List or otherwise qualifies as a
Prohibited Person, and Borrower has implemented procedures, approved by General Partner, to ensure
that no Person who now or hereafter owns an equity interest in Borrower or General Partner is a
Prohibited Person or Controlled by a Prohibited Person, (ii) no proceeds of the Loan will be used
to fund any operations in, finance any investments or activities in or make any payments to,
Prohibited Persons, and (iii) neither Borrower nor General Partner are in violation of any Legal
Requirements relating to anti-money laundering or anti-terrorism, including, without limitation,
Legal Requirements related to transacting business with Prohibited Persons or the requirements of
the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the related regulations issued
thereunder, including temporary regulations, all as amended from time to time.



(hh) Collateral. Borrower (i) represents and warrants to Lender that the
Collateral constitutes a “general intangible” (as defined in Section 9-102(a)(42) of the UCC); and
(ii) Borrower covenants and agrees that (A) the Collateral is not and will not be dealt in or
traded on securities exchanges or securities markets, (B) the terms of the Collateral do not and
will not provide that they are securities governed by the UCC, (C) the Collateral is not and will
not be investment company securities within the meaning of Section 8-103 of the UCC and (D)
Borrower shall not cause or permit any interests in the Collateral to be certificated and delivered
to any Person other than Lender.


 


14









 





(ii) Lockbox Account.



(i) Pursuant to the irrevocable direction letter delivered by Borrower to Owner on
the Closing Date, Borrower shall direct Owner to cause all Remaining Rents to be deposited into the
Lockbox Account;



(ii) neither Borrower nor Owner nor any other Person shall have any right, title or
interest in or to any Remaining Rents from and after the time at which the Mortgage Lender becomes
obligated under the Mortgage Loan Documents to transfer such Remaining Rents to the Lockbox Account
(other than Borrower’s interest in any Remaining Rents that remain in the Lockbox Account after all
disbursements have been made in accordance with the provisions of the Lockbox Agreement);



(iii) there are no other accounts maintained by Owner, Borrower or any other Person
with respect to the collection of rents, revenues, proceeds or other income from the Premises or
for the collection of Rents, except for the Rent Accounts and the Central Account and the Lockbox
Account; and



(iv) so long as any of the Debt shall be outstanding, neither Borrower, Owner nor any
other Person shall open any other accounts with respect to the collection of rents, revenues,
proceeds or other income from the Premises or for the collection of Rents.



(jj) Perfected Security Interest. Upon the filing of the UCC-1 financing
statements with the Delaware Secretary of State, Lender will have a valid, and duly perfected first
priority, security interest in the Collateral enforceable as such against all creditors of Borrower
and any Persons purporting to purchase any Pledged Interests and Proceeds from Borrower.



(kk) Financial Information. All financial data that has been delivered by
Borrower to Lender (i) is true, complete and correct in all material respects, (ii) accurately
represents the financial condition and results of operations of the Persons covered thereby as of
the date on which the same shall have been furnished, and (iii) has been prepared in accordance
with GAAP or the Uniform System of Accounts (or such other accounting basis as is reasonably
acceptable to Lender) throughout the periods covered thereby. As of the date hereof, neither
Borrower nor, if applicable, any General Partner, has any contingent liability, liability for taxes
or other unusual or forward commitment not reflected in such financial statements delivered to
Lender. Since the date of the last financial statements delivered by Borrower to Lender, except as
otherwise disclosed in such financial statements or notes thereto, there has been no change in the
assets, liabilities or financial position of Borrower nor, if applicable, any General Partner, or
in the results of operations of Borrower which would have a Material Adverse Effect. Neither
Borrower nor, if applicable, any General Partner, has incurred any obligation or liability,
contingent or otherwise not reflected in such financial statements which would have a Material
Adverse Effect.


 


15









 





Section 2.03. Further Acts, Etc. Borrower will, at the cost of Borrower, and without
expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, assignments, notices of assignments, transfers and assurances as Lender shall, from
time to time, reasonably require for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the property, security interest and rights hereby given, granted, bargained,
sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated, or which
Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out or
facilitating the performance of the terms of this Agreement or for filing, registering or recording
this Agreement and, within five (5) Business Days of written demand, will execute and deliver and
hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to
the extent Lender may lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments to evidence more effectively the lien hereof upon the Collateral.
Without limiting the generality of the foregoing, Borrower will: (i) if any Collateral shall be
evidenced by a promissory note or other instrument or chattel paper, deliver and pledge to Lender
hereunder such note or instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to Lender; (ii)
execute or authenticate and file such financing or continuation statements, or amendments thereto,
and such other instruments or notices, as may be necessary or desirable and as Lender may request,
in order to perfect and preserve the security interest granted or purported to be granted by
Borrower hereunder; (iii) take all action necessary to ensure that Lender has control of any
Collateral consisting of deposit accounts, electronic chattel paper, investment property and
letter-of-credit rights as provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC; and (iv)
deliver to Lender evidence that all other action that Lender may reasonably deem necessary or
desirable in order to perfect and protect the security interest granted or purported to be granted
by Borrower under this Agreement has been taken. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of protecting, perfecting, preserving and
realizing upon the interests granted pursuant to this Agreement and to effect the intent hereof,
all as fully and effectually as Borrower might or could do; and Borrower hereby ratifies all that
Lender shall lawfully do or cause to be done by virtue hereof. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan
Document which is not of public record, and, in the case of any such mutilation, upon surrender and
cancellation of such Note or other applicable Loan Document, Borrower will issue, in lieu thereof,
a replacement Note or other applicable Loan Document, dated the date of such lost, stolen,
destroyed or mutilated Note or other Loan Document in the same principal amount thereof and
otherwise of like tenor.



Section 2.04. Recording of Agreement, etc. Borrower forthwith upon the execution and
delivery of this Agreement and thereafter, from time to time, will, at the request of Lender, cause
this Agreement, and any security instrument creating a lien or security interest or evidencing the
lien hereof upon the Collateral and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or future law in order
to publish notice of and fully protect the lien or security interest hereof upon, and the interest
of Lender in, the Collateral. Borrower will pay all filing, registration or recording fees, and
all expenses incident to the preparation, execution and acknowledgment of this Agreement, any
additional security instrument with respect to the Collateral and any instrument of further
assurance, and all federal, state, county and municipal, taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of this Agreement, and any
security agreement supplemental hereto, or any instrument of further assurance, except where
prohibited by law to do so, in which event Lender may declare the Loan to be immediately
due and payable. Borrower shall hold harmless and indemnify Lender, and its successors and
assigns, against any liability incurred as a result of the imposition of any tax on the making and
recording of this Agreement.


 


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Section 2.05. Cost of Defending and Upholding Lien. If any action or proceeding is
commenced to which Lender is made a party relating to the Loan Documents and/or the Collateral or
Lender’s interest therein or in which it becomes necessary to defend or uphold the lien of this
Agreement or any other Loan Document, Borrower shall, on demand, reimburse Lender for all expenses
(including, without limitation, reasonable attorneys’ fees and disbursements) incurred by Lender in
connection therewith, and such sum, together with interest thereon at the Default Rate from and
after such demand until fully paid, shall constitute a part of the Loan.



Section 2.06. Financial Reports. Borrower shall keep accurate and complete books,
records and accounts in accordance with generally accepted accounting principles (“GAAP”)
or the Uniform System of Accounts (or such other accounting basis reasonably acceptable to Lender)
consistently applied with respect to the financial affairs of Borrower, including, but not limited
to, the financial affairs of Borrower which relate to the Collateral and all sums due or which may
become due thereunder. Borrower shall, within ten (10) Business Days after request and at its sole
cost and expense, deliver to Lender any of such books and records as may be requested by Lender.
Lender shall have the right from time to time at all times during normal business hours to examine
such books, records and accounts at the office of Borrower or other Person maintaining such books,
records and accounts and to make copies or extracts thereof as Lender shall desire. Borrower
shall, from time to time, within thirty (30) days after request and at its sole cost and expense,
deliver to Lender such information, reports and additional financial information with respect to
the financial affairs of Borrower as Lender shall reasonably request. Borrower will furnish Lender
annually, within one hundred twenty (120) days following the end of each Fiscal Year of Borrower,
with a complete copy of Borrower’s financial statement audited by an Independent certified public
accountant that is acceptable to Lender in accordance with GAAP or the Uniform System of Accounts
(or such other accounting basis reasonably acceptable to Lender) consistently applied covering (i)
all of the financial affairs of Borrower for such Fiscal Year and containing a statement of
revenues and expenses, a statement of assets and liabilities and a statement of Borrower’s equity.
Together with Borrower’s annual financial statements, Borrower shall furnish to Lender an Officer’s
Certificate certifying as of the date thereof (i) that the annual financial statements accurately
represent the results of operations and financial condition of Borrower all in accordance with GAAP
or the Uniform System of Accounts (or such other accounting basis reasonably acceptable to Lender)
consistently applied, and (ii) whether there exists an event or circumstance which constitutes, or
which upon notice or lapse of time or both would constitute, a Default under the Note or any other
Loan Document executed and delivered by Borrower, and if such event or circumstance exists, the
nature thereof, the period of time it has existed and the action then being taken to remedy such
event or circumstance. Borrower shall at all times, whether or not the Mortgage Loan is
outstanding, deliver or shall cause Owner to deliver to Lender (x) a copy of all financial
statements, reports, books, records and accounts required to be delivered to Mortgage Lender
pursuant to the terms of the Mortgage Loan Documents within the time frames set forth in the
Mortgage Loan Documents for the delivery of such financial statements, reports, books, records and
accounts (and, with each monthly statement of revenues and





 


17









 







expenses delivered or required to be
delivered under the Mortgage Loan Documents, a comparison of such revenues and expenses to the
Annual Budget) and (y) annually, within thirty (30) days following the end of each calendar year,
and within thirty (30) days after Lender’s request therefor, a true, complete and correct rent roll
for the Premises, including a list of which tenants are in default under their respective leases,
dated as of the end of the preceding month, identifying each tenant, the monthly rent and
additional rent, if any, payable by such tenant, the expiration date of such tenant’s Lease, the
security deposit, if any, held by Owner under the Lease, the space covered by the Lease, each
tenant that has filed a bankruptcy, insolvency, or reorganization proceeding since delivery of the
last such rent roll, and the arrearages for such tenant, if any, and such rent roll shall be
accompanied by an Officer’s Certificate, dated as of the date of the delivery of such rent roll,
certifying that such rent roll is true, correct and complete in all material respects as of its
date. Borrower shall furnish to Lender, within thirty (30) days after Lender’s request therefor,
such further detailed information with respect to the operation of the Premises and the financial
affairs of Borrower as may be reasonably requested by Lender. Borrower acknowledges that
notwithstanding anything to the contrary contained herein or in the Note, all extension fees and
exit fees will be treated as additional interest.



Section 2.07. Litigation. Borrower will give prompt written notice to Lender of any
litigation or governmental proceedings pending or threatened (in writing) against Borrower, Owner
or Guarantor which are reasonably likely to have a Material Adverse Effect and of any claim,
option, lien or encumbrance upon or against all or a portion of the Collateral.



Section 2.08. Estoppel Certificates. Borrower shall, or shall cause Owner to, from
time to time, request from Mortgage Lender such certificates of estoppel with respect to compliance
by Owner with the terms of the Mortgage Loan Documents as may be requested by Lender and required
to be given by Mortgage Lender pursuant to the Mortgage Loan Documents.



Section 2.09. Budget. Borrower shall submit to Lender for Lender’s written approval
an annual budget (the “Annual Budget”) not later than fifteen (15) days prior to the
commencement of such Fiscal Year, in form reasonably satisfactory to Lender setting forth in
reasonable detail budgeted monthly operating income and monthly operating capital and other
expenses for the Premises. Each Annual Budget shall contain, among other things, management fees,
third party service fees, and other expenses as Borrower may reasonably determine. Lender shall
have the right to approve such Annual Budget which approval shall not be unreasonably withheld, and
in the event that Lender objects to the proposed Annual Budget submitted by Borrower, Lender shall
advise Borrower of such objections within fifteen (15) days after receipt thereof (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 Annual Budget and resubmit the
same to Lender. Lender shall advise Borrower of any objections to such revised Annual Budget
within ten (10) days after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall revise the same in accordance with the process
described herein until Lender approves an Annual Budget, provided, however, that if Lender shall
not advise Borrower of its objections to any proposed Annual Budget within the applicable time
period set forth in this Section, then such proposed Annual Budget shall be deemed approved by
Lender. Until such time that Lender approves a proposed Annual Budget, the most recently Approved
Annual Budget shall apply; provided that, such Approved Annual Budget shall be adjusted to reflect
actual increases in Basic Carrying Costs
and utilities expenses. In the event that Owner must incur an Extraordinary Expense of the type
described in clause (a) of the definition of Extraordinary Expense, then Borrower shall promptly
deliver to Lender a reasonably detailed explanation of such proposed Extraordinary Expense for
Lender’s approval, which approval may be granted or denied in Lender’s reasonable discretion.


 


18









 





Section 2.10. Intentionally Omitted.



Section 2.11. Transfers, Etc. (a) Borrower shall not, without the prior consent of
Lender, in any manner allow a Transfer to occur or enter into any agreement which in either case
expressly restricts Borrower from making amendments, modifications or waivers to the Loan
Documents. Without the express prior written consent of Lender, Borrower shall not, and shall not
cause or permit Owner to, enter into any consensual sale or other similar transaction with respect
to the Premises or impair or otherwise adversely affect the interests of Lender in the Collateral
or any portion thereof or any interest therein.



(b) Notwithstanding the foregoing provisions of this Section 2.11, solely in connection with
a Sale (as defined in the Mortgage) permitted pursuant to Section 9.04 of the Mortgage a new
borrower (“New Borrower”), owning 100% of the unencumbered equity interests in the proposed
new owner of the Premises (the “New Owner”) may assume Borrower’s obligations hereunder
(hereinafter, a “Proposed Loan Assumption”) or a Transfer otherwise prohibited hereunder
shall be permitted without Lender consent or approval provided that each of the following terms and
conditions are satisfied:



(i) No Event of Default is then continuing hereunder or under any of the other Loan
Documents;



(ii) Lender shall have, in its reasonable discretion, consented to the Proposed Loan
Assumption;



(iii) Borrower gives Lender written notice of the terms of the Proposed Loan
Assumption not less than sixty (60) days before the date on which such Proposed Loan Assumption is
scheduled to close and, concurrently therewith, gives Lender all such information concerning the
New Borrower and the New Owner as Lender would require in evaluating an initial extension of credit
to a borrower and Lender determines, in its reasonable discretion that the New Borrower and the New
Owner are acceptable to Lender in all respects (it being acknowledged that any Permitted Transferee
shall be deemed acceptable to Lender provided that not more than 75% in the aggregate of the direct
or indirect interests in Borrower (but without including more than once one or more transfers of
the same interest) has been transferred subsequent to the Closing Date in one or more transactions
and Borrower continues to be Controlled by the same Persons which Controlled Borrower prior to such
transfer (it being acknowledged that (x) any holder of more than forty percent of the direct or
indirect interest in Borrower may have veto rights over major decisions which are customary in
joint venture agreements between two fifty percent owners of a Person and the same shall not
constitute a change in Control) and (y) it further being acknowledged that any Transfer of a direct
or indirect interest in Morgans Group LLC otherwise requiring approval hereunder shall not be
subject to the approval of Lender if Morgans Group LLC continues to own and manage hotel rooms
located in full service luxury or full service upscale properties numbering not less than eighty
percent (80%) of the number of hotel rooms which it owns and eighty percent (80%) of the number of
hotel rooms it manages as of the Closing Date (and such numbers shall be calculated on a pro rata
basis, so that, for example, if Morgans Group LLC has a fifty percent (50%) interest in a Person
that owns two hundred (200) hotel rooms, Morgans Group LLC shall be deemed to own one hundred (100)
hotel rooms) and the conditions set forth in clauses (A) and (B) of the definition of Permitted
Transferee are met);


 


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(iv) In the event the applicable Transfer will result in a New Borrower owning the
Collateral, Borrower pays Lender, concurrently with the closing of such Proposed Loan Assumption, a
non-refundable assumption fee in an amount equal to one percent (1%) of the then outstanding Loan
Amount (which fee shall be waived in the event of a Transfer of the type set forth in clause (y) of
Section 2.11((b)(iii)) for each Proposed Loan Assumption, together with all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys’ fees, incurred by Lender in
connection with the Proposed Loan Assumption;



(v) In the event the applicable Transfer will result in a New Borrower owning the
Collateral, New Borrower assumes all of the obligations under the Loan Documents and, prior to or
concurrently with the closing of such Proposed Loan Assumption, New Borrower executes, without any
cost or expense to Lender, such documents and agreements as Lender shall reasonably require to
evidence and effectuate said assumption and delivers such legal opinions as Lender may require
similar to those delivered at the closing of the Loan;



(vi) In the event the applicable Transfer will result in a New Borrower owning the
Collateral, Borrower and New Borrower execute, without any cost or expense to Lender, new financing
statements or financing statement amendments and any additional documents reasonably requested by
Lender and New Borrower grants to Lender a perfected first priority interest in 100% of the equity
ownership interests in New Owner (such interests, along with any other collateral securing the
Loan, the “New Collateral”) and grants Lender a perfected first priority lien in such New
Collateral;



(vii) In the event the applicable Transfer will result in a New Borrower owning the
Collateral, New Borrower delivers to Lender, without any cost or expense to Lender, such
endorsements to Lender’s “Eagle 9” (or equivalent) insurance policy which insures Lender’s lien in
the New Collateral, hazard insurance policy endorsements or certificates and other similar
materials as Lender may deem necessary at the time of the Proposed Loan Assumption, all in form and
substance reasonably satisfactory to Lender;



(viii) In the event the applicable Transfer will result in a New Borrower owning the
Collateral, Borrower executes and delivers to Lender, without any cost or expense to Lender, a
release of Lender, its officers, directors, employees and agents, from all claims and liability
relating to the transactions evidenced by the Loan Documents, through and including the date of the
closing of the Proposed Loan Assumption, which agreement shall be in form and substance
satisfactory to Lender and shall be binding upon New Borrower;



(ix) In the event the applicable Transfer will result in a New Borrower owning the
Collateral, subject to the provisions of Article VIII hereof, such Proposed Loan Assumption does
not relieve Borrower of any personal liability under the Note or any of the other Loan
Documents for any acts or events occurring or obligations arising prior to or simultaneously with
the closing of such Proposed Loan Assumption, and Borrower executes, without any cost or expense to
Lender, such documents and agreements as Lender shall reasonably require to evidence and effectuate
the ratification of said personal liability;


 


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(x) In the event the applicable Transfer will result in a New Borrower owning the
Collateral, such Proposed Loan Assumption does not relieve any Guarantor of its obligations under
any guaranty or indemnity agreement executed in connection with the Loan and each such Guarantor
executes, without any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate the ratification of each such guaranty agreement,
provided that if New Borrower or a party associated with New Borrower approved by Lender in its
reasonable discretion assumes the obligations of the current Guarantor under its guaranty and New
Borrower or such party associated with New Borrower, as applicable, executes, without any cost or
expense to Lender, a new guaranty in similar form and substance to the existing guaranty and
otherwise satisfactory to Lender, then Lender shall release the current Guarantor from all
obligations arising under its guaranty after the closing of such Proposed Loan Assumption; and



(xi) In the event the applicable Transfer will result in a New Borrower owning the
Collateral, New Borrower is a Single Purpose Entity and Lender receives a non-consolidation opinion
relating to New Borrower from New Borrower’s counsel, which opinion is in form and substance
reasonably acceptable to Lender.



Section 2.12. Sums Held In Trust. To the extent Borrower receives any sums it is not
otherwise entitled to receive pursuant to the terms of this Agreement, Borrower shall hold all such
sums sufficient to discharge all sums due or to become due on the Debt, in trust for use in payment
of the Debt.



Section 2.13. Notification of Defaults. Borrower shall promptly (and in all events
within one (1) Business Day of obtaining knowledge thereof) notify Lender of the occurrence of any
default under the Mortgage Loan or of the occurrence of any event, which but for the passage of
time or the giving of notice or both, would constitute a default under the Mortgage Loan.



Section 2.14. Compliance With Mortgage Loan Documents. Borrower shall cause Owner to
comply with all of the terms, covenants and conditions set forth in the Mortgage Loan Documents,
notwithstanding any waiver or future amendment of such covenants by Mortgage Lender. Borrower
acknowledges that the obligation to comply with such covenants is separate from, and may be
enforced independently from, the obligations of Owner under the Mortgage Loan Documents, and, to
the extent such term, covenants and conditions require any consents, approvals or waivers by
Mortgage Lender, Lender shall have the same rights to consent, approve or waive. The provisions of
Sections 3.01, 4.01, 7.02(a) through (c) and 8.01 of the Mortgage are hereby incorporated by
reference as if fully restated herein and shall constitute the direct obligation of Borrower to
either perform or to cause Owner to perform such covenants on behalf of Lender.



Section 2.15. No Change of Accounts. Borrower shall not permit Owner to change the
Rent Accounts or the Central Account (as such terms are defined in the Mortgage), without the
prior written consent of Lender and Mortgage Lender.


 


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Section 2.16. Confirmation of Loan Documents, Etc. (a) After request by Lender,
Borrower, within fifteen (15) days and at its expense, will furnish or will cause Owner to furnish
to Lender a statement, duly acknowledged and certified, setting forth with respect to this
Agreement, the Note and the Mortgage Note, as applicable, (i) the amount of the original principal
amount, and the unpaid principal amount, (ii) the rate of interest, (iii) the date payments of
interest and/or principal were last paid, (iv) any offsets or defenses to payment, and if any are
alleged, the nature thereof, (v) that no modifications have taken place, or if modified, giving
particulars of such modification and (vi) that there has occurred and is then continuing no Default
or if such Default exists, the nature thereof, the period of time it has existed, and the action
being taken to remedy such Default.



(b) Within fifteen (15) days after written request by Borrower, Lender shall furnish
to Borrower a written statement confirming the Principal Amount of the Loan, the maturity date of
the Note and the date to which interest has been paid.



Section 2.17. Corporate Actions. Without the prior written consent of Lender,
Borrower will not and will not cause or allow the Corporations, LLCs or Partnerships at any time,
to (and, without limiting the foregoing, will not vote to enable, or take any other action to
permit, the Corporations, LLCs or Partnerships to):



(a) purchase or redeem or obligate itself to purchase or redeem any Equity Interests
in violation of this Agreement or any of the other Loan Documents; or



(b) redeem or cancel any Equity Interests or authorize to be issued any additional
Equity Interests; or



(c) merge into or merge or consolidate with any corporation, partnership or limited
liability company or entity or cause itself to dissolve or liquidate its assets; or



(d) enter into, or cause or permit any affiliate of any of the Corporations, LLCs or
Partnerships to enter into, (x) any transaction with a Person or entity affiliated with or related
to itself, except upon arms-length terms and conditions, or (y) any transaction which is motivated
by an intent to evade this Agreement; or



(e) breach any of the covenants or obligations of the Corporations, LLCs or
Partnerships pursuant to this Agreement.



Section 2.18. Conduct of Operations. To the extent that such matters are within the
control of Borrower pursuant to the terms of the Organizational Documents and applicable laws,
Borrower shall cause the Corporations, LLCs and Partnerships to conduct their operations and to
manage, protect and preserve their assets and to act in a commercially reasonable manner to
preserve the value of the Collateral.


 


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Section 2.19. Voting Rights; Etc. (a) So long as an Event of Default shall not have
occurred and be continuing, Borrower shall be permitted (i) to receive any and all regular
Distributions and dividends paid in cash and in the ordinary course of business of the
Partnerships, the LLCs and the Corporations with respect to the Equity Interests and (ii) to
exercise all voting and other rights with respect to the Equity Interests as long as no vote shall
be cast, or right exercised or other action taken which would, directly or indirectly, materially
impair the value of any Collateral or which would be inconsistent with or result in a default under
this Agreement or any of the other Loan Documents. Upon the receipt of a written request from
Borrower, Lender shall execute and deliver (or cause to be executed and delivered) to Borrower all
such proxies and other instruments as Borrower may reasonably request for the purpose of enabling
Borrower to exercise the voting and other rights which it is entitled to exercise and to receive
the dividends or interest payments which it is authorized to receive and retain pursuant to this
Agreement. Upon the occurrence and during the continuance of an Event of Default, the aforesaid
rights shall immediately and automatically vest in Lender.



(b) If Borrower shall receive, by virtue of Borrower’s being or having been an owner
of any Equity Interest, (i) any Distributions or dividends payable in cash (except such
Distributions and dividends permitted to be retained by Borrower pursuant to sub-section (a) above)
or in securities or other property, or (ii) any Distributions or dividends in connection with a
partial or total liquidation or dissolution or a reclassification, increase or reduction of
capital, capital surplus or paid-in capital, Borrower shall receive the same in trust for Lender,
segregate the same from its other assets and promptly deliver the same to Lender in the exact form
received, with any necessary endorsement and/or appropriate powers or other instruments of
assignment or conveyance, to be held by Lender as Collateral pursuant to this Agreement.



Section 2.20. Admission of New Equity. Borrower will not agree to admit any new or
substitute shareholders, members or partners into the Corporations, LLCs or Partnerships or
transfer its interests in the Corporations, LLCs or Partnerships unless such new shareholder,
member or partner executes and delivers, and agrees to be bound by, an agreement, in form and
content substantially identical to this Agreement, pursuant to which such new shareholder, member
or partner pledges its interests in the Corporations, LLCs or Partnerships to Lender and such
admission is otherwise in accordance with the terms of the applicable Organizational Documents and
the Loan Documents.



Section 2.21. Proceeds of Collateral. Upon the occurrence and during the continuance
of an Event of Default, all Proceeds of the Collateral received by Borrower shall be promptly
delivered to Lender, in the same form as received, with the addition only of such endorsements and
assignments as may be necessary to transfer title to Lender, and pending such delivery, such
Proceeds shall be held in trust for Lender; and such Proceeds shall be applied to the Debt in such
order and manner as Lender shall direct in its sole discretion.



Section 2.22. Admission of Lender As Shareholder, Member, Partner. In the event that
Lender forecloses on the Collateral, notwithstanding anything to the contrary in the Organizational
Documents, the Person that acquires the Collateral in connection with such foreclosure (whether
Lender, a designee or Affiliate of Lender or any other Person) shall automatically be admitted as a
shareholder, member or partner of the Corporations, LLCs or Partnerships, respectively, and shall
be entitled to receive all benefits and exercise all rights in connection therewith pursuant to the
Organizational Documents; provided, however, that such Person (whether Lender, a designee or
Affiliate of Lender or any other Person) shall have no liability for matters in connection with the
Equity Interests arising or occurring, directly or
indirectly, prior to such Person’s becoming a shareholder, member or partner of the Corporations,
LLCs or Partnerships.


 


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Section 2.23. Purchase of Mortgage Loan, Etc. Neither Borrower nor any Affiliate
thereof or any other Person acting upon their direction or request shall, directly or indirectly,
acquire or agree to acquire, obtain, purchase or control the Mortgage Loan, or any portion thereof
or any interest therein, or any direct or indirect ownership interest in the holder of, or
participant in, the Mortgage Loan in any manner whatsoever. If, solely by operation of applicable
subrogation law, Borrower or any Affiliate thereof shall be in breach of or fail to comply with the
foregoing, then such breach or failure shall not be an Event of Default provided that
Borrower (a) shall immediately upon obtaining knowledge thereof notify Lender of such failure or
breach, and (b) shall cause Borrower and Affiliates thereof acquiring any interest in the Mortgage
Loan Documents (i) not to enforce the Mortgage Loan Documents, and (ii) upon the request of Lender,
to the extent any Borrower or such Affiliate has the power or authority to do so, to promptly (A)
cancel, reconvey and release its interest in the Mortgage Loan Documents, (B) discontinue and
terminate any enforcement proceeding(s) under the Mortgage Loan Documents and (C) assign and
transfer its interest in the Mortgage Loan Documents to Lender.



Section 2.24. Deed-In-Lieu, etc. Without the prior written consent of Lender,
Borrower shall not, and shall not cause or permit Owner to, enter into any deed-in-lieu or
consensual foreclosure or transfer or assignment with or for the benefit of Mortgage Lender or any
of Mortgage Lender’s Affiliates or designees. Without the express prior written consent of Lender,
Borrower shall not, and shall not cause or permit Owner to, enter into any consensual sale or
transfer or assignment or other similar transaction, impair or otherwise adversely affect the
interests of Lender in the Collateral or any portion thereof or any interest therein.



Section 2.25. Intercreditor Agreement. Borrower acknowledges and agrees that Lender
and Mortgage Lender have entered into an intercreditor agreement regarding their respective rights
under the Mortgage Loan and Loan (the “Intercreditor Agreement”). Borrower acknowledges
and agrees that: (a) no Person other than Lender and Mortgage Lender has any rights whatsoever,
direct or indirect, beneficial or otherwise, under the Intercreditor Agreement and Borrower is not
a third party beneficiary thereof; (b) Lender and Mortgage Lender may amend, modify, cancel,
terminate, supplement or waive the Intercreditor Agreement at any time without notice to, or the
consent of Borrower, Owner or any other Person, and (c) except as expressly set forth in this
Agreement, any restriction or other agreement between Lender and Mortgage Lender set forth in the
Intercreditor Agreement is personal between Lender, and Mortgage Lender and, as between Lender, on
the one hand, and Borrower, on the other hand, no such agreement or restriction will be deemed to
benefit or otherwise modify any of the rights of Lender under the Loan Documents.



Section 2.26. Payment of Impositions. Borrower shall pay and discharge all taxes now
or hereafter imposed on it, or its income or profits, on any of its property or upon the liens
provided for herein prior to the date on which penalties attach thereto; provided that Borrower
shall have the right to contest the validity or amount of any such tax in good faith and by proper
proceedings. Borrower shall promptly pay any valid, final judgment enforcing any such tax and
cause the same to be satisfied of record.




 


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Section 2.27. Central Cash Management. (a) All amounts paid by the issuer of the
Rate Cap Agreement (the “Counterparty”) to Borrower or Lender, together with all rents,
issues, profits, insurance proceeds, condemnation proceeds, refinancing proceeds and all other sums
received with respect to the Premises or distributed with respect to the Equity Interests after all
sums which are then due and payable have been paid to Mortgage Lender pursuant to the terms of the
Mortgage Loan Documents (collectively, “Remaining Rents”), shall be paid by federal wire
transfer or automatic clearing house funds (“ACH”) to Lender and shall be deposited
immediately into an Eligible Account located at a bank satisfactory to Lender (the “Lockbox
Account”). Lender has established the Lockbox Account in the name of Lender as secured party.
The Lockbox Account shall be under the sole dominion and control of Lender. The Lockbox Account
shall have a sub-account on a ledger basis entitled the “Debt Service Payment Account” (the
“Debt Service Sub-Account” and together with the other accounts now or hereafter required
to be established pursuant to this Section 2.27, collectively, the “Accounts”) to which
certain funds shall be allocated and from which disbursements shall be made pursuant to the terms
of the Lockbox Agreement. Borrower hereby irrevocably directs and authorizes Lender to withdraw
funds from the Lockbox Account, all in accordance with the terms and conditions of the Lockbox
Agreement. Borrower shall have no right of withdrawal in respect of the Lockbox Account. Each
transfer of funds to be made hereunder shall be made only to the extent that funds are on deposit
in the Lockbox Account, and Lender shall have no responsibility to make additional funds available
in the event that funds on deposit are insufficient. Borrower shall enter into or shall cause
Owner to enter into a substitute cash management agreement and related lockbox agreement
(collectively, the “Substitute CMA Agreements”) with substantially the same terms as the
agreements entered into as of the date hereof in connection with the Mortgage Loan as a condition
to the satisfaction of the Mortgage Loan or if Mortgage Lender is not requiring that sums be
deposited into any Sub-Accounts or Escrow Accounts. Such substitute agreements shall provide that
all Remaining Rents shall be deposited into the Lockbox Account for disbursement in accordance with
the terms of the Substitute CMA Agreements, the Lockbox Agreement (as amended to conform with the
Substitute CMA Agreements) and this Agreement. Additionally, on or before the Closing Date,
Borrower shall establish or cause Owner to establish such escrow and reserve accounts and deposit
such amounts into such accounts as required pursuant to the terms of the Mortgage Loan Documents.
After the occurrence and during the continuance of an Event of Default, the funds on deposit in the
Lockbox Account, and all other funds received by Lender in respect of the Loan, shall be disbursed
and applied in such order and such manner as Lender shall elect in its sole discretion. If
Borrower shall receive any Remaining Rents other than in accordance with this Agreement, Borrower
shall hold all such payments in trust for Lender, will not co-mingle such payments with other funds
of Borrower, and will immediately pay and deliver in kind, all such payments directly to Lender for
application by Lender in accordance with this Agreement.



(b) Borrower shall maintain the Rate Cap Agreement at all times during the term of
the Loan and pay all fees, charges and expenses incurred in connection therewith. Borrower shall
comply with all of its obligations under the terms of the Rate Cap Agreement. All amounts paid by
the Counterparty to Borrower or Lender shall be deposited immediately into the Lockbox Account.
Borrower shall take all actions reasonably requested by Lender to enforce Lender’s rights under the
Rate Cap Agreement in the event of a default by the Counterparty. In the event that (a) the
long-term unsecured debt obligations of the Counterparty are downgraded by



 


25









 






 the Rating Agency below
“A+” or its equivalent or (b) the Counterparty
shall default in any of its obligations under the Rate Cap Agreement, Borrower shall, at the request of Lender, promptly but in
all events within five (5) Business Days, replace the Rate Cap Agreement with an agreement having
identical payment terms and maturity as the Rate Cap Agreement and which is otherwise in form and
substance substantially similar to the Rate Cap Agreement and otherwise acceptable to Lender with a
cap provider, the long-term unsecured debt of which is rated at least “AA-” (or its equivalent) by
each Rating Agency, or which will allow each Rating Agency to reaffirm their then current ratings
of all rated certificates issued in connection with the Securitization. In the event that Borrower
fails to maintain the Rate Cap Agreement as provided in this Section, Lender may purchase the Rate
Cap Agreement and the cost incurred by Lender in connection therewith shall be paid by Borrower to
Lender with interest thereon at the Default Rate from the date such cost is incurred until such
cost is paid by Borrower to Lender.



(c) At any time that sums are not being deposited into the Sub-Accounts or Escrow
Accounts pursuant to the terms of the Mortgage, Borrower shall establish and maintain one or more
sub-accounts of the Lockbox Account into which Remaining Rents shall be deposited for the purposes
of paying Basic Carrying Costs, Recurring Replacement Expenditures and Operating Expenses (each as
defined in the Mortgage). In connection therewith, Borrower and Lender shall modify the Lockbox
Agreement to provide that, if sums are required to be deposited into the Lockbox Account pursuant
to this Section 2.27(c), such funds shall be allocated in the order of priority set forth in
Section 5.05 of the Mortgage and Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to execute any such amendment to the Lockbox Agreement.
The amounts to be deposited in such sub-accounts shall equal the amounts required to be deposited
in the Sub-Accounts and Escrow Accounts pursuant to the terms of the Mortgage (as in effect on the
Closing Date or as amended with Lender’s approval) and sums deposited into such sub-accounts may be
released on the same terms and conditions as set forth in the Mortgage (as in effect on the Closing
Date or as amended with Lender’s approval).



(d) Borrower hereby agrees for the benefit of itself and Owner that all payments
actually received by Lender shall be deemed payments to Borrower by Owner. Lender shall apply any
and all such payments actually received by Lender for application in accordance with this
Agreement. After payment of all sums due and payable with respect to the Loan or which may be
retained by Lender pursuant to the other provisions hereof, Lender shall return to Borrower that
portion of any payments actually received by Lender from Borrower or Owner.



Section 2.28. Certain Additional Rights of Lender. Notwithstanding anything to the
contrary which may be contained in this Agreement, Lender shall have:



(a) the right to routinely consult on a regular basis (no less frequently than
quarterly) with and advise Borrower’s management regarding the significant business activities and
business and financial developments of Borrower, provided, however, that such
consultations shall not include discussions of environmental compliance programs or disposal of
hazardous substances, and, provided, further, that Lender shall have the right to
call special meetings at any reasonable times;



(b) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), to restrict financing to be obtained in connection with future
property transactions, refinancing of any acquisition financings, and unsecured debt unless the
Loan has been paid in full or as otherwise permitted hereunder;


 


26









 





(c) the right, without restricting any other right of Lender under this Agreement
(including any similar right), to restrict, upon the occurrence of an Event of Default, Borrower’s
payments of management consulting, director or similar fees to Affiliates of Borrower (or their
personnel) other than management fees due pursuant to the Management Agreement which will continue
to be paid as long as Manager is managing the Premises and is not in default pursuant to its
Management Agreement;



(d) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), to approve any acquisition by Borrower of any other significant
property (other than personal property required for the day to day operation of the Premises);



(e) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), in the event of an Event of Default, to vote the owners’ interests
in Borrower pursuant to irrevocable proxies granted, at the request of Borrower in advance for this
purpose; and



(f) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), to restrict the transfer of voting interests in Borrower held by its
members, and the right to restrict the transfer of interests in such member, except for any
transfer that is a permitted Transfer.



The rights contained in this Section 2.28 may be exercised by any Person which owns or Controls,
directly or indirectly, substantially all of the interests in Lender or the Loan.



Section 2.29. Refinancing, Liens, etc. Borrower shall not and shall not permit Owner
to, without the prior written consent of Lender, which consent may be withheld, delayed or
conditioned in the sole discretion of Lender, give its consent or approval or agree to any of the
following:



(a) (i) any refinancing of the Mortgage Loan, (ii) any prepayment in full of the
Mortgage Loan, (iii) any Transfer (for purposes of this Section 2.29(a) only, as defined in the
Mortgage (as in effect on the Closing Date or as amended with Lender’s approval)) of the Premises
except pursuant to Section 2.11 hereof, or (iv) any action in connection with or in furtherance of
the foregoing;



(b) placing or permitting to attach any additional liens or encumbrances on the
Premises (except for liens and encumbrances permitted under the Mortgage Loan Documents (as in
effect on the Closing Date or as amended with Lender’s approval) not requiring the consent of
Mortgage Lender); or



(c) any modification, amendment, consolidation, spread, restatement or waiver of any
provision of the Mortgage Loan Documents.


 


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Section 2.30. Insurance. (a) The insurance described in Section 3.01 of the Mortgage
and Section 2.30(c) hereof (except policies for worker’s compensation) shall be in the form
(other than with respect to Sections 3.01(a)(vi) and (vii) of the Mortgage when insurance in those
two sub-sections is placed with a governmental agency or instrumentality on such agency’s forms)
and amount and with deductibles as, from time to time, shall be reasonably acceptable to Lender,
under valid and enforceable policies issued by financially responsible insurers authorized to do
business in the State where the Premises is located, which shall have a claims paying ability
rating and/or financial strength rating, as applicable, of not less than “A-” (or its equivalent),
or such lower claims paying ability rating and/or financial strength rating, as applicable, as
Lender shall, in its reasonable discretion (taking into account then current Rating Agency
guidelines), consent to, from a Rating Agency (one of which after a Securitization in which
Standard & Poor’s rates any securities issued in connection with such Securitization, shall be
Standard & Poor’s) and Borrower shall cause Owner to carry all such insurance (whether or not the
Mortgage Loan is outstanding) for so long as any portion of the Debt remains outstanding. All such
policies (except policies for worker’s compensation) shall name Lender as an additional named
insured (subject to the rights of Mortgage Lender), with respect to the insurance required pursuant
to Section 3.01(a)(iii) of the Mortgage, shall provide, subsequent to the satisfaction of the
Mortgage Loan, for loss payable to Lender and shall contain (or have attached): (i) standard
“non-contributory mortgagee” endorsement or its equivalent relating, inter alia, to
recovery by Lender notwithstanding the negligent or willful acts or omissions of Borrower; (ii) a
waiver of subrogation endorsement as to Lender; (iii) an endorsement indicating that neither Lender
nor Borrower shall be or be deemed to be a co-insurer with respect to any casualty risk insured by
such policies and shall provide for a deductible per loss of an amount not more than that which is
customarily maintained by owners of similar properties similarly situated, and (iv) a provision
that such policies shall not be canceled, terminated, denied renewal or amended, including, without
limitation, any amendment reducing the scope or limits of coverage, without at least thirty (30)
days’ prior written notice to Lender in each instance. Not less than thirty (30) days prior to the
expiration dates of the insurance policies obtained pursuant to this Agreement, originals or
certified copies of renewals of such policies (or certificates evidencing such renewals) bearing
notations evidencing the payment of premiums or accompanied by other reasonable evidence of such
payment (which premiums shall not be paid by Borrower or Owner through or by any financing
arrangement which would entitle an insurer to terminate a policy) provided, however, premiums for
the insurance required pursuant to this Section may be paid quarterly in advance or as otherwise
reasonably acceptable to Lender, it being acknowledged that paying the premium for such policies by
financing the same, paying twenty percent (20%) of the total annual premium (inclusive of finance
charges) at the time of the applicable policy renewal and paying the remaining eighty percent (80%)
of the total annual premium (inclusive of finance charges) in nine (9) equal monthly installments
is acceptable to Lender) shall be delivered by Borrower to Lender. Borrower shall not carry
separate insurance, concurrent in kind or form or contributing in the event of loss, with any
insurance required under Section 3.01 of the Mortgage or Section 2.30(c) hereof.



(b) If Borrower fails to maintain and deliver to Lender the original policies or
certificates of insurance required by this Agreement, Lender may, at its option, procure such
insurance, and Borrower shall pay, or as the case may be, reimburse Lender for, all premiums
thereon promptly, upon demand by Lender, with interest thereon at the Default Rate from the date
paid by Lender to the date of repayment and such sum shall constitute a part of the Debt.


 


28









 





(c) Borrower shall deliver, or shall cause Owner to deliver, to Lender such other
insurance as may from time to time be required by Lender and which is then customarily required by
Institutional Lenders for similar properties similarly situated, against other insurable hazards,
including, but not limited to, malicious mischief, vandalism, acts of terrorism, windstorm and/or
earthquake, due regard to be given to the size and type of the Premises, Improvements, Fixtures and
Equipment and their location, construction and use.



Section 2.31. Casualty. Borrower shall give Lender prompt notice of any loss or
damage to the Premises and, subject to the rights of the Mortgage Lender under the Mortgage Loan
Documents (which shall in all respects supersede the rights of Lender under this Section 2.31);



(a) After the Mortgage Loan has been paid in full, in the event of any loss or
damage covered by any insurance, Lender is hereby authorized (i) if an Event of Default shall have
occurred or, if no Event of Default shall have occurred but Borrower or Owner fails to settle and
adjust any claim within ninety (90) Business Days after such casualty has occurred, to settle and
adjust any claim under such insurance without the consent of Borrower or Owner, or (ii) if no Event
of Default has occurred, to allow Borrower or Owner within ninety (90) Business Days after such
casualty to settle and adjust such claim with, if any settlement may reasonably be anticipated to
result in proceeds in excess of $250,000.00, the consent of Lender, not to be unreasonably
withheld; provided, however, that in either case Lender shall, and is hereby authorized to, collect
and receive any such insurance proceeds, subject, however, to the rights of Mortgage Lender under
the Mortgage Loan Documents. The expenses incurred by Lender in the adjustment and collection of
such proceeds of insurance shall be additional Debt of Borrower, and shall be reimbursed to Lender
upon demand or, at Lender’s option, in the event and to the extent sufficient proceeds are
available, deducted by Lender from such proceeds of insurance prior to any other application
thereof. If the Mortgage Loan has been paid in full, each insurance company which has issued
insurance is hereby authorized and directed to make payment for all losses covered by such
insurance to Lender alone, and not to Lender and Borrower or Owner jointly. Borrower agrees to
execute and cause Owner to execute all documents and make all deliveries required in order to
permit adjustment and payment of insurance proceeds as provided above.



(b) Borrower hereby assigns to Lender the proceeds of all insurance (other than
worker’s compensation and liability insurance) obtained pursuant to this Agreement, all of which
proceeds shall be payable to Lender as collateral and further security for the payment of the Debt
and the performance of Borrower’s obligations hereunder and under the other Loan Documents, and
Borrower hereby authorizes and directs the issuer of any such insurance to, subject to the rights
of Mortgage Lender under the Mortgage Loan Documents, make payment of such proceeds directly to
Lender. Lender may, in its sole discretion, apply the proceeds of insurance received upon any
casualty either (i) to reduce the Debt, in such order or manner as Lender may elect; or (ii) at
Lender’s election, to reimburse Borrower or Owner for or to pay the costs of restoring, repairing,
replacing or rebuilding (collectively, a “Restoration”) the loss or damage caused by such
casualty, in accordance with and subject to such conditions as Lender may determine in its sole
discretion.


 


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Section 2.32. Management of Premises. Borrower shall cause Owner to operate and
manage the Premises or cause the Premises to be operated and managed in a manner which is
consistent with the Approved Manager Standard. Borrower covenants and agrees with Lender
that (a) the Premises will be managed at all times by Manager pursuant to the management agreement
approved by Lender (the “Management Agreement”), (b) after Borrower has knowledge of a
fifty percent (50%) or more change in control of the ownership of Manager, Borrower will promptly
give Lender notice thereof (a “Manager Control Notice”) and (c) the Management Agreement
may be terminated by Lender at any time for cause (including, but not limited to, Manager’s gross
negligence, misappropriation of funds, willful misconduct or fraud) or at any time following (A)
the occurrence of an Event of Default, or (B) the receipt of a Manager Control Notice, and a
substitute managing agent shall be appointed by Borrower, subject to Lender’s prior written
approval, which, in the case of clause (A) above, may be given or withheld in Lender’s sole
discretion and in the case of clause (B) above, shall not be unreasonably withheld or delayed, and
which may be conditioned on, inter alia, a letter from the Rating Agency confirming that any rating
issued by the Rating Agency in connection with a Securitization or Mortgage Securitization will
not, as a result of the proposed change of Manager, be downgraded from the then current ratings
thereof, qualified or withdrawn. Borrower may from time to time cause Owner to appoint a successor
manager to manage the Premises with Lender’s prior written consent which consent shall not be
unreasonably withheld or delayed, provided that any such successor manager shall be a reputable
management company which meets the Approved Manager Standard and each Rating Agency shall have
confirmed in writing that any rating issued by the Rating Agency in connection with a
Securitization or in connection with a Mortgage Securitization will not, as a result of the
proposed change of Manager, be downgraded from the then current ratings thereof, qualified or
withdrawn. Borrower further covenants and agrees that Borrower shall cause Owner to require the
Manager (or any successor managers) to maintain at all times during the term of the Loan worker’s
compensation insurance as required by Governmental Authorities.



Section 2.33. Power of Attorney. Borrower hereby irrevocably appoints and instructs
Lender as its attorney-in-fact, with full authority in the place and stead of Borrower and in the
name of Borrower, Lender or otherwise, from time to time in Lender’s discretion to take any and all
actions necessary and proper, to carry out the intent of this Agreement and (a) to perfect and
protect the lien, pledge, assignment and security interest of Lender created hereunder, (b) from
and during the continuance of an Event of Default, (i) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral, (ii) to file any claims or take any action or institute any
proceedings for the collection of any of the Collateral or otherwise to enforce the rights of
Lender with respect to any of the Collateral, and (iii) in connection with the exercise of any
power, right, privilege or remedy pursuant to this Agreement, to make all necessary assignments,
transfers and deliveries of the Collateral and rights and to execute all applications,
certificates, instruments, assignments and other documents and papers, (c) to collect and receive
any insurance proceeds paid with respect to any portion of the insurance policies required to be
maintained hereunder, and to endorse any checks, drafts or other instruments representing any
insurance proceeds whether payable by reason of loss thereunder or otherwise, (d) to exercise any
option to extend or renew the term of the Ground Lease in the name of and on behalf of Borrower or
Owner and (e) from and during the continuance of an Event of Default, to file and prosecute, to the
exclusion of Borrower and Owner, any proofs of claim, complaints, motions, applications, notices
and other documents, in any case in respect of the Ground Lessor under the Bankruptcy Code.
Borrower hereby ratifies, approves and confirms all actions taken by Lender and its
attorneys-in-fact pursuant to this Section 2.33. Neither Lender nor any said Lender or
attorney-in-fact will be liable for any acts of commission or omission nor for any error of
judgment or mistake of fact or law with respect to its dealings with the Collateral. This power of
attorney, being coupled with an interest, is irrevocable until the date upon which the Debt has
been indefeasibly satisfied in full. Without limiting the foregoing, if Borrower fails to perform
any agreement or obligation contained herein, Lender may itself perform, or cause performance of,
where necessary or advisable in the name or on behalf of Borrower, and at the expense of Borrower,
as applicable.


 


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Section 2.34. Leases. (a) Borrower covenants and agrees that, from the date hereof
and until payment in full of the Debt, Borrower shall, or shall cause Owner to, comply with the
terms and provisions of Section 7.02(a) through (c) of the Mortgage as provided in Section 2.14
hereof, and, to the extent such term, covenants and conditions require any consents, approvals or
waivers by Mortgage Lender, Lender shall have the same rights to consent, approve or waive.



(b) Subject to the rights of Mortgage Lender in respect of the Rents under the
Mortgage Loan Documents at any time that (i) payments are not being made to the Central Account,
(ii) following repayment of the Mortgage Loan or (iii) following the occurrence of an Event of
Default, then Lender shall have the immediate right to notify all tenants and other third parties
to make payments directly to the Lockbox Account. Borrower hereby authorizes and directs the
tenants and other third parties to make such payments directly to the Lockbox Account upon notice
by Lender. Subject to the rights of Mortgage Lender under the Mortgage Loan Documents, security
and other refundable deposits of tenants, whether held in cash or any other form, shall, after and
during the continuance of an Event of Default, be turned over to Lender (together with any
undisbursed interest earned thereon) upon Lender’s request therefor to be held by Lender subject to
the terms of the Leases. Any letter of credit or other instrument which Borrower or Owner holds in
lieu of cash security deposit shall be maintained in full force and effect in the full amount of
such deposits unless replaced by cash deposits as herein-above described and shall in all respects
comply with any applicable Legal Requirements and otherwise be satisfactory to Lender. Borrower
shall, upon request, provide Lender with evidence satisfactory to Lender of Borrower’s and Owner’s
compliance with the foregoing.



(c) Borrower (i) shall cause Owner to observe and perform all of its material
obligations under the Leases pursuant to applicable Legal Requirements and shall not do or permit
to be done anything to impair the value of the Leases; (ii) shall cause Owner to promptly send
copies to Lender of all notices of material default which Owner shall receive under the Leases;
(iii) shall, consistent with the Approved Manager Standard, enforce all of the terms, covenants and
conditions contained in the Leases to be observed or performed; (iv) shall not permit Owner to
collect any of the Rents under the Leases more than one (1) month in advance (except that Owner may
collect in advance such security deposits as are permitted pursuant to applicable Legal
Requirements and are commercially reasonable in the prevailing market); (v) shall not permit Owner
to cancel or terminate any of the Leases or accept a surrender thereof in any manner inconsistent
with the Approved Manager Standard; (vi) shall not permit Owner to alter, modify or change the
terms of any guaranty of any Major Space Lease or cancel or terminate any such guaranty; (vii)
shall cause Owner, in accordance with the Approved Manager Standard, to make all reasonable efforts
to seek lessees for space as it becomes vacant and enter into Leases in accordance with the terms
hereof; and (viii) shall not permit Owner to materially modify, alter or amend any Major Space
Lease or Premises Agreement without Lender’s
consent, which consent will not be unreasonably withheld or delayed. In all instances that Owner
is required to obtain the consent of Mortgage Lender prior to entering into any Lease, Lease
amendment, modification or termination, Borrower shall cause Owner to obtain Lender’s consent to
such proposed Lease, Lease amendment, modification or termination prior to permitting or causing
Owner to submit the proposed Lease, Lease amendment, modification or termination to Mortgage
Lender. Borrower shall, and shall cause Owner to, promptly send copies to Lender of all notices of
material default which Owner shall receive under the Leases.


 


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Section 2.35. Condemnation. In the event that all or any portion of the Premises
shall be damaged or taken through condemnation (which term shall include any damage or taking by
any governmental authority, quasi-governmental authority, any party having the power of
condemnation, or any transfer by private sale in lieu thereof), or any such condemnation shall be
threatened, Borrower shall give prompt written notice to Lender. Lender acknowledges that Owner’s
rights to any condemnation award is subject to the terms of the Mortgage. Notwithstanding the
foregoing, Borrower may not and shall not permit Owner to settle or compromise any claim, action or
proceeding relating to such damage or condemnation without the prior written consent of Lender,
which shall not be unreasonably withheld, delayed or denied; provided, further, that Owner may
settle, adjust and compromise any such claim, action or proceeding which is of an amount less than
$250,000 provided no Event of Default has occurred. Any proceeds remaining after the application
of any award to reconstruct or repair the Premises or to the payment of the Mortgage Loan shall be
paid to Lender and applied to the payment of the Debt whether or not then due. In the event that
Owner is permitted pursuant to the terms of the Mortgage to reconstruct, restore or repair the
Premises following a condemnation of any portion of the Premises, Borrower shall cause Owner to
promptly and diligently repair and restore the Premises in the manner and within the time periods
required by the Mortgage, the Leases and any other agreements affecting the Premises. In the event
that Owner is permitted pursuant to the terms of the Mortgage to elect not to reconstruct, restore
or repair the Premises following a condemnation of any portion of the Premises, Borrower shall not
permit Owner to elect not to reconstruct, restore or repair the Premises without the prior written
consent of Lender.




Section 2.36. Ground Lease.



(a) Borrower will, and will cause Owner to, comply in all material respects with the
terms and conditions of the Ground Lease. Borrower will not, and will not permit Owner to, do or
permit anything to be done, the doing of which, or refrain from doing anything, the omission of
which, will impair or tend to impair the security of the Premises under the Ground Lease or will be
grounds for declaring a forfeiture of the Ground Lease. Borrower shall, and shall cause Owner to,
promptly send copies of all notices of default which Owner may receive under the Ground Lease to
Lender.



(b) Borrower shall, and shall cause Owner to, enforce the Ground Lease and not
terminate, modify, cancel, change, supplement, alter or amend the Ground Lease, or waive, excuse,
condone or in any way release or discharge Ground Lessor of or from any of the material covenants
and conditions to be performed or observed by Ground Lessor.


 


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(c) Lender shall have the right, but not the obligation, to perform any obligations
of Borrower or Owner under the terms of the Ground Lease during the continuance of an Event of
Default. All costs and expenses (including, without limitation, reasonable attorneys’ fees and
expenses) so incurred, shall be treated as an advance secured by this Agreement, shall bear
interest thereon at the Default Rate from the date of payment by Lender until paid in full and
shall be paid by Borrower to Lender during the continuance of an Event of Default on demand. No
performance by Lender of any obligations of Borrower or Owner shall constitute a waiver of any
Event of Default arising by reason of Borrower’s or Owner’s failure to perform the same. If Lender
shall make any payment or perform any act or take action in accordance with this Section 2.36(c),
Lender will notify Borrower of the making of any such payment, the performance of any such act, or
the taking of any such action.



(d) Borrower shall cause Owner to exercise each individual option, if any, to extend
or renew the term of the Ground Lease not less than thirty (30) days prior to the last day upon
which any such option may be exercised (and in all events within five (5) days after demand by
Lender made at any time within one (1) year of the last day upon which any such option may be
exercised), and Borrower hereby expressly authorizes and appoints Lender its attorney-in-fact to
exercise any such option on behalf of Owner to so exercise such option if Borrower fails to cause
Owner to exercise as herein required, which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest. Borrower shall give Lender notice of Owner’s exercise of
any such option to extend or renew the term of the Ground Lease within five (5) days of the
exercise of any such option.



(e) Subject to Mortgage Lender’s rights under the Mortgage Loan, Borrower shall
cause Owner to assign, transfer and set over to Lender all of Borrower’s claims and rights to the
payment of damages arising from any rejection by the Ground Lessor of the Ground Lease under the
Bankruptcy Code. Borrower shall notify Lender promptly (and in any event within ten (10) days) of
any claim, suit, action or proceeding relating to the rejection of the Ground Lease. Lender is
hereby irrevocably appointed as Borrower’s attorney-in-fact, coupled with an interest, with
exclusive power to file and prosecute, to the exclusion of Borrower, any proofs of claim,
complaints, motions, applications, notices and other documents, in any case in respect of the
Ground Lessor under the Bankruptcy Code during the continuance of an Event of Default. Borrower
may make any compromise or settlement in connection with such proceedings (subject to Lender’s
reasonable approval); provided, however, that Lender shall be authorized and entitled to compromise
or settle any such proceeding if such compromise or settlement is made after the occurrence and
during the continuance of an Event of Default. Borrower shall promptly execute and deliver to
Lender any and all instruments reasonably required in connection with any such proceeding after
request therefor by Lender. Except as set forth above, Borrower shall not, nor permit Owner to,
adjust, compromise, settle or enter into any agreement with respect to such proceedings without the
prior written consent of Lender, which consent shall not be unreasonably withheld or delayed.



(f) Borrower shall not permit Owner to, without Lender’s prior written consent,
elect to treat the Ground Lease as terminated under Section 365(h)(1) of the Bankruptcy Code. Any
such election made without Lender’s prior written consent shall be void.


 


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(g) If pursuant to Section 365(h)(2) of the Bankruptcy Code, Owner seeks to offset
against the rent reserved in the Ground Lease the amount of any damages caused by the non-performance
by the Ground Lessor of any of the Ground Lessor’s obligations under the Ground Lease
after the rejection by the Ground Lessor of the Ground Lease under the Bankruptcy Code, Borrower
shall, prior to Owner effecting such offset, notify Lender of its intention to do so, setting forth
the amounts proposed to be so offset and the basis therefor. If Lender has failed to object as
aforesaid within ten (10) days after notice from Borrower in accordance with the first sentence of
this Section 2.35(g), Borrower may permit Owner to proceed to effect such offset in the amounts set
forth in Borrower’s notice. Neither Lender’s failure to object as aforesaid nor any objection or
other communication between Lender and Borrower relating to such offset shall constitute an
approval of any such offset by Lender. Borrower shall indemnify and save Lender harmless from and
against any and all claims, demands, actions, suits, proceedings, damages, losses, costs and
expenses of every nature whatsoever (including, without limitation, reasonable attorneys’ fees and
disbursements) arising from or relating to any such offset by Owner against the rent reserved in
the Ground Lease.



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



(i) Borrower shall, and shall cause Owner to, perform all other covenants with
respect to the Ground Lease as set forth in the Mortgage for so long as any portion of the Debt
remains outstanding (regardless of whether the Mortgage Loan remains outstanding).



ARTICLE III. EVENTS OF DEFAULT/REMEDIES




Section 3.01. Events of Default. The Loan shall become immediately due at the option
of Lender upon any one or more of the following events (“Event of Default”):



(a) if the final payment or prepayment premium, if any, due under the Note or
hereunder shall not be paid on Maturity;



(b) if any monthly payment of interest and/or principal due under the Note (other
than the sums described in (a) above) shall not be fully paid on the date upon which the same is
due and payable thereunder;



(c) if payment of any sum (other than the sums described in (a) above or (b) above)
required to be paid pursuant to the Note, this Agreement or any other Loan Document shall not be
paid within five (5) days after Lender delivers written notice to Borrower that same is due and
payable thereunder or hereunder;



(d) if Borrower, Owner, Guarantor or, if Borrower, Owner or Guarantor is a
partnership, any general partner of Borrower, Owner or Guarantor, or, if Borrower, Owner or
Guarantor is a limited liability company, any member of Borrower, Owner or Guarantor, shall
institute or cause to be instituted any proceeding for the termination or dissolution of Borrower,
Owner, Guarantor or any such general partner or member;


 


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(e) if a default beyond applicable notice and grace periods shall occur under any of
the Mortgage Loan Documents or any other event or condition shall exist, if the effect of such
event or condition is to accelerate or permit Mortgage Lender to accelerate the maturity of any
portion of the Mortgage Loan;



(f) if Borrower, Owner or Guarantor attempts to assign its rights under this
Agreement or any other Loan Document or any interest herein or therein, or if any Transfer occurs
other than in each case as permitted hereunder;



(g) if any representation or warranty of Borrower, Owner or Guarantor made herein or
in any other Loan Document or in any certificate, report, financial statement or other instrument
or agreement furnished to Lender shall prove false or misleading in any material respect as of the
date made or furnished;



(h) if Borrower, Owner, Guarantor or, if Borrower, Owner or Guarantor is a
partnership, any general partner of Borrower, Owner or Guarantor, or, if Borrower, Owner or
Guarantor is a limited liability company, any member of Borrower or Owner or managing member of
Guarantor, shall make an assignment for the benefit of creditors or shall admit in writing its
inability to pay its debts generally as they become due;



(i) if a receiver, liquidator or trustee of Borrower, Owner or Guarantor or any
general partner of Borrower, Owner or Guarantor shall be appointed or if Borrower, Owner or
Guarantor or their respective general partners shall be adjudicated a bankrupt or insolvent, or if
any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by,
Borrower, Owner, Guarantor or their respective general partners or if any proceeding for the
dissolution or liquidation of Borrower, Owner, Guarantor or their respective general partners shall
be instituted; however, if such appointment, adjudication, petition or proceeding was involuntary
and not consented to by Borrower, Owner, Guarantor or their respective general partners, as
applicable, upon the same not being discharged, stayed or dismissed within ninety (90) days or if
Borrower, Owner, Guarantor or their respective general partners shall generally not be paying its
debts as they become due;



(j) if Borrower consummates a transaction which would cause this Agreement or
Lender’s rights under this Agreement, the Note or any other Loan Document to constitute a
non-exempt prohibited transaction under ERISA or result in a violation of a state statute
regulating government plans subjecting Lender to liability for a violation of ERISA or a state
statute;



(k) if a default beyond applicable notice and grace periods shall occur under any
loan and security agreement executed by Borrower or any Affiliate of Borrower which secures, in
whole or in part, the Debt;



(l) if any pledge or security interest made or granted or purported to be made or
granted pursuant to this Agreement or any of the other Loan Documents shall cease to be in full
force and effect or shall not be enforceable or shall not be of the effect or have the priority
stated herein or therein for such pledge or security interest;


 


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(m) if a sale of the Premises occurs pursuant to Section 9.04 of the Mortgage and
concurrently therewith a Proposed Loan Assumption does not occur for any reason; or



(n) if a default shall occur under any of the other terms, covenants or conditions
of the Note, this Agreement or any other Loan Document, other than as set forth in (a) through (m)
above, for ten (10) days after notice from Lender in the case of any default which can be cured by
the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of any
other default or an additional ninety (90) days if Borrower is diligently and continuously
effectuating a cure of a curable non-monetary default, other than as set forth in (a) through (m)
above.



Section 3.02. Remedies. (a) Upon the occurrence and during the continuance of any
Event of Default, Lender may, in addition to any other rights or remedies available to it hereunder
or under any other Loan Document, at law or in equity, take such action, without notice or demand,
as it reasonably deems advisable to protect and enforce its rights against Borrower and in and to
the Collateral, including, but not limited to, the following actions, each of which may be pursued
singly, concurrently or otherwise, at such time and in such order as Lender may determine, in its
sole discretion, without impairing or otherwise affecting any other rights and remedies of Lender
hereunder, at law or in equity: (i) declare all or any portion of the unpaid Loan to be
immediately due and payable; provided, however, that upon the occurrence of any of the events
specified in Section 3.01(i), the entire Loan will be immediately due and payable without notice or
demand or any other declaration of the amounts due and payable; or (ii) bring an action to
foreclose this Agreement and thereupon Lender may (A) exercise all rights and powers of Borrower
with respect to the Collateral or any part thereof, whether in the name of Borrower or otherwise
and (B) apply the receipts from the Collateral to the payment of the Debt, after deducting
therefrom all expenses (including, without limitation, reasonable attorneys’ fees and disbursements
and all applicable transfer taxes) reasonably incurred in connection therewith, as well as just and
reasonable compensation for the services of Lender’s third-party agents; or (iii) sell the
Collateral or institute proceedings for the complete foreclosure of this Agreement, or take such
other action as may be allowed pursuant to Legal Requirements, at law or in equity, for the
enforcement of this Agreement; or (iv) pursue any or all such other rights or remedies as Lender
may have under applicable law or in equity (including, without limitation, all rights and remedies
to a secured party under the UCC); provided, however, that the provisions of this Section shall not
be construed to extend or modify any of the notice requirements or grace periods provided for
hereunder or under any of the other Loan Documents.



(b) In addition to the remedies described in subsection (a) above, if any Event of
Default shall occur, so long as such Event of Default shall be continuing, (i) Lender and/or its
nominees or designees shall have the right to receive any and all dividends, payments or
Distributions paid with respect to the Equity Interests and the other Collateral, as applicable,
and make application thereof in accordance with this Agreement (and any dividends and other
payments received in trust by Borrower for the benefit of Lender shall be segregated from the other
funds of Borrower) and (ii) at Lender’s election, all Equity Interests shall be transferred to
Lender and/or one (1) or more nominee(s) or designee(s) thereof, and Lender and/or such nominee(s)
or designee(s) may in the name of Borrower or in Lender’s and/or such nominee’s(s’) or
designee’s(s’) own name, collect all payments and assets due Borrower pursuant to the



 


36









 






 Equity
Interests and/or the applicable Organizational Documents, and Lender and/or such nominee(s) or designee(s) may thereafter exercise (A) all voting and other rights
pertaining to the Equity Interests and/or the other Collateral under the Organizational Documents,
and (ii) any and all rights of conversion, exchange, subscription and any other rights, privileges
or options pertaining to the Equity Interests as if they were the absolute owners thereof
(including the right to exchange at their discretion any and all of the Equity Interests upon the
merger, consolidation, reorganization, recapitalization or other change in the structure of any
Corporation, LLC or Partnership), or upon the exercise by Borrower or Lender and/or such nominee(s)
or designee(s) of any right, privilege or option pertaining to such Equity Interests, and, in
connection therewith, the right to deposit and deliver evidences of the Equity Interests with any
committee, depository, transfer agent, registrar or other designated agency (upon such terms and
conditions as they may determine), all without liability except to account for property actually
received by them, but neither Lender nor any such nominee or designee shall have any duty to
exercise any such right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing. Further, unless and until Lender and/or such nominee(s) or designee(s)
succeeds to actual ownership thereof, pursuant to the exercise of Lender’s remedies described in
subsection (a) above, neither Lender nor any such nominee or designee shall be obligated to perform
or discharge any obligation, duty or liability in connection with the Equity Interests or the other
Collateral. The rights of Lender hereunder shall not be conditioned or contingent upon the pursuit
by Lender of any other right or remedy against Borrower or any guarantor of any of the Debt, or
against any other Person which may be or become liable in respect of all or any part of the Debt or
against any other collateral security therefor, guarantee thereof or right of offset with respect
thereto. Neither Lender nor any of its nominees or designees shall be liable for any failure to
demand, collect or realize upon all or any part of the Collateral or for any delay in doing so, nor
shall they be under any obligation to sell or otherwise dispose of any Collateral upon the request
of Borrower or any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.



(c) Following the occurrence and during the continuance of an Event of Default,
Lender may, at its election, and in addition to any other remedies available hereunder, in its sole
and absolute discretion, no such duty being imposed hereby, pay, purchase, contest or compromise
any encumbrance, charge or lien which is prior or superior to its security interest in the
Collateral and pay all expenses incurred therewith (any payment or expense so incurred shall be
deemed a part of the Debt and shall be immediately due and payable and secured hereby), all of
which shall be deemed authorized by Borrower. All such expenses not paid when due shall accrue
interest at the Default Rate.



(d) Without limiting the generality of the other provisions of this Agreement,
Lender is hereby authorized by Borrower, but not obligated, in the event of any Event of Default
hereunder giving rise to Lender’s rights to sell or otherwise dispose of the Collateral, and after
the giving of any notices required herein, to sell all or any part of the Collateral at private
sale, subject to an investment letter or in any other manner which will not require the Collateral,
or any part thereof, to be registered in accordance with the Securities Act of 1933, as amended
(the “Securities Act”), or other applicable rules and regulations promulgated thereunder,
or any other law or regulation, at the best price reasonably obtainable by Lender at any such
private sale or other disposition in the manner mentioned above, and Borrower specifically
acknowledges that any such disposition shall be commercially reasonable under the UCC even



 


37









 






 though
any such private sales may be at prices and on terms less favorable than those obtainable through a
public sale without such restrictions, and agrees that Lender shall have no obligation to engage in public
sales and no obligation to delay the sale of any Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public sale required by registration under
the Securities Act or under applicable state securities laws, even if such issuer would, or should
agree to, so register it. Lender is also hereby authorized by Borrower, but not obligated, to take
such actions, give such notices, obtain such consents, and do such other things as Lender may deem
required or appropriate in the event of a sale or disposition of any of the Collateral. If Lender
determines to exercise its right to sell any or all of the Collateral, upon written request,
Borrower shall and shall cause each issuer of any Pledged Interests or other Equity Interests owned
by Borrower to be sold hereunder from time to time to furnish to Lender all such information as
Lender may request in order to determine the number of shares and other instruments included in the
Collateral which may be sold by Lender in exempt transactions under the Securities Act and the
rules and regulations of the Securities and Exchange Commission thereunder, as the same are from
time to time in effect. Borrower clearly understands that Lender may at its discretion approach a
restricted number of potential purchasers and that a sale under such circumstances may yield a
lower price for the Collateral, or any part or parts thereof, than would otherwise be obtainable if
same were registered and sold in the open market. Borrower agrees: (i) in the event Lender shall,
upon an Event of Default hereunder, sell the Collateral, or any portion thereof, at such private
sale or sales, Lender shall have the right to rely upon the advice and opinion of any member firm
of the National Security Exchange as to the best price reasonably obtainable upon such private sale
thereof; and (ii) that such reliance shall be conclusive evidence that Lender handled such matter
in a commercially reasonable manner under the UCC.



(e) In order to permit Lender to exercise the voting and other consensual rights
which it may be entitled to exercise pursuant to this Agreement and to receive all dividends and
other Distributions which it may be entitled to receive under this Agreement, (i) Borrower shall
promptly execute and deliver (or cause to be executed and delivered) to Lender all such proxies,
dividend payment orders and other instruments as Lender may from time to time reasonably request
and (ii) WITHOUT LIMITING THE EFFECT OF THE IMMEDIATELY PRECEDING CLAUSE (i), BORROWER HEREBY
GRANTS TO LENDER AN IRREVOCABLE PROXY TO VOTE THE PLEDGED INTERESTS AND OTHER EQUITY INTERESTS
PLEDGED BY BORROWER AND TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A
HOLDER OF THE PLEDGED INTERESTS OR OTHER EQUITY INTERESTS WOULD BE ENTITLED (INCLUDING WITHOUT
LIMITATION GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, MEMBERS OR PARTNERS, AS
APPLICABLE, CALLING SPECIAL MEETINGS OF SHAREHOLDERS, MEMBERS OR PARTNERS, AS APPLICABLE, AND
VOTING AT SUCH MEETINGS), WHICH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY
OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED INTERESTS ON THE RECORD BOOKS OF THE ISSUER
THEREOF) BY ANY OTHER PERSON (INCLUDING THE ISSUER OF THE PLEDGED INTERESTS OR ANY OFFICER OR AGENT
THEREOF), UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT AND WHICH PROXY
SHALL ONLY TERMINATE UPON THE PAYMENT IN FULL OF THE DEBT OTHER THAN THE SURVIVING OBLIGATIONS
(WHICH, HOWEVER, SHALL REMAIN SUBJECT TO
THE PREFERENTIAL PAYMENT PROVISIONS).


 


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(f) Any time after an Event of Default Lender shall have the power to sell the
Collateral or any part thereof at public auction, in such manner, at such time and place, upon such
terms and conditions, and upon such public notice as Lender may deem best for the interest of
Lender, or as may be required or permitted by applicable law, consisting of advertisement in a
newspaper of general circulation in the jurisdiction and for such period as applicable law may
require and at such other times and by such other methods, if any, as may be required by law to
convey the Collateral to and at the cost of the purchaser, who shall not be liable to see to the
application of the purchase money. Notwithstanding anything contained in this Agreement or in any
other Loan Document, the proceeds or avails of any sale made under or by virtue of this Section,
together with any other sums which then may be held by Lender under this Agreement, whether under
the provisions of this Section or otherwise, shall be applied as follows:




First: To the payment of the third-party costs and expenses reasonably incurred in
connection with any such sale (including, without limitation, any transfer taxes)
and to advances, fees and expenses, including, without limitation, reasonable fees
and expenses of Lender’s legal counsel as applicable, and of any judicial
proceedings wherein the same may be made, and of all expenses, liabilities and
advances reasonably made or incurred by Lender under this Agreement, together with
interest as provided herein on all such advances made by Lender;




Second: To the payment of the whole amount then due, owing and unpaid under the
Note for principal and interest thereon, with interest on such unpaid principal at
the Default Rate from the date of the occurrence of the earliest Event of Default
that formed a basis for such sale until the same is paid;




Third: To the payment of any other portion of the Loan required to be paid by
Borrower pursuant to any provision of this Agreement, the Note, or any of the other
Loan Documents; and




Fourth: The surplus, if any, to Borrower unless otherwise required by Legal
Requirements.



Lender and any receiver or custodian of the Collateral or any part thereof shall be liable to
account for only those rents, issues, proceeds and profits, as applicable, actually received by it.



(g) Lender may adjourn from time to time any sale by it to be made under or by
virtue of this Agreement by announcement at the time and place appointed for such sale or for such
adjourned sale or sales and, except as otherwise provided by any applicable provision of Legal
Requirements, Lender, without further notice or publication, may make such sale at the time and
place to which the same shall be so adjourned.


 


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(h) Upon the completion of any sale or sales made by Lender under or by virtue of
this Section, Lender, or any officer of any court empowered to do so, shall execute and deliver to
the accepted purchaser or purchasers a good and sufficient instrument, or good and sufficient
instruments, granting, conveying, assigning and transferring all estate, right, title and interest
in and to the Collateral. Lender is hereby irrevocably appointed the true and lawful
attorney-in-fact
of Borrower (coupled with an interest), in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries and for that purpose Lender may execute all necessary
instruments of conveyance, assignment, transfer and delivery, and may substitute one or more
Persons with like power, Borrower hereby ratifying and confirming all that its said
attorney-in-fact or such substitute or substitutes shall lawfully do by virtue hereof.
Nevertheless, Borrower, if so requested by Lender, shall ratify and confirm any such sale or sales
by executing and delivering to Lender, or to such purchaser or purchasers all such instruments as
may be advisable, in the sole judgment of Lender, for such purpose, and as may be designated in
such request. Any such sale or sales made under or by virtue of this Section shall operate to
divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in
equity, of Borrower in and to the Collateral, and shall, to the fullest extent permitted under
Legal Requirements, be a perpetual bar, both at law and in equity against Borrower and against any
and all Persons claiming or who may claim the same, or any part thereof, from, through or under
Borrower.



(i) In the event of any sale made under or by virtue of this Section, the entire
Loan immediately thereupon shall, anything in the Loan Documents to the contrary notwithstanding,
become due and payable.



(j) Upon any sale made under or by virtue of this Section (whether made under the
power of sale herein granted or under or by virtue of judicial proceedings or a judgment or decree
of foreclosure and sale), Lender may bid for and acquire the Collateral or any part thereof and in
lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Loan
the net sales price after deducting therefrom the expenses of the sale (including, without
limitation, transfer taxes) and the costs of the action.



(k) No recovery of any judgment by Lender and no levy of an execution under any
judgment upon the Collateral or upon any other property of Borrower shall release the lien of this
Agreement upon the Collateral or any part thereof, or any liens, rights, powers or remedies of
Lender hereunder, but such liens, rights, powers and remedies of Lender shall continue unimpaired
until all amounts due under the Note, this Agreement and the other Loan Documents are paid in full.



(l) Upon the exercise by Lender of any power, right, privilege, or remedy pursuant
to this Agreement which requires any consent, approval, registration, qualification, or
authorization of any Governmental Authority, Borrower agrees to execute and deliver, or will cause
the execution and delivery of, all applications, certificates, instruments, assignments and other
documents and papers that Lender or any purchaser of the Collateral may be required to obtain for
such governmental consent, approval, registration, qualification, or authorization and Lender is
hereby irrevocably appointed the true and lawful attorney-in-fact of Borrower (coupled with an
interest), in its name and stead, to execute all such applications, certificates, instruments,
assignments and other documents and papers.



(m) Lender may comply with any applicable Legal Requirements in connection with the
disposition of the Collateral, and Lender’s compliance therewith will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.


 


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(n) Lender may sell the Collateral without giving any warranties as to the
Collateral. Lender may specifically disclaim any warranties of title, possession, quiet enjoyment
or the like. This procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.



(o) If Lender sells any of the Collateral upon credit, Borrower will be credited
only with payments actually made by the purchaser, received by Lender and applied to the
indebtedness of the purchaser. In the event the purchaser of the Collateral fails to fully pay for
the Collateral, Lender may resell the Collateral and Borrower will be credited with the proceeds of
such sale.



Section 3.03. No Conditions Precedent to Exercise of Lender’s Remedies. Borrower
waives any and all legal requirements that Lender institute any action or proceeding at law or in
equity against Borrower or any other party or exhaust its remedies against Borrower or any other
party in respect of any other security held by Lender for the Debt or any portion thereof as a
condition precedent to exercising its right and remedies pursuant to this Agreement.



Section 3.04. Additional Security. Borrower authorizes Lender without notice or
demand and without affecting its liability under this Agreement or under the Note (i) to take and
hold security in addition to the security interest in the Collateral granted by Borrower to Lender
pursuant to this Agreement, for the payment of the Debt or any part thereof, and to exchange, waive
or release any such other security and (ii) to release or substitute Borrower.



Section 3.05. Rights and Remedies Continue. Until the Debt shall have been paid in
full, all rights, powers and remedies granted to Lender under this Agreement shall continue to
exist and may be exercised by Lender at any time and from time to time irrespective of the fact
that the Debt or any part thereof may have become barred by any statute of limitations or that the
liability of Borrower therefor may have ceased.



Section 3.06. Right to Terminate Proceedings. Lender may terminate or rescind any
proceeding or other action brought in connection with its exercise of the remedies provided in
Section 3.02 at any time before the conclusion thereof, as determined in Lender’s sole discretion
and without prejudice to Lender.



Section 3.07. No Waiver or Release. The failure of Lender to exercise any right,
remedy or option provided in the Loan Documents shall not be deemed a waiver of such right, remedy
or option or of any covenant or obligation contained in the Loan Documents. No acceptance by
Lender of any payment after the occurrence of an Event of Default and no payment by Lender of any
payment or obligation for which Borrower is liable hereunder shall be deemed to waive or cure any
Event of Default. No sale of all or any portion of the Collateral, no forbearance on the part of
Lender, and no extension of time for the payment of the whole or any portion of the Loan or any
other indulgence given by Lender to Borrower or any other Person, shall operate to release or in
any manner affect the interest of Lender in the Collateral or the liability of Borrower to pay the
Loan. No waiver by Lender shall be effective unless it is in writing and then only to the extent
specifically stated.


 


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Section 3.08. Payment of Debt After Default. If following the occurrence of any
Event of Default, Borrower shall tender payment of an amount sufficient to satisfy the Debt in whole or
in part at any time prior to a UCC sale of the Collateral, and if at the time of such tender
prepayment of the principal balance of the Note is not permitted by the Note and this Agreement,
Borrower shall, in addition to the entire Debt, also pay to Lender a sum equal to interest which
would have accrued on the principal balance of the Note at an interest rate equal to the LIBOR
Margin for the Note plus the greater of (x) the then current LIBOR Rate and (y) the then current
average yield for “This Week” as published by the Federal Reserve Board during the most recent full
week preceding the date on which Borrower tenders such payment in Federal Reserve Statistical
Release H.15 (519) for instruments having a ten (10) year maturity, from the date of such tender to
the earlier of (a) the Maturity Date or (b) the first day of the period during which prepayment of
the principal balance of the Note would have been permitted together with a prepayment
consideration equal to the prepayment consideration which would have been payable as of the first
day of the period during which prepayment would have been permitted. If at the time of such
tender, prepayment of the principal balance of the Note is permitted, such tender by Borrower shall
be deemed to be a voluntary prepayment of the principal balance of the Note and Borrower shall, in
addition to the entire Debt, also pay to Lender the applicable prepayment consideration specified
in the Note and this Agreement.



Section 3.09. No Impairment; No Releases. The interests and rights of Lender under
the Loan Documents shall not be impaired by any indulgence, including (a) any renewal, extension or
modification which Lender may grant with respect to any of the Loan; (b) any surrender, compromise,
release, renewal, extension, exchange or substitution which Lender may grant with respect to the
Loan Documents or any portion thereof; or (c) any release or indulgence granted to any maker,
endorser, or surety of any of the Loan.



Section 3.10. Interest After Default. If any amount due under the Note, this
Agreement or any of the other Loan Documents is not paid within any applicable notice and grace
period after same is due, whether such date is the stated due date, any accelerated due date or any
other date or at any other time specified under any of the terms hereof or thereof, then, in such
event, Borrower shall pay interest on the amount not so paid from and after the date on which such
amount first becomes due at the Default Rate; and such interest shall be due and payable at such
rate until the earlier of the cure of all Events of Default or the payment of the entire amount due
to Lender, whether or not any action shall have been taken or proceeding commenced to recover the
same or to foreclose this Agreement. All unpaid and accrued interest shall be secured by this
Agreement as part of the Debt. Nothing in this Section or in any other provision of this Agreement
shall constitute an extension of the time for payment of the Debt.



Section 3.11. Late Payment Charge. If any portion of the Debt is not paid in full on
or before the date on which it is due and payable hereunder (other than the principal portion of
the Debt due on the Maturity Date), Borrower shall pay to Lender an amount equal to five percent
(5%) of such unpaid portion of the Debt (“Late Charge”) to defray the expense incurred by
Lender in handling and processing such delinquent payment, and such amount shall constitute a part
of the Debt.



Section 3.12. Recovery of Sums Required To Be Paid. Lender shall have the right from
time to time to take action to recover any sum or sums which constitute a part of the Debt as the
same become due and payable hereunder (after the expiration of any grace period or the giving
of any notice herein provided, if any), without regard to whether or not the balance of the Debt
shall be due, and without prejudice to the right of Lender thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Borrower existing at the time such
earlier action was commenced.


 


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Section 3.13. Control By Lender After Default. Notwithstanding the appointment of
any custodian, receiver, liquidator or trustee of Borrower, or of any of its property, or of the
Collateral or any part thereof, to the extent permitted by Legal Requirements, Lender shall be
entitled to obtain possession and control of all Collateral.



ARTICLE IV. INDEMNIFICATION




Section 4.01. Indemnification Covering Property. In addition, and without
limitation, to any other provision of this Agreement or any other Loan Document, Borrower shall
protect, indemnify and save harmless Lender and its successors and assigns, and each of their
agents, employees, officers, directors, stockholders, partners and members (collectively,
“Indemnified Parties”) for, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature, known or unknown,
contingent or otherwise, whether incurred or imposed within or outside the judicial process,
including, without limitation, reasonable attorneys’ fees and disbursements imposed upon or
incurred by or asserted against any of the Indemnified Parties by reason of (a) ownership of this
Agreement or the Collateral; (b) any accident, injury to or death of any person or loss of or
damage to property occurring in, on or about the Premises or the Collateral or any part thereof or
on the adjoining sidewalks, curbs, parking areas, streets or ways; (c) any use, nonuse or condition
in, on or about, or possession, alteration, repair, operation, maintenance or management of, the
Premises or any part thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways;
(d) any failure on the part of Borrower to perform or comply with any of the terms of this
Agreement; (e) performance of any labor or services or the furnishing of any materials or other
property in respect of the Premises or any part thereof; (f) any claim by brokers, finders or
similar Persons claiming to be entitled to a commission in connection with any Lease or other
transaction involving the Premises or any part thereof; (g) any Imposition including, without
limitation, any Imposition attributable to the execution, delivery, filing, or recording of any
Loan Document, Lease or memorandum thereof; (h) any lien or claim arising on or against the
Premises or any part thereof under any Legal Requirement or any liability asserted against any of
the Indemnified Parties with respect thereto; (i) any claim arising out of or in any way relating
to any tax or other imposition on the making and/or recording of this Agreement, the Note or any of
the other Loan Documents; (j) a Default under Sections 2.02(f), 2.02(g), 2.02(k) or 2.02(s) hereof,
(k) the failure of any Person to file timely with the Internal Revenue Service an accurate Form
1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with the Loan, or to supply a copy thereof in a
timely fashion to the recipient of the proceeds of the Loan; (l) the claims of any lessee or any
Person acting through or under any lessee or otherwise arising under or as a consequence of any
Lease; or (m) the actual or alleged presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release or threat of release of any Hazardous Materials in, on, over, under,
from or affecting the Premises or (n) the failure to pay any insurance premiums. Notwithstanding
the foregoing provisions of this Section to the contrary, Borrower shall have no



 


43









 






obligation to
indemnify the Indemnified Parties pursuant to this Section for
liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses relative to the
foregoing which result from Lender’s, and its successors’ or assigns’, willful misconduct or gross
negligence. Any amounts payable to Lender by reason of the application of this Section shall
constitute a part of the Debt secured by this Agreement and the other Loan Documents and shall
become immediately due and payable and shall bear interest at the Default Rate from the date the
liability, obligation, claim, cost or expense is sustained by Lender, as applicable, until paid.
The provisions of this Section shall survive the termination of this Agreement whether by repayment
of the Debt, foreclosure of this Agreement, assignment or otherwise. In case any action, suit or
proceeding is brought against any of the Indemnified Parties by reason of any occurrence of the
type set forth in (a) through (m) above, Borrower shall, at Borrower’s expense, resist and defend
such action, suit or proceeding or will cause the same to be resisted and defended by counsel at
Borrower’s expense for the insurer of the liability or by counsel designated by Borrower (unless
reasonably disapproved by Lender promptly after Lender has been notified of such counsel);
provided, however, that nothing herein shall compromise the right of Lender (or any
other Indemnified Party) to appoint its own counsel at Borrower’s expense for its defense with
respect to any action which, in the reasonable opinion of Lender or such other Indemnified Party,
as applicable, presents a conflict or potential conflict between Lender or such other Indemnified
Party that would make such separate representation advisable. Any Indemnified Party will give
Borrower prompt notice after such Indemnified Party obtains actual knowledge of any potential claim
by such Indemnified Party for indemnification hereunder. The Indemnified Parties shall not settle
or compromise any action, proceeding or claim as to which it is indemnified hereunder without
notice to Borrower. Notwithstanding the foregoing, so long as no Default has occurred and is
continuing and Borrower is resisting and defending such action, suit or proceeding as provided
above in a prudent and commercially reasonable manner, in order to obtain the benefit of this
Section with respect to such action, suit or proceeding, Lender and the Indemnified Parties agree
that they shall not settle such action, suit or proceeding without obtaining Borrower’s consent
which Borrower agrees not to unreasonably withhold, condition or delay; provided,
however, (x) if Borrower is not diligently defending such action, suit or proceeding in a
prudent and commercially reasonable manner as provided above and Lender has provided Borrower with
thirty (30) days’ prior written notice, or shorter period if mandated by the requirements of the
applicable law, and Borrower has failed to correct such failure, or (y) failure to settle could, in
Lender’s reasonable judgment, expose Lender to criminal liability, Lender may settle such action,
suit or proceeding without the consent of but upon notice to Borrower and be entitled to the
benefits of this Section with respect to the settlement of such action, suit or proceeding.



ARTICLE V. SECURITY AGREEMENT




Section 5.01. Security Agreement. (a) This Agreement is a “security agreement”
within the meaning of the UCC. If an Event of Default shall occur, Lender, in addition to any
other rights and remedies which it may have, shall have and may exercise immediately and without
demand, any and all rights and remedies granted to a secured party upon default under the UCC,
including, without limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Lender may deem necessary for
the care, protection and preservation of the Collateral. Upon request or demand of Lender
following an Event of Default, Borrower shall, at its expense, assemble the Collateral and make it
available to Lender at a convenient place acceptable to Lender. Borrower shall pay to Lender
on demand any and all expenses, including reasonable legal expenses and attorneys’ fees and all
transfer taxes, incurred or paid by Lender in protecting its interest in the Collateral and in
enforcing its rights hereunder with respect to the Collateral. Any notice of sale, disposition or
other intended action by Lender with respect to the Collateral given to Borrower in accordance with
the provisions hereof at least ten (10) days prior to such action shall constitute reasonable
notice to Borrower.


 


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(b) Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled
with an interest, to file with the appropriate public office on its behalf any financing or other
statements signed only by Lender, as secured party, or, to the extent permitted under the UCC,
unsigned, in connection with the Collateral covered by this Agreement. Such financing statements
may, at the option of Lender, describe the Collateral as “all assets” or “all personal property” of
Borrower.



(c) Borrower will furnish to Lender from time to time statements and schedules
further identifying and describing the Collateral and such other reports in connection with the
Collateral as Lender may reasonably request, all in reasonable detail.



(d) The powers conferred on Lender hereunder are solely to protect Lender’s interest
in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, Lender shall have no duty (and neither Lender nor any of its partners,
members, officers, directors, employees or agents shall be responsible to Borrower for any act or
failure to act) as to any Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or
not Lender has or is deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to any Collateral.
Lender shall be deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment substantially equal to that
which it accords its own property.



ARTICLE VI. PREPAYMENT




Section 6.01. Prepayment. (a) Except as set forth in Section 6.01(b) hereof, no
prepayment of the Debt may be made in whole or in part.



(b) Borrower may voluntarily prepay the Loan, in whole or in part, on any Business
Day, in accordance with the following provisions:




(i) Lender shall have received from Borrower not less than thirty (30) days,
 nor more than ninety (90) days, prior written notice specifying the date proposed for
such prepayment and the amount which is to be prepaid (which notice shall be revocable by
Borrower up to three (3) times during the term of the Loan by giving Lender not less than
one (1) Business Day prior written notice of such revocation, provided that Borrower shall
remain obligated to pay Lender’s costs and expenses including, without limitation, breakage
costs incurred by Lender in connection with such revocation).


 


45









 






(ii) Borrower shall also pay to Lender all interest due through and
including the last day of the Interest Accrual Period in which such prepayment is being
made, together with any and all other amounts due and owing pursuant to the terms of the
Note, this Agreement or the other Loan Documents, provided that the amount prepaid shall be
deposited in an interest-bearing account until the Final Payment Date, and all interest
accruing thereon through the date immediately preceding the Final Payment Date shall be
remitted to Borrower, provided that Borrower acknowledges that Lender makes no
representation or warranty as to the rate of return. For the sake of clarity, if Borrower
shall have paid interest on the Payment Date in the month in which the repayment occurs
through the then current Interest Accrual Period and repays the Debt in full on or before
the Final Payment Date, no additional interest shall be due or payable by Borrower with
respect to the period subsequent to the Payment Date.




(iii) Any partial prepayment shall be in a minimum amount of not less than
$25,000 and shall be in whole multiples of $1,000 in excess thereof.




(iv) Intentionally omitted.




(v) Intentionally omitted.




(vi) In the event that the Loan is prepaid in whole or in part prior to the
first (1st) anniversary of the date hereof, Borrower shall pay to Lender, together with
such prepayment and all other amounts due in connection therewith, a non-refundable amount
which shall be deemed earned by Lender upon the funding of the Loan and shall not count to
or be credited to payment of the Principal Amount, any interest thereon or any other
amounts payable under the Note, this Agreement or any of the Loan Documents, equal to the
Spread Maintenance Premium. Thereafter, all prepayments of the Loan shall be without any
prepayment fee or charge of any kind.




(vii) No prepayments shall be made on the Mortgage Loan until the Loan shall
have been paid in full.



ARTICLE VII. MISCELLANEOUS




Section 7.01. Notices. Any notice, demand, statement, request or consent made
hereunder shall be in writing and delivered personally or sent to the party to whom the notice,
demand or request is being made by overnight delivery by Federal Express or other nationally
recognized overnight delivery service, as follows and shall be deemed given when delivered
personally or one (1) Business Day after being deposited with Federal Express or such other
nationally recognized delivery service:



	 	 	 
	If to Lender:

	 	Wachovia Bank, National Association
	 

	 	Commercial Real Estate Services
	 

	 	8739 Research Drive URP-4
	 

	 	NC 1075 
	 

	 	Charlotte, NC 28262 
	 

	 	Loan Number: 509850398 
	 

	 	Attention: Portfolio Management
	 

	 	Fax No.: (704) 715-0036 





 


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	with a copy to:

	 	Proskauer Rose LLP
	 

	 	1585 Broadway
	 

	 	New York, New York 10036 
	 

	 	Attn: David J. Weinberger, Esq.
	 
	 	 
	 

	 	Facsimile No.: (212) 969-2900 
	 
	 	 
	If to Borrower:

	 	To Borrower, at the address first written above, to the attention of Chief Financial Officer, Facsimile No. (212) 277-4268, 
	 
	 	 
	with a copy to:

	 	Sullivan & Cromwell LLP
	 

	 	125 Broad Street
	 

	 	New York, New York 10004 
	 

	 	Attn: Arthur Adler, Esq.
	 
	 	 
	 

	 	Facsimile No.: (212) 558-3588, 






or such other address as Borrower or Lender shall hereafter specify by not less than ten (10) days
prior written notice as provided herein; provided, however, that notwithstanding any provision of
this Section to the contrary, such notice of change of address shall be deemed given only upon
actual receipt thereof. Rejection or other refusal to accept or the inability to deliver because
of changed addresses of which no notice was given as herein required shall be deemed to be receipt
of the notice, demand, statement, request or consent.



Section 7.02. Exhibits Incorporated. The information set forth on the cover hereof,
and the Exhibits annexed hereto, are hereby incorporated herein as a part of this Agreement with
the same effect as if set forth in the body hereof.



Section 7.03. Severable Provisions. If any term, covenant or condition of the Loan
Documents including, without limitation, the Note or this Agreement, is held to be invalid, illegal
or unenforceable in any respect, such Loan Document shall be construed without such provision.



Section 7.04. Cumulative Rights. The rights, powers and remedies of Lender under
this Agreement shall be separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Lender shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision. Lender shall not be limited
exclusively to the rights and remedies herein stated but shall be entitled, subject to the terms of
this Agreement, to every right and remedy now or hereafter afforded by law.



Section 7.05. Duplicate Originals. This Agreement may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to constitute but one and the
same instrument.


 


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Section 7.06. Waiver of Notice. Borrower shall not be entitled to any notices of any
nature whatsoever from Lender except with respect to matters for which this Agreement specifically
and expressly provides for the giving of notice by Lender to Borrower and except with respect to
matters for which Borrower is not, pursuant to applicable legal requirements permitted to waive the
giving of notice.



Section 7.07. Joint and Several Liability. If Borrower consists of more than one
Person, the obligations and liabilities of each such Person hereunder shall be joint and several.



Section 7.08. No Oral Change. The terms of this Agreement, together with the terms
of the Note and the other Loan Documents constitute the entire understanding and agreement of the
parties hereto and supersede all prior agreements, understandings and negotiations between Borrower
and Lender with respect to the Loan. This Agreement, and any provisions hereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally or by any act on the
part of Borrower or Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge or termination is
sought.



Section 7.09. WAIVER OF COUNTERCLAIMS, ETC. BORROWER HEREBY WAIVES THE RIGHT TO
ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT
AGAINST IT BY LENDER OR ITS AGENTS, AND WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY
EITHER PARTY HERETO AGAINST THE OTHER OR IN ANY COUNTERCLAIM BORROWER MAY BE PERMITTED TO ASSERT
HEREUNDER OR WHICH MAY BE ASSERTED BY LENDER OR ITS AGENTS, AGAINST BORROWER, OR IN ANY MATTERS
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE DEBT.



Section 7.10. Headings; Construction of Documents, etc. The headings and captions of
various paragraphs of this Agreement are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
Borrower acknowledges that it was represented by competent counsel in connection with the
negotiation and drafting of this Agreement and the other Loan Documents and that neither this
Agreement nor the other Loan Documents shall be subject to the principle of construing the meaning
against the Person who drafted same.



Section 7.11. Sole Discretion of Lender. Whenever Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Lender and shall be final and
conclusive, except as may be otherwise specifically provided herein.



Section 7.12. APPLICABLE LAW. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK
AND MADE BY BORROWER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK AND THE PROCEEDS OF THE NOTE
WERE DISBURSED FROM THE STATE OF NEW YORK WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE
UNITED STATES OF AMERICA.


 


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Section 7.13. Actions and Proceedings. Lender has the right to appear in and defend
any action or proceeding brought with respect to the Collateral in its own name or, if required by
Legal Requirements or, if in Lender’s reasonable judgment, it is necessary, in the name and on
behalf of Borrower, which Lender believes will adversely affect the Collateral or this Agreement
and to bring any action or proceedings, in its name or in the name and on behalf of Borrower, which
Lender, in its discretion, decides should be brought to protect its interest in the Note, this
Agreement and the other Loan Documents.



Section 7.14. Usury Laws. This Agreement and the Note are subject to the express
condition, and it is the expressed intent of the parties, that at no time shall Borrower be
obligated or required to pay interest on the principal balance due under the Note at a rate which
could subject the holder of the Note 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 or agree to pay.
If by the terms of this Agreement or the Note, Borrower is at any time required or obligated to
pay interest on the principal balance due under the Note at a rate in excess of such maximum rate,
such rate of interest shall be deemed to be immediately reduced to such maximum rate and the
interest payable shall be computed at such maximum rate and all prior interest payments in excess
of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Note. No application to the principal balance of the Note pursuant to
this Section shall give rise to any requirement to pay any prepayment fee or charge of any kind due
hereunder, if any.



Section 7.15. Remedies of Borrower. In the event that a claim or adjudication is
made that Lender has acted unreasonably or unreasonably delayed acting in any case where by law or
under the Note, this Agreement or the Loan Documents, it has an obligation to act reasonably or
promptly, Lender shall not be liable for any monetary damages, and Borrower’s remedies shall be
limited to injunctive relief or declaratory judgment.



Section 7.16. Offsets, Counterclaims and Defenses. Any assignee of this Agreement
and the Note shall take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to the Note or this Agreement which Borrower may otherwise have against any assignor of
this Agreement and the Note and no such unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee upon this Agreement
or the Note and any such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.



Section 7.17. Restoration of Rights. In case Lender shall have proceeded to enforce
any right under this Agreement and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely, then, in every such case, Borrower and Lender
shall be restored to their former positions and rights hereunder with respect to the Collateral
subject to the lien hereof.


 


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Section 7.18. Waiver of Statute of Limitations. The pleadings of any statute of
limitations as a defense to any and all obligations secured by this Agreement are hereby waived to
the full extent permitted by Legal Requirements.



Section 7.19. Advances. This Agreement shall cover any and all advances made
pursuant to the Loan Documents, rearrangements and renewals of the Loan and all extensions in the
time of payment thereof, even though such advances, extensions or renewals be evidenced by new
promissory notes or other instruments hereafter executed and irrespective of whether filed or
recorded. Likewise, the execution of this Agreement shall not impair or affect any other security
which may be given to secure the payment of the Loan, and all such additional security shall be
considered as cumulative. The taking of additional security, execution of partial releases of the
security, or any extension of time of payment of the Loan shall not diminish the force, effect or
lien of this Agreement and shall not affect or impair the liability of Borrower and shall not
affect or impair the liability of any maker, surety, or endorser for the payment of the Loan.



Section 7.20. Application of Default Rate Not a Waiver. Application of the Default
Rate shall not be deemed to constitute a waiver of any Default or Event of Default or any rights or
remedies of Lender under this Agreement, any other Loan Document or applicable Legal Requirements,
or a consent to any extension of time for the payment or performance of any obligation with respect
to which the Default Rate may be invoked.



Section 7.21. Intervening Lien. To the fullest extent permitted by law, any
agreement hereafter made pursuant to this Agreement shall be superior to the rights of the holder
of any intervening lien.



Section 7.22. No Joint Venture or Partnership. Borrower and Lender intend that the
relationship created hereunder be solely that of pledgor and pledgee or borrower and lender, as the
case may be. Nothing herein is intended to create a joint venture or partnership relationship
between Borrower and Lender nor to grant Lender any interest in the Collateral other than that of
pledgee or lender.



Section 7.23. Time of the Essence. Time shall be of the essence in the performance
of all obligations of Borrower hereunder.



Section 7.24. Borrower’s Obligations Absolute. Borrower acknowledges that Lender
and/or certain Affiliates of Lender are engaged in the business of financing, owning, operating,
leasing, managing, and brokering real estate and in other business ventures which may be viewed as
adverse to or competitive with the business, prospect, profits, operations or condition (financial
or otherwise) of Borrower. Except as set forth to the contrary in the Loan Documents, all sums
payable by Borrower hereunder shall be paid without notice or demand, counterclaim, set-off,
deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the
obligations and liabilities of Borrower hereunder shall in no way be released, discharged, or
otherwise affected (except as



 


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expressly provided herein) by reason of: (a) any bankruptcy proceeding relating to Owner, Borrower, any General Partner, or any guarantor or
indemnitor, or any action taken with respect to this Agreement or any other Loan Document by any
trustee or receiver of Owner, Borrower or any such General Partner, guarantor or indemnitor, or by
any court, in any such proceeding; (b) any claim which Borrower has or might have against Lender;
(c) any default or failure on the part of Lender to perform or comply with any of the terms hereof
or of any other agreement with Borrower; or (d) any other occurrence whatsoever, whether similar or
dissimilar to the foregoing, whether or not Borrower shall have notice or knowledge of any of the
foregoing.



Section 7.25. Publicity. All promotional news releases, publicity or advertising by
Borrower or its Affiliates through any media intended to reach the general public shall not refer
to the Loan Documents or the financing evidenced by the Loan Documents, or to Lender or to any of
its Affiliates without the prior written approval of Lender or such Affiliate, as applicable, in
each instance, such approval not to be unreasonably withheld or delayed. Notwithstanding anything
herein to the contrary, Borrower shall be authorized to provide information relating to the Loan
Documents or the financing evidenced by the Loan Documents, or to Lender or to any of its
Affiliates, to rating agencies, underwriters, potential securities investors, auditors, regulatory
authorities and to any Persons which may be entitled to such information by operation of law and
without limiting the foregoing to issue press releases and make Form 8-K and other securities
filings containing the above-described information as it or its counsel reasonably deems required
by law. Lender shall be authorized to provide information relating to the Collateral, the Loan and
matters relating thereto to rating agencies, underwriters, potential securities investors,
auditors, regulatory authorities and to any Persons which may be entitled to such information by
operation of law and may use basic transaction information (including, without limitation, the name
of Borrower, the name and address of the Premises and the Loan Amount) in press releases or other
marketing materials.



Section 7.26. Securitization Opinions. In the event the Loan is included as an asset
of a Securitization by Lender or any of its Affiliates, Borrower shall, within fifteen (15)
Business Days after Lender’s written request therefor, at Lender’s sole cost and expense, deliver
opinions in form and substance and delivered by counsel reasonably acceptable to Lender and the
Rating Agency, as may be reasonably required by Lender and/or the Rating Agency in connection with
such securitization. Borrower’s failure to deliver the opinions required hereby within such
fifteen (15) Business Day period shall constitute an “Event of Default” hereunder. Notwithstanding
the foregoing, in no event shall Borrower be required to deliver a “10b-5 opinion” in connection
with any Securitization.



Section 7.27. Sale of Loan, Participations, Securitization. (a) Nothing contained in
this Agreement shall be construed as preventing Lender, at any time after the date hereof, from
selling, pledging, assigning or transferring the Note and in connection with any such sale, pledge,
assignment or transfer from assigning this Agreement and transferring possession of the Collateral,
if any, in Lender’s possession, to the purchaser of the Note. Upon any sale, pledge, assignment or
transfer of the Note and upon assignment of this Agreement and a transfer in connection therewith
of possession of the Collateral, if any, in Lender’s possession to the purchaser of the Note,
Lender shall be released and discharged from any liability or responsibility with respect to the
Loan Documents and references to “Lender” in this Agreement shall, with respect to any
matters thereafter occurring, be deemed to be references to the



 


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purchaser of the Note. Borrower or any agent of Borrower acting on its behalf shall maintain at
its offices a copy of each notice of a sale, pledge, assignment or other transfer of the Loan or a
portion thereof as a whole loan delivered to it and a register (the “Register”) for the
recordation of the names and addresses of each Lender and the principal amount of the Loan or
portion thereof owing to each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and Borrower may treat each Person whose name is
recorded in the Register as the owner of the Loan or portion thereof recorded therein, hereunder
for all purposes of this Agreement. A sale, pledge, assignment or other transfer of the Loan or a
portion thereof as a whole loan, whether or not evidenced by a Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and, if applicable, each Note
shall expressly so provide). The Register shall be available for inspection by each Lender at any
reasonable time and from time to time upon reasonable prior notice. Borrower hereby appoints
Lender as its agent to maintain the Register and Lender hereby accepts such appointment. Lender
shall indemnify and hold harmless Borrower for any losses resulting from Lender’s failure to
maintain the Register and no failure by Lender, as Borrower’s agent (solely for the purposes of
maintaining the Register), shall result in a default hereunder or under any other Loan Document or
otherwise subject Borrower to any liability.



(b) Borrower acknowledges that Lender may on or after the Closing Date sell and
assign participation interests in and to the Loan, or pledge, hypothecate or encumber, or sell and
assign all or any portion of the Loan, to or with such domestic or foreign banks, insurance
companies, pension funds, trusts or other institutional lenders or other Persons, parties or
investors (including, without limitation, grantor trusts, owner trusts, special purpose
corporations, real estate investment trusts or other similar or comparable investment vehicles) as
may be selected by Lender in its sole and absolute discretion and on terms and conditions
satisfactory to Lender in its sole and absolute discretion. Borrower and all Affiliates of
Borrower shall cooperate in all respects with Lender in connection with the sale of participation
interests in, or the pledge, hypothecation or encumbrance or sale of all or any portion of, the
Loan, and shall, in connection therewith, at Lender’s sole cost and expense, execute and deliver
such estoppels, certificates, instruments and documents as may be reasonably requested by Lender.
Borrower grants to Lender the right to distribute financial and other information concerning
Borrower, Owner, the Premises, the Collateral, and all other pertinent information with respect to
the Loan to any Person who has purchased a participation interest in the Loan, or who has purchased
the Loan, or who has made a loan to Lender secured by the Loan or who has expressed an interest in
purchasing a participation interest in the Loan, or expressed an interest in purchasing the Loan or
the making of a loan to Lender secured by the Loan. If requested by Lender, Borrower shall execute
and deliver, and shall cause each Affiliate of Borrower to execute and deliver, at no cost or
expense to Borrower, such documents and instruments as may be necessary to split the Loan into two
or more loans evidenced by separate sets of notes and secured by separate sets of other related
Loan Documents to the full extent required by Lender to facilitate the sale of participation
interests in the Loan or the sale of the Loan or the making of a loan to Lender secured by the
Loan, it being agreed that (a) any such splitting of the Loan will not adversely affect or diminish
the rights of Borrower as presently set forth herein and in the other Loan Documents and will not
increase the respective obligations and liabilities of Borrower or any other Person associated or
connected with the Loan or the Collateral, (b) the Loan Documents securing the Loan as so split
will have such priority of lien as may be specified by Lender, and



 


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(c) the retained interest of
Lender in the Loan as so split shall be allocated to or among one or more of such separate loans in a manner specified by Lender in its sole and absolute
discretion. From and after the effective date of any assignment of all or any portion of the Loan
to any Person (an “Assignee”) (a) such Assignee shall be a party hereto and to each of the
other Loan Documents to the extent of the applicable percentage or percentages assigned to such
Assignee and, except as otherwise specified herein, shall succeed to the rights and obligations of
Lender hereunder in respect of such applicable percentage or percentages and (b) Lender shall
relinquish its rights and be released from its obligations hereunder and under the Loan Documents
to the extent of such applicable percentage or percentages. The liabilities of Lender and each of
the other Assignees shall be separate and not joint and several. Neither Lender nor any Assignee
shall be responsible for the obligations of any other Assignee. Borrower acknowledges that the
information provided by Borrower to Lender may be incorporated into the offering documents for a
Securitization and to the fullest extent permitted, Borrower irrevocably waives all rights, if any,
to prohibit such disclosures including, without limitation, any right of privacy. Lender and each
Rating Agency shall be entitled to rely on the information supplied by, or on behalf of, Borrower
and Borrower indemnifies Lender as to any liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses, (including, without limitation, reasonable attorney’s fees
and expenses, whether incurred within or outside the judicial process) that arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact contained in such
information or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated in such information or necessary in order to make the
statements in such information, or in light of the circumstances under which they were made, not
misleading.



(c) Lender, at its option, may elect to effect a Securitization by means of the
issuance of certificates of interest therein or notes secured thereby (the “Securities”)
rated by one or more Rating Agencies. In such event and upon request by Lender to seek to effect
such a Securitization, Borrower, at no cost and expense to Borrower shall promptly thereafter
cooperate in all reasonable respects with Lender in the Securitization including, without
limitation, providing such information as may be requested in connection with the preparation of a
private placement memorandum or registration statement required to privately place or publicly
distribute the Securities in a manner which does not conflict with federal or state securities
laws.



Section 7.28. Expenses. Borrower shall reimburse Lender upon receipt of notice for
all reasonable costs and expenses (including reasonable attorneys’ fees and disbursements) incurred
by Lender in connection with (i) the preparation, negotiation, execution and delivery of the Loan
Documents and the consummation of the transactions contemplated thereby (other than, except as
specifically set forth herein, participations, assignments by Lender or a Securitization); (ii)
Borrower’s, its Affiliates’ and Lender’s ongoing performance under and compliance with the Loan
Documents, including confirming compliance with environmental and insurance requirements; (iii)
unless otherwise set forth herein, the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications of or under any Loan
Document and any other documents or matters requested by Lender; (iv) filing and recording of any
Loan Documents; (v) surveys, inspections and appraisals; (vi) enforcing or preserving any rights,
in response to third party claims or the prosecuting or defending of any action or proceeding or
other litigation, in each case against, under or affecting Borrower, Owner, the Loan Documents, the
Collateral, the Premises, or any other security given for the Loan; and (vii) enforcing any
obligations of or collecting any payments due from Borrower, or
Owner under any Loan Document or with respect to the Collateral, the Premises or in connection with
any refinancing or restructuring of the Loan in the nature of a “work-out”, or any insolvency or
bankruptcy proceedings. Any costs and expenses due and payable to Lender hereunder which are not
paid by Borrower within ten (10) days after demand may be paid from any amounts in the Lockbox
Account. The obligations and liabilities of Borrower under this Section shall survive the Maturity
Date and the exercise by Lender of any of its rights or remedies under the Loan Documents.


 


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Section 7.29. Mortgage Loan Defaults.



(a) Without limiting the generality of the other provisions of this Agreement, and
without waiving or releasing Borrower from any of its obligations hereunder, if there shall occur
any Event of Default under the Mortgage Loan Documents (without regard to any other defenses or
offset rights Owner may have against Mortgage Lender), Borrower hereby expressly agrees that Lender
shall have the immediate right, without notice to or demand on Borrower or Owner, but shall be
under no obligation: (i) to pay all or any part of the Mortgage Loan, and any other sums, that are
then due and payable and to perform any act or take any action on behalf of Owner, as may be
appropriate, to cause all of the terms, covenants and conditions of the Mortgage Loan Documents on
the part of Owner to be performed or observed thereunder to be promptly performed or observed; and
(ii) to pay any other amounts and take any other action as Lender, in its sole and absolute
discretion, shall deem advisable to protect or preserve the rights and interests of Lender in the
Loan and/or the Collateral. Lender shall have no obligation to complete any cure or attempted cure
undertaken or commenced by Lender. All sums so paid and the third party costs and expenses
actually incurred by Lender in exercising rights under this Section (including, without limitation,
reasonable attorneys’ and other professional fees), with interest at the Default Rate, for the
period from the date of demand by Lender to Borrower for such payments to the date of payment to
Lender, shall constitute a portion of the Debt, shall be secured by this Agreement and shall be due
and payable to Lender within two (2) Business Days following demand therefor. In the event that
Lender makes any payment in respect of the Mortgage Loan, Lender shall be subrogated to all of the
rights of Mortgage Lender under the Mortgage Loan Documents against the Premises and Owner in
addition to all other rights Lender may have under the Loan Documents or applicable law.



(b) Subject to the rights of tenants, Borrower hereby grants, and shall cause Owner
to grant, Lender and any Person designated by Lender the right to enter upon the Premises at any
time for the purpose of carrying out the rights granted to Lender under this Section 7.29.
Borrower shall not, and shall not cause or permit Owner or any other Person to impede, interfere
with, hinder or delay, any effort or action on the part of Lender to cure any Event of Default
under the Mortgage Loan as permitted by this Section 7.29, or to otherwise protect or preserve
Lender’s interests in the Loan and the Collateral, including the Premises in accordance with the
provisions of this Agreement and the other Loan Documents.



(c) Borrower hereby indemnifies Lender from and against all out-of-pocket
liabilities, obligations, losses, damages, penalties, assessments, actions, or causes of action,
judgments, suits, claims, demands, costs, expenses (including, without limitation, reasonable
attorneys’ and other professional fees, whether or not suit is brought, and settlement costs), and
disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted
against Lender as a result of the foregoing actions described in Section 7.29(a) or (b) other than as a
result of gross negligence or willful misconduct of Lender. Lender shall have no obligation to
Borrower, Owner or any other party to make any such payment or performance.


 


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(d) If Lender shall receive a copy of any notice of default under the Mortgage Loan
Documents sent by Mortgage Lender to Owner, such notice shall constitute full protection to Lender
for any action taken or omitted to be taken by Lender, in good faith, in reliance thereon. As a
material inducement to Lender’s making the Loan, Borrower hereby absolutely and unconditionally
releases and waives all claims against Lender arising out of Lender’s exercise of its rights and
remedies provided in this Section other than claims arising out of the fraud, illegal acts, gross
negligence or willful misconduct of Lender.



Section 7.30. Discussions With Mortgage Lender; Etc. In connection with the exercise
of its rights set forth in the Loan Documents, Lender shall have the right at any time to discuss
the Premises, the Mortgage Loan, the Loan or any other matter directly with Mortgage Lender or
Mortgage Lender’s consultants, agents or representatives without notice to or permission from
Borrower, nor shall Lender have any obligation to disclose such discussions or the contents thereof
with Borrower.



Section 7.31. Independent Approval Rights. If any action, proposed action or other
decision is consented to or approved by Mortgage Lender, such consent or approval shall not be
binding or controlling on Lender. Borrower hereby acknowledges and agrees that (a) the risks of
Mortgage Lender in making the Mortgage Loan are different from the risks of Lender in making the
Loan, (b) in determining whether to grant, deny, withhold or condition any requested consent or
approval Mortgage Lender and Lender may reasonably reach different conclusions, and (c) Lender has
an absolute independent right to grant, deny, withhold or condition any requested consent or
approval based on its own point of view in accordance with the terms hereof. Further, the denial
by Lender of a requested consent or approval in accordance with the Loan Documents shall not create
any liability or other obligation of Lender if the denial of such consent or approval results
directly or indirectly in a default under the Mortgage Loan, and Borrower hereby waives any claim
of liability against Lender arising from any such denial.



Section 7.32. Reinstatement. This Agreement and each other Loan Document shall
continue to be effective or be reinstated, as the case may be, if at any time payment and
performance of the Debt or any part thereof, is, pursuant to applicable law, rescinded or reduced
in amount, or must otherwise be restored or returned by Borrower, whether as a “voidable
preference”, “fraudulent conveyance”, or otherwise, all as though such payment or performance had
not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Debt shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.


 


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Section 7.33. Reallocation of Loan Amounts. Lender, without in any way limiting its
other rights hereunder, in its sole and absolute discretion, shall have the right to reallocate the
amount of the Loan and the Mortgage Loan and/or adjust the interest rate rates thereon provided
that (i) the aggregate principal amount of the Loan and the Mortgage Loan immediately following
such reallocation shall equal the outstanding principal balance of the Loan and the Mortgage Loan
immediately prior to such reallocation, and (ii) the initial weighted average
interest rate of the Note and the note evidencing the Mortgage Loan immediately following such
reallocation shall equal the weighted average interest rate which was applicable to the Note and
the note evidencing the Mortgage Loan immediately prior to such reallocation. Borrower shall
cooperate with all reasonable requests of Lender in order to reallocate the amount of the Loan and
the Mortgage Loan and shall execute and deliver such documents as shall reasonably be required by
Lender in connection therewith, including, without limitation, amendments to the Loan Documents and
the documents evidencing or securing the Mortgage Loan, and endorsements to the Title Policy and
the UCC title insurance policy, all in form and substance reasonably satisfactory to Lender, and
Lender shall pay all costs and expenses in connection with such reallocation pursuant to this
Section, including, without limitation, any additional title insurance and UCC insurance premiums
and any additional mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid by any Person under applicable Legal Requirements currently in effect in connection with
the execution, delivery, recordation, filing, registration, perfection or enforcement of any
amendments of the Loan Documents or the documents evidencing or securing the Mortgage Loan in
connection with the reallocation.



ARTICLE VIII. EXCULPATION




Section 8.01. Exculpation. Notwithstanding anything herein or in any other Loan
Document to the contrary, except as otherwise set forth in this Section 8.01 to the contrary,
Lender shall not enforce the liability and obligation of Borrower and (a) if Borrower is a
partnership, its constituent partners or any of their respective partners, (b) if Borrower is a
trust, its beneficiaries or any of their respective Partners (as hereinafter defined), (c) if
Borrower is a corporation, any of its shareholders, directors, principals, officers or employees,
or (d) if Borrower is a limited liability company, any of its members and their respective legal,
equitable and beneficial owner (the Persons described in the foregoing clauses (a) — (d), as the
case may be, are hereinafter referred to as the “Partners”) to perform and observe the
obligations contained in this Agreement or any of the other Loan Documents by any action or
proceeding wherein a money judgment shall be sought against Borrower or the Partners, except that
Lender may bring a UCC sale, action for specific performance, or other appropriate action or
proceeding (including, without limitation, an action to obtain a deficiency judgment) solely for
the purpose of enabling Lender to realize upon (i) Borrower’s interest in the Collateral and (ii)
any other collateral given to Lender under the Loan Documents (the “Default Collateral”);
provided, however, that any judgment in any such action or proceeding shall be
enforceable against Borrower and the Partners only to the extent of any such Default Collateral.
The provisions of this Section shall not, however, (a) impair the validity of the Debt evidenced by
the Note or in any way affect or impair the lien of this Agreement or any of the other Loan
Documents or the right of Lender to enforce this Agreement following the occurrence of an Event of
Default; (b) impair the right of Lender to name Borrower as a party defendant in any action or suit
for judicial foreclosure and sale under this Agreement; (c) affect the validity or enforceability
of the Note, this Agreement, or any of the other Loan Documents, or impair the right of Lender to
seek a personal judgment against the Guarantor; (d) impair the right of Lender



 


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 to obtain the
appointment of a receiver; (e) impair the right of Lender to
bring suit for a monetary judgment with respect to damages incurred by Lender resulting from fraud or intentional
misrepresentation by Borrower, or any other Person in connection with this Agreement, the Note or
the other Loan Documents, and the foregoing provisions shall not modify, diminish or discharge the
liability of Borrower or the Partners with respect to same; (f) impair the right of Lender to bring
suit for a monetary judgment with respect to Borrower’s misappropriation of tenant security
deposits or Rent, and the foregoing provisions shall not modify, diminish or discharge the
liability of Borrower or the Partners with respect to same; (g) impair the right of Lender to
obtain insurance proceeds due to Lender pursuant to this Agreement; (h) impair the right of Lender
to enforce the provisions of Section 2.02(g) of this Agreement, even after repayment in full by
Borrower of the Debt; (i) prevent or in any way hinder Lender from exercising, or constitute a
defense, or counterclaim, or other basis for relief in respect of the exercise of, any other remedy
against any or all of the collateral securing the Note as provided in the Loan Documents; (j)
impair the right of Lender to bring suit for a monetary judgment with respect to damages incurred
by Lender resulting from any misapplication or conversion of Loss Proceeds (as defined in the
Mortgage), and the foregoing provisions shall not modify, diminish or discharge the liability of
Borrower or the Partners with respect to same; (k) impair the right of Lender to sue for, seek or
demand a deficiency judgment against Borrower solely for the purpose of foreclosing the Premises or
any part thereof, or realizing upon the Default Collateral; provided, however, that
any such deficiency judgment referred to in this clause (k) shall be enforceable against Borrower
and the Partners only to the extent of any of the Default Collateral; (l) impair the ability of
Lender to bring suit for monetary judgment with respect to damages incurred by Lender resulting
from arson or waste to or of the Premises and/or the Collateral or damage to the Premises committed
by Borrower or its Affiliates; (m) impair the right of Lender to bring a suit for a monetary
judgment in the event of the exercise of any right or remedy under any federal, state or local
forfeiture laws resulting in the loss of the lien of this Agreement, or the priority thereof,
against the Collateral; (n) be deemed a waiver of any right which Lender may have under Sections
506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Code to file a claim for the full
amount of the Debt or to require that all collateral shall continue to secure all of the Debt; (o)
impair the right of Lender to bring suit for monetary judgment with respect to damages incurred by
Lender resulting from any losses resulting from any claims, actions or proceedings initiated by
Borrower (or any Affiliate of Borrower) alleging that the relationship of Borrower and Lender is
that of joint venturers, partners, tenants in common, joint tenants or any relationship other than
that of debtor and creditor; (p) impair the right of Lender to bring suit for a monetary judgment
for damages incurred by Lender in the event of a Transfer in violation of the provisions of Section
2.11 hereof, including, without limitation, the failure to obtain Lender’s consent to a Transfer
as, when and to the extent required thereunder; (q) impair the right of Lender to bring suit for a
monetary judgment in the event that Borrower moves its principal place of business or its books and
records relating to the Collateral which are governed by the UCC, or changes its name, its
jurisdiction of organization, type of organization or other legal structure or, if it has one,
organizational identification number, without first giving Lender thirty (30) days prior written
notice or (r) impair the right of Lender to bring suit for a monetary judgment in the event that
Borrower changes its name of otherwise does anything which would make the information set forth in
any UCC Financing Statements relating to the Collateral materially misleading without giving Lender
thirty (30) days prior written notice thereof. The provisions of this Section shall be
inapplicable to Borrower if (a) any proceeding, action, petition or filing under the Bankruptcy



 


57









 






Code, or any similar state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts, shall be filed by,
consented to or acquiesced in by or with respect to Borrower, or if Borrower shall institute any
proceeding for its dissolution or liquidation, or shall make an assignment for the benefit of
creditors or (b) Lender obtains a judgment that Borrower or any Affiliate of Borrower
has, other than in good faith, contested or in any material way interfered with, directly or
indirectly (collectively, a “Contest”) any UCC sale or other material remedy exercised by
Lender upon the occurrence of any Event of Default whether by making any motion, bringing any
counterclaim, claiming any defense, seeking any injunction or other restraint, commencing any
action, or otherwise or (c) Borrower (i) fails to cause Owner to deliver notice of default under
the Ground Lease to Lender or any other Person designated in writing by Lender or (ii) fails to
prevent Owner from amending or modifying the Ground Lease without the prior written consent of
Lender, in which event Lender shall have recourse against all of the assets of Borrower including,
without limitation, any right, title and interest of Borrower in and to the Premises, and any
partnership interests in Borrower (but excluding the other assets of such Partners to the extent
Lender would not have had recourse thereto other than in accordance with the provisions of this
Section).



* * * * *




 


58









 







IN WITNESS WHEREOF, Borrower has duly executed this Agreement the day and year first above
written.



	 	 	 
	Borrower’s Organizational Identification

	 	HENRY HUDSON SENIOR MEZZ LLC,
	Number:
4218604

	 	Borrower






	 	 	 	 	 
	 	 	 
	 	By:  	                                                              /s/ Marc S. Gordon
 	 
	 	 	Name:  	Marc S. Gordon 	 
	 	 	Title:  	Authorized Signatory 	 
	 



 


 









 




EXHIBIT A 




Description of the Premises




 


A-1









 







UNIT LOT 1701




ALL
THAT CERTAIN plot, piece or parcel of land, situate, lying and being in the Borough of
Manhattan, City, County and State of New York, bounded and described as follows:-



BEGINNING at a point on the northerly side of 57th Street, distant 20 feet easterly from the
corner formed by the intersection of the easterly side of Ninth Avenue with the northerly side of
57th Street;



RUNNING THENCE easterly along the said northerly side of 57th Street, 155 feet;



THENCE northerly parallel with Ninth Avenue, 200 feet 10 inches to the southerly side of 58th
Street;



THENCE westerly along the said southerly side of 58th Street, 135 feet to a point distant 40 feet
easterly from the corner formed by the intersection of the southerly side of 58th Street with the
easterly Side of Ninth Avenue;



THENCE southerly parallel with Ninth Avenue and part of the distance through
a party wall, 100 feet 10 inches;



THENCE westerly parallel more or less with 58th Street, 20 feet; and



THENCE southerly and part of the way through another party wall, 100 feet to the northerly side
of 57th Street, the point or place of BEGINNING.



TOGETHER with the benefit of that Final Certificate of Eligibility for Industrial and Commercial
Incentive Benefits made by the Commissioner of Finance of The City of New York to Henry Hudson
Holdings, LLC, dated March 30, 2001 and recorded
December 26, 2001 in Reel 3415 page 573.



 


 









 







UNIT LOT 1702




THE CONDOMINIUM UNIT (hereinafter referred to as the “Unit”) known as Unit 2, also known as
Modified Hotel Unit, in the building (hereinafter referred to as the “Building”) known as 353 West
57th Street Condominium and by the street number 353 West 57th
Street, New York, New York, said
Unit being designated and described in a certain declaration dated April 11, 1985 made by Irving
Sohatz pursuant to Article 9-B of the Real Property Law of the State of New York establishing a
plan for condominium ownership of the Building and the land (hereinafter referred to as the “Land”)
upon which the Building is situate (which Land is more particularly described on Exhibit A) , which
declaration was recorded in the New York County Office of the Register of the City of New York (the
“City Register’s Office”) on April 24, 1985 in Reel 902 page 1 and amended by First Amendment to
Declaration dated January 29, 1993 and recorded May 11, 1993 in Reel 1969 page 2286, further
amended by Amended and Restated Declaration made by Henry Hudson Holdings LLC, Irving Schatz,
Adrienne Wechsler and Cheryl Hirsch dated as of February 12, 1999 and recorded July 16, 1999 in
Reel 2913 page 1753 and Amendment to Amended and Restated Declaration dated as of September 30,
1999 and recorded October 27, 1999 in Reel 2979 page 2159 which declaration, as amended, is
hereinafter referred to as the “Declaration”). Said Unit is also designated as Tax Lot 1702 in
Block 1048 of Section 4 of the Borough of Manhattan on the Tax Map of the Real Property Assessment
Department of the City of New York and on the Floor Plans of the Building, certified by Butler
Rogers Baskett, Architects, on March 27, 1985 and filed in the Real Property Assessment Department
of the City of New York on April 22, 1985 as Condominium Map No. 4326, as amended by Amended Floor
Plans certified by Butler Rogers Baskett, Architects, on December 14, 1992, which Amended Floor
Plans were filed in the Real Property Assessment Department of the
City of New York on May 5, 1993
as Condominium Plan No. 208A and also filed in the New York County Register’s Office on May 11,
1993 as Condominium Map No. 5192.



TOGETHER with an undivided 46.94011% interest in the Common Elements (as such term is defined in
the Declaration).



continued......




 


 









 







UNIT LOT 1704




Terms, covenants and conditions of Lease made by and between Adrienne Schatz, also known as
Adrienne Weohsler, and Cheryl Hirsch, as Landlord, and Henry Hudson Holdings LLC, as Tenant, dated
as of January 1, 1999 as referenced in Memorandum of Lease as of September 30, 1999, and recorded
October 27, 1999 in Reel 2979 page 2172 (the “Unit 1704 Lease”), as amended pursuant to Amendment
to Lease by and between Adrienne Schatz, also known as Adrienne Wechsler and Cheryl Hirsoh,
together as Landlord and Henry Hudson Holdings LLC, as Tenant, dated as of September 30, 1999.



The leasehold estate insured herein covers premises more particularly bounded and described as
follows:



THE
CONDOMINIUM UNIT (hereinafter referred to as the “Unit”) known as Unit 4, also known as Store
Unit in the building (hereinafter referred to as the “Building”) known as 353 West 57th Street
Condominium and by the street number 353 West 57th Street, New York, New York, said unit being
designated and described in a certain declaration dated April 11, 1985 made by Irving Schatz
pursuant to Article 9-B of the Real Property Law of the State of New York establishing a plan for
condominium ownership of the Building and the
land (hereinafter referred to as the “Land”) upon which the Building is situate (which Land is
more particularly described on Exhibit A), which declaration was recorded in the New York County
Office of the Register of the City of New York (the “City Register’s Office”) on April 24, 1985 in
Reel 902 page 1 and amended by First Amendment to Declaration dated January 29, 1993 and recorded
May 11, 1993 in Reel 1969 page 2286, further amended by Amended and Restated Declaration made by
Henry Hudson Holdings LLC, Irving Schatz, Adrienne Wechsler and Cheryl Hirsch dated as of February
12, 1999, recorded July 16, 1999 in Reel 2913 page 1753 and
Amendment to Amended and Restated
Declaration dated as of September 30, 1999 and recorded
October 27, 1999 in Reel 2979 page 2159
which declaration, as amended, is hereinafter referred to as the “Declaration”). Said Unit is also
designated as Tax Lot 1704 in Block 1048 of Section 4 of the
Borough of Manhattan on the Tax Map of
the



continued.....




 


 









 







 Real
Property Assessment Department of the City of New York and on the Floor Plans of the Building,
certified by Butler Rogers Baskett, Architeots, on March 27, 1985 and filed
in the Real Property Assessment Department of the City of New York on April 22, 1985 as
Condominium. Map No. 4326, as amended by Amended Floor Plans certified by Butler Rogers Baskett,
Architects, on December 14, 1992, which Amended Floor Plans were filed in the Real Property
Assessment Department of the City of New York on May 5, 1993 as
Condominium Plan No. 208A and also
filed in the New York County Register’s Office on May 11,
1993 as Condominium Map No. 5192.



TOGETHER with an undivided 0.34577% interest in the Common Elements (as such term is defined in the
Declaration).



continued......



 


 









 





UNIT LOT 1706



Terms, covenants and conditions of Amended and Restated Lease (of Unit Lot 1706) made by and
between Irving Schatz, as Landlord, and Ian Schrager Hotels LLC, as Tenant, dated as of February
11, 1999, as referenced in Amended and Restated Memorandum of Lease dated as of February 12, 1999,
and recorded March 23, 1999 in Reel 2841 page 1872 (the “Unit Lot 1706 Lease”), which lease
amends, restates and supersedes a prior Lease made by and between
Irving Schatz, as Lessor, and
Educational Broadcasting Corporation, as Lessee, dated August 11, 1988, as referenced in
Memorandum of Lease dated September 1, 1988, and recorded
September 30, 1988 in Reel 1472 page
883, as assigned of record.



Assignment and Assumption of Lease made by and between Ian Schrager Hotels LLC (f/k/a West 57th
LLC) , as Assignor, and Henry Hudson Holdings LLC, as Assignee, dated as of February 12, 1999 and
recorded March 23, 1999 in Reel 2841 page 1882.



The leasehold estate insured herein covers premises more particularly bounded and described as
follows:



THE
CONDOMINIUM UNIT (hereinafter referred to as the “Unit”) known as Unit 6, also known as Tenth
Floor Unit in the building (hereinafter referred to as the
“Building”) known as 353 West 57th
Street Condominium and by the street number 353 West 57th Street, New York, New York, said unit
being designated and described in a certain declaration dated April 11, 1985 made by Irving Sohatz
pursuant to Article 9-B of the Real Property Law of the State of New York establishing a plan for
condominium ownership of the Building and the land (hereinafter referred to as the “Land”) upon
which the Building is situate (which Land is more particularly



continued




 


 









 




described on Exhibit A) , which
declaration was recorded in the New York County Office of the
Register of the City of New York (the “City Register’s Office”) on April 24, 1985 in Reel 902 page 1 and amended by First
Amendment to Declaration dated January 29, 1993 and recorded May 11, 1993 in Reel 1969 page 2286,
further amended by Amended and Restated Declaration made by Henry Hudson Holdings LLC, Irving
Schatz, Adrienne Wechsler and Cheryl Hirsch dated as of February 12, 1999 and recorded July 16,
1999 in Reel 2913 page 1753 and Amendment to Amended and Restated Declaration dated as of September
30, 1999, recorded October 27, 1999 in Reel 2979 page 2159 which declaration, as amended, is
hereinafter referred to as the “Declaration”). Said Unit is also designated as Tax Lot 1706 in
Block 1048 of Section 4 of the Borough of Manhattan on the Tax Map of the Real Property Assessment
Department of the City of New York and on the Floor Plans of the Building, certified by Butler
Rogers Baskett, Architects, on March 27, 1985 and filed in the Real Property Assessment Department
of the City of New York on April 22, 1985 as Condominium Map No. 4326, as amended by Amended Floor
Plans certified by Butler Rogers Baskett, Architects, on December 14, 1992, which Amended Floor
Plans were filed in the Real Property Assessment Department of the City of New York on May 5, 1993
as Condominium Plan No. 208A and also filed in the New York County Register’s Office on May 11,
1993 as Condominium Map No. 5192 .



TOGETHER with an undivided 3.89067% interest in the Common Elements (as such term is defined in the
Declaration).



 


 








 





EXHIBIT B




Unpaid Principal Balance of Mortgage Loan: $217,000,000




 


B-1











 





EXHIBIT C




CERTAIN DEFINED TERMS





“Accounts” shall have the meaning set forth in Section 2.27.




“ACH” shall have the meaning set forth in Section 2.27.



“Affiliate” of any specified Person shall mean any other Person directly or indirectly
Controlling or Controlled by or under direct or indirect common Control with such specified Person.




“Agreement” shall have the meaning set forth in the recitals hereto.




“Bankruptcy Code” shall mean 11 U.S.C. §101 et seq., as amended from time to time.




“Borrower” shall mean Borrower named herein and its successors and assigns.



“Business Day” shall mean any day other than (a) a Saturday or Sunday, or (b) a day on
which banking and savings and loan institutions in the State of New York or the State of North
Carolina are authorized or obligated by law or executive order to be closed, or at any time during
which the Loan is an asset of a Securitization, the cities, states and/or commonwealths used in the
comparable definition of “Business Day” in the Securitization documents.




“Closing Date” shall mean the date of the Note.



“Code” shall mean the Internal Revenue Code of 1986, as amended and as it may be
further amended from time to time, any successor statutes thereto, and applicable U.S. Department
of Treasury regulations issued pursuant thereto.



“Collateral” shall mean (a) all Equity Interests, (b) all additional Equity Interests
acquired by Borrower, including all rights, options, subscriptions and/or warrants acquired by
Borrower with respect to additional Equity Interests in any Pledged Entity, (c) all rights to
payment of all monetary obligations owed to Borrower, if any, by a Pledged Entity, (d) the Lockbox
Account, including any and all funds from time to time credited to the Lockbox Account; (e) the
Accounts and all cash, checks, drafts, securities entitlements, securities, securities accounts,
funds or deposit accounts maintained or deposited with Lender and other investment property,
certificates, instruments and other property, including, without limitation, all deposits and/or
wire transfers from time to time deposited or held in, credited to or made to any of the foregoing;
(f) all interest, dividends, cash, instruments, securities, securities entitlements and other
investment property, and other property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing or purchased with funds from the
Accounts; (g) all of Borrower’s rights in the Rate Cap Agreement; (h) all rights of Borrower in, to
and under Owner’s certificate of formation, limited liability company agreement and all other
organizational documents of Owner (collectively, the “Owner Organizational Documents”), or
any other agreement or instrument relating to the Pledged Interests, including, without limitation,
(i) all rights of Borrower to receive moneys due and to become due under or pursuant to Owner
Organizational Documents, (ii) all rights of Borrower to receive proceeds of
any insurance, indemnity, warranty or guaranty with respect to Owner Organizational Documents,
(iii) all claims of Borrower for damages arising out of or for breach of or default under Owner
Organizational Documents, and (iv) any right of Borrower to perform thereunder and to compel
performance and otherwise exercise all rights and remedies thereunder; and (i) all Proceeds.


 


 









 





“Condemnation Proceeds” shall mean all of the proceeds in respect of any Taking or
purchase in lieu thereof.



“Contractual Obligation” shall mean, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or undertaking to which such Person is a
party or by which it or any of the property owned by it is bound.



“Control” means, when used with respect to any specific Person, the
possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person whether through ownership of voting securities,
beneficial interests, by contract or otherwise. The definition is to be construed to
apply equally to variations of the word “Control” including “Controlled,” “Controlling” or
“Controlled by.”



“Corporations” shall mean the corporations identified on Schedule 1 hereto,
and each being a “Corporation”.




“Counterparty” shall have the meaning set forth in Section 2.27.




“Debt” shall have the meaning set forth in the recitals hereto.



“Default” shall mean any Event of Default or event which would constitute an Event of
Default if all requirements in connection therewith for the giving of notice, the lapse of time,
and the happening of any further condition, event or act, had been satisfied.



“Default Rate” shall mean the lesser of (a) the highest rate allowable at law and (b)
five percent (5%) above the interest rate set forth in the Note.



“Default Rate Interest” shall mean, to the extent the Default Rate becomes applicable,
interest in excess of the interest which would have accrued on (a) the principal amount of the Loan
which is outstanding from time to time and (b) any accrued but unpaid interest, if the Default Rate
was not applicable.



“Distributions” shall mean all dividends, distributions, liquidation proceeds, cash,
profits, instruments and other property and economic benefits to which Borrower is entitled with
respect to any one or more Equity Interests, whether or not received by or otherwise distributed to
Borrower, in each case whether cash or non-cash and whether such dividends, distributions,
liquidation proceeds, cash, profits, instruments and other property and economic benefits are paid
or distributed by the Pledged Entities in respect of operating profits, sales, exchanges,
refinancings, condemnations or insured losses of the relevant Pledged Entity’s assets, the
liquidation of such Pledge Entity’s assets and affairs, management fees, guaranteed payments,
repayment of loans, or reimbursement of expenses or otherwise in respect of or in exchange for any
or all of the Equity Interests.


 


 









 






“DTC” shall have the meaning set forth in Section 2.01.



“Eligible Account” shall mean a segregated account which is either (a) an account or
accounts maintained with a depository institution or trust company the long term unsecured debt
obligations of which are rated by each of the Rating Agencies (or, if not rated by Fitch, Inc.
(“Fitch”), otherwise acceptable to Fitch, as confirmed in writing that such account would
not, in and of itself, result in a downgrade, qualification or withdrawal of the then current
ratings assigned to any certificates issued in connection with a Securitization) in its highest
rating category at all times by each of the Rating Agencies (or, if not rated by Fitch, otherwise
acceptable to Fitch, as confirmed in writing that such account would not, in and of itself, result
in a downgrade, qualification or withdrawal of the then current ratings assigned to any
certificates issued in connection with a Securitization) or, if the funds in such account are to be
held in such account for less than thirty (30) days, the short term obligations of which are rated
by each of the Rating Agencies (or, if not rated by Fitch, otherwise acceptable to Fitch, as
confirmed in writing that such account would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any certificates issued in
connection with a Securitization) in its highest rating category at all times or (b) a segregated
trust account or accounts maintained with a federal or state chartered depository institution or
trust company acting in its fiduciary capacity which, in the case of a state chartered depository
institution is subject to regulations substantially similar to 12 C.F.R. § 9.10(b), having in
either case a combined capital and surplus of at least $100,000,000 and subject to supervision or
examination by federal and state authority, or otherwise acceptable (as evidenced by a written
confirmation from each Rating Agency that such account would not, in and of itself, cause a
downgrade, qualification or withdrawal of the then current ratings assigned to any certificates
issued in connection with a Securitization) to each Rating Agency, which may be an account
maintained by Lender or its agents. Eligible Accounts may bear interest. The title of each
Eligible Account shall indicate that the funds held therein are held in trust for the uses and
purposes set forth herein.



“Equity Interests” shall mean the LLC Interests, the Partnership Interests and the
Pledged Interests.



“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder. Section references to ERISA are to
ERISA, as in effect at the date of this Agreement and, as of the relevant date, an subsequent
provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.



“ERISA Affiliate” shall mean any corporation or trade or business that is a member of
any group of organizations (a) described in Section 414(b) or (c) of the Code of which Borrower is
a member and (b) solely for purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which Borrower is a member.



“Event of Default” shall have the meaning set forth in Section 3.01.


 


 









 





“Fiscal Year” shall mean the twelve (12) month period commencing on January 1 and
ending on December 31 during each year of the term of this Agreement, or such other fiscal year of
Borrower as Borrower may select from time to time with the prior written consent of Lender, which
consent shall not be unreasonably withheld.



“General Partner” shall mean, if Borrower is a partnership, each general partner of
Borrower and, if Borrower is a limited liability company, each managing member of Borrower and in
each case, if applicable, each general partner or managing member of such general partner or
managing member. In the event that Borrower or any General Partner is a single member limited
liability company, the term “General Partner” shall include such single member.



“Governmental Authority” shall mean, with respect to any Person, any federal or State
government or other political subdivision thereof and any entity, including any regulatory or
administrative authority or court, exercising executive, legislative, judicial, regulatory or
administrative or quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal, in each case having jurisdiction over such applicable Person or such
Person’s property and any stock exchange on which shares of capital stock of such Person are listed
or admitted for trading.




“Guarantor” shall mean Morgans Group LLC, a Delaware limited liability company.



“Independent” shall mean, when used with respect to any Person, a Person who (a) is in
fact independent, (b) does not have any direct financial interest or any material indirect
financial interest in Borrower, or in any Affiliate of Borrower or any constituent partner,
shareholder, member or beneficiary of Borrower, (c) is not connected with Borrower or any Affiliate
of Borrower or any constituent partner, shareholder, member or beneficiary of Borrower as an
officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar
functions and (d) is not a member of the immediate family of a Person defined in (b) or (c) above.
Whenever it is herein provided that any Independent Person’s opinion or certificate shall be
provided, such opinion or certificate shall state that the Person executing the same has read this
definition and is Independent within the meaning hereof.



“Insurance Proceeds” shall mean all of the proceeds received under the insurance
policies required to be maintained by Owner pursuant to Article III of the Mortgage.



“Interest Shortfall” shall mean any shortfall in the amount of interest required to be
paid with respect to the Loan on any Payment Date.




“Late Charge” shall have the meaning set forth in Section 3.11 hereof.



“Lease” means all leases and other agreements or arrangements affecting the use,
enjoyment or occupancy of all or any portion of the Premises now in effect or hereafter entered
into (including, without limitation, all lettings, subleases, licenses, concessions, tenancies and
other occupancy agreements covering or encumbering all or any portion of the Premises), whether
before or after the filing by or against Owner of any petition for relief under the Bankruptcy
Code, together with any guarantees, supplements, amendments, modifications, extensions and renewals
of the same, and all additional remainders, reversions, and other rights and estates appurtenant
thereto.


 


 









 





“Legal Requirement” shall mean as to any Person, the certificate of incorporation,
by-laws, certificate of limited partnership, agreement of limited partnership or other
organizational or governing documents of such Person, and any law, statute, order, ordinance,
judgment, decree, injunction, treaty, rule or regulation or determination of an arbitrator or a
court or other Governmental Authority and all covenants, agreements, restrictions and encumbrances
contained in any instruments, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.




“Lender” shall mean Lender named herein and its successors and assigns.




“LIBOR Rate” shall have the meaning set forth in the Note.



“LLC Interests” shall mean, with respect to Borrower, all membership, equity or
ownership and/or other interests now or hereafter owned by Borrower in the LLCs, and including all
of Borrower’s right, title and interest in and to: (a) any and all now existing and hereafter
acquired membership, equity or ownership interest of Borrower in the LLCs, whether in capital,
profits or otherwise; (b) any and all now existing and hereafter arising rights of Borrower to
receive Distributions or payments from the LLCs, whether in cash or in kind and whether such
Distributions or payments are on account of Borrower’s interest as owner of a membership, equity or
ownership interest of the LLCs or as a creditor in the LLCs or otherwise, and all other economic
rights and interests of any nature of Borrower in the LLCs; (c) any and all now existing and
hereafter acquired management and voting rights of Borrower of, in, or with respect to the LLCs,
whether as an owner of a membership, equity or ownership interest in the LLCs or otherwise, and
whether provided for under the Operating Agreements and/or applicable law, and all other rights of
and benefits to Borrower of any nature arising or accruing under the Operating Agreements; (d) any
and all now existing and hereafter acquired rights of Borrower to any specific property owned by
the LLCs; (e) if the LLC Interests are evidenced in certificate form, the LLC Interests shall
include all such certificates, delivered to Lender accompanied by Powers duly executed in blank;
and (f) all Proceeds of the foregoing Collateral.



“LLCs” shall mean the limited liability companies identified on Schedule 1
hereto, and each being a “LLC”.




“Loan” shall have the meaning set forth in the recitals hereto.




“Loan Documents” shall have the meaning set forth in the recitals hereto.



“Loan Year” shall mean each 365 day period (or 366 day period if the month of February
in a leap year is included) commencing on the first day of the month following the Closing Date
(provided, however, that the first Loan Year shall also include the period from the Closing Date to
the end of the month in which the Closing Date occurs).



“Lockbox Account” shall mean account number 5000000145012 established with Wachovia
Bank, National Association in the name “Wachovia Bank, National Association, as secured party of
Henry Hudson Senior Mezz”.



“Lockbox Agreement” shall mean that certain mezzanine lockbox agreement dated as of
the date hereof between Borrower, Lender and Wachovia Bank, National Association.


 


 









 





“Material Adverse Effect” shall mean any event or condition that has a material
adverse effect on (a) the Collateral or the Premises, (b) the business, prospects, profits,
management, operations or condition (financial or otherwise) of Borrower or Owner, (c) the
enforceability, validity, perfection or priority of the lien of any Loan Document or (d) the
ability of Borrower to perform any obligations under any Loan Document.



“Maturity” shall mean the Maturity Date set forth in the Note or such other date
pursuant to the Loan Documents on which the final payment of principal, and premium, if any, on the
Note becomes due and payable as therein or herein provided, whether at stated maturity or by
declaration of acceleration, or otherwise.




“Maturity Date” shall have the meaning set forth in the Note.




“Mortgage” shall have the meaning set forth in the recitals hereto.




“Mortgage Lender” shall have the meaning set forth in the recitals hereto.




“Mortgage Loan” shall have the meaning set forth in the recitals hereto.




“Mortgage Note” shall have the meaning set forth in the recitals hereto.



“Mortgage Securitization” shall mean a public or private offering of securities by
Mortgage Lender or any of its Affiliates or their respective successors and assigns which are
collateralized, in whole or in part, by the Mortgage Loan.



“Multiemployer Plan” shall mean a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been, or were required to have been, made by Borrower,
Guarantor or any ERISA Affiliate and which is covered by Title IV of ERISA.



“Net Proceeds” shall mean the excess of (a)(i) the purchase price actually received by
Lender with respect to the Collateral as a result of the exercise by Lender of its rights, powers,
privileges and other remedies after the occurrence of an Event of Default, or (ii) in the event
that Lender (or Lender’s nominee) is the purchaser of the Collateral by credit bid, then the amount
of such credit bid, in either case, over (b) all costs and expenses, including, without limitation,
all attorneys’ fees and disbursements and any brokerage fees, if applicable, incurred by Lender in
connection with the exercise of such remedies, including the sale of the Collateral after the
acquiring by Lender of the Collateral.




“Note” shall have the meaning set forth in the recitals hereto.



“OFAC List” shall mean the list of specially designated nationals and blocked persons
subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of
Foreign Assets Control and accessible through the internet website www.treas.gov/ofac/t11sdn.pdf.



“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which
is signed on behalf of Borrower by an authorized representative of Borrower which states that the
items set forth in such certificate are true, accurate and complete in all respects.


 


 









 





“Operating Agreements” shall mean all operating agreements and articles of
organization, certificates of formation or other formation documents and all other agreements,
certificates and other documents which govern the existence, operation and ownership of any LLC, as
the same are in effect as of the date hereof and as the same hereafter may be modified from time to
time.



“Organizational Documents” shall mean (i) all articles or certificate of incorporation
(including any amendments thereto or restatements thereof), bylaws and any certificate or statement
of designation of any Corporation, (ii) the Operating Agreements and (iii) the Partnership
Agreements.




“Owner” shall have the meaning set for in the recitals hereto.



“Partnership Agreements” shall mean any and all partnership agreements, together with
all agreements, certificates and other documents which govern the existence, operation and
ownership of any Partnership.



“Partnership Interests” shall mean all partnership, equity or ownership and/or other
interests now or hereafter owned by Borrower in the Partnerships, and including all of Borrower’s
right, title and interest in and to: (a) any and all now existing and hereafter acquired
membership, equity or ownership interest of Borrower in the Partnerships whether in capital,
profits or otherwise; (b) any and all now existing and hereafter arising rights of Borrower to
receive Distributions or payments from the Partnerships, whether in cash or in kind and whether
such Distributions or payments are on account of Borrower’s interest as an owner of a partnership,
equity or ownership interest in the Partnerships or as a creditor of the Partnerships or otherwise,
and all other economic rights and interests of any nature of Borrower in the Partnerships; (c) any
and all now existing and hereafter acquired management and voting rights of Borrower of, in, or
with respect to the Partnerships, whether as an owner of a partnership, equity or ownership
interest in the Partnerships or otherwise, and whether provided for under the Partnership
Agreements and/or applicable law, and all other rights of and benefits to Borrower of any nature
arising or accruing under the Partnership Agreements; (d) any and all now existing and hereafter
acquired rights of Borrower to any specific property owned by the Partnerships; (e) if the
Partnership Interests are evidenced in certificate form, the Partnership Interests shall include
all such certificates, delivered to Lender accompanied by Powers duly executed in blank; and (f)
all Proceeds of the foregoing.



“Partnerships” shall mean the partnerships identified on Schedule 1 attached
hereto, and each being a “Partnership”.



“PBGC” shall mean the Pension Benefit Guaranty Corporation established under ERISA, or
any successor thereto.



“Person” shall mean any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any fiduciary acting in
such capacity on behalf of any of the foregoing.


 


 









 





“Plan” shall mean an employee benefit or other plan established or maintained by
Borrower or any ERISA Affiliate during the five-year period ended prior to the date of this
Agreement or to which Borrower or any ERISA Affiliate makes, is obligated to make or has, within
the five year period ended prior to the date of this Agreement, been required to make contributions
(whether or not covered by Title IV of ERISA or Section 302 of ERISA or Section 401(a) or 412 of
the Code), other than a Multiemployer Plan.




“Pledged Entities” shall mean the Corporations, the LLCs and the Partnerships.



“Pledged Interests” shall mean with respect to Borrower, (a) all shares of capital
stock of the Corporations, now owned or hereafter acquired by Borrower, and the certificates
representing the shares of such capital stock and any interest of Borrower in the entries on the
books of any securities intermediary pertaining to such shares (such now-owned shares being
identified on Schedule 1 attached hereto), and all options and warrants for the purchase of
shares of the stock of the Corporations now or hereafter held in the name of Borrower, (b) all
certificated LLC Interests or Partnership Interests, now owned or hereafter acquired by Borrower,
and the certificates representing such interests and any interest of Borrower in the entries on the
books of any securities intermediary pertaining to such certificated interests (such now-owned
certificated interests being identified on Schedule 1 attached hereto), and all options and
warrants for the purchase of certificated interests in such LLCs or Partnership now or hereafter
held in the name of Borrower, (c) all additional shares of stock or certificated interests of the
Corporations, LLCs, or Partnerships from time to time acquired by Borrower in any manner, and the
certificates representing such additional shares and any interest of Borrower in the entries on the
books of any securities intermediary pertaining to such shares and interests, and all securities
convertible into and options, warrants, dividends, cash, instruments and other rights and options
from time to time received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares, (including all rights to request or cause the issuer thereof to register
any or all of the Collateral under federal and state securities laws to the maximum extent possible
under any agreement for such registration rights, and all put rights, tag-along rights or other
rights pertaining to the sale or other transfer of such Collateral, together in each case with all
rights under any agreements, articles or certificates of incorporation or otherwise pertaining to
such rights; and (d) all voting rights and rights to cash and non-cash dividends, securities,
securities entitlements and other investment property, instruments and other property from time to
time received, receivable or otherwise distributed in respect of, or in exchange for, any or all of
the foregoing Collateral, and (e) all Proceeds of the foregoing Collateral.




“Powers” shall mean transfer powers in the form of Schedule 4 attached hereto.




“Premises” shall have the meaning set forth in the recitals hereto.



“Principal Amount” shall mean the Loan Amount as such amount may be reduced
from time to time pursuant to the terms of this Agreement, the Note or the other Loan
Documents.


 


 









 





“Proceeds” shall mean (a) all “proceeds” (as such term is defined in the UCC) and
“products” (as such term is defined in the UCC) with respect to the Collateral and (b) includes,
without limitation: whatever is receivable or received when Collateral is sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary; all
rights to payment, including return premiums, with respect to any insurance relating thereto; all
interest, dividends and other property receivable or received on account of the Collateral or
proceeds thereof, (including all Distributions or other income from the Equity Interests, all
collections thereon or all Distributions with respect thereto); and proceeds of any indemnity or
guaranty payable to Borrower or Lender from time to time with respect to any Collateral.



“Prohibited Person” shall mean any Person identified on the OFAC List or any other
Person with whom a U.S. Person may not conduct business or transactions by prohibition of Federal
law or Executive Order of the President of the United States of America.



“Rate Cap Agreement” shall mean that certain interest rate protection agreement
(together with the confirmation and schedules relating thereto) with a notional amount which shall
not at any time be less than the Principal Amount and a LIBOR strike price equal to seven percent
(7%) entered into by Borrower in accordance with the terms hereof or of the other Loan Documents
and any similar interest rate cap or collar agreements subsequently entered into in replacement or
substitution therefor by Borrower with respect to the Loan.



“Rating Agency” shall mean each of Standard & Poor’s Ratings Services, Inc., a
division of The McGraw-Hill Company, Inc. (“Standard & Poor’s”), Fitch, Inc. and Moody’s
Investors Service, Inc. (“Moody’s”) and any successor to any of them; provided, however,
that at any time after a Securitization, “Rating Agency” shall mean those of the foregoing
rating agencies that from time to time rate the securities issued in connection with such
Securitization.




“Register” shall have the meaning set forth in Section 7.27(a).




“Remaining Rents” shall have the meaning set forth in Section 2.27.




“Securities Act” shall have the meaning set forth in Section 3.02(d).



“Securitization” shall mean a public or private offering of securities by Lender or
any of its Affiliates or their respective successors and assigns which are collateralized, in whole
or in part, by this Agreement.



“Single Purpose Entity” shall mean a corporation, partnership, joint venture, limited
liability company, trust or unincorporated association, which is formed or organized solely for the
purpose of holding, directly, an ownership interest in the Collateral, does not engage in any
business unrelated to the Collateral, does not have any assets other than those related to its
interest in the Collateral or any indebtedness other than as permitted by this Agreement or the
other Loan Documents, has its own separate books and records and has its own accounts, in each case
which are separate and apart from the books and records and accounts of any other Person, holds
itself out as being a Person separate and apart from any other Person and which otherwise satisfies
the criteria of the Rating Agency for a special-purpose bankruptcy-remote entity.


 


 









 





“Solvent” shall mean, as to any Person, that (a) the sum of the assets of such Person,
at a fair valuation, exceeds its liabilities, including contingent liabilities, (b) such Person has
sufficient capital with which to conduct its business as presently conducted and as proposed to be
conducted and (c) such Person has not incurred debts, and does not intend to incur debts, beyond
its ability to pay such debts as they mature. For purposes of this definition, “debt”
means any liability on a claim, and “claim” means (a) a right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured, or (b) a right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed in accordance with GAAP at the amount which, in light of all the
facts and circumstances existing at the time, represents the amount which can reasonably be
expected to become an actual or matured liability.



“Spread Maintenance Premium” shall mean (a) the amount of the prepayment, multiplied
by (b) the LIBOR Margin (as defined in the Note) multiplied by (c) a fraction, the numerator of
which is the number of full and partial months from such prepayment date through the end of the
first (1st) Loan Year and the denominator of which is 12.




“Substitute CMA Agreement” shall have the meaning set forth in Section 2.27.



“Transfer” shall mean any conveying, assigning, selling, mortgaging, encumbering,
pledging, hypothecating, granting of a security interest in, granting of options with respect to or
other disposition (directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise and whether or not for consideration or of record) of all or any portion of any legal or
beneficial interest in the Collateral, Borrower, Owner, the Premises or any other portion of the
Property (as defined in the Mortgage), provided that transfers of direct or indirect interests in
Borrower that, together with all other direct or indirect interests in Borrower previously
transferred (but without counting more than once one or more transfers of such interests),
aggregate 49% or less of the membership interest in Borrower (such that any Person who, as of the
Closing Date, did not own, directly or indirectly, 49% or more of the membership interest in
Borrower, will not subsequent to such transfer own, directly or indirectly, 49% or more of the
membership interest in Borrower) will not constitute a Transfer; provided, further, however,
notwithstanding the foregoing or anything to the contrary contained in any other Loan Document,
“Transfer” shall not include (a) transfers of publicly traded stock on a national stock exchange or
on the NASDAQ Stock Market in the normal course of business and not in connection with a tender
offer or a sale of Morgans Hotel Group Co. or substantially all of the assets of such Person or (b)
pledges (but not the transfer of any direct or indirect interest in Borrower in connection with the
realization of such pledged interests) of direct or indirect interests in Borrower to Qualified
Transferees in connection with a financing secured by pledges of direct or indirect interests in
all or substantially all of the assets of Morgans Group LLC, provided that the Net Operating Income
at the time of the origination of the financing constitutes ten percent (10%) or less of the net
operating income of the assets with respect to which the pledged interests which secure such debt
relate or (c) any Transfer which does not result in (i) a change of Control of Borrower (it being
acknowledged that any holder of more than forty percent of the direct or indirect interest in
Borrower may have veto rights over major decisions which are customary in joint venture agreements
between two fifty percent owners of a Person and the same shall not constitute a change of Control)
or (ii) a Transfer of more than 49% of any direct or indirect interest in Borrower.


 


 









 





“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if perfection or the effect of perfection or non-perfection or
the priority of any security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial
Code as in effect from time to time in such other jurisdiction for purposes of the provisions
hereof relating to such perfection, effect of perfection or non-perfection or priority.



“Unscheduled Payments” shall mean insurance proceeds that have been applied to the
repayment of the Debt, any funds representing a voluntary or involuntary principal prepayment and
proceeds of any foreclosure action or UCC sale.



“Welfare Plan” shall mean an employee welfare benefit plan as defined in Section 3(1)
of ERISA established or maintained by Borrower, Guarantor or any ERISA Affiliate or that covers any
current or former employee of Borrower, Guarantor or any ERISA Affiliate.




 


 











 




Schedule 1 




Corporations, Limited Liability Corporations and Partnerships




Henry Hudson Holdings LLC, a Delaware limited liability company




Hudson
Pledgor LLC, a Delaware limited liability company




Hudson Managing Member LLC, a Delaware limited liability company



 


 









 





Schedule 2 




Ownership Chart



 


 









 





Schedule 3 




Intentionally Omitted.



 


 









 





Schedule 4 




Stock Power




A transfer power in form and substance acceptable to Lender.




 


 









 







CONSENT AND WAIVER




As a material inducement for Lender to enter into the Loan and Security Agreement (“Loan
Agreement”) dated October 6, 2006 between HENRY HUDSON SENIOR MEZZ LLC (“Borrower”) and WACHOVIA
BANK, NATIONAL ASSOCIATION (“Lender”), and for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the undersigned, as of the 6th day of October, 2006, hereby
consents to the pledge of the Collateral contained in the Loan Agreement and ratifies all
encumbrances and terms contained therein.



The undersigned agrees that, by acceptance of the Loan Agreement, Lender assumes no
obligations with respect to the Pledged Entities or to the constituent members, partners, or
shareholders in the Pledged Entities and, without the prior written consent of Lender, the
undersigned shall not: (a) terminate or materially amend or modify the Organizational Documents of
the Pledged Entities or consent thereto; or (b) take any action that would operate to dilute the
interest of Borrower in the Pledged Entities.



The undersigned agrees that, upon written notice from Lender stating that an Event of Default
has occurred under the Loan Agreement, all Distributions, dividends, or other sums payable to
Borrower in connection with the Pledged Entities shall be made payable to and delivered to Lender.
The undersigned further agrees that, upon written notice from Lender that it has foreclosed the
Loan Agreement following an Event of Default, Borrower shall be removed as a manager, managing
member or general partner in the Pledged Entity, as applicable, and replaced with the assignee
designated in such notice, which assignee shall be Lender or its nominee. In connection therewith,
the undersigned agrees to request (and use reasonable efforts to ensure) that Lender is provided
with a written statement of Borrower’s defaults under the Organizational Documents and agrees that
Lender be entitled to rely on such statement in determining whether to become a substitute member,
shareholder or partner in the applicable Pledged Entity. If Lender so requests, the undersigned
covenants and agrees to consent to the execution of an amendment to the Organizational Documents to
reflect any such assignee’s substitution in place of Borrower, as applicable.



The undersigned further consents and agrees to (a) Borrower’s assignment to Lender for
security purposes, of Borrower’s Equity Interests, (b) any foreclosure and/or subsequent sale by
Lender or its nominee of its rights with respect to such Equity Interests and the substitution of
Lender or nominee of its rights with respect to such Equity Interests, (c) the exercise of any
remedy by Lender or its nominee under the Loan Agreement and (d) notwithstanding anything to the
contrary contained in the Organizational Documents of the Pledged Entities, Lender, its nominee or
any third-party purchaser at a foreclosure sale becoming a member, partner or shareholder, or a
substitute manager, managing member or general partner, as applicable, in a Pledged Entity, with
all of the rights enjoyed by Borrower prior to such foreclosure. Any such foreclosure will not
require any further consent of the undersigned or any other member, shareholder, or partner in the
applicable Pledged Entity and will not cause the dissolution of any LLC or Partnership.


 


 









 





The undersigned agrees that neither the execution and delivery of the Loan Agreement, the
enforcement by Lender of any of its rights thereunder, nor the transfer (or agreement to transfer)
by Lender of any of its rights in the Pledged Entities or under the Loan Agreement shall
constitute a default under the Organizational Documents, and the undersigned expressly waives any
rights it may have under the Organizational Documents as a result of the foregoing. The undersigned
hereby waives any and all rights under the Organizational Documents which, whether exercised by the
undersigned or not, would prevent, inhibit or interfere with the granting of a security interest in
the Collateral to Lender, the foreclosure of such security interest in the Collateral by Lender or
the full realization by Lender of any of its other rights under the Loan Agreement.



The undersigned acknowledges that Lender is materially relying on the undersigned’s execution
of this Consent and Waiver in entering into the Loan Agreement and the other Loan Documents.



All capitalized terms not otherwise defined herein shall have the meaning set forth in the
Loan Agreement.



IN WITNESS WHEREOF, the undersigned has duly executed this consent and waiver as of this
6th day of October, 2006.



	 	 	 	 	 
	 	HENRY HUDSON HOLDINGS LLC, a Delaware 

limited liability company, Borrower

 	 
	 	By:  	/s/ Marc S. Gordon	 
	 	 	Name:  	Marc S. Gordon	 
	 	 	Title:  	Authorized Signatory