Exhibit
10.33


 




 





CREDIT
AGREEMENT


 


 


dated
as of


 


February
17, 2006,


 


among


 


MORGANS
HOTEL GROUP CO.,


 


MORGANS
GROUP LLC,


as
Borrower,


 


The
Lenders Party Hereto,


 


CITICORP
NORTH AMERICA, INC.,

as Administrative Agent,


 


and


 


MORGAN STANLEY SENIOR FUNDING, INC.

and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, 

as Joint Lead Arrangers and Co-Syndication Agents











MORGAN STANLEY SENIOR FUNDING, INC.,

MERRILL LYNCH, PIERCE, FENNER & SMITH

INCORPORATED AND BANC OF AMERICA SECURITIES LLC

as Joint Bookrunners



BANK OF AMERICA N.A.

as Documentation Agent


 




 





 


[CS&M
Ref. 8669-117]


 

















 


TABLE
OF CONTENTS


 


	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  Definitions

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Defined Terms

  	
  1

  
	
  SECTION 1.02.

  	
  Classification of Loans
  and Borrowings

  	
  22

  
	
  SECTION 1.03.

  	
  Terms Generally

  	
  23

  
	
  SECTION 1.04.

  	
  Accounting Terms; GAAP

  	
  23

  
	
  SECTION 1.05.

  	
  Pro Forma Calculations

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  
	
  The Credits

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Commitments

  	
  24

  
	
  SECTION 2.02.

  	
  Loans and Borrowings

  	
  24

  
	
  SECTION 2.03.

  	
  Requests for Borrowings

  	
  24

  
	
  SECTION 2.04.

  	
  Funding of Borrowings

  	
  25

  
	
  SECTION 2.05.

  	
  Interest Elections

  	
  26

  
	
  SECTION 2.06.

  	
  Termination and Reduction
  of Commitments

  	
  27

  
	
  SECTION 2.07.

  	
  Repayment of Loans;
  Evidence of Debt

  	
  28

  
	
  SECTION 2.08.

  	
  Prepayment of Loans

  	
  28

  
	
  SECTION 2.09.

  	
  Fees

  	
  29

  
	
  SECTION 2.10.

  	
  Interest

  	
  30

  
	
  SECTION 2.11.

  	
  Alternate Rate of Interest

  	
  30

  
	
  SECTION 2.12.

  	
  Increased Costs

  	
  31

  
	
  SECTION 2.13.

  	
  Break Funding Payments

  	
  32

  
	
  SECTION 2.14.

  	
  Taxes

  	
  32

  
	
  SECTION 2.15.

  	
  Payments Generally; Pro
  Rata Treatment; Sharing of Setoffs

  	
  36

  
	
  SECTION 2.16.

  	
  Mitigation Obligations;
  Replacement of Lenders

  	
  37

  
	
  SECTION 2.17.

  	
  Incremental Extensions of
  Credit

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  Representations and
  Warranties

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Organization; Powers

  	
  39

  
	
  SECTION 3.02.

  	
  Authorization;
  Enforceability

  	
  40

  
	
  SECTION 3.03.

  	
  Governmental Approvals; No
  Conflicts

  	
  40

  
	
  SECTION 3.04.

  	
  Financial Condition; No
  Material Adverse Change

  	
  40

  
	
  SECTION 3.05.

  	
  Properties

  	
  41

  
	
  SECTION 3.06.

  	
  Litigation and
  Environmental Matters

  	
  41

  
	
  SECTION 3.07.

  	
  Compliance with Laws and
  Agreements

  	
  42

  
	
  SECTION 3.08.

  	
  Investment and Holding Company
  Status

  	
  42

  



 


2

















 


	
  SECTION 3.09.

  	
  Taxes

  	
  42

  
	
  SECTION 3.10.

  	
  ERISA

  	
  42

  
	
  SECTION 3.11.

  	
  Disclosure

  	
  42

  
	
  SECTION 3.12.

  	
  Subsidiaries

  	
  43

  
	
  SECTION 3.13.

  	
  Insurance

  	
  43

  
	
  SECTION 3.14.

  	
  Labor Matters

  	
  43

  
	
  SECTION 3.15.

  	
  Solvency

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  
	
  Conditions

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Effective Date

  	
  44

  
	
  SECTION 4.02.

  	
  Each Credit Event

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  
	
  Affirmative Covenants

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Financial Statements and
  Other Information

  	
  47

  
	
  SECTION 5.02.

  	
  Notices of Material Events

  	
  48

  
	
  SECTION 5.03.

  	
  Information Regarding
  Collateral

  	
  49

  
	
  SECTION 5.04.

  	
  Existence; Conduct of
  Business

  	
  49

  
	
  SECTION 5.05.

  	
  Payment of Obligations

  	
  50

  
	
  SECTION 5.06.

  	
  Maintenance of Properties

  	
  50

  
	
  SECTION 5.07.

  	
  Insurance

  	
  50

  
	
  SECTION 5.08.

  	
  Casualty and Condemnation

  	
  50

  
	
  SECTION 5.09.

  	
  Books and Records;
  Inspection and Audit Rights

  	
  50

  
	
  SECTION 5.10.

  	
  Compliance with Laws

  	
  50

  
	
  SECTION 5.11.

  	
  Use of Proceeds

  	
  51

  
	
  SECTION 5.12.

  	
  Additional Subsidiaries

  	
  51

  
	
  SECTION 5.13.

  	
  Further Assurances

  	
  51

  
	
  SECTION 5.14.

  	
  Interest Rate Protection

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  
	
  Negative Covenants

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Indebtedness; Certain
  Equity Securities

  	
  52

  
	
  SECTION 6.02.

  	
  Liens

  	
  54

  
	
  SECTION 6.03.

  	
  Fundamental Changes

  	
  56

  
	
  SECTION 6.04.

  	
  Investments, Loans,
  Advances, Guarantees and Acquisitions

  	
  57

  
	
  SECTION 6.05.

  	
  Asset Sales

  	
  59

  
	
  SECTION 6.06.

  	
  [Intentionally Omitted.]

  	
  61

  
	
  SECTION 6.07.

  	
  Swap Agreements

  	
  61

  
	
  SECTION 6.08.

  	
  Restricted Payments

  	
  61

  
	
  SECTION 6.09.

  	
  Transactions with
  Affiliates

  	
  61

  



 


3

















 


	
  SECTION 6.10.

  	
  Restrictive Agreements

  	
  62

  
	
  SECTION 6.11.

  	
  Amendment of Material
  Documents

  	
  63

  
	
  SECTION 6.12.

  	
  Interest Expense Coverage
  Ratio

  	
  63

  
	
  SECTION 6.13.

  	
  Leverage Ratio

  	
  63

  
	
  SECTION 6.14.

  	
  Senior Leverage Ratio

  	
  63

  
	
  SECTION 6.15.

  	
  Changes in Fiscal Periods

  	
  63

  
	
  SECTION 6.16.

  	
  Availability of Exceptions

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  	
   

  
	
  Events of Default

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  
	
  The Administrative Agent

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  Notices

  	
  69

  
	
  SECTION 9.02.

  	
  Waivers; Amendments

  	
  70

  
	
  SECTION 9.03.

  	
  Expenses; Indemnity;
  Damage Waiver

  	
  72

  
	
  SECTION 9.04.

  	
  Successors and Assigns

  	
  73

  
	
  SECTION 9.05.

  	
  Survival

  	
  76

  
	
  SECTION 9.06.

  	
  Counterparts; Integration;
  Effectiveness

  	
  77

  
	
  SECTION 9.07.

  	
  Severability

  	
  77

  
	
  SECTION 9.08.

  	
  Right of Setoff

  	
  77

  
	
  SECTION 9.09.

  	
  Governing Law;
  Jurisdiction; Consent to Service of Process

  	
  78

  
	
  SECTION 9.10.

  	
  WAIVER OF JURY TRIAL

  	
  78

  
	
  SECTION 9.11.

  	
  Headings

  	
  79

  
	
  SECTION 9.12.

  	
  Confidentiality

  	
  79

  
	
  SECTION 9.13.

  	
  Interest Rate Limitation

  	
  79

  
	
  SECTION 9.14.

  	
  USA Patriot Act

  	
  80

  



 


4

















 


SCHEDULES:


 


Schedule 1.01 — Transactions


 


Schedule 2.01 — Commitments


 


Schedule 3.05 — Real Property Liens


 


Schedule 3.06 — Disclosed Matters


 


Schedule 3.12 — Subsidiaries


 


Schedule 3.13 — Insurance


 


Schedule 6.01 — Existing Indebtedness


 


Schedule 6.02 — Existing Liens


 


Schedule 6.04 — Existing Investments


 


Schedule 6.10 — Existing Restrictions


 


EXHIBITS:


 


	
  Exhibit A

  	
   

  	
  —
  Form of Assignment and Assumption

  
	
  Exhibit
  B

  	
   

  	
  —
  Form of Opinion of Sullivan & Cromwell LLP

  
	
  Exhibit
  C

  	
   

  	
  —
  Form of Collateral Agreement

  
	
  Exhibit
  D

  	
   

  	
  —
  Form of Perfection Certificate

  
	
  Exhibit
  E

  	
   

  	
  —
  Form of Guarantee Agreement

  
	
  Exhibit
  F

  	
   

  	
  —
  Form of Opinion of Sullivan & Cromwell LLP (Collateral and Guarantee
  Requirement)

  



 


5

















 


CREDIT
AGREEMENT dated as of February 17, 2006 (this “Agreement”), among
Morgans Hotel Group Co., a Delaware corporation (“Holdings”), Morgans Group
LLC, a Delaware limited liability company (the “Borrower”), the LENDERS party
hereto, CITICORP NORTH AMERICA, INC., as Administrative Agent, and MORGAN
STANLEY SENIOR FUNDING, INC. and MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, as Joint Lead Arrangers.


 


In connection with the
Transactions described in Schedule 1.01, the Borrower has requested that the
Revolving Lenders extend credit in the form of Revolving Loans at any time and
from time to time during the Revolving Availability Period such that the
aggregate Revolving Exposures will not exceed $125,000,000 at any time.  In addition, the Borrower may request that
prospective Additional Lenders agree to make available Incremental Revolving
Loans and Revolving Commitment increases pursuant to Section 2.17 from time to
time after the Closing Date in an aggregate amount not to exceed $25,000,000.  The proceeds of the Revolving Loans will be
used only for general corporate purposes, including Permitted Acquisitions.


 


The Lenders are willing to
extend such credit to the Borrower on the terms and subject to the conditions
set forth herein.  Accordingly, the
parties hereto agree as follows:


 


ARTICLE I


 


Definitions


 


SECTION 1.01.  Defined
Terms.  As used in this Agreement,
the following terms have the meanings specified below:


 


“ABR”, when used in
reference to any Loan or Borrowing, means that the Loan or Borrowing is bearing
interest at a rate determined by reference to the Alternate Base Rate.


 


“Additional Lender”
has the meaning assigned to such term in Section 2.17.


 


“Additional Mortgage
Indebtedness” means Indebtedness incurred after the Effective Date to
finance any real property or interest therein and/or the improvements thereto,
or to finance the acquisition of any real property or interest therein by the
Borrower or any Subsidiary and, in either case, secured by a mortgage on such
property or a pledge of the Equity Interests of the entity that directly or
indirectly owns or acquires such property or interest, provided that
such entity is not a Loan Party.


 


“Adjusted LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, an
interest rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.


 

















 


“Administrative Agent”
means Citicorp North America, Inc., in its capacity as administrative agent for
the Lenders hereunder, and its successors in such capacity as provided in
Article VIII.


 


“Administrative
Questionnaire” means an administrative questionnaire in a form supplied by
the Administrative Agent.


 


“Affiliate” means,
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified, provided, however, that for
purposes of Section 6.09, the term “Affiliate” shall also include any
person that directly, or indirectly through one or more intermediaries, owns 5%
or more of any class of Equity Interests of the Person specified or that is an
officer or director of the Person specified.


 


“Alternate Base Rate”
means, for any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate
in effect on such day plus 1⁄2 of 1%. 
Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.


 


“Applicable Rate”
means, for any day with respect to any Revolving Loan, or with respect to the
commitment fees payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption “Revolving Loan ABR Spread”, “Revolving
Loan Eurodollar Spread” or “Commitment Fee Rate”, as the case may be, based
upon the Leverage Ratio as of the most recent determination date, provided
that until the delivery to the Administrative Agent pursuant to Sections
5.01(b) and (c) of the Borrower’s consolidated financial statements and related
certificate of a Financial Officer, respectively, for the first fiscal quarter
of the Borrower beginning after the Effective Date, the “Applicable Rate” shall
be the applicable rate per annum set forth below in Category 2; provided
further that if the Collateral and Guarantee Requirement is not satisfied
on or prior to April 1, 2006, then commencing on such date and, if applicable,
continuing until the date on which the Collateral and Guarantee Requirement has
been satisfied, each percentage set forth below under the headings “Revolving
Loan ABR Spread” and “Revolving Loan Eurodollar Spread” shall increase by 1.00%
(it being understood and agreed that such increases shall cease to apply to the
percentages set forth below under the headings “Revolving Loan ABR Spread” and
“Revolving Loan Eurodollar Spread” after the date on which the Collateral and
Guarantee Requirement is satisfied if such date occurs after April 1, 2006) :


 


	
  Leverage Ratio:

  	
   

  	
  Revolving Loan

  ABR

  Spread

  	
   

  	
  Revolving Loan 

  Eurodollar Spread

  	
   

  	
  Commitment Fee

  Rate

  	
   

  
	
  Category 1

  Greater than or equal to 6.00 to 1.00

  	
   

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  	
  0.375

  	
  %

  
	
  Category 2

  Less than 6.00 to 1.00 but greater than or equal to 5.00 to 1.00

  	
   

  	
  1.00

  	
  %

  	
  2.00

  	
  %

  	
  0.375

  	
  %

  
	
  Category 3

  Less than 5.00 to 1.00 but greater than or equal to 4.50 to 1.00

  	
   

  	
  0.75

  	
  %

  	
  1.75

  	
  %

  	
  0.375

  	
  %

  
	
  Category 4

  Less than 4.50 to 1.00

  	
   

  	
  0.50

  	
  %

  	
  1.50

  	
  %

  	
  0.375

  	
  %

  



 


2

















 


For purposes of the
foregoing, (a) the Leverage Ratio shall be determined as of the end of
each fiscal quarter of the Borrower’s fiscal year based upon the consolidated
financial statements delivered pursuant to Section 5.01(a) or (b) and
(b) each change in the Applicable Rate resulting from a change in the
Leverage Ratio shall be effective during the period commencing on and including
the date of delivery to the Administrative Agent of such consolidated financial
statements and related certificate of a Financial Officer indicating such
change and ending on the date immediately preceding the date of the next such
change, provided that the Leverage Ratio shall be deemed to be in
Category 1 (i) at any time that an Event of Default has occurred and
is continuing or (ii) at the option of the Administrative Agent or at the
request of the Required Lenders if the Borrower fails to deliver the consolidated
financial statements or related certificate of a Financial Officer required to
be delivered by it pursuant to Section 5.01(a) or (b) and
Section 5.01(c), as the case may be, during the period from the expiration
of the time for delivery thereof until such consolidated financial statements
and related certificate of a Financial Officer are delivered.


 


“Approved Fund” has
the meaning assigned to such term in Section 9.04(b).


 


“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an assignee (with the consent of any party whose consent is required by
Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A.


 


“Board” means the
Board of Governors of the Federal Reserve System of the United States of
America.


 


“Borrower” means
Morgans Group LLC, a Delaware limited liability company.


 


“Borrowing” means
Loans of the same Class and Type, made, converted or continued on the same date
and, in the case of Eurodollar Loans, as to which a single Interest Period is
in effect.


 


“Borrowing Request”
means a request by the Borrower for a Borrowing in accordance with
Section 2.03.


 


“Business Day” means
any day that is not a Saturday, Sunday or other day on which commercial banks
in New York City are authorized or required by law to


 


3

















 


remain closed, provided that, when
used in connection with a Eurodollar Loan, the term “Business Day” shall
also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.


 


“Capital Lease
Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP, and the amount of such obligations shall be
the capitalized amount thereof determined in accordance with GAAP.


 


“Change in Control”
means (a) (i) the cessation of Holdings being the sole managing member of the
Borrower or (ii) the gaining by any member of the Borrower (other than
Holdings) of the right to exercise control or management power over the
business and affairs of the Borrower, except as otherwise expressly permitted
in the LLC Agreement and as required by applicable law, (b) (i) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934,
as amended, and the rules of the SEC thereunder as in effect on the date
hereof) other than the Permitted Investors, of Equity Interests representing
more than 40% of either the aggregate ordinary voting power or the aggregate
equity value represented by the issued and outstanding Equity Interests in
Holdings, and (ii) the ownership, directly or indirectly, beneficially or
of record, by the Permitted Investors of Equity Interests in Holdings
representing in the aggregate a lesser percentage of either the aggregate
ordinary voting power or the aggregate equity value represented by the issued
and outstanding Equity Interests in Holdings than such Person or group,
(c) the occupation of a majority of the seats (other than vacant seats) on
the board of directors of Holdings by Persons who were neither
(i) nominated by the board of directors of Holdings or the Permitted
Investors nor (ii) appointed by directors so nominated or (d) the
acquisition of direct or indirect Control of Holdings by any Person or group
other than the Permitted Investors.


 


“Change in Law” means
(a) the adoption of any law, rule or regulation after the date of this
Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender (or, for purposes
of Section 2.12(b), by any lending office of such Lender or by such
Lender’s holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.


 


“Class”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are Revolving Loans or Incremental Revolving Loans
and, when used in reference to any Commitment, refers to whether such
Commitment is a Revolving Commitment or a Commitment in respect of any
Incremental Revolving Loans.  Incremental
Revolving Loans that have different terms and conditions (together with the
Commitments in respect thereof) shall be construed to be in different Classes.


 


4

















 


“Class”, when used in
reference to any Lender, refers to whether such Lender has a Loan or Commitment
with respect to a particular Class.


 


“CLO” has the meaning
assigned to such term in Section 9.04(b).


 


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


 


“Collateral” means
any and all “Collateral”, as defined in any applicable Security Document.


 


“Collateral Agreement”
means the Guarantee and Collateral Agreement among Holdings, the Borrower, the
Subsidiary Loan Parties and the Administrative Agent, substantially in the form
of Exhibit C.


 


“Collateral and Guarantee
Requirement” means the requirement that:


 


(a) the Administrative
Agent shall have received from each Loan Party a counterpart of the Collateral
Agreement duly executed and delivered on behalf of such Loan Party;


 


(b) the outstanding
Equity Interests listed on Schedule II to the Collateral Agreement, in
each case owned by or on behalf of any Loan Party, shall have been pledged
pursuant to the Collateral Agreement;


 


(c) all documents and
instruments, including Uniform Commercial Code financing statements, required
by law or reasonably requested by the Administrative Agent to be filed,
registered or recorded to create the Liens intended to be created by the
Collateral Agreement and perfect such Liens to the extent required by, and with
the priority required by, the Collateral Agreement, shall have been filed,
registered or recorded or delivered to the Administrative Agent for filing,
registration or recording;


 


(d) each Loan Party shall
have obtained all consents and approvals required to be obtained by it in connection
with the execution and delivery of all Security Documents to which it is a
party, the performance of its obligations thereunder and the granting by it of
the Liens thereunder; and


 


(e) the Administrative
Agent and the Joint Lead Arrangers shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
date of the Collateral Agreement) of Sullivan & Cromwell LLP or other
external counsel reasonably acceptable to the Joint Bookrunners, counsel for
Holdings, the Borrower and the Subsidiaries, substantially in the form of
Exhibit F.  Each of Holdings and the
Borrower hereby requests such counsel to deliver such opinion.


 


5

















 


“Commitment” means
with respect to any Lender, such Lender’s Revolving Commitment or commitment in
respect of any Incremental Revolving Loans or any combination thereof (as the
context requires).


 


“Consolidated Cash
Interest Expense” means, for any period, the excess of (a) the sum of
(i) the interest expense (including imputed interest expense in respect of
Capital Lease Obligations) of Holdings, the Borrower and the Subsidiaries
(other than the Excluded Subsidiaries) for such period, determined on a
consolidated basis in accordance with GAAP, (ii) any interest accrued
during such period in respect of Indebtedness of Holdings, the Borrower and any
Subsidiary (other than any Excluded Subsidiary) that is required to be
capitalized rather than included in consolidated interest expense for such
period in accordance with GAAP (other than interest attributable to Development
Debt), (iii) any cash payments made during such period in respect of
obligations referred to in clause (b)(ii) below that were amortized or
accrued in a previous period and (iv) all cash dividends paid during such
period in respect of preferred Equity Interests of Holdings and the Borrower
(but expressly excluding any such dividends paid by the Borrower to Holdings),
together with the Tax Amount attributable thereto, if any, minus
(b) the sum of (i) to the extent included in such consolidated interest
expense for such period, non-cash amounts attributable to amortization of
financing costs paid in a previous period, (ii) to the extent included in
such consolidated interest expense for such period, non-cash amounts
attributable to amortization of debt discounts or accrued interest payable in
kind for such period and (iii) the minority interest share of the amounts
included in clause (a) above. 
Consolidated Cash Interest Expense shall be deemed to be (a) for the
four fiscal quarter period ended March 31, 2006, Consolidated Cash
Interest Expense for the period from the Effective Date to and including
March 31, 2006, multiplied by a fraction equal to (x) 365 divided by
(y) the number of days actually elapsed from the Effective Date to
March 31, 2006, (b) for the four fiscal quarter period ended
June 30, 2006, Consolidated Cash Interest Expense for the period from the
Effective Date to and including June 30, 2006, multiplied by a fraction
equal to (x) 365 divided by (y) the number of days actually elapsed from the
Effective Date to June 30, 2006, (c) for the four fiscal quarter
period ended September 30, 2006, Consolidated Cash Interest Expense for
the period from the Effective Date to and including September 30, 2006,
multiplied by a fraction equal to (x) 365 divided by (y) the number of days
actually elapsed from the Effective Date to September 30, 2006 and
(d) for the four fiscal quarter period ended December 31, 2006, Consolidated
Cash Interest Expense for the period from the Effective Date to and including
December 31, 2006, multiplied by a fraction equal to (x) 365 divided by
(y) the number of days actually elapsed from the Effective Date to
December 31, 2006.


 


“Consolidated EBITDA”
means, for any period, Consolidated Net Income for such period plus
without duplication and to the extent deducted in determining such Consolidated
Net Income, the sum of (i) consolidated interest expense for such period,
(ii) consolidated income tax expense for such period, (iii) all
amounts attributable to depreciation and amortization for such period
(excluding amortization expense attributable to a prepaid cash item that was
paid in a prior period and excluding depreciation expense of minority interests
in consolidated joint ventures), (iv) other non-operating expense (or, if
applicable, minus non-operating income) (in each case as


 


6

















 


defined in the Combined
Statement of Operations and Comprehensive Loss of Holdings) for such period,
(v) non-cash expenses resulting from the grant of stock options or other
equity-related incentives to any director, officer or employee of Holdings, the
Borrower or any Subsidiary pursuant to a written plan or agreement approved by
the board of directors of Holdings, (vi) non-cash exchange, translation or
performance losses relating to any foreign currency hedging transactions or
currency fluctuations and (vii) all amounts attributable to equity in
income/loss of unconsolidated subsidiaries, provided that Consolidated
EBITDA for the four fiscal quarter periods ended March 31, 2006,
June 30, 2006, September 30, 2006 and December 31, 2006 shall be
determined on a pro forma basis giving effect to the Formation and Structuring
Transactions as if they occurred on the first day of each such four consecutive
fiscal quarter period (including cost savings to the extent such cost savings
would be permitted to be reflected in pro forma financial information complying
with the requirements of GAAP and Article XI of Regulation S-X
under the Securities Act of 1933, as amended, as interpreted by the Staff of
the SEC, and as certified by a Financial Officer).


 


“Consolidated Net Income”
means, for any period, the net income or loss of Holdings, the Borrower and the
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP (adjusted to reflect any charge, tax or expense incurred or accrued
by Holdings during such period as though such charge, tax or expense had been
incurred by the Borrower, to the extent that the Borrower has made or would be
entitled under the Loan Documents to make any Restricted Payment or other
payment to or for the account of Holdings in respect thereof), provided
that there shall be excluded (a) the income of any Subsidiary to the
extent that the declaration or payment of dividends or other distributions by
such Subsidiary of that income is not at the time permitted by a Requirement of
Law or any agreement or instrument applicable to such Subsidiary, except to the
extent of the amount of cash dividends or other cash distributions actually
paid to the Borrower or any Subsidiary during such period, (b) the income
of any Person (other than the Borrower or any Subsidiary that is not accounted
for using the equity method of accounting) in which the Borrower or any
Subsidiary owns an Equity Interest, except to the extent of the amount of cash
dividends or other cash distributions actually paid to the Borrower or any
Subsidiary during such period and (c) the income of any Excluded
Subsidiary.


 


“Consulting Agreement”
means the consulting agreement, dated as of June 24, 2005, by and between
Morgans Hotel Group LLC and Ian Schrager.


 


“Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies, or the dismissal or appointment of the
management, of a Person, whether through the ability to exercise voting power,
by contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative thereto.


 


“Debt Prepayment”
means the payment in cash, with proceeds of the IPO, of (a) all principal
amounts of Indebtedness outstanding under, together with all interest,
premiums, penalties and fees due in connection with prepayment of, the Existing
Mezzanine Loans, (b) Indebtedness outstanding under the NY/CA Mortgage Loan,


 


7

















 


together with all interest,
premiums, penalties and fees due in connection with such prepayment, and (c)
Indebtedness outstanding under the FL Mortgage Loan, together with all
interest, premiums, penalties and fees due in connection with such prepayment
such that the aggregate principal amount of Indebtedness repaid under clauses
(a), (b) and (c) shall equal an amount not less than $205,000,000.


 


“Default” means any
event or condition that constitutes an Event of Default or that upon notice,
lapse of time or both would, unless cured or waived, become an Event of
Default.


 


“Development Debt”
means Indebtedness of a Subsidiary that is a special purpose entity relating to
a development project in respect of which interest is being capitalized in
accordance with GAAP, provided that such Indebtedness is not recourse to
the Loan Parties, and provided  further that such Indebtedness shall
cease to constitute Development Debt on the date on which interest with respect
to such Indebtedness is not required to be capitalized in accordance with GAAP.


 


“Disclosed Matters”
means the actions, suits and proceedings and the environmental matters disclosed
in Schedule 3.06.


 


“Disqualified Equity
Interests” means Equity Interests that (a) mature or are mandatorily
redeemable or subject to mandatory repurchase or redemption or repurchase at
the option of the holders thereof, in each case in whole or in part and whether
upon the occurrence of any event, pursuant to a sinking fund obligation on a
fixed date or otherwise, prior to the date that is 180 days after the
Revolving Maturity Date or, if such Equity Interests are issued after the
Borrower has obtained any Incremental Revolving Loans or while any Commitments
from Additional Lenders to make Incremental Revolving Loans remain in effect,
after the maturity date for such Incremental Revolving Loans, unless all such
Incremental Revolving Loans have been repaid in full and all Commitments in
respect thereof shall have been terminated (other than (i) upon payment in
full of the Loan Document Obligations and termination of the Commitments or
(ii) upon a “change in control”, provided that any payment required
pursuant to this clause (ii) is contractually subordinated in right of
payment to the Loan Document Obligations on terms reasonably satisfactory to
the Administrative Agent and such requirement is applicable only in
circumstances that are market on the date of issuance of such Equity
Interests), (b) require the maintenance or achievement of any financial
performance standards other than as a condition to the taking of specific
actions, or provide remedies to holders thereof (other than voting and management
rights and increases in pay-in-kind dividends) or (c) are convertible or
exchangeable, automatically or at the option of any holder thereof, into any
Indebtedness (other than Indebtedness permitted under Section 6.01),
Equity Interests or other assets other than Qualified Equity Interests or trust
preferred securities otherwise permitted hereunder.


 


“dollars” or “$”
refers to lawful money of the United States of America.


 


“Effective Date”
means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 9.02).


 


8

















 


“Effective Date Guarantee
Requirement” means the requirement that the Administrative Agent shall have
received from each of Holdings, the Borrower and the Subsidiary Loan Parties a
counterpart of the Guarantee Agreement duly executed and delivered on behalf of
such entity, and that each such entity shall have obtained all consents and
approvals required to be obtained by it in connection with the execution and
delivery of the Guarantee Agreement and the performance of its obligations
thereunder.


 


“Environmental Laws”
means all treaties, laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, the preservation or reclamation of natural
resources or the generation, management, Release or threatened Release of any
Hazardous Material.


 


“Environmental Liability”
means any liability, contingent or otherwise (including any liability for
damages, costs of medical monitoring, costs of environmental remediation or
restoration, administrative oversight costs, consultants’ fees, fines, penalties
or indemnities), of Holdings, the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) any actual or alleged
violation of any Environmental Law or permit, license or approval issued
thereunder, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened Release of any
Hazardous Materials or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.


“Equity Interests”
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person.  As used herein,
references to “preferred Equity Interests” include Equity Interests in the form
of preferred stock, trust preferred securities and other similar securities
with regularly scheduled cash or payment-in-kind dividend payments and other
“debt-like” characteristics, but do not include customary real estate joint
venture and other similar equity ownership arrangements, even if such
arrangements involve some disproportionate sharing of cash flows of the
applicable entity.


 


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


 


“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with
Holdings, is treated as a single employer under Section 414(b) or (c) of
the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.


 


“ERISA Event” means
(a) any “reportable event”, as described in Section 4043(c) of ERISA
or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived), (b) the
existence with respect to any Plan of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether
or not waived, (c) the filing pursuant to Section 412(d) of the Code
or Section 303(d) of ERISA of an application for a waiver of


 


9

















 


the minimum funding standard
with respect to any Plan, (d) the incurrence by Holdings or any of its
ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan, (e) the receipt by Holdings or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan, (f) the incurrence by Holdings or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan or (g) the receipt by Holdings or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from Holdings or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of
ERISA.


 


“Eurodollar”, when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.


 


“Event of Default”
has the meaning assigned to such term in Article VII.


 


“Excluded Subsidiaries”
means Clift Holdings LLC, a Delaware limited liability company, and Shore Club
Holdings LLC, a Delaware limited liability company.


 


“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the jurisdiction
under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction
described in clause (a) above and (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under
Section 2.16(b)), any withholding tax that (i) is in effect and would
apply to amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office), except
to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.14(a), or (ii) is attributable to such Foreign
Lender’s failure to comply with Section 2.14(f).


 


“Existing Hotel
Properties” means the fee and leasehold estates in, and all buildings,
foundations, structures and improvements on, the premises commonly known on the
date hereof as the Morgans Hotel located in New York, New York, the Delano
Hotel located in Miami, Florida, the Royalton Hotel located in New York, New
York, the Mondrian Hotel located in Los Angeles, California and the Hudson
Hotel located in New York, New York.


 


“Existing Mezzanine Loans”
means the Loan and Security Agreement dated as of June 29, 2005 between
MMRDH Senior Mezz Holding Company LLC, a


 


10

















 


Delaware limited liability
company, and Wachovia Bank, National Association, (b) the Loan and
Security Agreement dated as of June 29, 2005 between MMRDH Intermediate
Mezz Holding Company LLC, a Delaware limited liability company, and Wachovia
Bank, National Association and (c) the Loan and Security Agreement dated
as of June 29, 2005 between MMRDH Junior Mezz Holding Company LLC, a
Delaware limited liability company, and Wachovia Bank, National Association.


 


“Federal Funds Effective
Rate” means, for any day, the weighted average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
that is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three federal funds brokers of recognized
standing selected by it.


 


“Financial Officer”
means the chief financial officer, principal accounting officer, treasurer or
controller of Holdings.


 


“FL Mortgage Loan”
means the Amended and Restated Renewal and Future Advance Promissory Note dated
June 29, 2005 by Beach Hotel Associates LLC, a Delaware limited liability
company.


 


“Foreign Lender”
means any Lender that is organized under the laws of a jurisdiction other than
that in which the Borrower is located. 
For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.


 


“Formation and
Structuring Transactions” means the formation and structuring transactions
described on Schedule 1.01.


 


“GAAP” means
generally accepted accounting principles in the United States of America.


 


“Governmental Authority”
means the government of the United States of America or any other nation or any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).


 


“Granting Lender” has
the meaning assigned to such term in Section 9.04(e).


 


“Guarantee” of or by
any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of


 


11

















 


the guarantor, direct or
indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase
(or to advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or
any other financial statement condition or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness or other obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation, provided,
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business.


 


“Guarantee Agreement”
means the Guarantee Agreement among Holdings, the Borrower, the Subsidiary Loan
Parties and the Administrative Agent, substantially in the form of Exhibit D.


 


“Hazardous Materials”
means all explosive, radioactive, hazardous or toxic substances, materials,
wastes or other pollutants, including petroleum or petroleum by-products or distillates,
asbestos or asbestos-containing materials, polychlorinated biphenyls, radon
gas, chlorofluorocarbons and other ozone-depleting substances or mold which are
regulated pursuant to any Environmental Law.


 


“Holdings” means
Morgans Hotel Group Co., a Delaware corporation.


 


“Incremental Extensions
of Credit” has the meaning assigned to such term in Section 2.17.


 


“Incremental Facility
Amendment” has the meaning assigned to such term in Section 2.17.


 


“Incremental Facility
Closing Date” has the meaning assigned to such term in Section 2.17.


 


“Incremental Revolving
Loans” has the meaning assigned to such term in Section 2.17.


 


“Indebtedness” of any
Person means, without duplication, (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind,
(b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding trade accounts
payable and other accrued obligations, in each case incurred in the ordinary
course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed,
(g) all Guarantees by such Person of Indebtedness of others, (h) all
Capital Lease Obligations of such Person, (i) all


 


12

















 


obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers’ acceptances. 
The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not
liable therefor.  Notwithstanding the
foregoing, in connection with any Permitted Acquisition, the term
“Indebtedness” shall not include contingent post-closing purchase price
adjustments or earn-outs to which the seller in such Permitted Acquisition may
become entitled.


 


“Indemnified Taxes”
means Taxes other than Excluded Taxes.


 


“Information Memorandum”
means the Confidential Information Memorandum dated January 2006, relating to
the Borrower and the Transactions.


 


“Interest Election
Request” means a request by the Borrower to convert or continue a Revolving
Borrowing in accordance with Section 2.05.


 


“Interest Payment Date”
means (a) with respect to any ABR Loan, the last day of each March, June,
September and December and (b) with respect to any Eurodollar Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of
more than three months’ duration, each day prior to the last day of such
Interest Period that occurs at intervals of three months’ duration after the
first day of such Interest Period.


 


“Interest Period”
means, with respect to any Eurodollar Borrowing, the period commencing on
the date of such Borrowing and ending on the numerically corresponding day in
the calendar month that is one, two, three or six months thereafter (or nine or
twelve months thereafter if, at the time of the relevant Borrowing, all Lenders
participating therein agree to make an interest period of such duration
available), as the Borrower may elect, provided, that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and
(b) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.


 


“IPO” means the
initial public offering of Holdings described in Schedule 1.01.


 


13

















 


“Joint Bookrunners”
means Morgan Stanley Senior Funding, Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Banc of America Securities LLC.


 


“Joint Lead Arrangers”
means Morgan Stanley Senior Funding, Inc. and Merrill Lynch, Pierce, Fenner
& Smith Incorporated.


 


“Lenders” means the
Persons listed on Schedule 2.01 and any other Person that shall have
become a party hereto pursuant to Section 9.04 or Section 2.17, other
than any such Person that ceases to be a party hereto pursuant to
Section 9.04.


 


“Leverage Ratio”
means, on any date, the ratio of (a) Total Indebtedness as of such date to
(b) Consolidated EBITDA for the period of four consecutive fiscal quarters
of the Borrower ended on such date (or, if such date is not the last day of a
fiscal quarter, ended on the last day of the fiscal quarter of the Borrower
most-recently ended prior to such date).


 


“LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Page 3750 of the Dow Jones Market Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period, as the rate for dollar deposits in an amount comparable
to the amount of such Eurodollar Borrowing and with a maturity comparable to
such Interest Period.  In the event that
such rate is not available at such time for any reason, then the “LIBO Rate”
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of an amount comparable to the amount of such
Eurodollar Borrowing and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period.


 


“Lien” means, with
respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.


 


“LLC Agreement” means
the amended and restated limited liability agreement of the Borrower dated as
of February 17, 2006, as amended from time to time to the extent not
prohibited by Section 6.12.


 


“Loan Document Obligations”
has the meaning assigned to such term in the Collateral Agreement.


 


14

















 


“Loan Documents”
means this Agreement, any Incremental Facility Amendment and the Security
Documents.


 


“Loan Parties” means
Holdings, the Borrower and the Subsidiary Loan Parties.


 


“Loans” means the
loans made by the Lenders to the Borrower pursuant to this Agreement.


 


“Management Term Loan
Credit Agreement” means the credit agreement, dated as of the date hereof,
among Holdings, the Term Loan Borrower, the lenders party thereto, Citicorp
North America, Inc., as administrative agent, and Morgan Stanley Senior
Funding, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
joint lead arrangers.


 


“Management Term Loan
Borrower” means Morgans Hotel Group Management LLC, a Delaware limited
liability company.


 


“Material Adverse Effect”
means a material adverse effect on (a) the business, operations,
properties, financial condition or results of operations of Holdings, the
Borrower and the Subsidiaries, taken as a whole, (b) the ability of any
Loan Party to perform any of its obligations under any Loan Document or
(c) the rights of or benefits or remedies available to the Lenders under
any Loan Document.


 


“Material Indebtedness”
means Indebtedness (other than the Loans), or obligations in respect of one or
more Swap Agreements, of any one or more of Holdings, the Borrower and the
Subsidiary Loan Parties in an aggregate principal amount exceeding $10,000,000.  For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of Holdings, the
Borrower or any Subsidiary Loan Party in respect of any Swap Agreement at any
time shall be the maximum aggregate amount (giving effect to any netting
agreements) that Holdings, the Borrower or such Subsidiary would be required to
pay if such Swap Agreement were terminated at such time.


 


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


 


“Mortgage Indebtedness”
means Indebtedness outstanding as of the date hereof under the NY/CA Mortgage
Loan and the FL Mortgage Loan.


 


“Multiemployer Plan”
means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.


 


“Non-Consenting Lender”
has the meaning assigned to such term in Section 9.02(c).


 


“NY/CA Mortgage Loan”
means the Amended, Restated and Consolidated Promissory Note dated
June 29, 2005 by Henry Hudson Holdings LLC, a Delaware limited liability
company, Morgans Holdings LLC, a Delaware limited liability company, Royalton,
LLC, a Delaware limited liability company, and Mondrian Holdings


 


15

















 


LLC, a Delaware limited
liability company, in favor of Wachovia Bank, National Association.


 


“Obligations” has the
meaning assigned to such term in the Guarantee Agreement or, if applicable, the
Collateral Agreement.


 


“Other Taxes” means
any and all present or future recording, stamp, documentary, excise, transfer,
sales, property or similar taxes, charges or levies arising from any payment
made under any Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Loan Document.


 


“Participant” has the
meaning assigned to such term in Section 9.04(c).


 


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


 


“Perfection Certificate”
means a certificate in the form of Exhibit D.


 


“Permitted Acquisition”
means any acquisition by the Borrower or a wholly-owned Subsidiary of all the
outstanding Equity Interests (other than directors’ qualifying shares) in, all
or substantially all the assets of, or all or substantially all the assets
constituting a division or line of business of, a Person if (a) no Default
has occurred and is continuing or would result therefrom, (b) such acquisition
and all transactions related thereto are consummated in accordance with
applicable laws, (c) the Borrower is in compliance, on a Pro Forma Basis
after giving effect to such acquisition as of the last day of the most-recently
ended fiscal quarter of the Borrower, with the covenants contained in
Sections 6.12, 6.13 and 6.14, (d) the business of such Person or such
assets, as the case may be, constitutes a business permitted by
Section 6.03(b), (e) the Leverage Ratio, calculated on a Pro Forma
Basis after giving effect to such acquisition as of the last day of the
most-recently ended fiscal quarter of the Borrower, is less than 6.50 to 1.00,
and (f) the Borrower has delivered to the Administrative Agent a
certificate of a Financial Officer to the effect set forth in clauses (a),
(b), (c), (d), and (e) above, together with all relevant financial information
for the Person or assets to be acquired and setting forth reasonably detailed
calculations demonstrating compliance with clauses (c) and (e) above (which
calculations shall, if made as of the last day of any fiscal quarter of the
Borrower for which the Borrower has not delivered to the Administrative Agent
the financial statements and certificate of a Financial Officer required to be
delivered by Section 5.01(a) or (b) and Section 5.01(c),
respectively, be accompanied by a reasonably detailed calculation of
Consolidated EBITDA and Consolidated Cash Interest Expense for the relevant
period).


 


“Permitted Encumbrances”
means:


 


(a) Liens imposed by law
for taxes, assessments or other governmental charges that are not yet due or
are being contested in compliance with Section 5.05;


 


16

















 


(b) carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlords’ and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.05;


 


(c) pledges and deposits
made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;


 


(d) deposits to secure
the performance of bids, trade contracts, leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;


 


(e) judgment liens in
respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII;


 


(f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed
by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any Subsidiary; and


 


(g) Liens arising from
Permitted Investments described in clause (d) of the definition of the term
“Permitted Investments”.


 


“Permitted Investments” means:


 


(a) direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from
the date of acquisition thereof;


 


(b) investments in
commercial paper maturing within 270 days from the date of acquisition thereof
and having, at such date of acquisition, the highest credit rating obtainable
from S&P or from Moody’s;


 


(c) investments in
certificates of deposit, banker’s acceptances and time or demand deposits
maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or offered
by, any domestic office of any commercial bank organized under the laws of the
United States of America or any State thereof that has a combined capital and
surplus and undivided profits of not less than $500,000,000;


 


(d) fully collateralized
repurchase agreements with a term of not more than 30 days for securities
described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above; and


 


17

















 


(e) investments in “money
market funds” within the meaning of Rule 2a-7 of the Investment
Company Act of 1940, as amended, substantially all of whose assets are invested
in investments of the type described in clauses (a) through (d) above.


 


“Permitted Investors”
means NCIC MHG Subsidiary LLC, North Star Partnership, L.P., W. Edward Scheetz,
David T. Hamamoto and Marc Gordon.


 


“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.


 


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


 


“Prime Rate” means
the rate of interest per annum publicly announced from time to time by Citicorp
North America, Inc. as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.


 


“Pro Forma Basis”
means, with respect to the calculation of the financial covenants contained in
Sections 6.12, 6.13 and 6.14 and the negative covenant contained in
Section 6.01(a)(iv) as of any date, that such calculation shall give pro forma
effect to all acquisitions and other investments, all issuances, incurrences or
assumptions of Indebtedness (with any such Indebtedness being deemed to be
amortized during the applicable testing period in accordance with its terms)
and all sales, transfers or other dispositions of any material assets outside
the ordinary course of business that have occurred during (or, if such
calculation is being made for the purpose of determining whether any proposed
acquisition will constitute a Permitted Acquisition, any Additional Mortgage
Indebtedness may be incurred or any Incremental Extension of Credit may be
made, since the beginning of) the four consecutive fiscal quarter period of the
Borrower most-recently ended on or prior to such date as if they occurred on
the first day of such four consecutive fiscal quarter period (including cost
savings to the extent such cost savings would be permitted to be reflected in
pro forma financial information complying with the requirements of GAAP and
Article XI of Regulation S-X under the Securities Act of 1933,
as amended, as interpreted by the Staff of the SEC, and as certified by a
Financial Officer).


 


“Proposed Change” has
the meaning assigned to such term in Section 9.02(c).


 


“Qualified Equity
Interests” means Equity Interests of Holdings or the Borrower other than
Disqualified Equity Interests.


 


“Register” has the
meaning assigned to such term in Section 9.04(b).


 


18

















 


“Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.


 


“Release” means any
release, spill, emission, leaking, dumping, injection, pouring, deposit,
disposal, discharge, dispersal, leaching or migration into or through the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within or upon any building, structure, facility or
fixture.


 


“Required Lenders”
means, at any time, Lenders having Revolving Exposures and unused Commitments
representing more than 50% of the aggregate Revolving Exposures and unused
Commitments at such time.


 


“Requirement of Law”
means, with respect to any Person, (a) the charter, articles or
certificate of organization or incorporation and bylaws or other organizational
or governing documents of such Person and (b) any statute, law, treaty,
rule, regulation, order, decree, writ, injunction or determination of any
arbitrator or court or other Governmental Authority, 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.


 


“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any Equity Interests in Holdings, the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancelation or termination of any Equity
Interests in Holdings, the Borrower or any Subsidiary or any option, warrant or
other right to acquire any such Equity Interests in Holdings, the Borrower or
any Subsidiary, or any other payment (including any payment under any Swap
Agreement) that has a substantially similar effect to any of the foregoing.


 


“Revolving Availability
Period” means the period from and including the Effective Date to but
excluding the earlier of the Revolving Maturity Date and the date of
termination of the Revolving Commitments as contemplated in Section 2.06
or Article VII.


 


“Revolving Commitment”
means, with respect to each Lender, the commitment, if any, of such Lender to
make Revolving Loans hereunder, expressed as an amount representing the maximum
possible aggregate amount of such Lender’s Revolving Exposure hereunder, as
such commitment may be (a) reduced from time to time pursuant to
Section 2.06 and (b) reduced or increased from time to time pursuant
to (i) assignments by or to such Lender pursuant to Section 9.04 or
(ii) Section 2.17.  The initial
amount of each Lender’s Revolving Commitment is set forth on Schedule 2.01, or
in the Assignment and Assumption or Incremental Facility Amendment pursuant to
which such Lender shall have assumed its Revolving Commitment, as the case may
be.  The initial aggregate amount of the
Lenders’ Revolving Commitments is $125,000,000.


 


19

















 


“Revolving Commitment
Increase” has the meaning assigned to such term in Section 2.17.


 


“Revolving Exposure”
means, with respect to any Lender at any time, the sum of the outstanding
principal amount of such Lender’s Revolving Loans at such time.


 


“Revolving Lender”
means a Lender with a Revolving Commitment or, if the Revolving Commitments
have terminated or expired, a Lender with Revolving Exposure.


 


“Revolving Loan”
means a Loan made pursuant to Section 2.01.


 


“Revolving Maturity Date”
means February 17, 2009 or, in the event that the Collateral and Guarantee
Agreement is satisfied on or prior to December 31, 2006, July 11,
2010.


 


“S&P” means
Standard & Poor’s Ratings Group, Inc.


 


“SEC” means the
Securities and Exchange Commission or any Governmental Authority succeeding to
any of its principal functions.


 


“Security Documents”
means the Guarantee Agreement or, if applicable, the Collateral Agreement, and
each other security agreement or other instrument or document executed and
delivered pursuant to Section 5.12 or 5.13 to secure any of the
Obligations.


 


“Senior Leverage Ratio”
means, on any date, the ratio of (a) Total Senior Indebtedness as of such
date to (b) Consolidated EBITDA for the period of four consecutive fiscal
quarters of the Borrower ended on such date (or, if such date is not the last
day of a fiscal quarter, ended on the last day of the fiscal quarter of the
Borrower most-recently ended prior to such date).


 


“SPV” has the meaning
assigned to such term in Section 9.04(e).


 


“Statutory Reserve Rate”
means a fraction (expressed as a decimal), the numerator of which is the number
one and the denominator of which is (x) the number one minus (y) the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board or any other banking authority (domestic or foreign) to which the
Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such
reserve percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. 
The Administrative Agent confirms that as of the Effective Date, the
amount referred to in clause (y) above is zero. 
The Statutory


 


20

















 


Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.


 


“subsidiary” means,
with respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership, association or other entity the
accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP.


 


“Subsidiary” means
any subsidiary of the Borrower.


 


“Subsidiary Loan Party”
means MMRDH Parent Holding Company LLC, a Delaware limited liability company,
MMRDH Junior Mezz Holding Company LLC, a Delaware limited liability company,
MMRDH Intermediate Mezz Holding Company LLC, a Delaware limited liability
company, and the Management Term Loan Borrower.


 


“Swap Agreement”
means any agreement with respect to any cap, swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions, provided that no
phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of Holdings, the Borrower or the Subsidiaries shall be a Swap
Agreement.


 


“Tax Amount” means,
with respect to any period, the lesser of (i) the product of any cash dividends
or distributions paid by Holdings and/or the Borrower in respect of preferred
Equity Interests in such period (but expressly excluding any such amounts paid
by Borrower to Holdings) and a fraction the numerator of which is one and the
denominator of which is one minus the effective combined tax rate of Holdings
(expressed as a decimal) for such period (as estimated by a Financial Officer
in good faith), minus such cash dividends or distributions paid by Holdings
and/or the Borrower in respect of such preferred Equity Interests and (ii) the
aggregate estimated combined income tax to be paid by Holdings in respect of
that same period (as estimated by a Financial Officer in good faith); provided
that the Tax Amount shall be zero with respect to the portion of cash dividends
or distributions paid by Holdings and/or the Borrower in respect of any
preferred Equity Interest permitted to be deducted by Holdings for tax
purposes.


 


“Taxes” means any and
all present or future taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority.


 


“Total Assets” means,
as of any date, the total assets (without deducting accumulated depreciation)
of Holdings, the Borrower and the Subsidiaries (other than the Excluded
Subsidiaries) determined on a consolidated basis in accordance with GAAP.


 


21

















 


“Total Indebtedness”
means, as of any date, the aggregate principal amount of Indebtedness of
Holdings, the Borrower and the Subsidiaries (other than the Excluded
Subsidiaries) outstanding as of such date, provided that the term
“Indebtedness” shall not include contingent obligations of Holdings, the
Borrower or any Subsidiary as an account party or applicant in respect of any
letter of credit or letter of guaranty unless such letter of credit or letter
of guaranty supports an obligation that constitutes Indebtedness minus
(a) Development Debt, (b) the aggregate amount of cash and cash
equivalents (other than restricted cash) of Holdings, the Borrower and the
Subsidiaries (other than the Excluded Subsidiaries) (in each case, free and
clear of all Liens, other than nonconsensual Liens permitted by
Section 6.02) included in the consolidated balance sheet of Holdings, the
Borrower and the Subsidiaries (other than the Excluded Subsidiaries) in
accordance with GAAP and all obligations to pay the deferred purchase price of
property or services (other than (i) trade accounts payable in the ordinary
course of business and (ii) any earn-out obligation until (A) such obligation
becomes a liability on the consolidated balance sheet of Holdings, the Borrower
and the Subsidiaries (other than the Excluded Subsidiaries) in accordance with
GAAP and (B) such obligation is earned by and payable to the applicable seller
under the terms and conditions of the underlying agreement with such seller)
and (c) the minority interest share of Indebtedness of any Subsidiary.


 


“Total Senior
Indebtedness” means, as of any date, (a) the aggregate principal
amount of all outstanding Mortgage Indebtedness, any refinancing thereof
permitted by Section 6.01(a)(ii), Additional Mortgage Indebtedness and any
refinancing thereof permitted by Section 6.01(a)(iv) less the minority interest
share of any such Indebtedness.


 


“Transactions” means
the transactions described on Schedule 1.01.


 


“Type”, when used in
reference to any Loan or Borrowing, refers to whether the rate of interest on
such Loan, or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted LIBO Rate or the Alternate Base Rate.


 


“wholly-owned Subsidiary”
means, with respect to any Person at any date, a subsidiary of such Person of
which securities or other ownership interests representing 100% of the Equity
Interests (other than directors’ qualifying shares) are, as of such date,
owned, controlled or held by such Person or one or more wholly-owned
Subsidiaries of such Person or by such Person and one or more wholly-owned
Subsidiaries of such Person.


 


“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.


 


SECTION 1.02.  Classification
of Loans and Borrowings.  For
purposes of this Agreement, Loans may be classified and referred to by Class (e.g.,
a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class
and Type (e.g., a “Eurodollar Revolving Loan”).  Borrowings also may be classified and
referred to by Class (e.g., a 


 


22

















 


“Revolving Borrowing”) or by
Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g.,
a “Eurodollar Revolving Borrowing”).


 


SECTION 1.03.  Terms
Generally.  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation”.  The word “will”
shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise,
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, amended and restated,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.


 


SECTION 1.04.  Accounting
Terms; GAAP.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time, provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision (including any definition) hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.


 


SECTION 1.05.  Pro
Forma Calculations.  With respect to
any period during which any Permitted Acquisition or any sale, transfer or
other disposition of any material assets occurs, for purposes of determining
compliance with the covenants contained in Sections 6.12, 6.13 and 6.14, or for
purposes of determining the Leverage Ratio, Senior Leverage Ratio, Consolidated
EBITDA and Consolidated Cash Interest Expense, calculations with respect to
such period shall be made on a Pro Forma Basis.


 


23

















 


ARTICLE II


 


The Credits


 


SECTION 2.01.  Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Revolving Loans to the Borrower from time to
time during the Revolving Availability Period in an aggregate principal amount
up to, but that will not result in such Lender’s Revolving Exposure exceeding,
such Lender’s Revolving Commitment. 
Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.


 


SECTION 2.02.  Loans
and Borrowings.  (a)  Each Loan shall be made as part of a
Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable
Class.  The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder, provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender’s failure to
make Loans as required.


 


(b)  Subject to
Section 2.11, each Revolving Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance
herewith.  Each Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate
of such Lender to make such Loan, provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.


 


(c)  At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $1,000,000. 
At the time that each ABR Revolving Borrowing is made, such Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $1,000,000.  Borrowings of
more than one Type and Class may be outstanding at the same time, provided
that there shall not at any time be more than a total of twelve Eurodollar
Borrowings outstanding.  Notwithstanding
anything to the contrary herein, an ABR Revolving Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the aggregate
Revolving Commitments with respect to the applicable Class of Revolving Loans.


 


(d) 
Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date.


 


SECTION 2.03.  Requests
for Borrowings.  To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three Business Days before the
date of the proposed Borrowing or (b) in


 


24

















 


the case of an ABR Borrowing,
not later than 11:00 a.m., New York City time, one Business Day before
the date of the proposed Borrowing.  Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower.  Each such telephonic and
written Borrowing Request shall specify the following information:


 


(i) whether the requested
Borrowing is to be a Revolving Borrowing or a Borrowing of any Incremental
Revolving Loan;


 


(ii) the aggregate amount
of such Borrowing;


 


(iii) the date of such
Borrowing, which shall be a Business Day;


 


(iv) whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;


 


(v) in the case of a
Eurodollar Borrowing, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Interest
Period”;


 


(vi) the location and
number of the Borrower’s account to which funds are to be disbursed, which
shall comply with the requirements of Section 2.04; and


 


(vii) that as of such
date Sections 4.02(a) and (b) are satisfied.


 


If no election as to the Type of Borrowing is
specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month’s
duration.  Promptly following receipt of
a Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing.


 


SECTION 2.04.  Funding
of Borrowings.  (a)  Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the
Administrative Agent most-recently designated by it for such purpose by notice
to the Lenders.  The Administrative Agent
will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower designated by
the Borrower in the applicable Borrowing Request.


 


(b)  Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon
such assumption and in its sole discretion, make available to the Borrower a
corresponding


 


25

















 


amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent then the Administrative Agent shall be entitled to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Administrative Agent’s demand therefor,
then the Administrative Agent shall promptly notify the Borrower, and the
Borrower shall, within five Business Days, repay such corresponding amount to
the Administrative Agent. The Administrative Agent shall also be entitled to
recover from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to the then applicable rate of interest, calculated in
accordance with Section 2.10, for the respective Loans.  No Lender’s obligation to make any Loan shall
be affected by any other Lender’s failure to make any Loan.  If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.


 


SECTION 2.05.  Interest
Elections.  (a)  Each Revolving Borrowing initially shall be
of the Type specified in the applicable Borrowing Request or designated by
Section 2.03 and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request or designated by
Section 2.03.  Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section.  The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.


 


(b)  To make an
election pursuant to this Section, the Borrower shall notify the Administrative
Agent of such election by telephone by the time that a Borrowing Request would
be required under Section 2.03 if the Borrower were requesting a Revolving
Borrowing of the Type resulting from such election to be made on the effective
date of such election.  Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.


 


(c)  Each
telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:


 


(i) the Borrowing to
which such Interest Election Request applies and, if different options are
being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information to
be specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);


 


26

















 


(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;


 


(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and


 


(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.


 


If any such
Interest Election Request requests a Eurodollar Borrowing but does not specify
an Interest Period, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration.


 


(d)  Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender’s portion of
each resulting Borrowing.


 


(e)  If the
Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end
of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding
any contrary provision hereof, if an Event of Default has occurred and is
continuing and the Administrative Agent, at the request of the Required
Lenders, so notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued
as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.


 


SECTION 2.06. Termination and Reduction of Commitments.
(a)  Unless previously terminated, the
Revolving Commitments shall terminate on the Revolving Maturity Date.


 


(b)  The Borrower
may at any time terminate, or from time to time reduce, the Commitments of any
Class, provided that each reduction of the Commitments of any Class
shall be in an amount that is an integral multiple of $5,000,000 and not less
than $5,000,000.


 


(c)  The Borrower
shall notify the Administrative Agent of any election to terminate or reduce
the Commitments under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any such notice, the Administrative Agent shall advise the Lenders
of the contents thereof. Each notice delivered by the Borrower pursuant to this
Section shall be irrevocable, provided that a notice of termination of
the Revolving Commitments delivered by the Borrower may state that such notice
is conditioned upon the effectiveness of other credit facilities or the receipt
of the proceeds from the issuance of other Indebtedness, in which case such
notice may be revoked by the Borrower (by notice to the Administrative Agent on
or


 


27

















 


prior to the specified effective date) if
such condition is not satisfied. Any termination or reduction of the
Commitments of any Class shall be permanent. Each reduction of the Commitments
of any Class shall be made ratably among the Lenders in accordance with their
respective Commitments of such Class.


 


SECTION 2.07. Repayment of Loans; Evidence of
Debt. (a)  The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Revolving Loan of such
Lender on the Revolving Maturity Date.


 


(b)  Each Lender
shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each
Loan made by such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.


 


(c)  The
Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal
or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender’s
share thereof.


 


(d)  The entries
made in the accounts maintained pursuant to paragraph (b) or (c) of this
Section shall be prima  facie evidence of the existence and
amounts of the obligations recorded therein absent manifest error, provided
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligation of
the Borrower to repay the Loans and pay interest thereon in accordance with the
terms of this Agreement.


 


(e)  Any Lender may
request that Loans of any Class made by it be evidenced by a promissory note. In
such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by
the Administrative Agent (it being understood that any such note shall not
increase the obligations of any Loan Party beyond those expressly provided for
in this Agreement and the other Loan Documents). Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).


 


SECTION 2.08. Prepayment of Loans. (a)  The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, subject to
the requirements of this Section.


 


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(b)  In the event
and on such occasion that the aggregate Revolving Exposures exceed the
aggregate Revolving Commitments, the Borrower shall prepay Revolving Borrowings
in an aggregate amount equal to such excess.


 


(c)  Prior to any
optional or mandatory prepayment of Borrowings hereunder, the Borrower shall
select the Borrowing or Borrowings to be prepaid and shall specify such
selection in the notice of such prepayment pursuant to paragraph (d) of
this Section.


 


(d)  The Borrower
shall notify the Administrative Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business
Days before the date of prepayment or (ii) in the case of prepayment of an
ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of each Borrowing or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment, provided
that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Revolving Commitments as contemplated
by Section 2.06, then such notice of prepayment may be revoked if such
notice of termination is revoked in accordance with Section 2.06 by the
Borrower (by notice to the Administrative Agent on or prior to the specified
date) if such condition is not satisfied. Promptly following receipt of any
such notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required
amount of a mandatory prepayment. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by
Section 2.10.


 


SECTION 2.09. Fees. (a)  The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at
the Applicable Rate on the average daily unused amount of the Revolving
Commitment of such Lender during the period from and including the Effective
Date to but excluding the date on which the Revolving Commitments terminate. Accrued
commitment fees shall be payable in arrears on the last Business Day of March,
June, September and December of each year and on the date on which the
Revolving Commitments terminate, commencing on the first such date to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees, a Revolving Commitment of a Lender shall be deemed to be used
to the extent of the outstanding Revolving Loans.


 


(b)  The Borrower
agrees to pay to the Administrative Agent, for its own account, fees payable in
the amounts and at the times separately agreed upon between the Borrower and
the Administrative Agent.


 


29

















 


(c)  All fees
payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, in the case of commitment
fees and participation fees, to the Lenders entitled thereto. Fees paid shall
not be refundable under any circumstances.


 


SECTION 2.10. Interest. (a)  The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus the Applicable Rate.


 


(b)  The Loans
comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable
Rate.


 


(c)  Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to
(i) in the case of overdue principal of any Loan, 2.00% plus the rate
otherwise applicable to such Loan as provided in the preceding paragraphs of
this Section or (ii) in the case of any other amount, 2.00% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this
Section.


 


(d)  Accrued
interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan and upon termination of the Revolving Commitments, provided
that (i) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior
to the end of the Revolving Availability Period), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.


 


(e)  All interest
hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate at times when the
Alternate Base Rate is based on the Prime Rate shall be computed on the basis
of a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO
Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error.


 


SECTION 2.11. Alternate Rate of Interest. If prior
to the commencement of any Interest Period for a Eurodollar Borrowing:


 


(a) the Administrative Agent
determines (which determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate for such Interest Period; or


 


30

















 


(b) the Administrative Agent is
advised by the Required Lenders that the Adjusted LIBO Rate for such Interest
Period will not adequately and fairly reflect the cost to such Lenders of making
or maintaining their Loans included in such Borrowing for such Interest Period;


 


then the
Administrative Agent shall give notice thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.


 


SECTION 2.12. Increased Costs. (a)  If any Change in Law shall:


 


(i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender (except
any such reserve requirement reflected in the Adjusted LIBO Rate); or


 


(ii) impose on any Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Loans made by
such Lender;


 


and the result
of any of the foregoing shall be to increase the cost to such Lender of making
or maintaining any Eurodollar Loan (or of maintaining its obligation to make
any such Loan) or to increase the cost to such Lender or to reduce the amount
of any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then upon request, accompanied by a copy of
the certificate and information referred to in clause (c) below, the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction
suffered.


 


(b)  If any Lender
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender’s capital or on
the capital of such Lender’s holding company, if any, as a consequence of this
Agreement or the Loans made by such Lender to a level below that which such
Lender or such Lender’s holding company could have achieved but for such Change
in Law (taking into consideration such Lender’s policies and the policies of
such Lender’s holding company with respect to capital adequacy), then from time
to time upon request,  accompanied by a
copy of the certificate and information referred to in clause (c) below,
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender’s holding company for any such reduction
suffered.


 


(c)  A certificate
of a Lender setting forth the amount or amounts necessary to compensate such
Lender or its holding company and the basis for


 


31

















 


calculating such amount or amounts in
reasonable detail, as the case may be, as specified in paragraph (a) or
(b) of this Section shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.


 


(d)  Failure or
delay on the part of any Lender to demand compensation pursuant to this Section
shall not constitute a waiver of such Lender’s right to demand such
compensation, provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor; provided
further that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.


 


SECTION 2.13. Break Funding Payments. In the event
of (a) the payment of any principal of any Eurodollar Loan other than on
the last day of an Interest Period applicable thereto (including as a result of
an Event of Default), (b) the conversion of any Eurodollar Loan other than
on the last day of the Interest Period applicable thereto, (c) the failure
to borrow, convert, continue or prepay any Revolving Loan on the date specified
in any notice delivered pursuant hereto (regardless of whether such notice may
be revoked under Section 2.08(d) and is revoked in accordance therewith)
or (d) the assignment of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 9.02(c), then, in any such event, upon request,
accompanied by a copy of the certificate and information to be delivered by the
Lender to the Borrower pursuant to this Section 2.13 the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest that would have accrued on
the principal amount of such Loan had such event not occurred, at the Adjusted
LIBO Rate that would have been applicable to such Loan, for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert or continue, for the period
that would have been the Interest Period for such Loan), over (ii) the
amount of interest that would accrue on such principal amount for such period
at the interest rate that such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section and the basis for calculating such amount or amounts
in reasonable detail shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.


 


SECTION 2.14. Taxes. (a)  Any and all payments by or on account of any
obligation of any Loan Party under any Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes, provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such


 


32

















 


payments, then (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.


 


(b)  Without
limiting the provisions of paragraph (a) above, the Borrower shall timely pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.


 


(c)  The Borrower
shall indemnify the Administrative Agent and each Lender within 10 days after
written demand therefor, accompanied by a copy of the certificate and
information to be delivered to the Borrower pursuant to this clause (c),
for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative
Agent or such Lender, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower under any Loan Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. The certificate as to the
amount of such payment or liability delivered to the Borrower by a Lender or by
the Administrative Agent on its own behalf or on behalf of a Lender shall be
conclusive absent manifest error.


 


(d)  As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.


 


(e)  Each Lender
that is a U.S. Person (as such term is defined in Section 7701(a)(30) of the
Code) (a “U.S. Lender”) shall (i) deliver to the Borrower and the
Administrative Agent, prior to the first day on which the Borrower is required
to make any payments hereunder to Lender, two copies of United States Internal
Revenue Service Form W-9 (or successor forms). Each U.S. Lender that shall
become a Participant pursuant to Section 9.04 shall, upon the effectiveness of
the related transfer, be required to provide all the forms and statements
required pursuant to this Section 2.14(e), provided that in the case of
a Participant such Participant shall furnish all such required forms and
statements to the Lender from which the related participation shall have been
purchased, and (ii) deliver to the Borrower and the Administrative Agent two
further copies of any such form of certification on or before the date that any
such form or certification expires or becomes obsolete and after the occurrence
of any event requiring a change in the most recent form previously delivered by
it to the Borrower.


 


33

















 


(f)  Each Lender
that is not a U.S. Person (as such term is defined in Section 7701(a)(30) of
the Code) (a “Non-U.S. Lender”) shall (i) deliver to the Borrower and
the Administrative Agent, prior to the first day on which the Borrower is
required to make any payments hereunder to Lender, two copies of either United
States Internal Revenue Service Form W-8BEN or Form W-8ECI (or successor forms)
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest,” a Form W-8BEN, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form
W-8BEN (with respect to the portfolio interest exemption), a certificate
representing that such Non-U.S. Lender (x) is not a bank for purposes of
Section 881(c) of the Code, is not subject to regulatory or other legal
requirements as a bank in any jurisdiction, and has not been treated as a bank
for purposes of any tax, securities law or other filing or submission made to
any Governmental Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or other legal
requirements, (y) is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and (z) is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on payments by the Borrower under this Agreement, (ii) deliver
to the Borrower and the Administrative Agent two further copies of any such
form of certification on or before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and completing such forms or
certifications as may reasonably be requested by the Borrower or the
Administrative Agent; unless in any such case any change in treaty, law or
regulation has occurred prior to the date on which any such delivery would
otherwise be required that renders any such form inapplicable or would prevent
such Lender from duly completing and delivering any such form with respect to
it and such Lender so advises the Borrower and the Administrative Agent. Each
Non-U.S. Lender that shall become a Participant or a Lender pursuant to Section
9.04 shall, upon the effectiveness of the related transfer, be required to
provide all the forms and statements required pursuant to this Section 2.14(f),
provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.


 


(g)  Notwithstanding
anything to the contrary herein, the Borrower shall not be required to
indemnify any U.S. Lender or the Administrative Agent, or to pay any additional
amounts to such U.S. Lender or the Administrative Agent pursuant to this
Section 2.14 to the extent that the obligation to pay such additional amounts
would not have arisen but for a failure by such U.S. Lender to comply with the
provisions of clause (e) above.


 


(h)  Notwithstanding
anything to the contrary herein the Borrower shall not be required to indemnify
any Non-U.S. Lender or the Administrative Agent, or to pay any additional
amounts to such Non-U.S. Lender or the Administrative Agent, in respect of U.S.
federal withholding tax pursuant to this Section 2.14 to the extent that (i)
the


 


34

















 


obligation to withhold amounts with respect
to U.S. federal withholding tax existed on the date such Non-U.S. Lender became
a party to this Agreement (or, in the case of a Non-U.S. Participant, on the
date such Participant became a Participant hereunder) or as of the date such
Non-U.S. Lender changes its applicable lending office; provided, however,
that this clause (i) shall not apply to the extent that (x) in the case of an
assignee Lender or a Participant or a change in the Lender’s applicable lending
office, the indemnity payments or additional amounts Lender (or Participant)
would be entitled to receive (without regard to this clause (i)) do not exceed
the indemnity payment or additional amounts that the Person making the
assignment, participation, transfer or change in lending office would have been
entitled to receive in the absence of such assignment, participation, transfer
or change in lending office, or (y) such assignment, participation, transfer or
change in lending office had been requested by the Borrower or made with the
Borrower’s prior written consent, (ii) the obligation to pay such additional
amounts would not have arisen but for a failure by such Non-U.S. Lender or
Non-U.S. Participant to comply with the provisions of clause (e) above or (iii)
any of the representations or certifications made by a Non-U.S. Lender or
Non-U.S. Participant pursuant to clause (e) above are incorrect at the time a
payment hereunder is made, other than by reason of any change in treaty, law or
regulation having effect after the date such representations or certifications
were made.


 


(i)  If the
Borrower determines in good faith that a reasonable basis exists for contesting
any Taxes for which indemnification has been paid hereunder, the relevant
Lender or the Administrative Agent, as applicable (to the extent such Lender or
the Administrative Agent reasonably determines in good faith that it will not
suffer any adverse effect as a result thereof), shall, subject to clause (i) of
the proviso in the immediately succeeding sentence, cooperate with the Borrower
in challenging such Taxes at the Borrower’s expense if so requested by the
Borrower in writing. If any Lender or the Administrative Agent, as applicable,
receives a refund relating to a Tax for which a payment has been made or borne
by the Borrower pursuant to this Agreement, which refund in the good faith
judgment of such Lender or the Administrative Agent, as the case may be, is
attributable to such payment, then such Lender or the Administrative Agent, as
the case may be, shall reimburse the Borrower for such amount as such Lender or
the Administrative Agent, as the case may be, determines to be the proportion
of the refund as will leave it, after such reimbursement, in no better or worse
position than it would have been in if the payment by or borne by the Borrower
had not been required; provided, however, that (i) any Lender or the
Administrative Agent may determine, in its reasonable discretion consistent
with the policies of such Lender or the Administrative Agent, whether to seek a
refund and (ii) any Taxes that are imposed on a Lender or the Administrative
Agent as a result of a disallowance or reduction of any refund with respect to
which such Lender or the Administrative Agent has made a payment to the
Borrower pursuant to this clause (h) shall be treated as a Tax for which the
Borrower is obligated to indemnify such Lender or the Administrative Agent
pursuant to this Section 2.14. Neither the Lenders nor the Administrative Agent
shall be obliged to disclose information regarding its tax affairs or
computations to the Borrower in connection with this clause (i) or any
other provision of this Section 2.14.


 


35

















 


SECTION 2.15. Payments Generally; Pro Rata Treatment;
Sharing of Setoffs. (a)  The Borrower
shall make each payment required to be made by it under any Loan Document
(whether of principal, interest or fees, or of amounts payable under
Section 2.12, 2.13 or 2.14, or otherwise) prior to the time expressly
required hereunder or under such other Loan Document for such payment (or, if
no such time is expressly required, prior to 12:00 noon, New York City time),
on the date when due, in immediately available funds, without setoff or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at 2 Penns Way,
Suite 200, New Castle, DE 19720, except that payments pursuant to Sections
2.12, 2.13, 2.14 and 9.03 shall be made directly to the Persons entitled
thereto and payments pursuant to other Loan Documents shall be made to the
Persons specified therein. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment under any Loan Document
shall be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day (except to the extent provided in
the definition of Interest Period) and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension. All
payments under each Loan Document shall be made in dollars.


 


(b)  If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, interest and fees then due hereunder, such
funds shall be applied towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties.


 


(c)  If any Lender
shall, by exercising any right of setoff or counterclaim or otherwise, obtain
payment in respect of any principal of or interest on any of its Revolving
Loans resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Revolving Loans, provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or other Affiliate
thereof (as to which the provisions of this paragraph shall apply). The
Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against the Borrower rights of
setoff and counterclaim with


 


36

















 


respect to such participation as fully as if
such Lender were a direct creditor of the Borrower in the amount of such participation.


 


(d)  Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption and in
its sole discretion, distribute to the Lenders the amount due. In such event,
if the Borrower has not in fact made such payment, then each of the Lenders
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender with interest thereon, for each day from
and including the date such amount is distributed to it to but excluding the
date of payment to the Administrative Agent, at the greater of the Federal
Funds Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.


 


(e)  If any Lender
shall fail to make any payment required to be made by it pursuant to
Section 2.04(a) or (b), 2.15(d) or 9.03(c), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid.


 


SECTION 2.16. Mitigation Obligations; Replacement of
Lenders. (a)  If any Lender requests
compensation under Section 2.12, or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.14, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates that would eliminate or, if
elimination is not possible, reduce to the extent practicable the amounts
payable pursuant to Section 2.12 or 2.14, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not be inconsistent with its internal policies or otherwise
adversely affect such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.


 


(b)  If any Lender
requests compensation under Section 2.12, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for
the account of any Lender pursuant to Section 2.14, or if any Lender
defaults in its obligation to fund Loans hereunder, then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment), provided that
(i) the Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an


 


37

















 


amount equal to the outstanding principal of
its Loans, accrued interest thereon, accrued fees and all other amounts payable
to it hereunder from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.12 or payments required to be made
pursuant to Section 2.14, such assignment will result in a material
reduction in such compensation or payments. A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise (including as a result of any action taken
by such Lender under paragraph (a) above), the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.


 


SECTION 2.17. Incremental Extensions of Credit. (a)  At any time and from time to time during the
Revolving Availability Period, subject to the terms and conditions set forth
herein, the Borrower may, by notice to the Administrative Agent (whereupon the
Administrative Agent shall promptly deliver a copy to each of the Lenders),
request to add (i) one additional tranche of revolving loans (the “Incremental
Revolving Loans”) or (ii) one increase in the aggregate amount of the
Revolving Commitments (each such increase, a “Revolving Commitment Increase”
and, together with the Incremental Revolving Loans, the “Incremental
Extensions of Credit”), provided that at the time of each such
request and upon the effectiveness of each Incremental Facility Amendment, (A)
no Default has occurred and is continuing or shall result therefrom, (B) the
Borrower shall be in compliance on a Pro Forma Basis with the covenants
contained in Sections 6.12, 6.13 and 6.14 recomputed as of the last day of the
most-recently ended fiscal quarter of the Borrower and (C) the Borrower shall
have delivered a certificate of a Financial Officer to the effect set forth in
clauses (A) and (B) above, together with reasonably detailed calculations
demonstrating compliance with clause (B) above (which calculations shall, if
made as of the last day of any fiscal quarter of the Borrower for which the
Borrower has not delivered to the Administrative Agent the financial statements
and certificate of a Financial Officer required to be delivered by
Section 5.01(a) or (b) and Section 5.01(c), respectively, be accompanied
by a reasonably detailed calculation of Consolidated EBITDA and Consolidated
Cash Interest Expense for the relevant period). Notwithstanding anything to
contrary herein, the aggregate principal amount of the Incremental Extensions
of Credit shall not exceed $25,000,000.


 


(b)  The
Incremental Revolving Loans (i) shall rank pari  passu or
junior in right of payment in respect of the Collateral and with the
Obligations in respect of the Revolving Commitments, and (ii) other than
pricing or maturity date, shall have the same terms as the Revolving Loans, provided
that (A) if the Applicable Rate (which, for such purposes only, shall be deemed
to include all upfront or similar fees or original issue discount payable to all
Lenders providing such Incremental Revolving Loans) relating to any Incremental
Revolving Loan exceeds the Applicable Rate relating to the Revolving Loans
immediately prior to the effectiveness of the applicable Incremental Facility
Amendment, the Applicable Rate relating to the Revolving Loans shall be
adjusted to be equal to the Applicable Rate (which, for such purposes only,
shall be deemed to include all upfront or similar fees or original issue
discount payable to all Lenders providing such Incremental Revolving Loans)
relating to such Incremental Revolving Loans, (B) any Incremental Revolving
Loan shall not have a final maturity date earlier than the


 


38

















 


Revolving Maturity Date and (C) any
Incremental Revolving Loan shall not have a weighted average life that is
shorter than the weighted average life of the Revolving Loans.


 


(c)  Each notice
from the Borrower pursuant to this Section shall set forth the requested amount
and proposed terms of the relevant Incremental Extension of Credit. Any
additional bank, financial institution, existing Lender or other Person that
elects to extend Incremental Extensions of Credit shall be reasonably
satisfactory to the Borrower and the Administrative Agent (any such bank,
financial institution, existing Lender or other Person being called an “Additional
Lender”) and, if not already a Lender, shall become a Lender under this
Agreement pursuant to an amendment (an “Incremental Facility Amendment”)
to this Agreement and, as appropriate, the other Loan Documents, executed by
Holdings, the Borrower, such Additional Lender and the Administrative Agent. No
Lender shall be obligated to provided any Incremental Extension of Credit,
unless it so agrees. Commitments in respect of any Incremental Extensions of
Credit shall become Commitments (or in the case of any Revolving Commitment
Increase to be provided by an existing Revolving Lender, an increase in such
Revolving Lender’s Revolving Commitment) under this Agreement. An Incremental
Facility Amendment may, without the consent of any other Lenders, effect such
amendments to any Loan Documents as may be necessary or appropriate, in the
opinion of the Administrative Agent, to effect the provisions of this Section
(including to provide for voting provisions applicable to the Additional
Lenders comparable to the provisions of clause (B) of the second proviso of
Section 9.02(b)). The effectiveness of any Incremental Facility Amendment
shall, unless otherwise agreed to by the Administrative Agent and the
Additional Lenders, be subject to the satisfaction on the date thereof (each,
an “Incremental Facility Closing Date”) of each of the conditions set
forth in Section 4.02 (it being understood that all references to “the date of
such Borrowing” in Section 4.02 shall be deemed to refer to the Incremental
Facility Closing Date). The proceeds of any Incremental Extensions of Credit
will be used only for general corporate purposes, including Permitted
Acquisitions.


 


ARTICLE III


 


Representations and Warranties


 


Each of
Holdings and the Borrower represents and warrants to the Lenders that:


 


SECTION 3.01. Organization; Powers. Each of
Holdings, the Borrower and the Subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
has all requisite power and authority to carry on its business as now conducted
and as proposed to be conducted, to execute, deliver and perform its
obligations under each Loan Document to which it is a party and to effect the
Transactions and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.


 


39

















 


SECTION 3.02. Authorization; Enforceability. The
Transactions to be entered into by each Loan Party have been duly authorized by
all necessary corporate or other action and, if required, action by the holders
of such Loan Party’s Equity Interests. This Agreement has been duly executed
and delivered by each of Holdings and the Borrower and constitutes, and each
other Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of Holdings, the Borrower or such Loan Party (as the case may be),
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.


 


SECTION 3.03. Governmental Approvals; No Conflicts.
The Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental
Authority, except such as have been obtained or made and are in full force and
effect and except filings necessary to perfect Liens created under the Loan
Documents, (b) will not violate any Requirement of Law applicable to
Holdings, the Borrower or any Subsidiary, (c) will not violate or result
in a default under any indenture, agreement or other instrument binding upon Holdings,
the Borrower or any Subsidiary or their respective assets, or give rise to a
right thereunder to require any payment to be made by Holdings, the Borrower or
any Subsidiary or give rise to a right of, or result in, termination,
cancelation or acceleration of any obligation thereunder, and (d) will not
result in the creation or imposition of any Lien on any asset of Holdings, the
Borrower or any Subsidiary, except Liens created under the Loan Documents and
liens permitted under Section 6.02.


 


SECTION 3.04. Financial Condition; No Material Adverse
Change. (a)  (i)The Borrower has
heretofore furnished to the Lenders the combined balance sheet and combined
statements of income, stockholders’ equity and cash flows of Morgans Hotel
Group Co. Predecessor (x) as of and for the fiscal years ended December
31, 2004, reported on by BDO Seidman, LLP, independent registered public
accounting firm, and (y) as of and for the fiscal quarter and the portion
of the fiscal year ended September 30, 2005 (and comparable period for the
prior fiscal year), certified by a Financial Officer and (ii) the balance sheet
of Holdings as of October 21, 2005, reported on by BDO Seidman, LLP,
independent registered public accounting firm. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of Holdings and its subsidiaries as of such dates and
for such periods in accordance with GAAP consistently applied, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (i)(y) above.


 


(b)  The Borrower
has heretofore furnished to the Lenders the pro forma consolidated balance
sheet of Holdings as of September 30, 2005, prepared giving effect to the
Transactions as if the Transactions had occurred on such date. Such pro forma
consolidated balance sheet (i) has been prepared in good faith based on
the same assumptions used to prepare the pro forma financial statements
included in the Information Memorandum (which assumptions are believed by
Holdings and the Borrower to be reasonable), (ii) is based on the best
information available to Holdings


 


40

















 


and the Borrower after due inquiry,
(iii) accurately reflects all adjustments necessary to give effect to the
Transactions and (iv) presents fairly, in all material respects, the pro
forma financial position of Holdings and its subsidiaries as of September 30,
2005, as if the Transactions had occurred on such date.


 


(c)  Except as disclosed
in the financial statements referred to above or the notes thereto or in the
Information Memorandum and except for the Disclosed Matters, after giving
effect to the Transactions, none of Holdings, the Borrower or the Subsidiaries
has, as of the Effective Date, any material direct or contingent liabilities,
unusual long-term commitments or unrealized losses.


 


SECTION 3.05. Properties. (a)  Each of Holdings, the Borrower and the
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for Liens permitted
hereby and other exceptions to title that do not materially interfere with its
ability to conduct its business as currently conducted or as proposed to be
conducted or to utilize such properties for their intended purposes.


 


(b)  Each of
Holdings, the Borrower and the Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings, the Borrower and the
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.


 


(c)  As of the
Effective Date, none of Holdings, the Borrower or any Subsidiary has received
notice of, or has knowledge of, any pending or contemplated condemnation
proceeding affecting any Existing Hotel Property or any sale or disposition
thereof in lieu of condemnation that could reasonably be expected to result in
a Material Adverse Effect.


 


SECTION 3.06. Litigation and Environmental Matters.
(a)  There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending against
or, to the knowledge of Holdings or the Borrower threatened against or
affecting Holdings, the Borrower or any Subsidiary (i) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or
(ii) that involve any challenge to the validity or enforceability of the
Loan Documents or the Transactions.


 


(b)  Except for the
Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, to the knowledge of Holdings or the Borrower, none
of Holdings, the Borrower or any Subsidiary (i) has failed to comply with
any Environmental Law or to obtain, maintain or comply with any permit, license
or other approval required under any Environmental Law, (ii) has become
subject to any


 


41

















 


Environmental Liability, (iii) has
received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.


 


(c)  Since the date
of this Agreement, there has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.


 


SECTION 3.07. Compliance with Laws and Agreements.
Each of Holdings, the Borrower and the Subsidiaries is in compliance with
(a) all Requirements of Law applicable to it or its property and
(b) all indentures, agreements and other instruments binding upon it or
its property, except, in the case of clause (b) of this Section, where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.


 


SECTION 3.08. Investment and Holding Company Status.
None of Holdings, the Borrower or any Subsidiary is (a) an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a “holding company” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935.


 


SECTION 3.09. Taxes. Each of Holdings, the
Borrower and the Subsidiaries (a) has timely filed or caused to be filed
all Tax returns and reports required to have been filed, except to the extent
that failure to do so could not reasonably be expected to result in a Material
Adverse Effect, and (b) has paid or caused to be paid all Taxes required
to have been paid by it, except any Taxes that are being contested in good
faith by appropriate proceedings, provided that Holdings, the Borrower
or such Subsidiary, as the case may be, has set aside on its books adequate
reserves therefor and the failure to pay such Taxes pending resolution of the
contest would not reasonably be expected to result in a Material Adverse
Effect.


 


SECTION 3.10. ERISA. No ERISA Event has occurred
or is reasonably expected to occur that, when taken together with all other
such ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of such
Plan by an amount that could reasonably be expected to result in a Material
Adverse Effect, and the present value of all accumulated benefit obligations of
all underfunded Plans (based on the assumptions used for purposes of Statement
of Financial Accounting Standards No. 87) did not, as of the date of the
most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of all such underfunded Plans by an amount that
could reasonably be expected to result in a Material Adverse Effect.


 


SECTION 3.11. Disclosure. The Borrower has
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which Holdings, the Borrower or any Subsidiary is subject, and
all other matters known to any of them, that,


 


42

















 


individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. To the knowledge
of Holdings or the Borrower, neither the Information Memorandum nor any of the
other reports, financial statements, certificates or other information
furnished by or on behalf of any Loan Party to the Administrative Agent or any
Lender in connection with the negotiation of any Loan Document or delivered
thereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, provided that, with respect
to projected financial information, Holdings and the Borrower represent only
that such information was prepared in good faith based upon assumptions
believed by them to be reasonable at the time delivered and, if such projected
financial information was delivered prior to the Effective Date, as of the
Effective Date.


 


SECTION 3.12. Subsidiaries. Holdings does not have
any subsidiaries other than the Borrower and the Subsidiaries. Schedule 3.12
sets forth the name of, and the ownership interest of the Borrower and each
Subsidiary in, each Subsidiary and identifies each Subsidiary that is a
Subsidiary Loan Party, in each case as of the Effective Date.


 


SECTION 3.13. Insurance. Schedule 3.13 sets forth
a description of all insurance maintained by or on behalf of Holdings, the
Borrower or any Subsidiary as of the Effective Date. As of the Effective Date,
all premiums in respect of such insurance have been paid. Holdings and the
Borrower believe that the insurance maintained by or on behalf of Holdings, the
Borrower and the Subsidiaries is in such amounts (with no greater risk
retention) and against such risks as is (i) customarily maintained by
companies of established repute engaged in the same or similar businesses
operating in the same or similar locations and (ii) adequate.


 


SECTION 3.14. Labor Matters. Except for Disclosed
Matters and such other matter that in the aggregate would not reasonably be
expected to have a Material Adverse Effect, none of Holdings, Borrower, nor any
of the Subsidiaries has received written notice, or otherwise has reason to
believe that it is engaged in any unfair labor practice that would reasonably
be expected to have a Material Adverse Effect. There is (i) no unfair
labor practice complaint pending against Holdings, Borrower or any of the
Subsidiaries or, to the knowledge of Holdings or the Borrower, threatened
against any of them, before the National Labor Relations Board, and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against Holdings, Borrower or any of the
Subsidiaries or, to the knowledge of Holdings or the Borrower, threatened
against any of them, (ii) no strike, labor dispute, slowdown or stoppage
pending against Holdings, Borrower or any of the Subsidiaries or, to the
knowledge of Holdings or the Borrower, threatened against Holdings, Borrower or
any of the Subsidiaries and (iii) to the knowledge of Holdings or the
Borrower, no union representation question existing with respect to the
employees of Holdings, Borrower or any of the Subsidiaries and, to the
knowledge of Holdings or the Borrower, no union organizing activities are
taking place.


 


43

















 


SECTION 3.15. Solvency. Immediately after the
consummation of the Transactions, (a) the fair value of the assets of each
Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise, (b) the present fair saleable value
of the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured, (c) each Loan Party will be able to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, and (d) each Loan Party will not
have unreasonably small capital with which to conduct the business in which it
is engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.


 


ARTICLE IV


 


Conditions


 


SECTION 4.01. Effective Date. The obligations of
the Lenders to make Loans hereunder shall not become effective until the date
on which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):


 


(a) The Administrative Agent
and the Joint Lead Arrangers (or their counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf
of such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.


 


(b) The Administrative Agent
and the Joint Lead Arrangers shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of Sullivan & Cromwell LLP, counsel for Holdings, the Borrower and
the Subsidiaries, substantially in the form of Exhibit B and covering such
other matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Administrative Agent or either Joint Lead Arranger shall
reasonably request. Each of Holdings and the Borrower hereby requests such
counsel to deliver such opinion.


 


(c) The Administrative Agent
and the Joint Lead Arrangers shall have received such documents and
certificates as the Administrative Agent, either Joint Lead Arranger or their
counsel may reasonably request relating to the organization, existence and good
standing of each Loan Party, the authorization of the Transactions and any
other legal matters relating to the Loan Parties, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Administrative
Agent, the Joint Lead Arrangers and their counsel.


 


(d) The Administrative Agent
and the Joint Lead Arrangers shall have received a certificate, dated the
Effective Date and signed by a Financial Officer


 


44

















 


or the President
or a Vice President of Holdings, confirming compliance with the conditions set
forth in paragraphs (a) and (b) of Section 4.02.


 


(e) The Administrative Agent,
the Joint Bookrunners, the Joint Lead Arrangers and their Affiliates shall have
received all fees and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses (including fees, charges and disbursements of
counsel) required to be reimbursed or paid by any Loan Party under any Loan
Document.


 


(f) The Effective Date
Guarantee Requirement shall have been satisfied and the Administrative Agent
and the Joint Lead Arrangers shall have received a completed Perfection
Certificate dated the Effective Date and signed by a Financial Officer or legal
officer of Holdings, together with all attachments contemplated thereby,
including the results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties in the jurisdictions
contemplated by the Perfection Certificate and copies of the financing
statements (or similar documents) disclosed by such search and evidence
reasonably satisfactory to the Administrative Agent and the Joint Lead
Arrangers that the Liens indicated by such financing statements (or similar
documents) are permitted by Section 6.02 or have been released.


 


(g) The Administrative Agent
shall have received evidence that the insurance required by Section 5.07
is in effect.


 


(h) All consents and approvals
required to be obtained from any Governmental Authority or other Person in
connection with the Transactions shall have been obtained, and all applicable
waiting periods and appeal periods (including any extensions thereof) shall
have expired and there shall be no governmental or judicial action, actual or
threatened, that could reasonably be expected to restrain, prevent or impose
burdensome conditions on the Transactions.


 


(i) The Lenders shall have
received a pro forma consolidated balance sheet of Holdings as of
September 30, 2005, reflecting all pro forma adjustments as if the
Transactions had been consummated on such date, and such pro forma consolidated
balance sheet shall be consistent in all material respects with the forecasts
and other information previously provided to the Lenders.


 


(j) The Lenders shall have
received (i)(a) audited combined balance sheets and combined statements of
operations and comprehensive income, stockholders’ equity and cash flows of
Morgans Hotel Group Co. Predecessor as of and for the fiscal years ended
December 31, 2004 and the related notes thereto and (b) the audited balance
sheet of Holdings as of October 21, 2005 and the related notes thereto, in each
case accompanied by a true and correct copy of the reports thereon by BDO
Seidman, LLP, independent registered public accounting firm, and
(ii) unaudited combined balance sheets and combined statements of


 


45

















 


operations and
comprehensive income, stockholders’ equity and cash flows of Morgans Hotel
Group Co. Predecessor as of and for the fiscal quarter and portion of the
fiscal year ended September 30, 2005 (and for the comparable periods for the
prior fiscal year), prepared in accordance with GAAP consistently applied
(subject to year-end audit adjustments and the absence of footnotes) and
certified by a Financial Officer, which financial statements described in
clauses (i) and (ii) shall not be materially inconsistent with the
financial statements or forecasts previously provided to the Lenders.


 


(k) The Joint Lead Arrangers
shall be satisfied that the Transactions (other than the effectiveness of this
Agreement) shall be or have been consummated in all material respects as
described on Schedule 1.01 or otherwise on terms reasonably acceptable to the
Joint Lead Arrangers (and no material aspect of the Transactions shall have
been modified in a manner material and adverse to the Lenders without the
consent of the Joint Lead Arrangers). The Lenders shall have received a
certificate of a Financial Officer or a legal officer of Holdings certifying
that the Formation and Structuring Transactions have been consummated and the
Debt Prepayment has occurred.


 


(l) After giving effect to the
Transactions, none of Holdings, the Borrower or any Subsidiary shall have
outstanding any shares of preferred stock or Disqualified Equity Interests or
any Indebtedness, other than (i) Indebtedness incurred under the Loan
Documents, (ii) Indebtedness outstanding under the Management Term Loan
Credit Agreement and (iii) Indebtedness set forth on Schedule 6.01. The
terms and conditions of all Indebtedness to remain outstanding after the
Effective Date (including terms and conditions relating to interest rates,
fees, amortization, maturity, redemption, subordination, covenants, events of
default and remedies) shall be satisfactory in all respects to the Lenders.


 


(m) The Administrative Agent
and the Joint Lead Arrangers shall be satisfied that, after giving effect to
the Transactions on the Effective Date, the Leverage Ratio for the most
recently ended four fiscal quarter period ending at least 45 days prior to the
Effective Date shall be no more than 5.00 to 1.00, and the Lenders shall have
received a certificate of a Financial Officer certifying to that effect.


 


The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and binding. Notwithstanding the
foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or
waived pursuant to Section 9.02) at or prior to 5:00 p.m., New York
City time, on March 15, 2006 (and, in the event such conditions are not so
satisfied or waived, the Commitments shall terminate at such time).


 


SECTION 4.02. Each Credit Event. The obligation of
each Lender to make a Loan on the occasion of any Borrowing is subject to
receipt of the request therefor in accordance herewith and to the satisfaction
of the following conditions:


 


46

















 


(a) The representations and
warranties of each Loan Party set forth in the Loan Documents shall be true and
correct on and as of the date of such Borrowing.


 


(b) At the time of and
immediately after giving effect to such Borrowing no Default shall have
occurred and be continuing.


 


Each Borrowing
(provided that a conversion or a continuation of a Borrowing shall not
constitute a “Borrowing” for purposes of this Section) shall be deemed to
constitute a representation and warranty by Holdings and the Borrower on the
date thereof as to the matters specified in paragraphs (a) and (b) of this
Section.


 


ARTICLE V


 


Affirmative Covenants


 


Until the
Commitments have expired or been terminated and the principal of and interest
on each Loan and all fees, expenses and other amounts (other than contingent
amounts not yet due) payable under any Loan Document shall have been paid in
full, each of Holdings and the Borrower covenants and agrees with the Lenders
that:


 


SECTION 5.01. Financial Statements and Other
Information. The Borrower will furnish to the Administrative Agent and each
Joint Lead Arranger:


 


(a) within 90 days after
the end of each fiscal year of Holdings, Holdings’s audited consolidated
balance sheet and audited consolidated statements of operations and
comprehensive income, stockholders’ equity and cash flows as of the end of and
for such year, and related notes thereto, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
BDO Seidman, LLP or other independent registered public accountants of
recognized national standing (without a “going concern” or like qualification
or exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
Holdings and its subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, provided that the filing of such financial
statements with the Securities and Exchange Commission shall constitute
delivery for purposes of this Section;


 


(b) within 45 days after
the end of each of the first three fiscal quarters of each fiscal year of
Holdings, Holdings’s unaudited consolidated balance sheet and unaudited
consolidated statements of operations and comprehensive income, stockholders’
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
a Financial Officer as presenting fairly in all material respects the financial
condition and results of operations of Holdings and its subsidiaries on a


 


47

















 


consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes, provided that the filing
of such financial statements with the Securities and Exchange Commission shall
constitute delivery for purposes of this Section;


 


(c) concurrently with any
delivery of financial statements under paragraph (a) or
(b) above, a certificate of a Financial Officer (i) certifying as to
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations demonstrating
compliance with the covenants contained in Sections 6.12, 6.13 and 6.14 and
(iii) stating whether any change in the application of GAAP to the
financial statements of Holdings has occurred since the later of the date of
the Borrower’s audited financial statements referred to in Section 3.04
and the date of the prior certificate delivered pursuant to this paragraph (c)
indicating such a change and, if any such change has occurred, specifying the
effect of such change on the financial statements accompanying such
certificate;


 


(d) prior to the commencement
of each fiscal year of the Borrower, a detailed consolidated budget for such
fiscal year (including a projected consolidated balance sheet and consolidated
statements of projected operations, comprehensive income and cash flows as of
the end of and for such fiscal year and setting forth the assumptions used for
purposes of preparing such budget) and, promptly when available, any
significant revisions of such budget; and


 


(e) promptly following any
request therefor, such other information regarding the operations, business
affairs and financial condition of Holdings, the Borrower or any Subsidiary, or
compliance with the terms of any Loan Document, as the Administrative Agent or
any Lender may reasonably request.


 


SECTION 5.02. Notices of Material Events. Holdings
and the Borrower will furnish to the Administrative Agent (for distribution to
each Lender through the Administrative Agent) written notice of the following
promptly after obtaining knowledge thereof:


 


(a) the occurrence of any
Default;


 


(b) the filing or commencement
of any action, suit or proceeding by or before any arbitrator or Governmental
Authority against or, to the knowledge of a Financial Officer or another
executive officer of Holdings, the Borrower or any Subsidiary, affecting
Holdings, the Borrower or any Affiliate thereof that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect;


 


(c) the occurrence of any ERISA
Event or any fact or circumstance that gives rise to a reasonable expectation
that any ERISA Event will occur that, in either case, alone or together with
any other ERISA Events that have occurred or


 


48

















 


are reasonably
expected to occur, could reasonably be expected to result in a Material Adverse
Effect; and


 


(d) any other development
(including notice of any Environmental Liability) that results in, or could
reasonably be expected to result in, a Material Adverse Effect.


 


Each notice
delivered under this Section shall be accompanied by a written statement of a
Financial Officer or other executive officer of Holdings setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.


 


SECTION 5.03. Information Regarding Collateral. (a)  In the event that the Collateral and
Guarantee Requirement has been satisfied, the Borrower will furnish to the
Administrative Agent prompt written notice of any change (i) in any Loan
Party’s corporate name, (ii) in the jurisdiction of incorporation or
organization of any Loan Party or (iii) in any Loan Party’s organizational
identification number. The Borrower agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral. The
Borrower also agrees promptly to notify the Administrative Agent if any
material portion of the Collateral is damaged or destroyed.


 


(b)  In the event
that the Collateral and Guarantee Requirement has been satisfied, at the time
of delivery of financial statements pursuant to Section 5.01(a) or (b),
the Borrower shall deliver to the Administrative Agent a certificate executed
by a Financial Officer or chief legal officer of Holdings (i) setting
forth the information required pursuant to the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Effective Date or the date of the
most recent certificate delivered pursuant to this Section and
(ii) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as the case may be) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect
and perfect the security interests under the Collateral Agreement for a period
of not less than 18 months after the date of such certificate (except as noted
therein with respect to any continuation statements to be filed within such
period).


 


SECTION 5.04. Existence; Conduct of Business. Each
of Holdings and the Borrower will, and will cause each Subsidiary to, do or
cause to be done all things necessary to obtain, preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits,
privileges, franchises, patents, copyrights, trademarks and trade names
material to the conduct of its business, provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.03.


 


49

















 


SECTION 5.05. Payment of Obligations. Each of
Holdings and the Borrower will, and will cause each Subsidiary to, pay its
material obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) Holdings,
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP, (c) such contest effectively
suspends collection of the contested obligation and the enforcement of any Lien
securing such obligation and (d) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.


 


SECTION 5.06. Maintenance of Properties. Except to
the extent the failure to do so could not reasonably be expected to result in a
Material Adverse Effect, each of Holdings and the Borrower will, and will cause
each Subsidiary to, keep and maintain all property material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted.


 


SECTION 5.07. Insurance. Each of Holdings and the
Borrower will, and will cause each Subsidiary to, maintain, with financially
sound and reputable insurance companies, (a) insurance in such amounts
(with no greater risk retention) and against such risks as is
(i) customarily maintained by companies of established repute engaged in
the same or similar businesses operating in the same or similar locations and
(ii) considered adequate by Holdings and the Borrower and (b) all
other insurance as may be required by law or any other Loan Document. The
Borrower will furnish to the Lenders, upon request of the Administrative Agent,
information in reasonable detail as to the insurance so maintained.


 


SECTION 5.08. Casualty and Condemnation. In the
event that the Collateral and Guarantee Requirement has been satisfied, the
Borrower (a) will furnish to the Administrative Agent (for distribution to
each Lender through the Administrative Agent) prompt written notice of any
casualty or other insured damage to any material portion of the Collateral or
the commencement of any action or proceeding for the taking of any material
portion of or any material interest in the Collateral under power of eminent
domain or by condemnation or similar proceeding.


 


SECTION 5.09. Books and Records; Inspection and Audit
Rights. Each of Holdings and the Borrower will, and will cause each
Subsidiary to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities. Each of Holdings and the Borrower will, and will cause
each Subsidiary to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.


 


SECTION 5.10. Compliance with Laws. Each of
Holdings and the Borrower will, and will cause each Subsidiary to, comply with
all Requirements of Law with respect to it or its property except to the extent
that the failure to do so, individually


 


50

















 


or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.


 


SECTION 5.11. Use of Proceeds. The proceeds of the
Revolving Loans will be used only for general corporate purposes, including
Permitted Acquisitions. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations T, U and X.


 


SECTION 5.12. Additional Subsidiaries. If any
additional Subsidiary is formed or acquired after the Effective Date, the
Borrower will, within thirty Business Days after such Subsidiary is formed or
acquired, notify the Administrative Agent and the Lenders thereof.


 


SECTION 5.13. Further Assurances. (a)  Each of Holdings and the Borrower will, and
will cause each Subsidiary Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), that may be
required under any applicable law, or that the Administrative Agent or the
Required Lenders may reasonably request, to cause the Effective Date Guarantee
Requirement to be and remain satisfied and to cause the Collateral and
Guarantee Requirement, if satisfied, to remain satisfied, all at the expense of
the Loan Parties. Each of Holdings and the Borrower also agrees to provide to
the Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents.


 


(b)  In the event
that the Collateral and Guarantee Requirement has been satisfied, if any
material assets (including any real property or improvements thereto or any
interest therein with a fair market value in excess of $5,000,000) are acquired
by the Borrower or any Subsidiary Loan Party after the Effective Date (other
than assets constituting Collateral under the Collateral Agreement that become
subject to the Lien created by the Collateral Agreement upon acquisition thereof),
the Borrower will notify the Administrative Agent and the Lenders thereof.


 


SECTION 5.14. Interest Rate Protection. Holdings
will, directly or indirectly, maintain in effect one or more Swap Agreements
the effect of which is that at least 50% of Total Indebtedness will be subject
to interest at a fixed rate or the interest cost in respect of which will be
fixed, in each case on terms and conditions reasonably acceptable to the Joint
Lead Arrangers.


 


ARTICLE VI


 


Negative Covenants


 


Until the
Commitments have expired or been terminated and the principal of and interest
on each Loan and all fees, expenses and other amounts payable (other than


 


51

















 


contingent
amounts not yet due) under any Loan Document have been paid in full, each of
Holdings and the Borrower covenants and agrees with the Lenders that:


 


SECTION 6.01. Indebtedness; Certain Equity Securities.
(a)  The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:


 


(i) Indebtedness created under the Loan Documents;


 


(ii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness, provided that such extending, renewal or replacement
Indebtedness (A) shall not be Indebtedness of an obligor that was not an
obligor with respect to the Indebtedness being extended, renewed or replaced
(unless such obligor is a Subsidiary formed specifically for that purpose), (B) shall
not be in a principal amount that exceeds the principal amount of the
Indebtedness being extended, renewed or replaced (plus any accrued but unpaid
interest and redemption premium thereon), (C) shall not have an earlier
maturity date or shorter weighted average life than the Indebtedness being
extended, renewed or replaced and (D) shall not have terms (including
covenants, events of default, remedies, redemption provisions and sinking fund
provisions, but excluding financial terms such as interest rates and redemption
provisions) less favorable in any material respect to the Lenders than the
terms of the Indebtedness being extended, renewed or replaced;


 


(iii) Indebtedness outstanding under the Management Term Loan Credit
Agreement and extensions, renewals and replacements of such Indebtedness, provided
that such extending, renewal or replacement Indebtedness (A) shall not be
Indebtedness of an obligor that was not an obligor with respect to Indebtedness
being extended, renewed or replaced (unless such obligor is a Subsidiary formed
specifically for that purpose), (B) shall not be in a principal amount
that exceeds the principal amount of the Indebtedness being extended, renewed
or replaced (plus any accrued but unpaid interest and redemption premium thereon),
(C) shall not have an earlier maturity date or shorter weighted average
life than the Indebtedness being extended, renewed or replaced, (D) if
applicable, shall rank pari  passu or junior in right of payment
in respect of the Collateral and with the obligations in respect of the
Revolving Loans and (E) shall not have terms (including covenants, events
of default, remedies, redemption provisions and sinking fund provisions, but
excluding financial terms such as interest rates and redemption provisions) less
favorable in any material respect to the Lenders than the terms of the
Management Term Loan Credit Agreement;


 


(iv) Additional Mortgage Indebtedness and extensions, renewals and
replacements thereof if, on the date of such incurrence or extension, renewal
or replacement and after giving effect thereto on a Pro Forma Basis, the Senior
Leverage Ratio shall not exceed 5.00 to 1.00;


 


52

















 


(v) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary, provided
(A) that Indebtedness of any Subsidiary that is not a Loan Party to the
Borrower or any Subsidiary Loan Party shall be subject to Section 6.04 and
(B) Indebtedness of the Borrower to any Subsidiary and Indebtedness of any
Subsidiary Loan Party to any Subsidiary that is not a Subsidiary Loan Party
shall be subordinated to the Obligations on terms reasonably satisfactory to
the Administrative Agent;


 


(vi) Guarantees by the Borrower of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary, provided
that (A) the Indebtedness so Guaranteed is permitted by this Section
(other than clause (a)(ii) or (a)(viii)), (B) Guarantees by the
Borrower or any Subsidiary Loan Party of Indebtedness of any Subsidiary that is
not a Loan Party shall be subject to Section 6.04 and (C) Guarantees
permitted under this clause (vi) shall be subordinated to the Obligations
of the applicable Subsidiary Loan Party to the same extent and on the same
terms as the Indebtedness so Guaranteed is subordinated to the Obligations;


 


(vii) (A) Indebtedness of the Borrower or any Subsidiary incurred
to finance the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness assumed by the
Borrower or any Subsidiary in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition
thereof, provided that such Indebtedness is incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement, and (B) extensions, renewals and replacements of any such
Indebtedness so long as the outstanding principal amount of such extensions,
renewals and replacements does not exceed the principal of the Indebtedness
being extended, renewed or replaced (plus any accrued but unpaid interest and
premium thereon), provided that the aggregate principal amount of
Indebtedness permitted by this clause (vii) shall not exceed $5,000,000 at
any time outstanding;


 


(viii) Indebtedness of any Person that becomes a Subsidiary after the
date hereof, provided that such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary, and extensions, renewals and
replacements of any such Indebtedness so long as the principal amount of such
extensions, renewals and replacements does not exceed the principal of the
Indebtedness being extended, renewed or replaced (plus any accrued but unpaid
interest and redemption premium thereon), provided that the aggregate
principal amount of Indebtedness permitted by this clause (viii) shall not
exceed $5,000,000 at any time outstanding;


 


(ix) other unsecured Indebtedness of the Borrower or any Subsidiary in
an aggregate principal amount not exceeding $5,000,000 at any time outstanding;


 


53

















 


(x) Indebtedness owed to any Person (including obligations in respect
of letters of credit for the benefit of such Person) providing workers’
compensation, health, disability or other employee benefits or property,
casualty or liability insurance, pursuant to reimbursement or indemnification
obligations to such Person, in each case incurred in the ordinary course of
business;


 


(xi) Indebtedness of the Borrower or any Subsidiary in respect of
performance bonds, bid bonds, appeal bonds, surety bonds, performance and
completion guarantees and similar obligations (other than in respect of other
Indebtedness), in each case provided in the ordinary course of business;


 


(xii) Indebtedness in respect of Swap Agreements permitted by
Section 6.07;


 


(xiii) Capital Lease Obligations of the Borrower or any Subsidiary
resulting from any arrangement whereby the Borrower or such Subsidiary sells or
transfers any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rents or leases such
property or other property that it intends to use for substantially the same
purpose or purposes as the property sold or transferred if, on the date of such
incurrence on a Pro Forma Basis, the Senior Leverage Ratio shall not exceed
5.00 to 1.00; and


 


(xiv) Guarantees and/or indemnities (other than in respect of payment
of principal or interest) by the Borrower or any Subsidiary in respect of
capital contributions, project completions and cost-overruns and other
performance matters (including environmental, fraud, misappropriation,
bankruptcy and other customary non-recourse carveouts), in each case in
connection with investments or Indebtedness otherwise permitted under this
Agreement.


 


(b)  Holdings will
not create, incur, assume or permit to exist any Indebtedness except
(i) Indebtedness created under the Loan Documents and the Management Term
Loan Credit Agreement and (ii) Indebtedness that would be permitted to be
created, incurred or assumed by the Borrower or any Subsidiary under
Sections 6.01(a)(vi), (x), (xi), (xii) and (xiv).


 


(c)  Neither
Holdings nor the Borrower will, nor will they permit any Subsidiary to, issue
any preferred Equity Interests except in the case of Holdings or the Borrower,
preferred Equity Interests that are Qualified Equity Interests or trust
preferred securities in an aggregate principal amount not exceeding
$150,000,000 at any time outstanding, provided that any such preferred
Equity Interests or trust preferred securities issued by the Borrower to
Holdings for purposes of matching preferred Equity Interests or trust preferred
securities issued by Holdings shall be excluded from the calculation of such
amount.


 


SECTION 6.02. Liens. (a)  Neither Holdings nor the Borrower will, nor
will they permit any Subsidiary to, create, incur, assume or permit to exist
any Lien on


 


54

















 


any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except:


 


(i) Liens created under the Loan Documents;


 


(ii) Permitted Encumbrances;


 


(iii) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02, provided
that (A) such Lien shall not apply to any other property or asset of the
Borrower or any Subsidiary (other than assets financed by the same financing
source pursuant to the same financing scheme in the ordinary course of
business) and (B) such Lien shall secure only those obligations that it
secures on the date hereof and extensions, renewals and replacements thereof so
long as the principal amount of such extensions, renewals and replacements does
not exceed the principal amount of the obligations being extended, renewed or
replaced (plus any accrued but unpaid interest and premium thereon);


 


(iv) Liens securing Indebtedness permitted by clause (a)(iii) of
Section 6.01, provided that such Lien shall not apply to any other
property or asset of the Borrower or any Subsidiary (other than assets financed
by the same financing source pursuant to the same financing scheme in the
ordinary course of business);


 


(v) Liens securing Indebtedness permitted by clause (a)(iv) of
Section 6.01, provided that (A) such Lien shall not apply to any
other property or asset of the Borrower or any Subsidiary (other than assets
financed by the same financing source pursuant to the same financing scheme in
the ordinary course of business) and (B) the Indebtedness secured thereby does
not exceed the fair market value of the property or assets securing such
Indebtedness at the time such security interest attaches;


 


(vi) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary, provided that (A)
such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (B) such
Lien shall not apply to any other property or asset of the Borrower or any
Subsidiary (other than assets financed by the same financing source pursuant to
the same financing scheme in the ordinary course of business) and (C) such Lien
shall secure only those obligations that it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case may be,
and extensions, renewals and replacements thereof so long as the principal
amount of such extensions, renewals and replacements does not exceed the
principal amount of the obligations being extended, renewed or replaced (plus
any accrued but unpaid interest and premium thereon);


 


55

















 


(vii) Liens on fixed or capital assets acquired, constructed or
improved (including any such assets made the subject of a Capital Lease
Obligation incurred) by the Borrower or any Subsidiary, provided that
(A) such Liens secure Indebtedness incurred to finance such acquisition,
construction or improvement and permitted by clause (vii)(A) of
Section 6.01(a) or to extend, renew or replace such Indebtedness and
permitted by clause (vii)(B) of Section 6.01(a), (B) such Liens
and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement (provided that this clause (B) shall not apply to any
Indebtedness permitted by clause (vii)(B) of Section 6.01(a) or any
Lien securing such Indebtedness), (C) the Indebtedness secured thereby
does not exceed the lesser of the cost of acquiring, constructing or improving
such fixed or capital asset or, in the case of Indebtedness permitted by
clause (vii)(A) of Section 6.01, its fair market value at the time
such security interest attaches, and in any event, the aggregate principal
amount of such Indebtedness does not exceed $5,000,000 at any time outstanding
and (D) such Liens shall not apply to any other property or assets of the
Borrower or any Subsidiary (except assets financed by the same financing source
pursuant to the same financing scheme in the ordinary course of business);


 


(viii) Liens of a collecting bank arising in the ordinary course of
business under Section 4-208 of the Uniform Commercial Code in effect in
the relevant jurisdiction covering only the items being collected upon;


 


(ix) Liens representing any interest or title of a licensor, lessor or
sublicensor or sublessor under any lease or license permitted by this
Agreement;


 


(x) Liens that are rights of setoff relating to deposit accounts in
favor of banks and other depositary institutions arising in the ordinary course
of business;


 


(xi) Liens not otherwise permitted by this Section to the extent that
neither (A) the aggregate outstanding principal amount of the obligations secured
thereby nor (B) the aggregate fair market value (determined as of the date such
Lien is incurred) of the assets subject thereto exceeds $1,000,000 at any time
outstanding;


 


(xii) Liens granted by a Subsidiary that is not a Loan Party in favor
of the Borrower or another Loan Party in respect of Indebtedness or other
obligations owed by such Subsidiary to such Loan Party; and


 


(xiii) Liens securing Indebtedness permitted by clause (a)(xiii)
of Section 6.01, provided that such Lien shall not apply to any
other property or asset of the Borrower or any Subsidiary (other than assets
financed by the same financing source pursuant to the same financing scheme in
the ordinary course of business).


 


SECTION 6.03. Fundamental Changes. (a)  Neither Holdings nor the Borrower will, nor
will they permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate


 


56

















 


or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving entity, (ii) any Person
(other than the Borrower) may merge into any Subsidiary in a transaction in
which the surviving entity is a Subsidiary and (if any party to such merger is
a Subsidiary Loan Party) is a Subsidiary Loan Party, (iii) any Subsidiary
(other than a Subsidiary Loan Party) may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders
and (iv) any Subsidiary (other than the Revolving Borrower and any Subsidiary
Loan Party) may merge into another Person in a transaction permitted by Section
6.05 in which such Person is the surviving entity, provided that any
such merger involving a Person that is not a wholly-owned Subsidiary
immediately prior to such merger shall not be permitted unless also permitted
by Sections 6.04 and 6.05.


 


(b)  The Borrower
will not, and Holdings and the Borrower will not permit any Subsidiary to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and the Subsidiaries on the Effective Date and
businesses reasonably related thereto.


 


(c)  Holdings will
not engage in any business or activity other than the ownership of Equity
Interests of the Borrower and activities incidental thereto and compliance with
its obligations under the Loan Documents and the Management Term Loan Credit
Agreement. Holdings will not own or acquire any assets (other than Equity
Interests of the Borrower, cash and Permitted Investments) or incur any
liabilities (other than liabilities under the Loan Documents and the Management
Term Loan Credit Agreement, liabilities imposed by law, including tax
liabilities, and other liabilities incidental to its existence as a public
holding company and permitted business and activities).


 


SECTION 6.04. Investments, Loans, Advances, Guarantees
and Acquisitions. Neither Holdings nor the Borrower will, nor will they
permit any Subsidiary to, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly-owned Subsidiary prior to such
merger) any Equity Interests (but specifically excluding (x) Holdings’ right to
acquire and hold additional Equity Interests in (including, for this purpose,
to the extent not otherwise falling within the definition of “Equity Interests”,
any trust preferred securities of) the Borrower and (y) redemptions or other
repurchases by the Borrower or Holdings of any such Equity Interests in
accordance with the provisions of Sections 4.2(e) and 7.4(d) of the LLC
Agreement) in or evidences of Indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person,
or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit,
except:


 


(a) Permitted Investments;


 


57

















 


(b)
Permitted Acquisitions;


 


(c)
investments existing on the date hereof and set forth on Schedule 6.04;


 


(d)
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses of Holdings, the
Borrower or any Subsidiary for accounting purposes and that are made in the
ordinary course of business;


 


(e)
(i) investments by Holdings in Equity Interests of the Borrower, by the
Borrower or any other Loan Party (other than Holdings) in Equity Interests of a
Subsidiary Loan Party or any direct or indirect wholly owned Subsidiary of any
Loan Party and (ii) loans or advances made by the Borrower or any other Loan
Party (other than Holdings) to any Subsidiary Loan Party or any direct or
indirect wholly owned Subsidiary of any Loan Party and (iii) any
contribution of assets from a Loan Party or a wholly owned direct or indirect
Subsidiary of a Loan Party to another Loan Party or wholly owned direct or
indirect Subsidiary of a Loan Party;


 


(f)
investments received in connection with the bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers,
in each case in the ordinary course of business;


 


(g)
investments in the form of Swap Agreements permitted by Section 6.07;


 


(h)
investments of any Person existing at the time such Person becomes a Subsidiary
or consolidates or merges with the Borrower or any Subsidiary (including in
connection with a Permitted Acquisition) so long as such investments were not
made in contemplation of such Person becoming a Subsidiary or of such
consolidation or merger;


 


(i)
investments resulting from pledges or deposits described in clause (c) or (d)
of the definition of the term “Permitted Encumbrance”;


 


(j)
investments received in connection with the disposition of any asset permitted
by Section 6.05;


 


(k)
receivables or other trade payables owing to the Borrower or a Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms, provided that
such trade terms may include such concessionary trade terms as the Borrower or
any Subsidiary deems reasonable under the circumstances;


 


(l)
investments by the Borrower or a Subsidiary in Equity Interests in joint
ventures the primary business of which are businesses of the type conducted by
the Borrower and the Subsidiaries on the Effective Date and businesses
reasonably related thereto, provided that immediately after giving
effect to such


 


58

















 


investment,
(i) the Borrower or such Subsidiary will own Equity Interests in such
joint venture representing at least 50% of the aggregate equity value
represented by the issued and outstanding Equity Interests in such joint
venture, (ii) the Borrower or a Subsidiary will manage or otherwise be
responsible for the day-to-day operations of such joint venture pursuant to a
customary management contract (or will have been designated to act in such
capacity upon project completion) or will have influence over such day-to-day
operations by virtue of a franchise arrangement (or will have been designated
to have such influence upon project completion) or (iii) the Borrower or a
Subsidiary will be the managing member or day-to-day administrative member of
such joint venture, or will have approval rights over major decisions with
respect to such joint venture;


 


(m)
other investments, loans and advances by the Borrower or any Subsidiary in an
aggregate amount, as valued at cost at the time each such investment, loan or
advance is made and including all related commitments for future investments,
loans or advances (and the principal amount of any Indebtedness that is assumed
or otherwise incurred in connection with such investment, loan or advance) and
without giving effect to any write-downs or write-offs thereof, that at the
time of, and after giving effect to, the making thereof would not exceed 25% of
Total Assets as of the end of the fiscal quarter immediately prior to the date
of such investment for which financial statements have been delivered pursuant
to Section 5.01;


 


(n)
repurchases by either of Holdings or the Borrower of common Equity
Interests previously issued by such entity, subject to an aggregate limit of
not more than 5% of the outstanding shares of common stock or common
membership interests, as applicable; and


 


(o)
any Guarantees and/or indemnities permitted by Section 6.01(a)(xiv).


 


SECTION
6.05. Asset Sales. Neither Holdings nor the Borrower will, nor will they
permit any Subsidiary to, sell, transfer, lease or otherwise dispose of any
asset, including any Equity Interest owned by it, nor will Holdings or the
Borrower permit any Subsidiary to issue any additional Equity Interest in such
Subsidiary (other than issuing directors’ qualifying shares and other than
issuing Equity Interests to the Borrower or another Subsidiary in compliance
with Section 6.04(e)(i)), except:


 


(a)
sales, transfers, leases and other dispositions of (i) inventory,
(ii) used or surplus equipment and (iii) Permitted Investments, in
each case in the ordinary course of business;


 


(b)
sales, transfers, leases and other dispositions to the Borrower or a
Subsidiary, provided that any such sales, transfers, leases or other
dispositions involving a Subsidiary that is not a Loan Party shall be made in
compliance with Section 6.09;


 


59

















 


(c)
sales, transfers and other dispositions of accounts receivable in connection
with the compromise, settlement or collection thereof consistent with past
practice;


 


(d)
sales, transfers, leases and other dispositions of property to the extent that
such property constitutes an investment permitted by clause (f), (h) or
(j) of Section 6.04 or another asset received as consideration for the
disposition of any asset permitted by this Section (in each case, other than
Equity Interests in a Subsidiary, unless all Equity Interests in such
Subsidiary are sold);


 


(e)
sale and leaseback transactions not prohibited by any other Section of this
Article VI;


 


(f)
leases entered into in the ordinary course of business, to the extent that they
do not materially interfere with the business of Holdings, the Borrower or any
Subsidiary;


 


(g)
licenses or sublicenses of intellectual property in the ordinary course of
business, to the extent that they do not materially interfere with the business
of Holdings, the Borrower or any Subsidiary;


 


(h)
dispositions resulting from any casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any property or asset of the Borrower or any Subsidiary;


 


(i)
sales, transfers and other dispositions of assets or any direct or indirect
interest therein, provided that promptly following the receipt of any
cash proceeds from such sale, transfer or disposition, the Borrower or the
applicable Subsidiary will use such proceeds to (x) acquire, maintain, develop,
construct, improve, upgrade or repair assets useful in the business of the Loan
Parties, or make investments pursuant to Section 6.04(b), in each case within
nine months of such receipt or (y) repay outstanding Indebtedness, and


 


(j)
sales, transfers and other dispositions of assets (other than Equity Interests
in a Subsidiary unless all Equity Interests in such Subsidiary are sold) that
are not permitted by any other clause of this Section, provided that the
aggregate fair market value of all assets sold, transferred or otherwise
disposed of in reliance upon this clause (i) shall not exceed $5,000,000 during
any fiscal year of the Borrower,


 


provided that all sales, transfers, leases and other
dispositions permitted hereby (other than those permitted by clause (b))
shall be made for fair value (as determined by a Financial Officer in good
faith) and, in the event of sale, transfer, lease or other disposition of all
or substantially all of the Borrower’s or the applicable Subsidiary’s interest
in any Existing Hotel Property, for at least 75% cash consideration and/or
like-kind consideration payable at the time of such sale, transfer or other
disposition, provided that assumed debt shall be deemed to be cash for purposes
of such determination.


 


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SECTION
6.06. [Intentionally Omitted.]


 


SECTION
6.07. Swap Agreements. Neither Holdings nor the Borrower will, nor will
they permit any Subsidiary to, enter into any Swap Agreement, except
(a) Swap Agreements required by Section 5.14 or entered into to hedge or
mitigate risks to which the Borrower or any Subsidiary has actual exposure
(other than those in respect of shares of capital stock or other equity
ownership interests of the Borrower or any Subsidiary), (b) Swap
Agreements entered into in order to effectively cap, collar or exchange
interest rates (from fixed to floating rates, from one floating rate to another
floating rate or otherwise) with respect to any interest-bearing liability or
investment of the Borrower or any Subsidiary and (c) the Borrower or any
Subsidiary will be entitled to issue interest rate protection
pursuant to one or more Swap Agreements if and to the extent that one or
more other wholly-owned Subsidiaries of the Borrower or such
Subsidiary is purchasing or already owns offsetting interest rate
protection for the same duration (or longer) and notional amount (or
greater), provided that any such offsetting Swap Agreement arrangements
will be disregarded for purposes of determining Holdings’s compliance with the
requirements of Section 5.14.


 


SECTION
6.08. Restricted Payments. (a) 
Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except (i)  the Subsidiaries may declare and pay
dividends ratably with respect to their Equity Interests, (ii) Holdings
may declare and pay dividends with respect to its common stock payable solely
in shares of common stock, (iii)  the Borrower may, or may make Restricted
Payments to Holdings so that Holdings may (and Holdings may), make Restricted
Payments pursuant to and in accordance with stock option plans or other benefit
plans approved by Holdings’s board of directors for management or employees of
Holdings, the Borrower and the Subsidiaries, (iv) the Borrower may make
Restricted Payments to Holdings at such times and in such amounts (A) as
shall be necessary to permit Holdings to discharge its general corporate and
overhead (including franchise taxes and directors fees) expenses incurred in
the ordinary course and other permitted liabilities and (B) as shall be
necessary to pay the Tax liabilities of Holdings directly attributable to (or
arising as a result of) the operations of the Borrower and the Subsidiaries; provided,
however, that (1) the amount of Restricted Payments pursuant to
clause (B) of this clause (iv) shall not exceed the amount that the
Borrower and the Subsidiaries would be required to pay in respect of federal,
State and local taxes were the Borrower and the Subsidiaries to pay such taxes
as stand-alone taxpayers, (2) all Restricted Payments made to Holdings
pursuant to this clause (iv) are used by Holdings for the purposes
specified herein within ten Business Days after Holdings’s receipt thereof and
(3) no Default shall have occurred and be continuing or would result
therefrom, (v) each of Holdings, the Borrower may declare and pay
dividends in respect of Qualified Equity Interests and/or trust preferred
securities otherwise permitted hereunder and (vi) Holdings and the
Borrower may make repurchases of common Equity Interests permitted by
Section 6.04(n).


 


SECTION
6.09. Transactions with Affiliates. Neither Holdings nor the Borrower
will, nor will they permit any Subsidiary to, sell, lease or otherwise transfer
any


 


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property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (i) transactions in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or such Subsidiary than could be obtained on an
arm’s-length basis from unrelated third parties or, in the case of management
and/or franchise agreements arising in the ordinary course of business,
agreements between any Subsidiary and the Borrower or any other Subsidiary as
reasonably deemed appropriate by the Borrower, (ii) transactions between
or among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (iii) payroll, travel and similar advances to cover matters
permitted under Section 6.04(d), (iv)  the payment of reasonable fees
to directors or managers of Holdings, the Borrower or any Subsidiary who are
not employees of Holdings, the Borrower or any Subsidiary, and compensation and
employee benefit arrangements paid to, and indemnities provided for the benefit
of, directors, managers, officers or employees of Holdings, the Borrower or the
Subsidiaries in the ordinary course of business, (v) any issuances of
securities or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment agreements, stock options and stock
ownership plans approved by Holdings’s board of directors, (vi) employment
and severance arrangements entered into in the ordinary course of business
between Holdings, the Borrower or any Subsidiary and any employee thereof and
approved by Holdings’s board of directors, (vii) transactions contemplated
by and payments due to Ian Schrager under the Consulting Agreement and the
Services Agreement, (viii) any Restricted Payment permitted by
Section 6.08 or any distributions of cash or other assets from any Person
to any Loan Party or any Subsidiary in respect of Equity Interests held by such
Loan Party or Subsidiary in that Person and (ix) capital contributions by the
Borrower to a Subsidiary or by a Subsidiary to any other Subsidiary, provided
that a Financial Officer has determined in good faith that the terms of such
contribution are fair and reasonable to the contributing party.


 


SECTION
6.10. Restrictive Agreements. Neither Holdings nor the Borrower will,
nor will they permit any Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of Holdings, the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any of its Equity Interests or
to make or repay loans or advances to the Borrower or any other Subsidiary or
to Guarantee Indebtedness of the Borrower or any other Subsidiary, provided
that (i) the foregoing shall not apply to restrictions and conditions
imposed by (A) law or (B) any Loan Document or the Management Term Loan Credit
Agreement, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.10 (but shall
apply to any extension or renewal of, or any amendment, modification or
replacement expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary or any assets
pending such sale, provided that such restrictions and conditions apply
only to the Subsidiary or assets that is or are to be sold and such sale is
permitted hereunder, (iv) the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to 


 


62

















 


the property or assets securing such Indebtedness
and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts restricting the assignment thereof.


 


SECTION
6.11. Amendment of Material Documents. Neither Holdings nor the Borrower
will, nor will they permit any Subsidiary to, amend, modify, waive, terminate
or release (a) its certificate of incorporation, by-laws or other
organizational documents, (b) the Indebtedness permitted under
Section 6.01(a)(ii) or (a)(iii) or (c) any agreements governing joint
ventures of the Borrower or any Subsidiary as of the Effective Date, in each
case if the effect of such amendment, modification, waiver, termination or
release is adverse to Holdings, the Borrower, any Subsidiary or the Lenders.


 


SECTION
6.12. Interest Expense Coverage Ratio. The Borrower will not permit the
ratio of (a) Consolidated EBITDA to (b) Consolidated Cash Interest
Expense (determined on a Pro Forma Basis in accordance with Section 1.05),
in each case for any period of four consecutive fiscal quarters of the Borrower
ending on or about any date during any such period to be less than 2.0 to 1.0.


 


SECTION
6.13. Leverage Ratio. The Borrower will not permit the Leverage Ratio
(determined on a Pro Forma Basis in accordance with Section 1.05) to
exceed 6.5 to 1.0.


 


SECTION
6.14. Senior Leverage Ratio. The Borrower will not permit the Senior
Leverage Ratio (determined on a Pro Forma Basis in accordance with
Section 1.05) to exceed 5.0 to 1.0.


 


SECTION
6.15. Changes in Fiscal Periods. Holdings will neither (a) permit
its fiscal year or the fiscal year of the Borrower or any Subsidiary to end on
a day other than December 31, nor (b) change its method of
determining fiscal quarters.


 


SECTION
6.16. Availability of Exceptions. For the avoidance of doubt, in
determining compliance with the restrictions set forth in this Article VI with
respect to any proposed financing, purchase, sale or other transaction,
the Loan Parties shall be entitled to elect and rely upon any single
exception or any combination of applicable exceptions as they deem appropriate.



 


ARTICLE VII


 


Events of Default


 


If
any of the following events (any such event, an “Event of Default”)
shall occur:


 


(a)
the Borrower shall fail to pay any principal of any Loan when and as the same
shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;


 


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(b)
the Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in paragraph (a) of this Article)
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;


 


(c)
any representation or warranty made or deemed made by or on behalf of Holdings,
the Borrower or any Subsidiary in any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any written report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;


 


(d)
Holdings or the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in (i) Section 5.02, 5.04 (with
respect to keeping in effect the existence of Holdings or the Borrower) or 5.11
or Section 6.01 (indebtedness), Section 6.03 (fundamental change), Section
6.08 (restricted payments) or (ii) any other Section of Article VI not
referred to in clause (i) above and such failure shall continue unremedied for
a period of 10 days after the Borrower receives written notice thereof from any
Lender or the Administrative Agent;


 


(e)
any Loan Party shall fail to observe or perform any covenant, condition or
agreement contained in any Loan Document (other than those specified in
paragraph (a), (b) or (d) of this Article), and such failure shall
continue unremedied for a period of 30 days after Borrower receives
written notice thereof from any Lender or the Administrative Agent to the
Borrower, provided that if such default is susceptible of cure but
cannot reasonably be cured within such 30 day period and the Borrower shall
have commenced to cure such default within such 30 day period and is working in
good faith to cure the same, such 30 day period shall be extended for up to an
additional 30 days;


 


(f)
(i) Holdings, the Borrower or any Subsidiary Loan Party shall fail to make any
payment of principal or interest (regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable or
(ii) the Subsidiary borrower thereunder shall fail to make any payment of
principal or interest (regardless of amount) in respect of Indebtedness
outstanding under the NY/CA Mortgage Loan or any refinancing thereof permitted
hereunder or Indebtedness outstanding under the FL Mortgage Loan or any
refinancing thereof permitted hereunder, when and as the same shall become due
and payable;


 


(g)
any event or condition occurs that results in any Material Indebtedness,
Indebtedness outstanding under the NY/CA Mortgage Loan or any refinancing
thereof permitted hereunder or Indebtedness outstanding under the FL Mortgage
Loan or any refinancing thereof permitted hereunder becoming due prior to its
scheduled maturity, provided that this paragraph (g) shall not
apply to secured 


 


64

















 


Indebtedness
that becomes due as a result of the sale, transfer or other disposition
(including as a result of a casualty or condemnation event) of the property or
assets securing such Indebtedness (to the extent such sale, transfer or other
disposition is not prohibited under this Agreement);


 


(h)
an involuntary proceeding shall be commenced or an involuntary petition shall
be filed seeking (i) liquidation, reorganization or other relief in
respect of Holdings, the Borrower or any Subsidiary Loan Party or its debts, or
of a substantial part of its assets, under any federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings, the Borrower or any Subsidiary
Loan Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;


 


(i)
Holdings, the Borrower or any Subsidiary Loan Party shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in paragraph (h)
of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
Holdings, the Borrower or any Subsidiary Loan Party or for a substantial part
of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any formal action for
the purpose of effecting any of the foregoing;


 


(j)
Holdings, the Borrower or any Subsidiary Loan Party shall become unable, admit
in writing its inability or fail generally to pay its debts as they become due;


 


(k)
one or more judgments for the payment of money in an aggregate amount in excess
of $5,000,000 shall be rendered against Holdings, the Borrower, any Subsidiary
Loan Party or any combination thereof (provided that in determining whether the
foregoing threshold is satisfied, there shall be excluded any portion of such
judgments that is fully covered by a solvent third party insurance company
(less any applicable deductible) and as to which the insurer has not disputed,
in writing, its responsibility to cover such judgment, order, decree or
arbitration award) and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach
or levy upon any assets of Holdings, the Borrower or any Subsidiary Loan Party
to enforce any such judgment;


 


65

















 


(l)
an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;


 


(m)
in the event that the Collateral and Guarantee Requirement has been satisfied,
any Lien purported to be created under any Security Document shall cease to be,
or shall be asserted by any Loan Party not to be, a valid and perfected Lien on
any Collateral with a fair value in excess of $5,000,000, with the priority
required by the applicable Security Document, except (i) as a result of
the sale or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (ii) as a result of the
Administrative Agent’s failure to (A) maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under the
Collateral Agreement or (B) file Uniform Commercial Code continuation
statements;


 


(n)
any Loan Document or any Guarantee of the Loan Document Obligations shall for
any reason be asserted by any Loan Party in writing not to be a legal, valid
and binding obligation of any Loan Party party thereto;


 


(o)
the Guarantees of the Loan Document Obligations by Holdings, the Borrower and
the Subsidiary Loan Parties pursuant to the Guarantee Agreement or, if
applicable, the Collateral Agreement shall cease to be in full force and effect
(in each case, other than in accordance with the terms of the Loan Documents);
or


 


(p)
a Change in Control shall occur;


 


then,
and in every such event (other than an event with respect to Holdings or the
Borrower described in paragraph (h) or (i) of this Article), and at any
time thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times:  (i) terminate the Commitments, and thereupon
the Commitments shall terminate immediately, and (ii) declare the Loans
then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to
be due and payable), and thereupon the principal of the Loans so declared to be
due and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to Holdings or the Borrower described in paragraph (h) or (i) of
this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.


 


66

















 


ARTICLE VIII


 


The Administrative Agent


 


Each
of the Lenders hereby irrevocably appoints the Administrative Agent as its
agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms of the Loan Documents, together with such actions and powers as
are reasonably incidental thereto. The provisions of this Article are solely
for the benefit of the Administrative Agent and the Lenders, and the Borrower
shall not have rights as a third party beneficiary of any of such provisions.


 


The
bank serving as the Administrative Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with Holdings, the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.


 


The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing as directed by
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary or believed by the Administrative Agent in good faith to be
necessary under the circumstances as provided in Section 9.02), and
(c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to Holdings, the
Borrower or any Subsidiary that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own
gross negligence or wilful misconduct. The Administrative Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by Holdings, the Borrower or a Lender, and
the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document or the
occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document or (v) the satisfaction of any condition set forth
in Article IV or elsewhere in


 


67

















 


any Loan Document, other than to confirm
receipt of items expressly required to be delivered to the Administrative
Agent.


 


The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed
by it to be genuine and to have been signed or sent or otherwise authenticated
by the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.


 


The
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers by or through
their respective Related Parties. The exculpatory provisions of this Article
shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.


 


In
determining compliance with any condition hereunder to the making of a Loan
that by its terms must be fulfilled to the satisfaction of a Lender, the
Administrative Agent may presume that such condition is satisfactory to such
Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender prior to the making of such Loan.


 


Subject
to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time
upon notice to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor approved by the Borrower, such approval not to be
unreasonably withheld. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent that shall be a bank with an office in New York,
New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from all its duties and obligations under the Loan
Documents. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article and 


 


68

















 


Section 9.03 shall continue in effect
for the benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.


 


Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this any Loan Document or any related agreement or any
document furnished thereunder.


 


Notwithstanding
anything herein to the contrary, none of the Bookrunners or Arrangers or
syndication or documentation agents listed on the cover page hereof shall have
any powers, duties or responsibilities under any Loan Document, except in its
capacity, as applicable, as the Administrative Agent or a Lender hereunder.


 


ARTICLE IX


 


Miscellaneous


 


SECTION
9.01. Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:


 


(a)
if to Holdings or the Borrower, to it at 475 Tenth Avenue, New York, New York
10018 (Telecopy No. (212) 277-4270);


 


(b)
if to the Administrative Agent, to Citicorp North America, Inc., 399 Park Avenue,
New York, NY 10022, Attention of Susan Godwin (Telecopy No. (646) 291-3638);
and


 


(c)
if to any other Lender, to it at its address (or telecopy number) set forth in
its Administrative Questionnaire.


 


Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. Notices and
other communications to the Lenders hereunder may also be delivered or
furnished by electronic communication (including e-mail and Internet or intranet
websites) pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender pursuant to
Article II if such Lender has notified the Administrative Agent that it is
incapable of receiving notices under such Article by electronic communication. The
Administrative Agent or the Borrower may, in its 


 


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discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that
approval of such procedures may be limited to particular notices or
communications. All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt.


 


SECTION
9.02. Waivers; Amendments. (a)  No
failure or delay by the Administrative Agent or any Lender in exercising any
right or power under any Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of any Loan Document or consent to any departure by any Loan
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing, the making of a
Loan shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time. No notice or demand on the Borrower or Holdings in any
case shall entitle the Borrower or Holdings to any other or further notice or
demand in similar or other circumstances.


 


(b)  Except as provided in Section 2.17 with
respect to any Incremental Facility Amendment, neither any Loan Document nor
any provision thereof may be waived, amended or modified except, in the case of
this Agreement, pursuant to an agreement or agreements in writing entered into
by Holdings, the Borrower and the Required Lenders or, in the case of any other
Loan Document, pursuant to an agreement or agreements in writing entered into
by the Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the consent of the Required Lenders, provided
that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the maturity of any Loan, or any date for the payment of
any interest or fees payable hereunder, or reduce the amount of, waive or
excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.15(b) or (c) in a manner that would alter
the pro rata sharing of payments required thereby, without the written consent
of each Lender adversely affected thereby, (v) change any of the
provisions of this Section or the percentage set forth in the definition of
“Required Lenders” or any other provision of any Loan Document specifying the
number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (or each Lender
of such Class, as the case may be) (it being understood that, with the consent
of the Required Lenders, additional extensions of credit pursuant to this 


 


70

















 


Agreement may be included in the determination of
the Required Lenders on substantially the same basis as the Revolving
Commitments on the date hereof), (vi) release any Subsidiary Loan Party
from its Guarantee under the Collateral Agreement (except as expressly provided
in the Collateral Agreement), or limit its liability in respect of such
Guarantee, without the written consent of each Lender, (vii) release all
or substantially all the Collateral from the Liens of the Security Documents,
without the written consent of each Lender, (viii) change any provisions
of any Loan Document in a manner that by its terms adversely affects the rights
in respect of payments due to Lenders holding Loans of any Class differently
than those holding Loans of any other Class, without the written consent of
Lenders holding a majority in interest of the outstanding Loans and unused
Commitments of each affected Class or (ix) modify the protections afforded
to an SPV pursuant to the provisions of Section 9.04(e) without the written
consent of such SPV; provided further that (A) no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent without the prior written consent of the Administrative Agent, (B) any
waiver, amendment or modification of this Agreement that by its terms affects
the rights or duties under this Agreement of Lenders holding Loans or
Commitments of a particular Class (but not the Lenders holding Loans or
Commitments of any other Class) may be effected by an agreement or agreements
in writing entered into by Holdings, the Borrower and requisite percentage in
interest of the affected Class of Lenders that would be required to consent
thereto under this Section if such Class of Lenders were the only Class of
Lenders hereunder at the time and (C) if the terms of any waiver,
amendment or modification of any Loan Document provide that any Class of Loans
(together with all accrued interest thereon and all accrued fees payable with
respect to the Commitments of such Class) will be repaid or paid in full, and
the Commitments of such Class (if any) terminated, as a condition to the
effectiveness of such waiver, amendment or modification, then so long as the
Loans of such Class (together with such accrued interest and fees) are in fact
repaid or paid and such Commitments are in fact terminated, in each case prior
to or substantially simultaneously with the effectiveness of such amendment,
then such Loans and Commitments shall not be included in the determination of
the Required Lenders with respect to such amendment.


 


(c)  In connection with any proposed amendment,
modification, waiver or termination (a “Proposed Change”) requiring the
consent of all Lenders or all affected Lenders, if the consent of the Required
Lenders (and, to the extent any Proposed Change requires the consent of Lenders
holding Loans of any Class pursuant to clause (v) or (viii) of paragraph (b)
of this Section, the consent of a majority in interest of the outstanding Loans
and unused Commitments of such Class) to such Proposed Change is obtained, but
the consent to such Proposed Change of other Lenders whose consent is required
is not obtained (any such Lender whose consent is not obtained as described in
paragraph (b) of this Section being referred to as a “Non-Consenting Lender”),
then, so long as the Lender that is acting as Administrative Agent is not a
Non-Consenting Lender, the Borrower may, at its sole expense and effort, upon
notice to such Non-Consenting Lender and the Administrative Agent, require such
Non-Consenting Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in Section 9.04), all its
interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender 


 


71

















 


accepts such assignment), provided that (a)
the Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld and (b)
such Non-Consenting Lender shall have received payment of an amount equal to
the outstanding principal of its Loans, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower
(in the case of all other amounts).


 


SECTION
9.03. Expenses; Indemnity; Damage Waiver. (a)  The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent, the
Joint Bookrunners and the Joint Lead Arrangers and their respective Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent, the Joint Bookrunners and the Joint Lead Arrangers, in
connection with the syndication of the credit facilities provided for herein,
the preparation and administration of the Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and
(ii) all out-of-pocket expenses incurred by the Administrative Agent or
any Lender, including the fees, charges and disbursements of any counsel for
the Administrative Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with the Loan Documents, including its
rights under this Section, or in connection with the Loans made hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans.


 


(b)  The Borrower shall indemnify the
Administrative Agent and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”),
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee by any third party or by Holdings, the Borrower
or any Subsidiary arising out of, in connection with, or as a result of
(i) the execution or delivery of any Loan Document or any other agreement
or instrument contemplated thereby, the performance by the parties to the Loan
Documents of their respective obligations thereunder, (ii) any Loan or the
use of the proceeds therefrom, (iii) any actual or alleged presence or Release
of Hazardous Materials on, at, to or from any property currently or formerly
owned or operated by Holdings, the Borrower or any Subsidiary, or any other
Environmental Liability related in any way to Holdings, the Borrower or any
Subsidiary, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by
Holdings, the Borrower or any Subsidiary and regardless of whether any
Indemnitee is a party thereto, provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses result from the gross negligence, bad
faith or wilful misconduct of such Indemnitee.


 


(c)  To the extent that the Borrower fails to pay
any amount required to be paid by it to the Administrative Agent under
paragraph (a) or (b) of this Section, each 


 


72

















 


Lender severally agrees to pay to the Administrative
Agent such Lender’s pro rata share (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred
by or asserted against the Administrative Agent in its capacity as such. For
purposes hereof, a Lender’s “pro rata share” shall be determined based upon its
share of the aggregate Revolving Exposures and unused Commitments at the time. The
obligations of the Lenders under this paragraph (c) are subject to the
last sentence of Section 2.02(a) (which shall apply mutatis  mutandis
to the Lenders’ obligations under this paragraph (c)).


 


(d)  To the fullest extent permitted by applicable
law, neither Holdings nor the Borrower shall assert, and each hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, any Loan
Document or any agreement or instrument contemplated thereby, the Transactions,
any Loan or the use of the proceeds thereof.


 


(e)  All amounts due under this Section shall be
payable not later than ten Business Days after written demand therefor.


 


SECTION
9.04. Successors and Assigns. (a) 
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign
or otherwise transfer its rights or obligations hereunder except in accordance
with this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.


 


(b)  (i) Subject to the conditions set forth
in paragraph (b)(ii) below, any Lender may assign to one or more assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it) with
the prior written consent (such consent not to be unreasonably withheld or
delayed) of the Administrative Agent; provided  further that no
Lender may assign or otherwise transfer its rights or obligations hereunder to
Holdings, the Borrower, any Subsidiary Loan Party or any of their respective
Affiliates.


 


(ii)  Assignments shall be subject to the following
additional conditions: (A) except in the case of an assignment to a
Lender, an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender’s Commitment or Loans of any Class, the amount
of the Commitment or Loans of the assigning Lender


 


73

















 


subject to each such assignment (determined as of
the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $1,000,000 unless
the Administrative Agent otherwise consent (such consent not to be unreasonably
withheld or delayed), (B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement, provided that this clause (B)
shall not be construed to prohibit assignment of a proportionate part of all
the assigning Lender’s rights and obligations in respect of one Class of
Commitments or Loans, (C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, provided
that assignments made pursuant to Section 2.16(b) or Section 9.02(c)
shall not require the signature of the assigning Lender to become effective,
and (D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire and any tax forms required
by Section 2.14(e) or (f).


 


(iii)  Subject to acceptance and recording thereof
pursuant to paragraph (b)(v) of this Section, from and after the effective
date specified in each Assignment and Assumption, the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.12, 2.13, 2.14 and 9.03 and
to any fees payable hereunder that have accrued for such Lender’s account but
have not yet been paid). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with
paragraph (c)(i) of this Section.


 


(iv)  The Administrative Agent, acting for this
purpose as an agent of the Borrower, shall maintain at one of its offices a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and Holdings, the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.


 


(v)  Upon its receipt of a duly completed
Assignment and Assumption executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire and any tax forms required by
Section 2.14(e) or (f) (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in
paragraph (b) of this Section and any written consent to such assignment


 


74

















 


required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.


 


(vi)  The words “execution”, “signed”, “signature”
and words of like import in any Assignment and Assumption shall be deemed to
include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as
a manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act or any other
similar state laws based on the Uniform Electronic Transactions Act.


 


(c)  (i) 
Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other
entities (a “Participant”) in all or a portion of such Lender’s rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it), provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) Holdings, the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents, provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 9.02(b) that affects such
Participant. Subject to paragraph (c)(ii) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections
2.12, 2.13 and 2.14 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to paragraph (b) of this Section. To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided that
such Participant agrees to be subject to Section 2.15(c) as though it were
a Lender.


 


(ii)  A Participant shall not be entitled to
receive any greater payment under Section 2.12 or Section 2.14 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.14 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 2.14(e) and (f) as
though it were a Lender.


 


(d)  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender,


 


75

















 


including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest, provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.


 


(e)  Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a
special purpose funding vehicle (an “SPV”), identified as such in
writing from time to time by the Granting Lender to the Administrative Agent
and the Borrower, the option to provide to the Borrower all or any part of any
Loan that such Granting Lender would otherwise be obligated to make to the
Borrower pursuant to this Agreement, provided that (i) nothing
herein shall constitute a commitment by any SPV to make any Loan and
(ii) if an SPV elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the Granting Lender shall be obligated to
make such Loan pursuant to the terms hereof. The making of a Loan by an SPV
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPV shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPV,
such party will not institute against, or join any other person in instituting
against, such SPV any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under the laws of the United States or any State
thereof. In addition, notwithstanding anything to the contrary contained in
this Section 9.04, any SPV may (i) with notice to, but without the prior
written consent of, the Borrower and the Administrative Agent and without
paying any processing fee therefor, assign all or a portion of its interests in
any Loans to the Granting Lender or to any financial institutions (consented to
by the Borrower and Administrative Agent) providing liquidity or credit support
to or for the account of such SPV to support the funding or maintenance of
Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPV.


 


SECTION
9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
any Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan Documents
and the making of any Loans and issuance of any Letters of Credit, regardless
of any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under this Agreement is outstanding and unpaid and so
long as the Commitments have not expired or terminated. The provisions of
Sections 2.12, 2.13, 2.14 and 9.03 and 


 


76

















 


Article VIII shall survive and remain in full force
and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the
Commitments or the termination of this Agreement or any provision hereof.


 


SECTION
9.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. This Agreement, the
other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent or to the Joint Lead Arrangers, the Joint
Bookrunners or any of their Affiliates, or the syndication of the Loans and
Commitments constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.


 


SECTION
9.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.


 


SECTION
9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by such Lender or any such Affiliate to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured or
are owed to a branch or office of such Lender different from the branch or
office holding such deposit or obligated on such Indebtedness. The applicable
Lender shall notify the Borrower and the Administrative Agent of such setoff
and application, provided that any failure to give or any delay in
giving such notice shall not affect the validity of any such setoff and
application under this Section. The rights of each Lender and its Affiliates
under this Section are in addition to other rights and remedies (including
other rights of setoff) that such Lender and its respective Affiliates may
have.


 


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SECTION
9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a)  This Agreement shall be construed in
accordance with and governed by the law of the State of New York.


 


(b)  Each of the parties hereto hereby irrevocably
and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in any Loan Document shall
affect any right that the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to any Loan Document against
Holdings, the Borrower or their respective properties in the courts of any
jurisdiction.


 


(c)  Each of the parties hereto hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
any Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.


 


(d)  Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in
Section 9.01. Nothing in any Loan Document will affect the right of any
party to this Agreement to serve process in any other manner permitted by law.


 


SECTION
9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


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SECTION
9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.


 


SECTION
9.12. Confidentiality. Each of the Administrative Agent, the Joint Lead
Arrangers, the Joint Bookrunners and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to any Loan
Document or the enforcement of rights thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement, (g) with the
consent of the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent or any
Lender on a nonconfidential basis from a source other than Holdings or the
Borrower. For the purposes of this Section, “Information” means all
information received from Holdings or the Borrower or any Subsidiary relating
to Holdings or the Borrower or any Subsidiary or the business of any of them,
other than any such information that is available to the Administrative Agent
or any Lender on a nonconfidential basis prior to disclosure by Holdings or the
Borrower, provided that, in the case of information received from
Holdings, the Borrower or any Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.


 


SECTION
9.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) that may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at


 


79

















 


the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.


 


SECTION
9.14. USA Patriot Act. Each Lender hereby notifies Holdings and the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is
required to obtain, verify and record information that identifies Holdings and
the Borrower, which information includes the name and address of Holdings and
the Borrower and other information that will allow such Lender to identify
Holdings and the Borrower in accordance with the Act.


 


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


 


	
   

  	
  MORGANS
  HOTEL GROUP CO.,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Marc Gordon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Marc
  Gordon

  
	
   

  	
   

  	
  Title:

  	
  Chief Investment Officer and Executive Vice President 

  of Capital Markets

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MORGANS
  GROUP LLC,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Marc Gordon

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Marc
  Gordon

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITICORP
  NORTH AMERICA, INC.,

  individually and as Administrative Agent,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  David Bouton

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David
  Bouton

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORGAN
  STANLEY SENIOR

  FUNDING, INC., as Joint Lead Arranger

  and Co-Syndication Agent,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Eugene F. Martin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eugene F. Martin

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MORGAN
  STANLEY BANK,

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Eugene F. Martin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eugene F. Martin

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
					



 


81

















 


	
   

  	
  MERRILL
  LYNCH, PIERCE, FENNER &

  SMITH INCORPORATED, as Joint Lead

  Arranger and Co-Syndication Agent,

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/ Stephen Paras

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Stephen
  Paras

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERRILL
  LYNCH CAPITAL

  CORPORATION,

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Stephen Paras

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Stephen
  Paras

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A., as

  Documentation Agent,

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Roger C. Davis

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Roger
  C. Davis

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A.,

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Roger C. Davis

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Roger
  C. Davis

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President

  
							



 


82