Exhibit 10.3





Exhibit 10.3




Execution Version




LOAN AND SECURITY AGREEMENT




Dated as of August 12, 2011




by and among




HENRY HUDSON HOLDINGS LLC,

58th STREET BAR COMPANY LLC,

AND HUDSON LEASECO LLC, collectively,

as Borrower,




DEUTSCHE BANK TRUST COMPANY AMERICAS,

and

THE INSTITUTIONS FROM TIME TO TIME PARTY HERETO,

as Lenders,




DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Administrative Agent for Lenders,




DEUTSCHE BANK SECURITIES INC.,

as Lead Arranger and Bookrunner.



 


 









 







Table of Contents




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I Definitions; Principles of Construction
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Principles of Construction
	 	 	32	 
	 
	 	 	 	 
	ARTICLE II General Terms
	 	 	33	 
	 
	 	 	 	 
	Section 2.1 Loan; Disbursement to Borrower
	 	 	33	 
	Section 2.2 Interest Rate and Yield-Related Provisions
	 	 	37	 
	Section 2.3 Payments
	 	 	44	 
	Section 2.4 Conditions Precedent to Closing
	 	 	48	 
	Section 2.5 Delayed Draw Term Loan Conditions Precedent
	 	 	53	 
	 
	 	 	 	 
	ARTICLE III Cash Management
	 	 	54	 
	 
	 	 	 	 
	Section 3.1 Cash Management
	 	 	54	 
	 
	 	 	 	 
	ARTICLE IV Representations and Warranties
	 	 	65	 
	 
	 	 	 	 
	Section 4.1 Borrower Representations
	 	 	65	 
	 
	 	 	 	 
	ARTICLE V Borrower Covenants
	 	 	79	 
	 
	 	 	 	 
	Section 5.1 Affirmative Covenants
	 	 	79	 
	Section 5.2 Negative Covenants
	 	 	92	 
	 
	 	 	 	 
	ARTICLE VI Insurance; Casualty; Condemnation; Restoration
	 	 	96	 
	 
	 	 	 	 
	Section 6.1 Insurance Coverage Requirements
	 	 	96	 
	Section 6.2 Condemnation and Insurance Proceeds
	 	 	102	 
	 
	 	 	 	 
	ARTICLE VII Impositions, Other Charges, Liens and Other Items
	 	 	107	 
	 
	 	 	 	 
	Section 7.1 Impositions and Other Charges
	 	 	107	 
	Section 7.2 No Liens
	 	 	108	 
	Section 7.3 Contest
	 	 	108	 
	 
	 	 	 	 
	ARTICLE VIII Transfers and Leases
	 	 	109	 
	 
	 	 	 	 
	Section 8.1 Restrictions on Transfers
	 	 	109	 
	Section 8.2 Sale of Equipment
	 	 	109	 
	Section 8.3 Immaterial Transfers and Easements, etc.
	 	 	110	 
	Section 8.4 Transfers of Interests in Borrower
	 	 	110	 
	Section 8.5 Loan Assumption
	 	 	111	 
	Section 8.6 Notice Required; Legal Opinions
	 	 	111	 
	Section 8.7 Leases
	 	 	111	 
	 
	 	 	 	 
	ARTICLE IX Interest Rate Cap Agreement
	 	 	115	 
	 
	 	 	 	 
	Section 9.1 Interest Rate Cap Agreement
	 	 	115	 
	Section 9.2 Pledge and Collateral Assignment
	 	 	115	 
	Section 9.3 Covenants
	 	 	116	 





 


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Table of Contents
(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 9.4 Representations and Warranties
	 	 	117	 
	Section 9.5 Payments
	 	 	118	 
	Section 9.6 Remedies
	 	 	118	 
	Section 9.7 Sales of Rate Cap Collateral
	 	 	120	 
	Section 9.8 Public Sales Not Possible
	 	 	121	 
	Section 9.9 Receipt of Sale Proceeds
	 	 	121	 
	Section 9.10 Extension Interest Rate Cap Agreement
	 	 	121	 
	Section 9.11 Filing of Financing Statements Authorized
	 	 	121	 
	 
	 	 	 	 
	ARTICLE X Maintenance of Property; Alterations
	 	 	121	 
	 
	 	 	 	 
	Section 10.1 Maintenance of Property
	 	 	121	 
	Section 10.2 Alterations and Expansions
	 	 	122	 
	 
	 	 	 	 
	ARTICLE XI Books and Records, Financial Statements, Reports and Other Information
	 	 	125	 
	 
	 	 	 	 
	Section 11.1 Books and Records
	 	 	125	 
	Section 11.2 Financial Statements
	 	 	125	 
	 
	 	 	 	 
	ARTICLE XII Environmental Matters
	 	 	129	 
	 
	 	 	 	 
	Section 12.1 Representations
	 	 	129	 
	Section 12.2 Covenant
	 	 	129	 
	Section 12.3 Environmental Reports
	 	 	130	 
	Section 12.4 Environmental Indemnification
	 	 	130	 
	Section 12.5 Recourse Nature of Certain Indemnifications
	 	 	131	 
	 
	 	 	 	 
	ARTICLE XIII Reserved
	 	 	132	 
	 
	 	 	 	 
	ARTICLE XIV Administrative Agent
	 	 	132	 
	 
	 	 	 	 
	Section 14.1 Appointment
	 	 	132	 
	Section 14.2 Delegation of Duties
	 	 	132	 
	Section 14.3 Exculpatory Provisions
	 	 	132	 
	Section 14.4 Reliance by the Agents
	 	 	132	 
	Section 14.5 Notice of Default
	 	 	133	 
	Section 14.6 Non-Reliance on Agents and Other Lenders
	 	 	133	 
	Section 14.7 Indemnification; Reimbursement of Protective Advances
	 	 	134	 
	Section 14.8 Agents in Their Individual Capacity
	 	 	135	 
	Section 14.9 Successor Administrative Agent
	 	 	135	 
	Section 14.10 Limitations on Agents Liability
	 	 	135	 
	Section 14.11 Approvals of Lenders
	 	 	136	 
	 
	 	 	 	 
	ARTICLE XV Assignments and Participations
	 	 	136	 
	Section 15.1 Assignments, Delegations and Pledges
	 	 	136	 
	 
	 	 	 	 
	Section 15.2 Register; Effect of Assignment and Acceptance
	 	 	136	 
	Section 15.3 Substitute Notes
	 	 	137	 
	Section 15.4 Participations
	 	 	137	 
	Section 15.5 Security Interest in Favor of Federal Reserve Bank
	 	 	138	 
	Section 15.6 Redirection Notice
	 	 	138	 





 


(ii)









 




Table of Contents
(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 15.7 Syndication
	 	 	138	 
	Section 15.8 Pfandbrief Appraisal
	 	 	139	 
	 
	 	 	 	 
	ARTICLE XVI Reserve Accounts
	 	 	139	 
	 
	 	 	 	 
	Section 16.1 Tax Reserve Account
	 	 	139	 
	Section 16.2 Insurance Reserve Account
	 	 	140	 
	Section 16.3 Cash Sweep Reserve Account
	 	 	141	 
	Section 16.4 Required Repairs Reserve Account
	 	 	141	 
	Section 16.5 FF&E Reserve Account
	 	 	142	 
	Section 16.6 Ground Rent Reserve Account
	 	 	143	 
	 
	 	 	 	 
	ARTICLE XVII Defaults
	 	 	143	 
	 
	 	 	 	 
	Section 17.1 Event of Default
	 	 	143	 
	Section 17.2 Remedies
	 	 	146	 
	Section 17.3 Remedies Cumulative; Waivers
	 	 	148	 
	Section 17.4 Costs of Collection
	 	 	148	 
	 
	 	 	 	 
	ARTICLE XVIII Special Provisions
	 	 	149	 
	 
	 	 	 	 
	Section 18.1 Exculpation
	 	 	149	 
	 
	 	 	 	 
	ARTICLE XIX Miscellaneous
	 	 	153	 
	 
	 	 	 	 
	Section 19.1 Survival
	 	 	153	 
	Section 19.2 Administrative Agent’s Discretion
	 	 	154	 
	Section 19.3 Governing Law
	 	 	154	 
	Section 19.4 No Assignment by Borrower
	 	 	156	 
	Section 19.5 Modification
	 	 	156	 
	Section 19.6 Modification, Waiver in Writing
	 	 	156	 
	Section 19.7 Delay Not a Waiver
	 	 	156	 
	Section 19.8 Notices
	 	 	157	 
	Section 19.9 TRIAL BY JURY
	 	 	158	 
	Section 19.10 Headings
	 	 	158	 
	Section 19.11 Severability
	 	 	159	 
	Section 19.12 Preferences
	 	 	159	 
	Section 19.13 Waiver of Notice
	 	 	159	 
	Section 19.14 Expenses; Indemnity; No Consequential Damages
	 	 	159	 
	Section 19.15 Exhibits and Schedules Incorporated
	 	 	162	 
	Section 19.16 Offsets, Counterclaims and Defenses
	 	 	162	 
	Section 19.17 Liability of Assignees of Lenders
	 	 	162	 
	Section 19.18 Sharing of Payments
	 	 	163	 
	Section 19.19 Set-off
	 	 	163	 
	Section 19.20 No Joint Venture or Partnership; No Third Party Beneficiaries
	 	 	163	 
	Section 19.21 Confidentiality
	 	 	164	 
	Section 19.22 Waiver of Marshalling of Assets
	 	 	164	 
	Section 19.23 Waiver of Counterclaim and other Actions
	 	 	165	 
	Section 19.24 Conflict; Construction of Documents; Reliance
	 	 	165	 





 


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Table of Contents
(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 19.25 Prior Agreements
	 	 	165	 
	Section 19.26 Reinstatement
	 	 	166	 
	Section 19.27 Counterparts
	 	 	166	 
	Section 19.28 Nature of Borrower Obligations
	 	 	166	 






	 	 	 	 	 
	EXHIBITS	 	 	 	 
	 
	 	 	 	 
	Exhibit A

	 	—
	 	Title Insurance Requirements
	Exhibit B

	 	—
	 	Survey Requirements
	Exhibit C

	 	—
	 	Single Purpose Entity Provisions
	Exhibit D

	 	—
	 	Intentionally Omitted
	Exhibit E

	 	—
	 	Non-Consolidation Opinion Requirements
	Exhibit F

	 	—
	 	Counterparty Opinion Requirements
	Exhibit G

	 	—
	 	Form of Tenant Estoppel Letter
	Exhibit H

	 	—
	 	Borrower Organizational Structure
	Exhibit I

	 	—
	 	Interest Rate Cap Agreement Requirements
	Exhibit J

	 	—
	 	Form of Assignment and Acceptance Agreement
	Exhibit K

	 	—
	 	Form of Subordination, Non-Disturbance and Attornment Agreement
	Exhibit L

	 	—
	 	Form of Note
	Exhibit M

	 	—
	 	Counterparty Acknowledgment
	Exhibit N

	 	—
	 	Funding Notice
	Exhibit O

	 	—
	 	Form of Independent Director Certificate
	Exhibit P

	 	—
	 	Form of IP Security Agreement






	 	 	 	 	 
	SCHEDULES	 	 	 	 
	 
	 	 	 	 
	Schedule I

	 	—
	 	Litigation Schedule
	Schedule II

	 	—
	 	Labor Matters Schedule
	Schedule III

	 	—
	 	Rent Roll
	Schedule IV

	 	—
	 	Intentionally Omitted
	Schedule V

	 	—
	 	SRO Tenancies
	Schedule VI

	 	—
	 	Required Repairs
	Schedule VII

	 	—
	 	Percentage Share
	Schedule VIII

	 	—
	 	Ground Lease
	Schedule IX

	 	—
	 	IP Schedule





 


(iv)









 





LOAN AND SECURITY AGREEMENT




THIS LOAN AND SECURITY AGREEMENT, dated as of August 12, 2011 (as Modified from time to time,
this “Agreement”), by and among HENRY HUDSON HOLDINGS LLC, a Delaware limited liability
company (“Owner”), 58th STREET BAR COMPANY LLC, a Delaware limited liability
company (“Bar Lessee”), and HUDSON LEASECO LLC, a New York limited liability company
(“Operating Lessee”; Operating Lessee, Bar Lessee and Owner, together with their respective
successors and assigns, collectively “Borrower”), each having an address at c/o Morgans
Hotel Group, 475 Tenth Avenue, New York, New York 10018, THE INSTITUTIONS FROM TIME TO TIME PARTY
HERETO (together with their successors and assigns, collectively and severally, “Lenders”);
and DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”), as administrative agent for Lenders (in
such capacity, together with its successors and assigns, “Administrative Agent”).




W I T N E S S E T H:




WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from Lenders and
requests that DBTCA act as administrative agent for the benefit of Lenders with respect to the
Loan;



WHEREAS, Lenders are willing to make the Loan to Borrower and DBTCA is willing to act as
administrative agent on behalf of Lenders, subject to and in accordance with the terms of this
Agreement and the other Loan Documents (as hereinafter defined).



NOW, THEREFORE, in consideration of the above recitals and the making of the Loan by Lenders
and the covenants, agreements, representations and warranties set forth in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto hereby covenant, agree, represent and warrant as follows:



ARTICLE I




Definitions; Principles of Construction




Section 1.1 Definitions. For all purposes of this Agreement, except as otherwise
expressly required or unless the context clearly indicates a contrary intent:



“Acceptable Counterparty” shall mean a bank or other financial institution which has
(a) either (i) a long-term unsecured debt rating or counterparty rating of “A-” or higher by S&P or
(ii) if the long-term unsecured debt rating or counterparty rating is “A” or lower by S&P, a
short-term rating of not less than “A-1” from S&P; (b) a long-term unsecured debt rating of not
less than “A3” by Moody’s; and (c) if the counterparty is rated by Fitch, either a long-term
unsecured debt rating or counterparty rating of not less than “A-” from Fitch or a short-term
unsecured debt rating of not less than “F-1” from Fitch.


 


 









 





“Acceptable Management Agreement” shall mean, with respect to the Property, the
Management Agreement in effect as of the Closing Date or such other agreement for managing the
Property as may be approved by Administrative Agent in accordance with this Agreement.



“Acceptable Manager” shall mean (i) the current Manager as of the Closing Date or (ii)
any other reputable and experienced professional hotel management company approved by
Administrative Agent.



“Accommodation Security Documents” shall mean the Security Instrument, the IP Security
Agreement, the Assignment of Leases and UCC-1 Financing Statements which have been executed by
Borrower and any other Transaction Party in favor of Administrative Agent to secure Borrower’s
obligations under the Loan Documents.




“Account Collateral” shall have the meaning set forth in Section 3.1.2.



“Acknowledgment” shall mean the Acknowledgment, dated on or about the date hereof made
by Counterparty, or as applicable, Acceptable Counterparty in the form of Exhibit M.



“Additional Non-Consolidation Opinion” shall have the meaning set forth in
Section 4.1.29(B).




“Affected Lender” shall have the meaning set forth in Section 2.2.7(ii).



“Affiliate” shall mean, with respect to any specified Person, any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect common Control
with, or any general partner or managing member in, such specified Person.




“Agents” shall have the meaning set forth in Section 14.2.




“Agreement” shall mean this Agreement, as the same may be Modified from time to time.




“Allocable Amount” shall have the meaning set forth in Section 19.28(g).



“Allocable Chain Expenses” shall mean the fees expressed as a percentage of Hotel
Revenue paid to Manager in respect of Chain Services (as defined in the Management Agreement)
rendered by Manager pursuant to the Management Agreement.




“ALTA” shall mean American Land Title Association, or any successor thereto.



“Alteration” shall mean any demolition, alteration, installation, improvement, or
excavation of or to the Property or any part thereof or the Improvements (including FF&E) thereon.



“Applicable Base Rate” shall mean the floating rate per annum equal to the daily
average Base Rate in effect during the applicable calculation period plus the Base Rate
Spread.


 


-2-









 





“Applicable LIBO Rate” shall mean, with respect to the applicable Interest Period, the
per annum rate equal to the Reserve Adjusted LIBO Rate plus the LIBO Rate Spread.



“Appraisal” shall mean a FIRREA-compliant, MAI appraisal of the Property acceptable to
Administrative Agent in its reasonable discretion.



“Approved Operating Expenses” shall mean, with respect to any calendar month during a
Cash Sweep Period, the monthly Operating Expenses as set forth for such calendar month on the
Budget approved by Administrative Agent during a Cash Sweep Period pursuant to
Section 11.2.6(C); provided, however, that if such Budget has not been so
approved by Administrative Agent, then the term Approved Operating Expenses shall mean the amount
of Operating Expenses set forth for such calendar month on the immediately preceding Budget
approved by Administrative Agent (or if no such Budget has been approved by Administrative Agent,
on the then current Budget in effect) with increases thereto for Impositions, increased management
fees due to increases in revenue at the Property, utility costs and insurance costs.




“Assignee” shall have the meaning set forth in Section 15.1.



“Assignment and Acceptance Agreement” shall mean an assignment and acceptance
agreement entered into by a Lender and an assignee, and accepted by such Lender in accordance with
Article XV and in substantially the form of Exhibit J or such other form customarily used
by the applicable Lender in connection with the participation or syndication of mortgage loans at
the time of such assignment or such other form approved in writing by Administrative Agent in its
reasonable discretion.



“Assignment of Leases” shall mean that certain first priority Assignment of Leases,
Rents and Hotel Revenue, dated as of the date hereof, from Borrower, as assignor, to Administrative
Agent, as assignee, assigning to Administrative Agent all of Borrower’s interest in and to the
Leases, Rents, Hotel Revenue and Security Deposits as security for the Loan, as the same may be
Modified from time to time.



“Assignment of Management Agreement” shall mean that certain Assignment of Management
Agreement and Subordination of Management Fees, dated as of the date hereof, among Administrative
Agent, Borrower and Manager.



“Assumed Interest Expense” shall mean, with respect to the immediately preceding
twelve (12) calendar months, an amount equal to the product of the Principal Amount then
outstanding multiplied by the greater of (A) (i) with respect to the calculation of DSCR in
connection with entering into an Extension Interest Rate Cap Agreement, the proposed LIBOR Cap
Strike Rate and (ii) in all other cases, seven percent (7%), or (B) the weighted average Applicable
Base Rate or Applicable LIBO Rate, as applicable, then applicable under the Loan (which constant,
in each case shall be calculated at all times using an actual/360 accrual convention).



“Bankruptcy Code” shall mean Title 11, U.S.C.A., as amended from time to time and any
successor statute thereto.


 


-3-









 





“Bar Lease” shall mean that certain Lease dated as of August 12, 2011 between
Operating Lessee and Bar Lessee with respect to certain premises to be used for bar/lounge purposes
at the Property.




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



“Base Rate” shall mean on any day the highest of: (a) the Prime Rate in effect on
such day, (b) the sum of the Federal Funds Rate in effect on such day plus one half of one
percent (0.50%), and (c) the Reserve Adjusted LIBO Rate in effect on such day plus one half
of one percent (0.50%).




“Base Rate Spread” shall mean three percent (3.00%).



“Beneficial” when used in the context of beneficial ownership has the analogous
meaning to that specified in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.



“Best of Borrower’s Knowledge”, shall mean the actual (as opposed to imputed or
constructive) present knowledge of Richard Szymanski and/or Daniel Flannery after due inquiry, and
without creating any personal liability on the part of any said individuals. In the case where the
term “Best of Borrower’s Knowledge” is used in the context of representations or warranties of
Borrower to be made after the date hereof, the term shall include the Person or Persons, as
applicable, that occupy the capacities of said individuals on the date such representation or
warranty to the extent that one or more of such individuals no longer occupy their current
capacities.




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



“Borrower’s Account” shall mean the account identified in a written notice from
Borrower to Administrative Agent, which Borrower’s Account shall be under the sole dominion and
control of Borrower.



“Budget” shall mean the operating budget for the Property prepared by Borrower or
Manager on Borrower’s behalf, pursuant to the Management Agreement, for the applicable Fiscal Year
or other period setting forth, in reasonable detail, Borrower’s or Manager’s estimates of the
anticipated results of operations of the Property, including revenues from all sources, all
Operating Expenses, Management Fees and Capital Expenditures.



“Business Day” shall mean any day other than a Saturday, Sunday or any other day on
which national banks in New York, New York are not open for business. When used with respect to an
Interest Determination Date, Business Day shall mean any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.




“Calculation Date” shall mean the last day of each calendar quarter during the Term.



“Capital Expenditures” shall mean any amount incurred in respect of capital items
which in accordance with GAAP would not be included in Borrower’s annual financial statements for
an applicable period as an operating expense of the Property.


 


-4-









 






“Cash” shall mean the legal tender of the United States of America.



“Cash and Cash Equivalents” shall mean any one or a combination of the following:
(i) Cash, and (ii) U.S. Government Obligations.



“Cash Management Bank” shall mean a financial institution approved by Administrative
Agent.



“Cash Sweep Period” shall commence if (i) as of any Calculation Date occurring on or
after September 30, 2012 and before the Initial Maturity Date (such period, the “Second Loan
Year”), the Debt Yield Ratio for the immediately preceding twelve (12) calendar months is less
than 9.5% (the “Second Loan Year Cash Flow Sweep Trigger”) and (ii) as of any Calculation
Date occurring on or after the Initial Maturity Date until the date the Loan is repaid in full
(such period, the “Extension Period”), the Debt Yield Ratio for the immediately preceding
twelve (12) calendar months is less than 11.0% (the “Extension Period Cash Flow Sweep
Trigger”). A Cash Sweep Period which (x) commenced due to a Second Loan Year Cash Flow Sweep
Trigger shall end if the Property has achieved a Debt Yield Ratio for the immediately preceding
twelve (12) calendar months exceeding 9.5% for two consecutive Calculation Dates (and no other Cash
Sweep Period is then in effect) or (y) commenced due to an Extension Period Cash Flow Sweep Trigger
shall end if the Property has achieved a Debt Yield Ratio for the immediately preceding twelve (12)
calendar months exceeding 11.0% for two consecutive Calculation Dates (and no other Cash Sweep
Period is then in effect).



“Cash Sweep Reserve Account” shall have the meaning set forth in
Section 3.1.1(H).



“Casualty” shall mean a fire, explosion, flood, collapse, earthquake or other casualty
affecting the Property.



“Change in Law” shall mean (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 by any lending office of such Lender or by such Lender’s holding
company, if any) with any guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.



“Close Affiliate” shall mean with respect to any Person (the “First Person”)
any other Person (each, a “Second Person”) which is an Affiliate of the First Person and in
respect of which any of the following are true: (a) the Second Person owns, directly or
indirectly, at least 75% of all of the ownership interests in such First Person, (b) the First
Person owns, directly or indirectly, at least 75% of all of the ownership interests in such Second
Person, or (c) a third Person owns, directly or indirectly, at least 75% of all of the ownership
interests in both the First Person and the Second Person.



“Closing Date” shall mean the date of this Agreement set forth in the first paragraph
hereof.


 


-5-









 





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



“Collateral” shall mean the Property, the Account Collateral, the Rate Cap Collateral,
the IP Collateral and any other real or personal property in which Administrative Agent has been
granted a security interest in respect of the Loan or other collateral securing the Loan, in whole
or in part.




“Collateral Accounts” shall have the meaning set forth in Section 3.1.1.




“Collection Account” shall have the meaning set forth in Section 3.1.1.



“Collection Account Agreement” shall mean the Blocked Account Control Agreement, dated
as of the date hereof, among Administrative Agent, Operating Lessee and Collection Bank relating to
the Collection Account.



“Collection Bank” shall mean JPMorgan Chase Bank, N.A. or any successor financial
institution approved by Administrative Agent.




“Common Elements” shall have the meaning set forth in the Condominium Declaration.



“Condemnation” shall mean a taking or voluntary conveyance during the term hereof of
all or any part of the Property or any interest therein or right accruing thereto or use thereof,
as the result of, or in settlement of, any condemnation or other eminent domain proceeding by any
Governmental Authority, whether or not the same shall have actually been commenced.




“Condominium Declaration” shall have the meaning set forth in the Security Instrument.




“Condominium Regime” shall have the meaning set forth in the Security Instrument.




“Condominium Rules” shall have the meaning set forth in Section 5.1.27.




“Condominium Units” shall mean collectively, the Owned Units and the Leasehold Units.



“Contact Office” shall mean the office of DBTCA located at Deutsche Bank Trust Company
Americas, c/o DB Services New Jersey Inc., 5022 Gate Parkway, # 200, Jacksonville, FL 32256,
Attention: Tihana Mesic, or such other offices as Administrative Agent may notify Borrower and
Lenders from time to time in writing.



“Control” shall mean (i) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise and (ii) the ownership, direct or indirect, of 51%
or more of the voting securities of such Person, and the terms Controlled, Controlling and Common
Control shall have correlative meanings (it being agreed that Manager does not Control any Person
by virtue of the exercise of its rights under the Management Agreement).


 


-6-









 





“Counterparty” shall mean the counterparty to the Interest Rate Cap Agreement and any
counterparty under a Replacement Interest Rate Cap Agreement or Extension Interest Rate Cap
Agreement and, if applicable, any credit support provider identified in the Interest Rate Cap
Agreement, Replacement Interest Rate Cap Agreement or Extension Interest Rate Cap Agreement.




“Counterparty Opinion” shall have the meaning set forth in Section 9.3.



“Current Debt Service Reserve Account” shall have the meaning set forth in
Section 3.1.1(D).



“Debt” shall mean, with respect to any Person at any time, (a) indebtedness or
liability of such Person for borrowed money whether or not evidenced by bonds, debentures, notes or
other instruments, or for the deferred purchase price of property or services; (b) obligations of
such Person as lessee under leases which should have been or should be, in accordance with GAAP,
recorded as capital leases; (c) current liabilities of such Person in respect of unfunded vested
benefits under plans covered by Title IV of ERISA; (d) intentionally omitted; (e) obligations or
liabilities of such Person arising under letters of credit, credit facilities or other acceptance
facilities; (f) obligations of such Person under any guarantees or other agreement to become
secondarily liable for any obligation of any other Person, endorsements (other than for collection
or deposit in the Ordinary Course of Business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person or otherwise to assure a
creditor against loss; (g) obligations of such Person secured by any Lien on any property of such
Person, whether or not the obligations have been assumed by such Person (other than Liens relating
to Taxes and mechanics’ and materialmen’s Liens permitted under the Loan Documents); or
(h) obligations of such Person under any interest rate or currency swap agreements.



“Debt Service” shall mean, with respect to any particular period of time, scheduled
interest payments under the Notes.



“Debt Yield Ratio” shall mean, with respect to any applicable period, a ratio in
which:




(a) the numerator is Net Operating Income for such period; and




(b) the denominator is the Principal Amount as of the date of determination.



“Debt Yield Test” shall mean the test with respect to the trailing twelve (12)
calendar month period ending on the last day of the most recent Fiscal Quarter immediately
preceding the Second Extended Maturity Date to determine the Debt Yield Ratio for such period
(based on the financial information delivered by Borrower pursuant to Section 11.2 hereof
with respect to such period).


 


-7-









 





“Default” shall mean the occurrence of any event hereunder or under any other Loan
Document which, but for the giving of notice or passage of time, or both, would be an Event of
Default.




“Default Rate” shall have the meaning set forth in Section 2.2.10.



“Delayed Draw Term Loan Available Amount” shall mean, on any Funding Date, a principal
amount of Delayed Draw Term Loans equal to the positive difference, if any, between (i) that
Principal Amount which, when divided into Net Operating Income (calculated as provided in
Section 2.5(B)(i)), produces a Debt Yield Ratio of 9.5% or greater and (ii) the Principal
Amount outstanding immediately prior, and without giving effect, to the making of any Delayed Draw
Term Loans on such Funding Date.



“Delayed Draw Term Loan” shall mean any term loan made pursuant to Section
2.1.1(b).



“Delayed Draw Term Loan Availability Period” shall mean the period from the Closing
Date through and including the Business Day immediately preceding the fifteen month anniversary of
the Closing Date.



“Delayed Draw Term Loan Commitment” shall mean, with respect to any Lender, such
Lender’s commitment to make or otherwise fund a Delayed Draw Term Loan pursuant to Section
2.1.1(b), and “Delayed Draw Term Loan Commitments” shall mean such commitments of all
such Lenders in the aggregate. The amount of each Lender’s Delayed Draw Term Loan Commitment is
set forth on Schedule VII to this Agreement and/or in any Assignment and Acceptance pursuant to
which such Lender assumed any Delayed Draw Term Loan Commitments, subject to any adjustment or
reduction pursuant to the terms and conditions hereof. The aggregate amount of the Delayed Draw
Term Loan Commitments as of the Closing Date is $20,000,000.



“Disqualified Transferee” shall mean any Person or its Close Affiliate that, (i) has
been convicted in a criminal proceeding for a felony or a crime involving moral turpitude or that
is an organized crime figure or is reputed (as determined by Administrative Agent in its sole
discretion) to have substantial business or other affiliations with an organized crime figure; (ii)
has at any time filed a voluntary petition under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law; (iii) as to which an involuntary petition (which was not subsequently
dismissed) has at any time been filed under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law; (iv) has at any time filed an answer consenting to or acquiescing in
any involuntary petition filed against it by any other person under the Bankruptcy Code or any
other federal or state bankruptcy or insolvency law; (v) has at any time consented to or acquiesced
in or joined in an application for the appointment of a custodian, receiver, trustee or examiner
for itself or any of its property; (vi) has at any time made an assignment for the benefit of
creditors, or has at any time admitted its insolvency or inability to pay its debts as they become
due; or (vii) has been found by a court of competent jurisdiction or other governmental authority
in a comparable proceeding to have violated any federal or state securities laws or regulations
promulgated thereunder.


 


-8-









 






“Downgrade” shall have the meaning as set forth in Section 9.3(c) hereof.



“DSCR” shall mean, with respect to a particular period, the ratio (expressed in terms
of a percentage) of Net Operating Income for the trailing twelve (12) calendar month period ending
on the last day of the most recent Fiscal Quarter for which Borrower has delivered financial
statements to Administrative Agent to the aggregate amount of Assumed Interest Expense that is
payable in respect of such period, as computed by Administrative Agent from time to time pursuant
to the terms hereof.




“EBC Unit” shall have the meaning set forth in the Condominium Declaration.




“Eligible Assignee” shall mean any of the following:



(a) A commercial bank organized under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000;



(b) A commercial bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the “OECD”), or a political
subdivision of any such country, and having a combined capital and surplus of at least $100,000,000
(provided that such bank is acting through a branch or agency located in the country in
which it is organized or another country which is also a member of the OECD);



(c) A Person that is Controlled by a commercial bank organized under the laws of any other
country which is a member of the OECD, or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000 (provided that such bank is acting
through a branch or agency located in the country in which it is organized or another country which
is also a member of the OECD);



(d) A Person that is engaged in the business of commercial banking or an insurance company
that engages in commercial lending and that is: (1) an Affiliate of a Lender, (2) an Affiliate of
a Person of which a Lender is an Affiliate, or (3) a Person of which a Lender is an Affiliate;



(e) An insurance company, mutual fund or other financial institution organized under the laws
of the United States, any state thereof, any other country which is a member of the OECD or a
political subdivision of any such country, which invests in bank loans and has a net worth of
$500,000,000;



(f) Any fund (other than a mutual fund) which invests in bank loans and whose assets exceed
$100,000,000; and




(g) A Pfandbrief,



provided, however, that no Person shall be an “Eligible Assignee” unless at
the time of the proposed assignment to such Person: (i) such Person is able to make or maintain,
as applicable, its portion of the Loan in U.S. dollars, (ii) such Person is exempt from withholding
of tax on interest and is able to deliver the documents related thereto pursuant to
Section 2.2.9(v) of this Agreement, and (iii) such Person is not a Transaction Party or an
Affiliate of a Transaction Party.


 


-9-









 





“Eligible Collateral” shall mean U.S. Government Obligations, or Cash and Cash
Equivalents, or any combination thereof.




“Embargoed Person” shall have the meaning set forth in Section 4.1.41(c).



“Environmental Certificate” shall have the meaning set forth in
Section 12.2.1.



“Environmental Claim” shall mean any claim, action, cause of action, investigation or
written notice by any Person alleging potential liability (including potential liability for
investigatory costs, cleanup costs, natural resource damages, property damages, personal injuries
or penalties) arising out of, based upon or resulting from (a) the presence, threatened presence,
release or threatened release into the environment of any Hazardous Materials from or at the
Property, or (b) the violation, or alleged violation, of any Environmental Law relating to the
Property.




“Environmental Event” shall have the meaning set forth in Section 12.2.1.



“Environmental Indemnity” shall mean the Environmental Indemnity, dated the date
hereof, made by Borrower and Guarantor in favor of Administrative Agent as may be Modified from
time to time.




“Environmental Law” shall have the meaning provided in the Environmental Indemnity.




“Environmental Reports” shall have the meaning set forth in Section 12.1.




“Equipment” shall have the meaning set forth in the Security Instrument.



“ERISA” shall mean the United States Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and the rulings issued thereunder.



“Eurodollar Business Day” shall mean a Business Day on which commercial banks in
London, England are open for domestic and international business.




“Event of Default” shall have the meaning set forth in Section 17.1.



“Evidence of No Withholding” shall have the meaning set forth in
Section 2.2.9(v).




“Excess Cash Flow” shall have the meaning set forth in Section 3.1.5(A)(x).



“Excluded Taxes” shall mean, with respect to Administrative Agent, any Lender, or any
other recipient of any payment to be made by or on account of any obligation of Borrower hereunder
or under the other Loan Documents, (a) income or franchise taxes imposed on (or measured by) its
net income by the United States of America, or by any state, locality or foreign jurisdiction under
the laws of which such recipient is organized or in which it maintains an office or permanent
establishment, (b) any branch profits taxes imposed by the United States of America or any similar
tax imposed by any other jurisdiction in which Borrower is located and (c) in the case of a Foreign
Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a party to this Agreement or is attributable to such Foreign Lender’s
failure to comply with Section 2.2.9 of this Agreement; provided, however,
Excluded Taxes shall not include any withholding tax resulting from any inability to comply with
Section 2.2.9 of this Agreement solely by reason of there having occurred a Change in Law.


 


-10-









 






“Exculpated Parties” shall have the meaning set forth in Section 18.1.1.



“Excusable Delay” shall mean a delay due to acts of god, governmental restrictions,
stays, judgments, orders, decrees, enemy actions, civil commotion, fire, casualty, earthquake,
strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable
control of Borrower, but Borrower’s lack of funds in and of itself shall not be deemed a cause
beyond the control of Borrower.



“Expansion” shall mean any expansion or reduction of the Property or any portion
thereof or the Improvements thereon.



“Extension Interest Rate Cap Agreement” shall mean, following Borrower’s exercise of
its option to extend the Maturity Date pursuant to 2.1.6, an Interest Rate Cap Agreement or
Agreements (together with the confirmations and schedules relating thereto), each from an
Acceptable Counterparty and satisfying the requirements set forth on Exhibit I hereto;
provided that, to the extent any such interest rate cap agreement does not meet the
foregoing requirements, an “Extension Interest Rate Cap Agreement” shall be such interest
rate cap agreement as may be approved by Administrative Agent in its sole and absolute discretion.



“Federal Funds Rate” shall mean, for any period, a fluctuating interest rate equal for
each day during such period to the weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such transactions received by
Administrative Agent from three Federal Funds brokers of recognized standing selected by
Administrative Agent.



“Fee Letter” shall mean the Fee Letter, dated as of the Closing Date, among, Borrower,
Administrative Agent and Deutsche Bank Securities, Inc., as Lead Arranger.




“FF&E” shall mean furniture, fixtures and equipment.




“FF&E Reserve Account” shall have the meaning set forth in Section 3.1.1(F).



“Final Completion” shall mean, with respect to any specified work, the final
completion of all such work, including the performance of all “punch list” items, as confirmed by
an Officer’s Certificate and, with respect to any Material Alteration, a certificate of the
Independent Architect, if applicable.


 


-11-









 





“Final Extended Maturity Date” shall have the meaning given such term in
Section 2.1.6(iii).



“First Extended Maturity Date” shall have the meaning given such term in
Section 2.1.6(i).




“Fiscal Quarter” shall mean each quarter within a Fiscal Year in accordance with GAAP.



“Fiscal Year” shall mean the period commencing on the Closing Date and ending on and
including December 31 of the calendar year in which the Closing Date occurs and thereafter each
twelve month period commencing on January 1 and ending on December 31 until the Indebtedness is
repaid in full, or such other common fiscal year of Borrower as Borrower may select from time to
time with the prior consent of Administrative Agent, such consent not to be unreasonably withheld.




“Fitch” shall mean Fitch Ratings Inc.



“Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which 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.



“Franchise Agreement” shall mean a document or instrument pursuant to which a Borrower
or Manager is granted the right to operate the Property as a franchise.




“Franchisor” shall mean a franchisor under a Franchise Agreement.




“Funding Date” shall have the meaning set forth in Section 2.1.2(b).




“Funding Notice” shall mean a notice substantially in the form of Exhibit N.



“GAAP” shall mean the generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such entity as may be in general use by
significant segments of the U.S. accounting profession, to the extent such principles are
applicable to the facts and circumstances on the date of determination, as appropriately modified
by the Uniform System.




“Government Lists” shall have the meaning set forth in Section 4.1.41(b).



“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or regulatory authority)
thereof, and any court, board, agency, commission, office or other entity or authority of any
nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or
otherwise) exercising executive, legislative, judicial, regulatory or administrative functions, in
each case whether now or hereafter in existence.


 


-12-









 





“Ground Lease” shall mean collectively those certain ground leases more particularly
described on Schedule VIII attached hereto and made a part hereof as the same may be
amended, restated, supplemented or otherwise modified from time to time in accordance with the
terms of this Agreement.



“Ground Rent” shall mean any rent, additional rent or other charge payable by the
tenant under the Ground Lease.



“Ground Rent Reserve Account” shall have the meaning set forth in
Section 3.1.1(G).



“Guarantor” shall mean, Morgans Group LLC, a Delaware limited liability company, which
shall execute and deliver the Recourse Guaranty and the Environmental Indemnity.



“Hazardous Materials” shall have the meaning given to “Hazardous Substances” in the
Environmental Indemnity.




“Holdco” shall mean Morgans Hotel Group Co., a Delaware corporation.




“Holding Account” shall have the meaning set forth in Section 3.1.1.



“Holding Account Agreement” shall mean the securities account control agreement to be
entered into following the Closing Date in accordance with Section 3.1.1 among
Administrative Agent, Borrower and Cash Management Bank relating to the Holding Account in form and
substance satisfactory to Administrative Agent.



“Hotel Operating Account” shall mean an “Operating Account” (as defined in the
Management Agreement) maintained by Manager in the name of Operating Lessee with respect to Hotel
Operating Expenses at the Property and in accordance with the terms of the Management Agreement.



“Hotel Operating Account Agreement” shall mean the deposit account control agreement
to be entered into following the Closing Date in accordance with Section 3.1.1 among
Administrative Agent, Operating Lessee and Cash Management Bank relating to the Hotel Operating
Account in form and substance satisfactory to Administrative Agent.



“Hotel Operating Account Bank” shall mean JPMorgan Chase Bank, N.A. or any successor
financial institution approved by Administrative Agent.



“Hotel Operating Expenses” shall mean all expenses of Borrower (or of Manager for the
account of Borrower) in connection with the ownership or operation of the Property, including costs
(including labor) of providing services including rooms, food and beverage, telecommunications,
garage and parking and other operating departments, as well as Impositions and Other Charges,
Ground Rent, rental expenses, insurance premiums, utilities costs, administrative and general costs
(other than Management Fees and Allocable Chain Expenses under the Management Agreement), repair
and maintenance costs (excluding for purposes of this clause any amounts payable out of the FF&E
Reserve Account and any amounts that are treated as capital expenditures under GAAP) and marketing
and legal expenses incurred in connection with the operation of the Property.


 


-13-









 





“Hotel Revenue” shall mean all revenues, income, Rents, issues, profits, termination
or surrender fees, penalties and other amounts arising from the use or enjoyment of all or any
portion of the Property, including, without limitation, the rental or surrender of any office
space, retail space, parking space, halls, stores, and offices of every kind, the rental or
licensing of signs, sign space or advertising space, rentals, revenues, receipts, income, accounts,
accounts receivable, cancellation fees, penalties, credit card receipts and other receivables
relating to or arising from rentals, rent equivalent income, income and profits from guest rooms,
meeting rooms, conference and banquet rooms, food and beverage facilities, health clubs, spas,
vending machines, parking facilities, telecommunication and television systems, guest laundry, the
provision or sale of other goods and services, and any other items of revenue, receipts or other
income as identified in the Uniform System; plus business interruption insurance Proceeds.



“Impositions” shall mean all taxes (including all ad valorem, sales (including those
imposed on lease rentals), use, single business, gross receipts, value added, intangible
transaction, privilege or license or similar taxes), governmental assessments (including all
assessments for public improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of this Agreement), water,
sewer or other rents and charges, excises, levies, fees (including license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of
the Property and/or any Rents and Hotel Revenue (including all interest and penalties thereon),
which at any time prior to, during or in respect of the term hereof may be assessed or imposed on
or in respect of or be a Lien upon (a) Borrower (including all income, franchise, single business
or other taxes imposed on Borrower for the privilege of doing business in the jurisdiction in which
the Property is located), (b) the Property, or any other Collateral or any part thereof, or any
Rents or other Hotel Revenue therefrom or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Property or the leasing or use of all or any part thereof. Nothing contained
in this Agreement shall be construed to require Borrower to pay any tax, assessment, levy or charge
imposed on (i) any tenant occupying any portion of the Property, (ii) any manager of the Property,
including any Manager, or (iii) servicer, Lenders, Administrative Agent or any other third party in
the nature of a capital levy, estate, inheritance, succession, income or net revenue tax.




“Improvements” shall have the meaning set forth in the Security Instrument.




“Incremental Payment” shall have the meaning set forth in Section 2.2.8.



“Indebtedness” shall mean, at any given time, the Principal Amount, together with all
accrued and unpaid interest thereon and all other obligations and liabilities due or to become due
to Lenders pursuant hereto, under the Notes or in accordance with the other Loan Documents and all
other amounts, sums and expenses paid by or payable to Lenders hereunder or pursuant to the Notes
or the other Loan Documents.


 


-14-









 






“Indemnified Parties” shall have the meaning set forth in Section 19.14(b).




“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.



“Independent” shall mean, when used with respect to any Person, a Person who:
(i) does not have any direct financial interest or any material indirect financial interest in any
Borrower or in any Affiliate of any Borrower, (ii) is not connected with Borrower or any Affiliate
of Borrower as an officer, employee, promoter, underwriter, trustee, partner, member, manager,
creditor, director, supplier, customer or person performing similar functions and (iii) is not a
member of the immediate family of a Person defined in (i) or (ii) above.



“Independent Architect” shall mean an architect, engineer or construction consultant
selected by Borrower which is licensed to practice in the State and has at least five (5) years of
architectural experience and which is reasonably acceptable to Administrative Agent and (i) does
not have any direct financial interest or any material indirect financial interest in any Borrower
or in any Affiliate of any Borrower, (ii) is not connected with Borrower or any Affiliate of
Borrower as an officer, employee, partner, member, manager, director, or Person performing similar
functions and (iii) is not a member of the immediate family of a Person defined in (i) or (ii)
above.



“Independent Director, Independent Manager, or Independent Member” shall mean a
natural person selected by Borrower (a) with prior experience as an independent director,
independent manager or independent member, (b) with at least three (3) years of employment
experience, (c) who is provided by a Nationally Recognized Service Company, (d) who is duly
appointed as an Independent Director, Independent Manager, or Independent Member and is not, will
not be while serving in such capacity, and shall not have been at any time during the preceding
five (5) years, any of the following:



(i) a stockholder, director (other than as an independent director), officer, employee,
partner, attorney or counsel of Borrower, any Affiliate of Borrower or any direct or indirect
parent of Borrower;



(ii) a customer, supplier or other Person who derives any of its purchases or revenues from
its activities with Borrower or any Affiliate of Borrower;



(iii) a Person or other entity Controlling or under Common Control with any such stockholder,
partner, customer, supplier or other Person; or



(iv) a member of the immediate family of any such stockholder, director, officer, employee,
partner, customer, supplier or other Person.


 


-15-









 





A natural person who otherwise satisfies the foregoing definition and satisfies subparagraph
(i) by reason of being the Independent Director of a “special purpose entity” affiliated with
Borrower shall be qualified to serve as an Independent Director, Independent Manager, or
Independent Member of Borrower, provided that the fees that such individual earns from
serving as Independent Director of Affiliates of Borrower in any given year constitute in the
aggregate less than five percent (5%) of such individual’s annual income for that year.



A natural person who satisfies the foregoing definition other than clause (ii) shall not be
disqualified from serving as an Independent Director of Borrower if such individual is an
independent director, independent manager, independent member or special manager provided by a
Nationally Recognized Service Company that provides professional independent directors, independent
managers, independent members and special managers and also provides other corporate services in
the ordinary course of its business.




“Initial LIBOR Cap Strike Rate” shall mean 3.00% per annum.




“Initial Maturity Date” shall mean August 12, 2013.




“Insurance Premiums” shall have the meaning set forth in Section 6.1.14(A).



“Insurance Requirements” shall mean, collectively, (i) all material terms of any
insurance policy required pursuant to this Agreement and (ii) all material regulations and
then-current standards applicable to or affecting the Property or any part thereof or any use or
condition thereof, which may, at any time, be recommended by the Board of Fire Underwriters, if
any, having jurisdiction over the Property, or such other body exercising similar functions.



“Insurance Reserve Account” shall have the meaning set forth in
Section 3.1.1(b).




“Insurance Reserve Amount” shall have the meaning set forth in Section 16.2.



“Insurance Reserve Trigger” shall mean Borrower’s failure to deliver to Administrative
Agent not less than five Business Days prior to each Payment Date (unless Borrower has provided to
Administrative Agent evidence reasonably satisfactory to Administrative Agent that Borrower had
prepaid such insurance premiums through a future Payment Date), evidence that all insurance
premiums for the insurance required to be maintained pursuant to the terms of this Agreement have
been paid in full.



“Intellectual Property” shall mean all intellectual property worldwide including: (a)
Trademarks; (b) patents issued by the United States Patent and Trademark Office or the equivalent
thereof in any other country, industrial designs, and applications for any of the foregoing,
including any continuations, divisionals, continuations in part, renewals, extensions and reissues,
and the inventions disclosed or claimed therein; (c) copyrights in published and unpublished works
of authorship, whether registered or unregistered in the United States or any other country,
whether as author, assignee, or transferee (including without limitation databases and other
compilations of information, computer software, middleware, user interface, source code, object
code, and the like, and user manuals and other training documentation related thereto), all
derivative works, renewals, extensions, restorations, and reversions thereof; (d) domain names; (e)
trade secrets, proprietary confidential information and operational systems, including confidential
know-how, processes, schematics, concepts, ideas, inventions, business methods and processes,
marketing plans, research and development, formulae, drawings, prototypes, models, designs,
customer and supplier information and lists, databases and other compilations of information,
historical guest lists, mailing lists, computer software and systems (including reservations and
other hotel systems), middleware, user interface, source code, object code, algorithms, and the
like, and user manuals and other training documentation related thereto, and other nonpublic,
confidential, or proprietary information; (f) any registrations, applications for registration or
issuance, recordings, reissues, renewals, divisions, continuations, and extensions relating to any
or all of the foregoing; (g) income, fees, royalties, damages and payments now and hereafter due
and/or payable thereunder and with respect thereto, including, without limitation, damages, claims
and payments for past, present or future infringements or other violations thereof relating to any
or all of the foregoing; (i) rights to sue for past, present and future infringements and other
violations thereof relating to any or all of the foregoing; and (j) for all of the foregoing, any
of which is now owned, acquired or developed after the Closing Date.


 


-16-









 





“Interest Determination Date” shall mean, with respect to each Interest Period, the
date which is two (2) Business Days prior to the fifteenth (15th) day of each calendar
month.



“Interest Period” shall mean (i) while the Loan bears interest at the Applicable LIBO
Rate or Default Rate based on Applicable LIBO Rate, a period of one month commencing on the
expiration of the preceding Interest Period (or, in the case of the first Interest Period, on the
Closing Date) and (ii) while the Loan bears interest at the Applicable Base Rate or the Default
Rate based on the Applicable Base Rate, the period commencing on the date of conversion and ending
on the last day of the calendar month in which the date of conversion occurred, and each succeeding
calendar month thereafter; provided, that (x) while the Loan bears interest at the Applicable LIBO
Rate, if an Interest Period would otherwise end on a day which is not a Eurodollar Business Day,
such Interest Period shall end on the next succeeding Eurodollar Business Day, provided, however,
that if said next succeeding Eurodollar Business Day falls in a new calendar month, such Interest
Period shall end on the immediately preceding Eurodollar Business Day, and (y) no Interest Period
may continue past the Maturity Date.



“Interest Rate Cap Agreement” shall mean an interest rate cap agreement or agreements
(together with the confirmation and schedules relating thereto), or, with Administrative Agent’s
prior written consent (which shall not be unreasonably withheld, delayed or conditioned), a swap or
other interest rate hedging instrument, each between a Counterparty and Borrower obtained by
Borrower and collaterally assigned to Administrative Agent pursuant to this Agreement, and each
satisfying the requirements set forth in Exhibit I (and, in the case of a swap or other interest
rate hedging agreement, consented to by Administrative Agent in its reasonable discretion).



“IP Collateral” shall mean all Borrower’s right, title and interest in, to and under
Intellectual Property and IP Licenses.



“IP Licenses” shall mean all licenses of Intellectual Property with respect to
Intellectual Property (regardless of whether such agreements and covenants are contained within an
agreement that also covers other matters, such as development, consulting services or distribution
of products) and regardless of whether Borrower is a licensor or licensee under any such agreement,
together with any and all (i) amendments, renewals, extensions, supplements and continuations
thereof, (ii) income, fees, royalties, damages, claims and payments now and hereafter due and/or
payable thereunder and with respect thereto including damages and payments for past, present or
future breaches or violations thereof, and (iii) the right to sue for past, present and future
breaches or violations thereof.


 


-17-









 






“IP Schedule” shall have the meaning provided in Section 4.1.46.



“IP Security Agreement” shall mean the IP Security Agreement in form and substance
substantially similar to the form attached hereto as Exhibit P.



“Joint Venture Partner” shall mean any Person (other than a Person in which Holdco
owns a direct or indirect ownership interest) that (x) is not a Disqualified Transferee and (y)
acquires either (i) a direct ownership interest in Borrower or (ii) a direct ownership interest in
a Person that holds a direct or indirect ownership interest in Borrower and in which Guarantor owns
a direct or indirect ownership interest as the result of a Transfer made in compliance with Section
8.4.




“Land” shall have the meaning set forth in the Security Instrument.




“Late Payment Charge” shall have the meaning set forth in Section 2.2.2.



“Lease” shall mean any lease (including, without limitation, the Operating Lease and
the Bar Lease), sublease or sub sublease, letting, license, concession, or other agreement (whether
written or oral and whether now or hereafter in effect) pursuant to which any Person is granted by
Borrower a possessory interest in, or right to use or occupy all or any portion of any space in the
Property or any facilities at the Property (other than Ordinary Course of Business (a) short-term
occupancy rights of hotel guests, (b) occupancy agreements or other occupancy rights for groups of
hotel guests for transitory periods of time and (c) agreements for catering, business and similar
special events or functions at the Property), and every Modification or other agreement relating to
such lease, sublease, sub-sublease, or other agreement entered into in connection with such lease,
sublease, sub-sublease, or other agreement and every guarantee of the performance and observance of
the covenants, conditions and agreements to be performed and observed by the other party thereto.




“Lease Modification” shall have the meaning set forth in Section 8.7.1.



“Leaseco Intercompany Loan” shall mean that certain indebtedness of Owner to Operating
Lessee in the principal amount of $6,500,000 evidenced by a promissory note dated August 28, 2000.



“Leasehold Units” shall mean the Tenth Floor Unit and the Store Unit leased by
Borrower pursuant to the Ground Lease.



“Legal Requirements” shall mean all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations and requirements, and
irrespective of the nature of the work to be done, of every Governmental Authority including,
without limitation, Environmental Laws, and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Borrower or to the Property and the Improvements and
the Equipment thereon, or to the use, manner of use, occupancy, possession, operation, maintenance,
alteration, repair or reconstruction of the Property and the Improvements and the Equipment thereon
including, without limitation, building and zoning codes and ordinances and laws relating to
handicapped accessibility.


 


-18-









 






“Lenders” shall have the meaning set forth in the first paragraph of this Agreement.



“Liabilities” shall mean all liabilities, claims, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including
reasonable attorney’s fees and expenses) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loan and the termination, resignation or
replacement of Administrative Agent or replacement of any Lender) be imposed on, incurred by or
asserted against Administrative Agent, Lenders, or, as applicable, any other Indemnified Party.



“LIBO Rate” shall mean, with respect to any Interest Period, the average of interbank
offered rates for dollar deposits having a maturity approximately equal to such Interest Period in
the London interbank market as set forth on Reuters Screen LIBOR01 Page (i.e., the LIBOR
page), or any successor page, of the Reuters System, titled “British Banker Association Interest
Settlement Rates” at approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior
to the first day of such Interest Period or if such rate is not then quoted, the arithmetic average
as determined by Administrative Agent of the rates at which deposits in immediately available U.S.
dollars in an amount equal to the amount of such LIBOR Rate Loan having a maturity approximately
equal to such Interest Period are offered by four (4) major reference banks to be selected by
Administrative Agent in the London interbank market, at approximately 11:00 a.m. (London time) two
(2) Eurodollar Business Days prior to the first day of such Interest Period.




“LIBO Rate Spread” shall mean four percent (4.00%).



“LIBO Reserve Percentage” shall mean with respect to an Interest Period, the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and other reserves and
taking into account any transitional adjustments) which is actually imposed on a Lender under
Regulation D on eurocurrency liabilities.



“LIBOR Cap Strike Rate” shall mean, (i) with respect to the Interest Rate Cap
Agreement in effect prior to the Initial Maturity Date, the Initial LIBOR Cap Strike Rate; and (ii)
with respect to any Extension Interest Rate Cap Agreement, a rate equal to that sufficient to
maintain a DSCR of 1.10x measured for the period applicable to the Fiscal Quarter immediately
preceding the Initial Maturity Date, the First Extended Maturity Date or the Second Extended
Maturity Date, as applicable.




“License” shall have the meaning set forth in Section 4.1.23.



“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance or charge on or affecting Borrower, the
Property, any portion thereof or any interest therein, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing statement, and the filing
of mechanic’s, materialmen’s and other similar liens and encumbrances.


 


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“Loan” shall mean, collectively, (i) the Term Loans made by Lenders to Borrower on the
Closing Date pursuant to this Agreement and (ii) any Delayed Draw Term Loans made by Lenders to
Borrower during the Delayed Draw Term Loan Availability Period pursuant to this Agreement.



“Loan Documents” shall mean, collectively, this Agreement, the Notes, the Security
Instrument, the Assignment of Leases, the Environmental Indemnity, the Assignment of Management
Agreement, the Account Agreement, the Post Closing Agreement, the Fee Letter, the Recourse Guaranty
and all other documents executed and/or delivered by Borrower or any of its Affiliates in
connection with the Loan including any certifications or representations delivered by or on behalf
of Borrower, any Affiliate of Borrower, the Manager, or any Affiliate of the Manager (including,
without limitation, any certificates in connection with any legal opinions delivered on the date
hereof).




“Loan Sale” shall have the meaning set forth in Section 15.7.



“Management Agreement” shall mean the First Amended and Restated Hotel Management
Agreement, dated as of August 12, 2011, by and between Operating Lessee and Morgans Hotel Group
Management LLC, a Delaware limited liability company, as the same may be Modified from time to time
in accordance with the terms hereof.



“Management Control” shall mean, with respect to any direct or indirect ownership
interest in Borrower or the Property (not including Manager’s interest under an Acceptable
Management Agreement), the power and authority to make and implement or cause to be made and
implemented all material decisions with respect to the operation, management, financing and
disposition of the specified interest.



“Management Fee” shall mean an amount equal to the monthly property management fees
payable to the Manager pursuant to the terms of the Management Agreement for management services,
incentive management fees and any other fees described in the Management Agreement, and any
allocated franchise fees.



“Manager” shall mean Morgans Hotel Group Management LLC, a Delaware limited liability
company, or any replacement “Manager” appointed in accordance with Section 5.2.14
hereof.



“Manager Reimbursable Expenses” shall mean the expenses of manager to be reimbursed
under the Management Agreement.



“Material Adverse Effect” shall mean any event or condition that has a material
adverse effect on (i) the Property taken as a whole, (ii) the use, operation, or value of the
Property, (iii) the business, profits, operations or financial condition of the (a) Borrower
(considered as a whole) or (b) Guarantor; or (iv) the ability of Borrower to repay the principal
and interest of the Loan as it becomes due or to satisfy any of Borrower’s obligations under the
Loan Documents.


 


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“Material Alteration” shall mean any Alteration the estimated total cost of which
(including, without limitation, construction costs and costs of architects, engineers and other
professionals), as reasonably estimated by an Independent Architect, exceeds the Threshold Amount;
provided, however, that in no event shall (i) any Required Repairs, (ii)
Alterations performed as part of a Restoration, or (iii) the replacement of fixtures, furnishings
and equipment to the extent being of a routine and recurring nature and performed in the ordinary
course of business, constitute a Material Alteration.



“Material Casualty” shall mean a Casualty where the loss (i) is in an aggregate amount
equal to or in excess of the Threshold Amount or (ii) has caused fifteen percent (15%) or more of
the hotel rooms in the Property to be unavailable for its applicable use for longer than thirty
(30) days.



“Material Condemnation” shall mean a Condemnation where the loss (i) is in an
aggregate amount equal to or in excess of the Threshold Amount or (ii) has caused fifteen percent
(15%) or more of the hotel rooms in the Property to be unavailable for its applicable use.



“Material Lease” shall mean any Lease (a) demising a premises within the Property that
is more than 5,000 net rentable square feet or (b) that is for a term equal to or greater than
120 months (inclusive of all extension and renewal options), provided that the initial term of such
Lease is no longer than 60 months.



“Maturity Date” initially shall mean the Initial Maturity Date; provided that
the “Maturity Date” shall mean the First Extended Maturity Date, the Second Extended
Maturity Date or the Final Extended Maturity Date if Borrower extends the Initial Maturity Date,
the First Extended Maturity Date, or the Second Extended Maturity Date, as applicable, in
accordance with the terms and conditions of Section 2.1.6 of this Agreement. The Maturity
Date shall be subject to acceleration upon an Event of Default as otherwise provided in this
Agreement.




“Maturity Date Payment” shall have the meaning set forth in Section 2.1.5.



“Maximum Legal Rate” shall mean the maximum non-usurious interest rate, if any, that
at any time or from time to time may be contracted for, taken, reserved, charged or received on the
indebtedness evidenced by the Notes and as provided for herein or the other Loan Documents, under
the laws of such state or states whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.



“Modifications” shall mean any amendments, supplements, modifications, renewals,
replacements, consolidations, severances, substitutions and extensions of any document or
instrument from time to time; “Modify,” “Modified,” or related words shall have
meanings correlative thereto.




“Modified Hotel Unit” shall have the meaning set forth in the Condominium Declaration.



“Monthly FF&E Reserve Amount” shall mean an amount determined by Administrative Agent
(based upon the most recent monthly operating statements delivered pursuant hereto) equal to 4% of
Operating Revenues unless otherwise determined by Administrative Agent in its reasonable
discretion.


 


-21-









 





“Monthly Ground Rent Reserve Amount” shall have the meaning set forth in
Section 16.6.



“Monthly Insurance Reserve Amount” shall have the meaning set forth in
Section 16.2.




“Monthly Tax Reserve Amount” shall have the meaning set forth in Section 16.1.




“Moody’s” shall mean Moody’s Investors Service, Inc.



“Nationally Recognized Service Company” shall mean any of CT Corporation, Corporation
Service Company, National Registered Agents, Inc., Wilmington Trust Company or such other
nationally recognized company that provides independent director, independent manager or
independent member services and that is reasonably satisfactory to Administrative Agent, in each
case that is not an Affiliate of Borrower and that provides professional independent directors and
other corporate services in the ordinary course of its business.



“Net Operating Income” shall mean, for any specified period, the excess of Operating
Revenues over Operating Expenses for the immediately preceding twelve (12) calendar month period.
Notwithstanding the foregoing, for purposes of calculating Net Operating Income, unless otherwise
specified herein, Operating Expenses shall be calculated assuming that the Allocable Chain Expenses
and Management Fee under the Management Agreement in effect (or, in the case of Section
5.2.22, as proposed to be increased) at the time of such calculation had been in effect for
such specified period.




“New Lease” shall have the meaning set forth in Section 8.7.1.




“Non-Consenting Lender” shall have the meaning set forth in Section 2.2.7(ii).




“Non-Consolidation Opinion” shall have the meaning provided in Section 2.4.5.




“Non-Disturbance Agreement” shall have the meaning set forth in Section 8.7.9.



“Northstar Guarantee” shall mean that certain Guarantee, dated as of the date hereof,
by Northstar Guarantor in favor of Lenders, as the same may be Modified from time to time.



“Northstar Guarantor” shall mean NorthStar Partnership, LP, a Delaware limited
partnership.



“Note” shall mean any of the promissory notes in the form of that attached to the
Agreement as Exhibit L issued by Borrower to a Lender, as the same may be Modified from time to
time.


 


-22-









 





“Obligations” shall mean any and all debts, obligations and liabilities of Borrower or
the other Transaction Parties to Administrative Agent and Lenders (whether now existing or
hereafter arising, voluntary or involuntary, whether or not jointly owed with others, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred), arising out of or related to
the Loan Documents.



“Officer’s Certificate” shall mean a certificate executed by an authorized signatory
of Borrower that is familiar with the financial condition of Borrower and the operation of the
Property or the particular matter which is the subject of such Officer’s Certificate.



“Operating Expense Reserve Account” shall have the meaning set forth in
Section 3.1.1(C).



“Operating Expenses” shall mean, for any specified period, without duplication, all
expenses of Borrower (or of Manager for the account of Borrower) during such period in connection
with the ownership or operation of the Property, including costs (including labor) of providing
services including rooms, food and beverage, telecommunications, garage and parking and other
operating departments, as well as real estate and other business taxes, rental expenses, insurance
premiums, utilities costs, administrative and general costs, repair and maintenance costs
(excluding for purposes of this clause any amounts payable out of the FF&E Reserve Account),
Third-Party Franchise Fees, Management Fees under the Management Agreement calculated as the
greater of (i) actual Management Fees or (ii) 3% of Operating Revenues, other costs and expenses
relating to the Property, required FF&E reserves calculated as 4% of Hotel Revenue, and legal
expenses incurred in connection with the operation of the Property, determined, in each case on an
accrual basis in accordance with GAAP. “Operating Expenses” shall not include
(i) depreciation or amortization or other noncash items, (ii) the principal of and interest on the
Notes or on any Permitted Debt, (iii) income taxes or other taxes in the nature of income taxes,
(iv) any expenses (including legal, accounting and other professional fees, expenses and
disbursements) incurred in connection with and allocable to the issuance of the Notes, (v) Capital
Expenditures, (vi) distributions to the shareholders of Borrower or (vii) any item of expense which
would otherwise be considered within Operating Expenses pursuant to the provisions above but is
paid directly by any Tenant (other than a Borrower). Expenses that are accrued as Operating
Expenses during any period shall not be included in Operating Expenses when paid during any
subsequent period.



“Operating Revenues” shall mean, for any specified period, all revenues received by
Borrower (or by Manager for the account of Borrower) from any Person during such period in
connection with the ownership or operation of the Property, determined on an accrual basis of
accounting in accordance with GAAP, including the following:



(i) all amounts payable to Borrower (or to Manager for the account of Borrower) by any Person
as Rent and/or Hotel Revenue;



(ii) all amounts payable to Borrower (or to Manager for the account of Borrower) pursuant to
any reciprocal easement and/or operating agreements, covenants, conditions and restrictions,
condominium documents and similar agreements affecting the Property and binding upon and/or
benefiting Borrower and other third parties;


 


-23-









 





(iii) condemnation awards to the extent that such awards are compensation for lost rent
allocable to such specified period;



(iv) business interruption and loss of “rental value” insurance proceeds to the extent such
proceeds are allocable to such specified period; and




(v) all investment income with respect to the Collateral Accounts.



Notwithstanding the foregoing clauses (i) through (v), Operating Revenues shall not include
(A) any Proceeds (other than of the types described in clauses (iii) and (iv) above), (B) any
proceeds resulting from the sale, exchange, transfer, financing or refinancing of all or any part
of the Property (other than of the types described in clause (i) and (iii) above), (C) any
repayments received from Tenants of principal loaned or advanced to Tenants by Borrower, (D) any
type of income that would otherwise be considered Operating Revenues pursuant to the provisions
above but is paid directly by any Tenant to a Person other than Borrower or Manager or its agent
and (E) any fees or other amounts payable by a Tenant or another Person to Borrower that are
reimbursable by Borrower or Manager on behalf of Borrower to Tenant or such other Person.



“Operating Lease” shall mean the Lease dated August 28, 2000 by and between Owner, as
landlord, and Operating Lessee, as tenant, with respect to the Property.



“Operating Lease Subordination” shall mean that certain Operating Lease Subordination
Agreement, dated as the date hereof, by and among Owner, Operating Lessee and Administrative Agent.




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



“Opinion of Counsel” shall mean an opinion of counsel of law firm(s) licensed to
practice in New York and Delaware and selected by Borrower and reasonably acceptable to
Administrative Agent.



“Ordinary Course of Business” shall mean with respect to a specific Person, the
ordinary course of such Person’s business, substantially as conducted by such Person prior to and
as of the Closing Date, and (A) undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Loan Document, and (B) which shall not in any event
interfere with the ongoing operation of the assets of such Person in a manner consistent with
similar properties and shall not interfere with the day-to-day operations of such assets as
contemplated in the Loan Documents.




“Originating Lender” shall have the meaning set forth in Section 15.4.


 


-24-









 





“Other Charges” shall mean maintenance charges, impositions other than Impositions,
and any other charges, including, without limitation, condominium common charges and assessments,
vault charges and license fees for the use of vaults, chutes and similar areas adjoining the
Property, now or hereafter levied or assessed or imposed against the Property or any part thereof
by any Governmental Authority, other than those required to be paid by a Tenant pursuant to its
respective Lease.



“Other Taxes” shall mean any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies of a Governmental Authority with
respect to any payment made under any Loan Document or from the execution, delivery or enforcement
of any Loan Document, excluding Excluded Taxes.




“Owned Units” shall mean the EBC Unit and the Modified Hotel Unit.




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




“Participant” shall have the meaning set forth in Section 15.4.



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




“Patriot Act Offense” shall have the meaning set forth in Section 4.1.41(b).



“Payment Date” shall mean, commencing on September 1, 2011, the first (1st)
day of each month, or if such day is not a Business Day, the immediately succeeding Business Day,
and the Maturity Date.



“Percentage Share” shall mean for any Lender at any date the percentage set forth next
to such Lender’s name on Schedule VII to this Agreement, as the same may be Modified from time to
time, including, without limitation, to reflect the addition or withdrawal of a Lender or the
assignment of all or a portion of an existing Lender’s Percentage Share as permitted pursuant to
Section 15.1



“Permitted Debt” shall mean collectively, (a) the Notes and the other obligations,
indebtedness and liabilities specifically provided for in any Loan Document and secured by this
Agreement, the Security Instrument and the other Loan Documents, (b) trade payables and other
liabilities incurred in the Ordinary Course of Business and payable by or on behalf of Borrower in
respect of the operation of the Property, not secured by Liens on the Property (other than liens
being properly contested in accordance with the provisions of this Agreement or the Security
Instrument), such payables and liabilities (which shall not include taxes, accrued payroll and
benefits, customer, security deposits and deferred income), not to exceed at any one time
outstanding two percent (2%) of the outstanding Principal Amount, provided that (but
subject to the remaining terms of this definition) each such payable and liability shall be paid
within sixty (60) days following the date of the invoice for such payable or liability,
provided, that such two percent (2.0%) limitation shall not include normal and customary
retainages related to Alterations that are reserved for by Borrower, (c) purchase money
indebtedness and capital lease obligations incurred in the Ordinary Course of Business, having
scheduled annual


 


-25-









 






debt service not to exceed $500,000, (d) contingent obligations to repay customer
and Tenant security deposits held in the Ordinary Course of Business, (e) obligations incurred in
the Ordinary Course of Business for the financing of any applicable portfolio insurance premiums,
(f) indebtedness of Borrower to any partner or member of Borrower or its Affiliates provided such
indebtedness is evidenced by a promissory note that evidences such indebtedness and provides that
the obligation of the maker thereof to repay such indebtedness is fully subordinated to Borrower’s
obligation to repay in full of all amounts under the Notes and (g) the Leaseco Intercompany Loan.
Subject to Section 7.3, nothing contained herein shall be deemed to require Borrower to pay
any amount, so long as Borrower is in good faith diligently contesting (including, without
limitation, by instituting appropriate legal proceedings, when necessary) the validity, amount or
application thereof, provided that in each case, at the time of the commencement of any
such action or proceeding, and during the pendency of such action or proceeding (i) adequate
reserves with respect thereto are maintained on the books of Borrower in accordance with GAAP and
(ii) such contest is maintained and prosecuted continuously and with diligence. Notwithstanding
anything set forth herein, in no event shall Borrower be permitted under this provision to enter
into a note (other than the Notes and the other Loan Documents) or other instrument for borrowed
money other than permitted purchase money indebtedness as described in this definition or a note
described in clause (f) of this definition.



“Permitted Encumbrances” shall mean collectively, (a) the Liens and security interests
created or permitted by the Loan Documents, (b) all Liens, encumbrances and other matters disclosed
in the Title Policy, (c) Liens, if any, for Impositions imposed by any Governmental Authority not
yet due or delinquent (other than any such Lien imposed pursuant to Section 401(a)(29) of the Code
or by ERISA), (d) Liens and security interests on personal property items that are the subject of
clause (c) of the definition of Permitted Debt, (e) non-exclusive IP Licenses issued in the
ordinary course of business and the IP Licenses set forth on the IP Schedule, (f) any workers’,
mechanics’ or other similar Liens on the Property provided that any such Lien is bonded or
discharged within thirty (30) days after Borrower first receives written notice of such Lien or
which is being contested in good faith in accordance with the requirements of Section 7.3,
(g) pledges or deposits made to secure payment of workers’ compensation insurance (or to
participate in any fund in connection with workers’ compensation insurance), unemployment
insurance, pensions or social security programs, incurred in the Ordinary Course of Business and
(h) any Leases existing or entered into in accordance with the terms hereof and rights to use the
Property granted to hotel guests in the Ordinary Course of Business, including (i) short term
occupancy rights of hotel guests, (ii) occupancy agreements or other occupancy rights of groups of
hotel guests for transitory periods of time and (iii) agreements for catering, business and similar
special events or functions at the Property.




“Permitted Investments” shall have the meaning set forth in the Account Agreement.



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



“Pfandbrief” shall mean the trustee, administrator or receiver (or a nominee,
collateral agent or collateral trustee) of, a mortgage pool securing covered mortgage bonds issued
by an eligible German bank (Pfandbriefbanken), by the bondholders (as a collective whole) thereof,
or by any other Person otherwise permitted to issue covered mortgage bonds (Hypothekenpfandbriefe)
under German bond law (Pfandbriefgesetz 2005, as the same may be amended or modified and in effect
from time to time, and/or any substitute or successor legislation thereto).


 


-26-









 





“Physical Conditions Report” shall mean, with respect to the Property, a structural
engineering report (prepared by an Independent Architect), which is (a) addressed to Administrative
Agent (b) prepared based on a scope of work determined by Administrative Agent in Administrative
Agent’s reasonable discretion, and (c) in form and content acceptable to Administrative Agent in
Administrative Agent’s reasonable discretion, together with any amendments or supplements thereto.




“Plan” shall have the meaning set forth in Section 4.1.10.




“Pledgee” shall have the meaning set forth in Section 15.1.



“Post Closing Agreement” shall mean the Post Closing Agreement, dated the Closing
Date, between Borrower and Administrative Agent.




“Pre-Approved Manager” shall mean any entity set forth on Schedule IV.



“Prepayment Premium” shall mean with respect to any voluntary or involuntary
prepayment of the Principal Amount before the Restricted Prepayment Date, a non-refundable fee
equal to the product of the following: (A) the amount of the Principal Amount then being prepaid,
multiplied by (B) the sum of (i) Reserve Adjusted LIBO Rate (determined as of the Interest
Determination Date immediately preceding the commencement of the Interest Period in which such
prepayment occurs) and (ii) 3.00%, multiplied by (C) a fraction (expressed as a percentage) having
(x) a numerator equal to the number of days during the period extending from and including the date
such prepayment occurs to but excluding the Restricted Prepayment Date and (y) a denominator equal
to seven-hundred thirty (730). No Prepayment Premium shall be due on any prepayments made on or
after the Restricted Prepayment Date. The Prepayment Premium shall be payable simultaneously with
Borrower’s prepayment of the Principal Amount.



“Prime Rate” shall mean the fluctuating per annum rate announced from time to time by
DBTCA (or any successor bank designated by Administrative Agent) at its principal office in New
York, New York as its “prime rate”. The Prime Rate is a rate set by DBTCA as one of its base rates
and serves as the basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its announcement in such
internal publication or publications as DBTCA may designate. The Prime Rate is not tied to any
external index and does not necessarily represent the lowest or best rate of interest actually
charged to any class or category of customers. Each change in the Prime Rate will be effective on
the day the change is announced within DBTCA.




“Primarily Liable” shall have the meaning set forth in Section 19.28(g).


 


-27-









 





“Principal Amount” shall mean One Hundred Thirty Five Million and NO/100 U.S. dollars
($135,000,000) or so much as may be outstanding under the Notes from time to time.



“Proceeds” shall mean amounts, awards or payments payable to Borrower (including,
without limitation, amounts payable under any title insurance policies covering Borrower’s
ownership interest in the Property) or Administrative Agent with respect to any insurance required
to be maintained hereunder (after the deduction therefrom and payment to Borrower and
Administrative Agent, respectively, of any and all reasonable expenses incurred by Borrower and
Administrative Agent in the recovery thereof, including all attorneys’ fees and disbursements, the
fees of insurance experts and adjusters and the costs incurred in any litigation or arbitration
with respect to any claim under such insurance policies).



“Proceeds Reserve Account” shall have the meaning set forth in
Section 3.1.1(E).



“Property” shall mean the “Property,” “Mortgaged Property” and other
collateral described in the Security Instrument.




“Rate Cap Collateral” shall have the meaning set forth in Section 9.2.



“Rating Agencies” shall mean each of S&P, Moody’s and Fitch and any other
nationally-recognized statistical rating agency which has been approved by Administrative Agent.



“Real Property” shall mean, collectively, the Land, the Improvements and the
Appurtenances (as defined in the Security Instrument).



“Recourse Guaranty” shall mean that certain Guaranty of Recourse Obligations of
Borrower, dated as of the date hereof, by Guarantor in favor of Administrative Agent, as the same
may be Modified from time to time.




“Redirection Notice” shall have the meaning set forth in Section 15.6.




“Register” shall have the meaning set forth in Section 15.2.



“Rents” shall mean all rents, rent equivalents, moneys payable as damages or in lieu
of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including,
without limitation, security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other consideration of whatever form or nature received by or paid to or
for the account of or benefit of Borrower from any and all sources arising from or attributable to
the Property and Proceeds, if any, from business interruption or other loss of income insurance.



“Replacement Interest Rate Cap Agreement” shall mean, in connection with a replacement
of an Interest Rate Cap Agreement following a Downgrade of the Counterparty thereto, an interest
rate cap agreement (together with the confirmation and schedules relating thereto) from an
Acceptable Counterparty and satisfying the requirements set forth on Exhibit I hereto;
provided that to the extent any such interest rate cap agreement does not meet the
foregoing requirements a “Replacement Interest Cap Agreement” shall be such interest rate
cap agreement approved by Administrative Agent in its sole discretion.


 


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“Required Lenders” shall mean, at any date, those Lenders holding in aggregate greater
than 2/3rd of the outstanding principal amount of the Loan; provided, that (i)
such Lenders shall be entitled to their voting, consent and approval rights, and (ii) at all times
when two (2) or more Lenders that are entitled to their voting, consent and approval rights, the
term “Required Lenders” shall in no event mean less than two (2) Lenders.




“Required Repairs” shall have the meaning set forth in Section 16.4.




“Required Repairs Funds” shall have the meaning set forth in Section 16.4.



“Required Repairs Reserve Account” shall have the meaning set forth in
Section 3.1.1(J).




“Required Terrorism Amount” shall have the meaning set forth in Section 6.1.8.



“Reserve Adjusted LIBO Rate” shall mean the rate per annum calculated as of the first
day of such Interest Period in accordance with the following formula:



	 	 	 	 	 
	Reserve Adjusted LIBO Rate =

	 	LR

	 	 
		 	
1-LRP
	 	 






where



LR = LIBO Rate



LRP = LIBO Reserve Percentage; provided that in no event shall the Reserve Adjusted
LIBO Rate be less than one percent (1.00%).



“Reserve Funds” shall mean, collectively, all funds deposited by Borrower with
Administrative Agent or Cash Management Bank pursuant to Article 16 of this Agreement.




“Restoration” shall have the meaning provided in Section 6.2.2.




“Restricted Prepayment Date” shall mean August 12, 2013.



“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc.



“Second Extended Maturity Date” shall have the meaning given such term in
Section 2.1.6(ii).



“Security Instrument” shall mean first priority Amended, Restated and Consolidated
Mortgage, Assignment of Leases and Rents, Hotel Revenue and Security Agreement, dated as of the
date hereof, executed and delivered by Borrower to Administrative Agent and encumbering the
Property, as the same may be Modified from time to time.


 


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



“Solvent” means, when used with respect to any Person, that (a) the fair value and the
fair salable value of its assets (excluding any Debt due from any affiliate of such Person) are
each in excess of the fair valuation of its total liabilities (including all contingent liabilities
computed at the amount which, in light of all the facts and circumstances existing at such time,
represents the amount that could reasonably be expected to become an actual and matured liability);
(b) such Person is able to pay its debts or other obligations in the ordinary course as they
mature; and (c) such Person has capital not unreasonably small to carry on its business and all
business in which it proposes to be engaged.




“SRO Tenancies” shall mean the tenancies describe on Schedule V.



“SRO Unit” shall mean a guestroom or other single-room unit at the Property that is
leased for the use as a primary residence by the occupant(s) thereof.




“State” shall mean the State of New York.




“Sub-Account(s)” shall have the meaning set forth in Section 3.1.1.



“Survey” shall mean a survey of the Property prepared by a surveyor licensed in the
State and satisfactory to Administrative Agent and the company or companies issuing the Title
Policy, and containing a certification of such surveyor satisfactory to Administrative Agent.



“Taxes” shall mean any and all federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise, profits, withholding, social
security, unemployment, disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.




“Tax Reserve Account” shall have the meaning set forth in Section 3.1.1(A).




“Tax Reserve Amount” shall have the meaning set forth in Section 16.1.



“Tenant” shall mean any Person leasing, subleasing or otherwise occupying any portion
of the Property or permitted to use any portion of the facilities at the Property, other than the
Manager and its employees, agents and assigns.



“Tenth Floor Unit” shall have the meaning assigned to it in the Condominium
Declaration.



“Term” shall mean the entire term of this Agreement, which shall expire upon repayment
in full of all Obligations and full performance of each and every Obligation to be performed by
Borrower pursuant to the Loan Documents.


 


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“Term Loan” shall mean the term loan in the principal amount of One Hundred Fifteen
Million and No/100 U.S. dollars ($115,000,000.00) made by Lenders to Borrower pursuant to
Section 2.1.1(a).




“Terrorism Insurance” shall have the meaning set forth in Section 6.1.8.



“Third-Party Franchise Fee” shall mean the monthly franchise fee, if any, payable to
the Manager under the Management Agreement or any separate franchise agreement (provided such
Management Agreement or franchise agreement is with a third-party manager that is not an Affiliate
of Borrower and has been approved by Administrative Agent). As of the Closing Date, no Third-Party
Franchise Fee is payable under the Management Agreement.




“Threshold Amount” shall mean an amount equal to, in the aggregate, $7,500,000.



“Title Company” shall mean, collectively, First American Title Insurance Company,
Stewart Title Insurance Company and Commonwealth Land Title Insurance Company.



“Title Policy” shall mean an ALTA mortgagee title insurance policy in a form
acceptable to Administrative Agent issued by the Title Company with respect to the Property and
insuring the lien of the Security Instrument.



“Total Insurable Value” shall mean the sum of the full replacement cost of the
Improvements of the Property inclusive of furniture, fixtures and equipment plus twelve (12) months
of business interruption insurance.



“Trademarks” shall mean all trademarks, service marks, certification marks, collective
marks, business names, corporate names, trade names, d/b/a’s, trade dress, designs, logos, slogans,
and all other indicia of origin or quality, and general intangibles of like nature, whether
registered or unregistered, and all goodwill of any business connected with the use thereof and
symbolized thereby.



“Transaction Parties” shall mean each of Borrower, Guarantor and any other Affiliate
of any of the foregoing that is a party to any Loan Document; provided, however,
that (i) an Affiliate shall not include a person executing an Officer’s Certificate and not
otherwise a party to any other Loan Document and (ii) each of Manager and Northstar Guarantor shall
not be a Transaction Party.



“Transfer” shall mean to, directly or indirectly, sell, assign, convey, mortgage,
transfer, pledge, hypothecate, encumber, grant a security interest in, lease, exchange or otherwise
dispose of any ownership interest or grant any option or warrant with respect to, or where used as
a noun, a direct or indirect sale, assignment, conveyance, transfer, pledge or other disposition of
any ownership interest, by any means whatsoever whether voluntary, involuntary, by operation of law
or otherwise.



“UCC or Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect
in the State.


 


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“Uniform System” shall mean the Uniform System of Accounts for Hotels, 9th Edition,
International Association of Hospitality Accountants (1996), as from time to time amended or
replaced by an updated edition.



“U.S. Government Obligations” shall mean any direct obligations of, or obligations
guaranteed as to principal and interest by, the United States Government or any agency or
instrumentality thereof, provided that such obligations are backed by the full faith and
credit of the United States. Any such obligation must be limited to instruments that have a
predetermined fixed dollar amount of principal due at maturity that cannot vary or change. If any
such obligation is rated by S&P, it shall not have an “r” highlighter affixed to its rating.
Interest must be fixed or tied to a single interest rate index plus a single fixed spread
(if any), and move proportionately with said index. U.S. Government Obligations include, but are
not limited to: U.S. Treasury direct or fully guaranteed obligations, Farmers Home Administration
certificates of beneficial ownership, General Services Administration participation certificates,
U.S. Maritime Administration guaranteed Title XI financing, Small Business Administration
guaranteed participation certificates or guaranteed pool certificates, U.S. Department of Housing
and Urban Development local authority bonds, and Washington Metropolitan Area Transit Authority
guaranteed transit bonds. In no event shall any such obligation have a maturity in excess of 365
days.



Section 1.2 Principles of Construction. All references to sections and schedules are
to sections and schedules in or to this Agreement unless otherwise specified. All accounting terms
not specifically defined herein shall be construed in accordance with GAAP as modified by the
Uniform System. When used herein, the term “financial statements” shall include the notes and
schedules thereto. Unless otherwise specified herein or therein, all terms defined in this
Agreement shall have the definitions given them in this Agreement when used in any other Loan
Document or in any certificate or other document made or delivered pursuant thereto. All uses of
the word “including” shall mean including, without limitation unless the context shall indicate
otherwise. Unless otherwise specified, the words hereof, herein and hereunder and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise specified, all meanings attributed to
defined terms herein shall be equally applicable to both the singular and plural forms of the terms
so defined.



Section 1.3 GAAP. Unless otherwise indicated, all accounting terms, ratios and
measurements shall be interpreted or determined in accordance with GAAP as in effect from time to
time; provided that, all computations and all definitions (including accounting terms) used in
determining DSCR and Debt Yield shall utilize GAAP and policies in conformity with those used to
prepare the audited financial statements of the Property referred to in Section 2.4.18 for
the fiscal year ended December 31, 2010.


 


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ARTICLE II




General Terms





Section 2.1 Loan; Disbursement to Borrower.



2.1.1 Loan. (a) Term Loan. Subject to and upon the terms and conditions set
forth herein, Lenders severally agree that they shall fund their respective Percentage Shares of
the Term Loan, and Borrower hereby agrees to accept the Term Loan on the Closing Date.



(b) Delayed Draw Term Loan Commitments. Subject to the terms and conditions hereof,
each Lender severally agrees to make to Borrower, and Borrower may request, once during each
calendar month during the Delayed Draw Term Loan Availability Period, that Delayed Draw Term Loans
be made to Borrower in an aggregate principal amount up to but not exceeding such Lender’s Delayed
Draw Term Loan Commitment; provided that (i) up to ten borrowings of Delayed Draw Term
Loans under the Delayed Draw Term Loan Commitments shall be permitted hereunder, (ii) all
borrowings of Delayed Draw Term Loans under the Delayed Draw Term Loan Commitments must be made on
or prior to the last Business Day of the Delayed Draw Term Loan Availability Period and (iii) the
borrowing of Delayed Draw Term Loans under the Delayed Draw Term Loan Commitments shall be in
principal amounts not less than $1,000,000 or integral multiples of $100,000 in excess thereof.
Notwithstanding any other provision of this Agreement, outstanding Delayed Draw Term Loan
Commitments shall automatically terminate upon the earlier of (x) the funding of Delayed Draw Term
Loans pursuant to this Section 2.1.1(b) (in which case, such Delayed Draw Term Loan
Commitments shall terminate in an amount equal to the principal amount of any Delayed Draw Term
Loans so funded) and (y) at 5:00 p.m., New York City time, on the last Business Day of the Delayed
Draw Term Loan Availability Period (in which case, all then outstanding Delayed Draw Term Loan
Commitments shall so terminate).



(c) Loans. Once funded, the Term Loans and the Delayed Draw Term Loans made pursuant
to this Section 2.1.1 shall be treated uniformly as the Loan without regard to whether the
Loan was funded on the Closing Date or pursuant to Delayed Draw Term Loan Commitments. Any amount
borrowed under this Section 2.1.1 and subsequently repaid or prepaid may not be reborrowed.
Subject to Section 2.3, all amounts owed hereunder with respect to the Loan shall be paid
in full no later than the Maturity Date.



2.1.2 Disbursement to Borrower. (a) Each Lender shall make its Percentage Share of
the Term Loan available to Administrative Agent, in same-day funds, on the Closing Date at the
Contact Office, ABA 021-001-033 for Administrative Agent’s Account No. 99-401-268, Ref: Hudson
Hotel, Attn: Tihana Mesic, no later than 11:00 a.m. (New York time) on the Closing Date. Borrower
may request and receive only one borrowing hereunder in respect of the Term Loans. Borrower
acknowledges and agrees that the full proceeds of the Term Loans have been disbursed by Lenders to
Borrower on the Closing Date.


 


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(b) Borrower shall deliver to Administrative Agent a fully executed Funding Notice no later
than 11:00 a.m. (New York City time) at least ten (10) Business Days prior to the requested date of
funding of any Delayed Draw Term Loan, which requested date of funding shall be a Business Day (the
“Funding Date”). Except as otherwise provided herein, a Funding Notice for a Delayed Draw
Term Loan shall be irrevocable and Borrower shall be bound to make a borrowing in accordance
therewith. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative
Agent shall notify each applicable Lender of the proposed borrowing. Each Lender shall make its
Delayed Draw Term Loan available to Administrative Agent not later than 11:00 a.m. (New York City
time) on the Funding Date, by wire transfer of same day funds in dollars, at the Contact Office,
ABA 021-001-033 for Administrative Agent’s Account No. 99-401-268, Ref: Hudson Hotel, Attn: Tihana
Mesic. Upon satisfaction of the applicable conditions precedent specified in Section 2.5,
Administrative Agent shall cause an amount of same day funds in dollars equal to the proceeds of
all such Delayed Draw Term Loans received by Administrative Agent from Lenders to be credited to
the Borrower’s Account on the Funding Date.



2.1.3 The Notes, Security Instrument and Loan Documents. The Loan shall be evidenced
by the Notes and secured by the Security Instrument, the Assignment of Leases, this Agreement and
the other Loan Documents. In connection with the Loan, the Northstar Guarantor shall enter into the
Northstar Guarantee and an original of the duly executed Northstar Guarantee shall be delivered to
Administrative Agent.



2.1.4 Use of Proceeds. Borrower shall use the proceeds of the Loan (i) to (a) pay and
discharge any loans relating to the Property existing on the Closing Date, (b) pay all past-due
Taxes, Insurance Premiums and Other Charges, if any, in respect of the Property, (c) make initial
deposits of the Reserve Funds required to be made on the Closing Date (if any are required under
this Agreement), (d) pay costs and expenses incurred in connection with the closing of the Loan,
and (ii) to the extent any proceeds remain after satisfying clauses (a) through (d) above,
for such lawful purposes as Borrower shall designate.




2.1.5 Repayment of Principal and Interest.



(i) Subject to (i) the mandatory prepayment provisions of Section 2.3.3(i), (ii) the
Loan extension provisions of Section 2.1.6 below, and (iii) any earlier acceleration of the
Loan following an Event of Default, the Principal Amount, all unpaid accrued interest, all interest
that would accrue on the Principal Amount through and including the Maturity Date, and all other
fees and sums then payable hereunder or under the Loan Documents, including, without limitation the
Prepayment Premium, if applicable (collectively, the “Maturity Date Payment”), shall be due
and payable in full on the Maturity Date. Principal amounts of the Loan that are repaid or prepaid
by Borrower may not be reborrowed.


 


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(ii) All amounts advanced by Lenders pursuant to the Loan Documents, other than the Principal
Amount, and other charges provided in the Loan Documents, shall be due and payable as provided in
the Loan Documents. In the event any such advance or charge is not so repaid by Borrower,
Administrative Agent may, at its option, first apply any payments received under the Notes to repay
such advances, together with any interest thereon, or other charges as provided in the Loan
Documents, together with any interest thereon, and the balance, if any, shall be applied in payment
of any installment of interest or principal then due and payable.




2.1.6 Loan Extension.



(i) Provided that no Default or Event of Default shall have occurred and be
continuing, Borrower shall have the option, to be exercised by giving written notice to
Administrative Agent at least thirty (30) calendar days but not more than ninety (90) calendar days
prior to the Initial Maturity Date, subject to the terms and conditions set forth in
Section 2.1.6(iv), to extend the Initial Maturity Date for all (and not a portion) of the
Loan by twelve (12) months to August 12, 2014 (the “First Extended Maturity Date”). The
request by Borrower for the extension of the Initial Maturity Date shall constitute a
representation and warranty by Borrower that no Default or Event of Default then exists and a
covenant by Borrower that all of the conditions set forth in Section 2.1.6(iv) below shall
be satisfied on the Initial Maturity Date. Within twenty-five (25) days after Administrative
Agent’s receipt of Borrower’s written election, Administrative Agent shall provide to Borrower
Administrative Agent’s good faith estimate of the DSCR as of the Initial Maturity Date, and the
reduction of principal, if any, required to satisfy Section 2.1.6(iv)(C)



(ii) Provided that no Default or Event of Default shall have occurred and be
continuing, Borrower shall have the option, to be exercised by giving written notice to
Administrative Agent at least thirty (30) calendar days but not more than ninety (90) calendar days
prior to the First Extended Maturity Date, subject to the terms and conditions set forth in
Section 2.1.6(iv), to extend the First Extended Maturity Date for all (and not a portion)
of the Loan by twelve (12) months to August 12, 2015 (the “Second Extended Maturity Date”).
The request by Borrower for the extension of the Initial Maturity Date shall constitute a
representation and warranty by Borrower that no Default or Event of Default then exists and a
covenant by Borrower that all of the conditions set forth in Section 2.1.6(iv) below shall
be satisfied on the First Extended Maturity Date. Within twenty-five (25) days after
Administrative Agent’s receipt of Borrower’s written election, Administrative Agent shall provide
to Borrower Administrative Agent’s good faith estimate of the DSCR as of the First Extended
Maturity Date, and the reduction of principal, if any, required to satisfy Section
2.1.6(iv)(C)



(iii) Provided that no Default or Event of Default shall have occurred and be
continuing, Borrower shall have the option, to be exercised by giving written notice to
Administrative Agent at least thirty (30) calendar days but not more than ninety (90) calendar days
prior to the Second Extended Maturity Date, subject to the terms and conditions set forth in
Section 2.1.6(iv), to extend the Second Extended Maturity Date for all (and not a portion)
of the Loan by twelve (12) months to August 12, 2016 (the “Final Extended Maturity Date”).
The request by Borrower for the extension of the Second Extended Maturity Date shall constitute a
representation and warranty by Borrower that no Default or Event of Default then exists and a
covenant by Borrower that all of the conditions set forth in Section 2.1.6(iv) below shall
be satisfied on the Second Extended Maturity Date. Within twenty-five (25) days after
Administrative Agent’s receipt of Borrower’s written election, Administrative Agent shall provide
to Borrower Administrative Agent’s good faith estimate of the Debt Yield Ratio and DSCR as of the
Second Extended Maturity Date, and the reduction of principal, if any, required to satisfy
Section 2.1.6(iv)(B) and/or Section 2.1.6(iv)(C).


 


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(iv) The obligations of Administrative Agent and Lenders to extend the Initial Maturity Date
as provided in Section 2.1.6(i) or the First Extended Maturity Date as provided in
Section 2.1.6(ii) or the Second Extended Maturity Date as provided in Section
2.1.6(iii) shall be subject to the prior satisfaction of each of the following conditions
precedent as determined by Administrative Agent: (A) on the Initial Maturity Date, the First
Extended Maturity Date and the Second Extended Maturity Date, as applicable, there shall exist no
Default or Event of Default; (B) solely in connection with extending the Second Extended Maturity
Date, the Debt Yield Ratio calculated on the Debt Yield Test for the Property shall be not be less
than 13 percent (13%); (C)  on the Initial Maturity Date, the First Extended Maturity Date and the
Second Extended Maturity Date, as applicable, the DSCR for the immediately preceding twelve (12)
calendar months for the Property shall be not less than 1.00x; (D) Borrower shall have paid to
Administrative Agent on or prior to the Initial Maturity Date, the First Extended Maturity Date or
the Second Extended Maturity Date, as applicable, for the ratable benefit of Lenders, an extension
fee equal to one-quarter of one percent (0.25%) of the outstanding Principal Amount on the Initial
Maturity Date, the First Extended Maturity Date or the Second Extended Maturity Date, as applicable
(which fee Borrower hereby agrees shall be fully earned and nonrefundable under any circumstances
when paid); (E) Borrower shall have delivered to Administrative Agent an Extension Interest Rate
Cap Agreement with respect to the extension term duly executed by the appropriate Persons, (F) the
representations and warranties made by the Transaction Parties in the Loan Documents shall be true
and correct in all material respects on the Initial Maturity Date, the First Extended Maturity Date
and the Second Extended Maturity Date, as applicable (provided, however, that any
factual matters disclosed in the Schedules referenced in Article 4 may be updated in accordance
with clause (G) below); (G)  Borrower shall have delivered updates to Administrative Agent of all
of the Schedules set forth in Article 4 hereof, and such updated Schedules shall not disclose any
materially adverse facts or conditions not disclosed to Lenders as of the Closing Date which are
not permitted by the Loan Documents, or which were not consented to by Lenders, with respect to the
Collateral or the Transaction Parties; (H) Borrower shall have paid all reasonable out-of-pocket
third party costs and expenses incurred by Administrative Agent and of which Administrative Agent
has notified Borrower (including reasonable attorneys’ fees and expenses) in connection with such
extension or as otherwise then due under this Agreement; and (I) Guarantor and each other
Transaction Party shall have acknowledged and ratified that its obligations under the Recourse
Guaranty, Environmental Indemnity and other Loan Documents (as applicable) remain in full force and
effect, and continue to guaranty, evidence or secure (as applicable) the Obligations under the Loan
Documents, as extended.


 


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Section 2.2 Interest Rate and Yield-Related Provisions.



2.2.1 Interest Rate.



(a) Prior to the Maturity Date, during the period the Loan is accruing interest at the
Applicable LIBO Rate, interest shall accrue on the Principal Amount (subject to the provisions of
Sections 2.2.3, 2.2.4 and 2.2.10 below) at the Applicable LIBO Rate as set
forth on an interest billing statement delivered by Administrative Agent to Borrower.



(b) Prior to the Maturity Date, during the period the Loan is accruing interest at the
Applicable Base Rate, interest shall accrue on the Principal Amount at the Applicable Base Rate as
set forth on an interest billing statement delivered by Administrative Agent to Borrower.



(c) From and after the Maturity Date or, at the request of the Required Lenders, from and
after the occurrence and during the continuance of any Event of Default, interest shall accrue on
the Principal Amount at the Default Rate.



(d) Except as expressly set forth in this Agreement to the contrary, interest shall accrue on
all amounts advanced by Lenders pursuant to the Loan Documents (other than the Principal Amount,
which shall accrue interest in accordance with clauses (a) above) at the Default Rate.



(e) The provisions of this Section 2.2.1 are subject in all events to the provisions
of Section 2.2.4 of this Agreement.



2.2.2 Payment of Interest. Interest accrued on the Loan shall be paid by Borrower (i)
on the day hereof through August 31, 2011, and (ii) thereafter, monthly, in arrears, on each
Payment Date, as set forth in an interest billing statement delivered by Administrative Agent to
Borrower (which delivery may be by facsimile or email transmission). All payments made by Borrower
hereunder or under any of the Loan Documents shall be made on or before 11:00 a.m. New York City
time. Any payments received after such time shall be credited to the next following Business Day.
If any interest payment due under the Loan Documents is not paid by Borrower within three (3) days
after the date on which it is due (or, if such third (3rd) day is not a Business Day, then the
Business Day immediately preceding such day), Borrower shall pay to Administrative Agent upon
demand an amount equal to the lesser of three percent (3%) of such unpaid sum or the Maximum Legal
Rate (the “Late Payment Charge”) in order to defray the expense incurred by Lenders and
Administrative Agent in handling and processing such delinquent payment and to compensate Lenders
for the loss of the use of such delinquent payment. Any such amount shall be secured by this
Agreement, the Security Instrument and the other Loan Documents to the extent permitted by
applicable law. Borrower acknowledges and agrees that the three day grace period with respect to
the applicability of the Late Payment Charge (i) shall only apply to Borrower’s first failure to
make a monthly interest payment in any calendar year, (ii) shall not apply to Borrower’s failure to
make the Maturity Date Payment and (iii) shall not constitute a payment grace period and shall in
no way limit Administrative Agent’s rights under Article XVII.


 


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2.2.3 Inability to Determine Rate. In the event that Administrative Agent shall have
determined (which determination shall be conclusive and binding upon Borrower) that by reason of
circumstances affecting the interbank market, adequate and reasonable means do not exist for
ascertaining the LIBO Rate for any Interest Period that has not already commenced, Administrative
Agent shall forthwith give telephonic notice of such determination to each Lender and to Borrower.
If such notice is given, the outstanding principal balance of the Loan shall bear interest during
each day of any affected Interest Period at the Applicable Base Rate. Administrative Agent shall
withdraw such notice in the event that the circumstances giving rise thereto no longer pertain and
that adequate and reasonable means exist for ascertaining the LIBO Rate for the relevant Interest
Period, and, following withdrawal of such notice by Administrative Agent, the outstanding principal
balance of the Loan shall bear interest at the Applicable LIBO Rate pursuant to
Section 2.2.1 above.



2.2.4 Illegality. Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive issued by any Governmental Authority or any change therein or in
the interpretation or application thereof, shall make it unlawful for any Lender to maintain the
Loan based on the LIBO Rate as contemplated by this Agreement, the Loan shall automatically bear
interest at the Applicable Base Rate at the end of then-current Interest Period or within such
earlier period as may be required by law. In the event of a conversion to interest based on the
Base Rate prior to the end of the then-current Interest Period, Borrower hereby agrees promptly to
pay any Lender affected thereby, upon demand, the amounts required pursuant to
Section 2.2.8 below, it being agreed and understood that such conversion shall constitute a
prepayment for all purposes hereof. The provisions hereof shall survive the termination of this
Agreement and payment of all other Obligations.



2.2.5 Funding. Each Lender shall be entitled to fund all or any portion of its
Percentage Share of the Loan in any manner it may determine in its sole discretion, including,
without limitation, in the Grand Cayman inter-bank market, the London inter-bank market and within
the United States, but all calculations and transactions hereunder shall be conducted as though all
Lenders actually fund the Loan through the purchase of offshore dollar deposits in the amount of
such Lender’s Percentage Share of the Loan with a maturity corresponding to the applicable Interest
Period.




2.2.6 Requirements of Law; Increased Costs.



(i) In the event that any applicable law, order, regulation, treaty or directive issued by any
central bank or other governmental authority, agency or instrumentality or in the governmental or
judicial interpretation or application thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) issued by any central bank or other governmental
authority, agency or instrumentality, in each case enacted after the date hereof (or any change
enacted after the date hereof):




(A) does or shall subject any Lender to any Taxes of any kind whatsoever with respect
to this Agreement or the Loan, or change the basis of determining the Taxes imposed on
payments to such Lender of principal, fee, interest or any other amount payable hereunder
(except for Excluded Taxes);


 


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(B) does or shall impose, modify or hold applicable any reserve, capital requirement,
special deposit, compulsory loan or similar requirements (other than Regulation D of the
Board of Governors of the Federal Reserve System or other reserve requirements, in each case
to the extent utilized in the determination of the Applicable LIBO Rate for such Loan)
against assets held by, or deposits or other liabilities in or for the account of, advances
or loans by, or other credit extended by, or any other acquisition of funds by, any office
of such Lender which are not otherwise included in the determination of interest payable on
the Obligations; or




(C) does or shall impose on such Lender any other condition;



and the result of any of the foregoing is to increase the cost to such Lender of making, renewing
or maintaining its Percentage Share of the Loan or to reduce any amount receivable in respect
thereof or the rate of return on the capital of such Lender or any corporation controlling such
Lender, then, in any such case, Borrower shall, without duplication of amounts payable pursuant to
Section 2.2.9, promptly pay to such Lender, upon its written demand made through
Administrative Agent, any additional amounts necessary to compensate such Lender for such
additional cost or reduced amounts receivable or rate of return as determined by such Lender with
respect to this Agreement or such Lender’s Percentage Share of the Loan, so long as such Lender
requires substantially all obligors under other commitments of this type made available by such
Lender to similarly so compensate such Lender.



(ii) If a Lender becomes entitled to claim any additional amounts pursuant to this Section
2.2.6, it shall promptly notify Borrower of the event by reason of which it has become so
entitled. A certificate as to any additional amounts so claimed payable containing the calculation
thereof in reasonable detail submitted by a Lender to Borrower, accompanied by a certification that
such Lender has required substantially all obligors under other commitments of this type made
available by such Lender to similarly so compensate such Lender, shall constitute prima facie
evidence thereof.



(iii) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section 2.2.6 shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that Borrower shall not be required to compensate or reimburse a
Lender pursuant to this Article II for any increased costs or reductions in return in the event
such Lender does not notify Borrower within two hundred and seventy (270) days of such Lender
becoming aware of the circumstances; provided, further that if any of the
circumstances giving rise to such increased costs or reductions in return are retroactive, then the
two hundred and seventy (270) day period referred to in the preceding proviso shall be extended to
include the period of retroactive effect. The provisions of this Section 2.2.6 shall
survive the termination of this Agreement and payment of the Loan and all other Obligations.


 


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2.2.7 Obligation of Lenders to Mitigate; Replacement of Lenders. Each Lender agrees
that:




(i) As promptly as reasonably practicable after the officer of such Lender responsible
for administering such Lender’s Percentage Share of the Loan becomes aware of any event or
condition that would entitle such Lender to receive payments under Section 2.2.6
above or Section 2.2.9 below or to cease maintaining the Loan based on the LIBO Rate
under Section 2.2.4 above, such Lender will use reasonable efforts (i) to maintain
its Percentage Share of the Loan through another lending office of such Lender or (ii) take
such other measures as such Lender may deem reasonable, if as a result thereof the
additional amounts which would otherwise be required to be paid to such Lender pursuant to
Section 2.2.6 above or pursuant to Section 2.2.9 below would be materially
reduced or eliminated or the conditions rendering such Lender incapable of maintaining the
Loan based on the LIBO Rate under Section 2.2.4 above no longer would be applicable,
and if, as determined by such Lender in its sole discretion, the maintaining of such
Lender’s Percentage Share of the Loan through such other lending office or in accordance
with such other measures, as the case may be, would not otherwise materially adversely
affect the Loan or the interests of such Lender.




(ii) If (A) Borrower receives a notice pursuant to Section 2.2.6 above or
pursuant to Section 2.2.9 below or a notice pursuant to Section 2.2.4 above
stating that a Lender is unable to maintain the Loan based on the LIBO Rate (for reasons not
generally applicable to the Required Lenders) or (B) If any Lender (a “Non-Consenting
Lender”) does not consent to a proposed amendment, waiver, consent or release with
respect to any Loan Document that requires the consent of one hundred percent (100%) of
Lenders and that has been approved by Required Lenders (each Lender delivering a notice
pursuant to clause (A) and each Non-Consenting Lender, an “Affected Lender”), then
so long as (i) no Event of Default shall have occurred and be continuing, (ii) Borrower has
obtained a commitment from another Lender or an Eligible Assignee to purchase at par such
Affected Lender’s Percentage Share of the Loan, Delayed Draw Term Loan Commitments and
accrued interest and fees and to assume all obligations of the Affected Lender to be
replaced under the Loan Documents and (iii) such Affected Lender to be replaced is unwilling
to withdraw the notice delivered to Borrower or approve the proposed amendment, waiver,
consent or release with respect to such Loan Document, as applicable, upon twenty (20) days’
prior written notice to such Affected Lender and Administrative Agent, Borrower may require,
at Borrower’s expense, such Affected Lender to assign, without recourse, all of its
Percentage Share of the Loan, Delayed Draw Term Loan Commitments and accrued interest and
fees to such other Lender or Eligible Assignee pursuant to the provisions of
Section 15.1 below. Upon any such assignment, the Affected Lender’s interest in the
Loan and its rights hereunder (but not its liability in respect thereof or under the Loan
Documents to the extent the same relate to the period prior to the effective date of the
purchase) shall terminate on the date of purchase, and the Affected Lender shall promptly
execute all documents reasonably requested to surrender and transfer such interest to the
purchaser or assignee thereof, including an appropriate Assignment and Acceptance Agreement,
and shall pay to Administrative Agent an assignment fee as provided in Section 15.1.
In the case of an Affected Lender, the sum required to be paid upon assignment of its
Percentage Share of the Loan, Delayed Draw Term Loan Commitments and accrued interest and
fees shall be (i) the purchase price equal to the outstanding principal of its Percentage
Share of the Loan, accrued interest thereon and all accrued fees owing to such Affected
Lender, all of which shall be paid by the Assignee, and (ii) all other amounts payable by
Borrower to such Affected Lender hereunder (including amounts, if any, payable under
Section 2.2.6 or Section 2.2.9), all of which shall be paid by Borrower.


 


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2.2.8 Funding Indemnification. In addition to all other payment obligations
hereunder, in the event the Loan is accruing interest at the Applicable LIBO Rate and is prepaid in
full or in part prior to the last day of the applicable Interest Period, whether following a
voluntary prepayment, a mandatory prepayment (other than a mandatory prepayment arising under
Section 2.3.3(i) below when no Event of Default has occurred and is continuing) or
otherwise, then Borrower shall promptly, and in any event within five (5) days of the request of
any lender, pay to such Lender, through Administrative Agent, an additional sum compensating such
Lender for losses, costs and expenses incurred by such Lender in connection with such prepayment.
The loss to any Lender attributable to any such prepayment shall be deemed to include an amount
determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that
such Lender would have accrued on the principal amount so prepaid (the “Incremental
Payment”) from the date of such payment to the last day of the then-current Interest Period if
the interest rate payable on such deposit were equal to the Reserve Adjusted LIBO Rate for such
Interest Period, over (ii) the amount of interest that such Lender would earn for such period on an
amount equal to the Incremental Payment if such Lender were to invest such amount for such period
at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for dollar
deposits from other banks in the eurodollar market at the commencement of such period. A
determination of any Lender as to the amounts payable pursuant to this Section 2.2.8 shall
be conclusive absent manifest error.




2.2.9 Taxes.



(i) Any and all payments by or on account of any obligation of Borrower hereunder or under any
other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that if Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such 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 2.2.9) 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) Borrower
shall make such deductions and (iii) Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.


 


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(ii) In addition, Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.



(iii) Borrower shall indemnify Administrative Agent and each Lender, within ten (10) Business
Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section 2.2.9) paid by Administrative Agent or such Lender, as the case
may be, and any penalties, interest (except to the extent such penalties and/or interest arise as a
result of a Lender’s unreasonable delay in dealing with any such Indemnified Tax or Other Taxes)
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. A certificate as to the amount of such payment or liability delivered to Borrower by a
Lender or by Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive
absent manifest error.



(iv) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower
to a Governmental Authority, Borrower shall deliver to 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
Administrative Agent.



(v) Each Foreign Lender shall deliver to Borrower (with copies to Administrative Agent) on or
before the date hereof (or in the case of a Foreign Lender who became a Lender by way of an
assignment, on or before the date of the assignment) or at least five (5) Business Days prior to
the first date for any payment herewith to such Lender, and from time to time as required for
renewal under applicable law, such certificates, documents or other evidence, as required by the
Code or Treasury Regulations issued pursuant thereto, including, without limitation, Internal
Revenue Service Form W-8BEN or W-8ECI, as appropriate, and any other certificate or statement of
exemption required by Section 871(h) or Section 881(c) of the Code or any subsequent version
thereof, properly completed and duly executed by such Lender establishing that payments to such
Lender hereunder are not subject to withholding or are subject to a reduced rate of withholding
under the Code or applicable tax treaty (“Evidence of No Withholding”). Each Foreign
Lender shall promptly notify Borrower and Administrative Agent of any change in its applicable
lending office and upon written request of Borrower or Administrative Agent shall, prior to the
immediately following due date of any payment by Borrower hereunder or under any other Loan
Document, deliver Evidence of No Withholding to Borrower and Administrative Agent. Borrower shall
be entitled to rely on such forms in their possession until receipt of any revised or successor
form pursuant to this Section 2.2.9(v). If a Lender fails to provide Evidence of No
Withholding as required pursuant to this Section 2.2.9(v), then (i) Borrower (or
Administrative Agent) shall be entitled to deduct or withhold from payments to Administrative Agent
or such Lender as a result of such failure, as required by law, and (ii) Borrower shall not be
required to make payments of additional amounts with respect to such withheld Taxes pursuant to
Section 2.2.9(i) to the extent such withholding is required solely by reason of the failure
of such Lender to provide the necessary Evidence of No Withholding. Without limiting Borrower’s
rights under the immediately preceding sentence, a Foreign Lender shall not be required to deliver
any form or statement pursuant to Section 2.2.9(v) that such foreign Lender is not legally
able to deliver.


 


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(vi) If Administrative Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes as to which it has been indemnified pursuant to this Section
(including additional amounts paid by Borrower pursuant to this Section), it shall pay to the
applicable indemnifying party an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, under this Section with respect to the Taxes giving rise
to such refund), net of all out-of-pocket expenses (including Taxes) of Administrative Agent or
such Lender, as the case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided that the applicable indemnifying
party, upon the request of Administrative Agent or such Lender, agrees promptly to repay the amount
paid over pursuant to this Section (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to Administrative Agent or such Lender in the event Administrative
Agent or such Lender is required to repay such refund to such Governmental Authority.
Notwithstanding anything to the contrary in this paragraph (vi), in no event will Administrative
Agent or such Lender be required to pay any amount to an indemnifying party pursuant to this
paragraph (vi) the payment of which would place Administrative Agent or such Lender in a less
favorable net after-tax position than Administrative Agent or such Lender would have been in if the
indemnification payments or additional amounts giving rise to such refund had never been paid.
This paragraph shall not be construed to require Administrative Agent or such Lender to make
available its Tax returns (or any other information relating to its Taxes which it deems
confidential) to Borrower or any other Person. Neither Administrative Agent nor any Lender shall
be required to pay any amounts pursuant to this paragraph (vi) at any time that an Event of Default
exists, provided that such amounts shall become due and payable at the time such Event of Default
ceases to exist and no other Event of Default exists.



2.2.10 Post-Default/Maturity Date Interest. From and after the Maturity Date if the
entire Principal Amount is not repaid on the Maturity Date, and at the request of the Required
Lenders at any time after the occurrence and during the continuance of an Event of Default,
interest on the outstanding principal balance of the Loan and, to the extent permitted by law,
overdue interest and other amounts due in respect of the Loan shall bear interest at a per annum
rate equal to three percent (3.0%) above the Applicable Base Rate or the Applicable LIBO Rate,
whichever mode is in effect at such time (the “Default Rate”). Interest at the Default
Rate shall be computed from the date of imposition of such interest at the Default Rate until no
Event of Default exists or the actual receipt and collection of the Indebtedness (or that portion
thereof that is then due). To the extent permitted by applicable law, interest at the Default Rate
shall be added to the Indebtedness, shall itself accrue interest at the same rate as the Loan and
shall be secured by the Security Instrument. This paragraph shall not be construed as an agreement
or privilege to extend the date of the payment of the Indebtedness, nor as a waiver of any other
right or remedy accruing to Administrative Agent or Lenders by reason of the occurrence of any
Event of Default, and Administrative Agent and each Lender retains its rights under the Notes to
accelerate and to continue to demand payment of the Indebtedness upon the happening of any Event of
Default.


 


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2.2.11 Computations. All computations of interest and fees payable hereunder shall be
based upon a year of 360 days for the actual number of days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year); provided, however, that
interest accruing at the Applicable Base Rate shall be computed on the basis of a year of 365 or
366 days, as applicable, and the actual number of days elapsed.



2.2.12 Usury Savings. This Agreement and the Notes are subject to the express
condition that at no time shall Borrower be obligated or required to pay interest on the Principal
Amount of the Loan at a rate which could subject Lenders to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate. If, by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay interest on the
Principal Amount due under the Notes at a rate in excess of the Maximum Legal Rate, then the
Applicable LIBO Rate, the Applicable Base Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of
the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on
account of the interest due under the Notes. All sums paid or agreed to be paid to Lenders for the
use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment in full so that the rate or amount of interest on account of the Loan does
not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the
Loan for so long as the Loan is outstanding.



2.2.13 Survival. Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section 2.2 shall
survive the payment in full of principal and interest hereunder, and the termination of this
Agreement.




Section 2.3 Payments.



2.3.1 Evidence of Indebtedness. The obligation of Borrower to repay the Loan shall be
evidenced by notations on the books and records of Lenders. Such books and records shall
constitute prima facie evidence thereof. Any failure to record the interest rate applicable
thereto or any other information regarding the Obligations, or any error in doing so, shall not
limit or otherwise affect the obligation of Borrower with respect to any of the Obligations.
Borrower shall promptly execute and deliver to each Lender a Note evidencing such Lender’s
Percentage Share of the Loan provided that at all times all Notes issued by Borrower shall
be in the aggregate amount of the Principal Amount, as reduced by prior prepayment.


 


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2.3.2 Nature and Place of Payments. All payments made on account of the Obligations
shall be made by Borrower, without setoff or counterclaim, in lawful money of the United States of
America in immediately available same day funds, free and clear of and without deduction for any
Indemnified Taxes or Other Taxes, fees or other charges of any nature whatsoever imposed by any
taxing authority and must be received by Administrative Agent by 2:00 p.m. (New York time) on the
day of payment, it being expressly agreed and understood that if a payment is received after 2:00
p.m. (New York time) by Administrative Agent, such payment will be considered to have been made by
Borrower on the next succeeding Business Day and interest thereon shall be payable by Borrower at
the rate otherwise applicable thereto during such extension. All payments on account of the
Obligations shall be made to Administrative Agent through the Contact Office. If any payment
required to be made by Borrower hereunder becomes due and payable on a day other than a Business
Day, the due date thereof shall be extended to the next succeeding Business Day and interest
thereon shall be payable at then applicable rate during such extension.




2.3.3 Prepayments.



(i) Borrower shall remit to Administrative Agent as a mandatory prepayment for application
against the outstanding Principal Amount:




(a) The Proceeds of a Casualty or Condemnation of the Property, to the extent
required to be applied to the prepayment of the Loan under Section 6.2.2.




(b) During any Cash Sweep Period, all sums required to be deposited in the Cash
Sweep Reserve Account shall be applied as provided in Section 3.1.5.



(ii) If prior to the Restricted Prepayment Date, the Obligations in respect of the principal
balance of the Loan are accelerated by reason of an Event of Default, then Lenders shall be
entitled to receive, in addition to the unpaid principal and accrued interest and other sums due
under the Loan Documents, an amount equal to the Prepayment Premium applicable to such principal so
accelerated or paid.



(iii) Upon not less than five (5) Business Days’ prior written notice to Administrative Agent
(which shall promptly provide telephonic notice of the receipt thereof to each of Lenders),
Borrower may voluntarily prepay the principal amount outstanding under the Loan in whole or in part
(without any release of collateral securing the Loan) subject to the following conditions: (A) any
such prepayment of principal shall be accompanied by the payments required to be made under
Section 2.3.3(iv) below; and (B) voluntary prepayments shall be in the minimum amount of
$1,000,000 and integral multiples of $100,000 in excess thereof. Voluntary prepayments of
principal pursuant to this Section 2.3.3(iii), shall not relieve Borrower from the
obligation to make mandatory prepayments pursuant to Section 2.3.3(i).


 


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(iv) Borrower acknowledges that (a) Lenders are making the Loan in consideration of the
receipt by Lenders of all interest and other benefits intended to be conferred by the Loan
Documents and (b) if payments of principal are made to Lenders prior to the Restricted Prepayment
Date voluntarily or involuntarily as a result of the acceleration of the Loan after an Event of
Default, Lenders will not receive all such interest and other benefits and may, in addition, incur
costs. For these reasons, and to induce Lenders to make the Loan, Borrower agrees that all
payments made voluntarily or involuntarily (other than due to a casualty or condemnation and other
than by application of amounts on deposit in the Cash Sweep Reserve Account to the outstanding
Principal Amount) or after the acceleration of the principal amount of the Loan on or prior to the
Restricted Prepayment Date will be accompanied by the Prepayment Premium. Such Prepayment Premium
shall be required whether payment is made by Borrower, by a Person on behalf of Borrower, or by the
purchaser at any foreclosure sale, and may be included in any bid by Lenders at such sale.
Borrower further acknowledges that (A) it is a knowledgeable real estate developer and/or investor;
(B) it fully understands the effect of the provisions of this Section 2.3.3(iv), as well as
the other provisions of the Loan Documents; (C) the making of the Loan by Lenders at the interest
rate provided and other terms set forth in the Loan Documents are sufficient consideration for
Borrower’s obligation to pay a Prepayment Premium (if required); and (D) Lenders would not make the
Loan on the terms set forth herein without the inclusion of such provisions. Borrower also
acknowledges that the provisions of this Agreement limiting the right of prepayment and providing
for the payment of the Prepayment Premium and other charges specified herein were independently
negotiated and bargained for, and constitute a specific material part of the consideration given by
Borrower to Lenders for the making of the Loan.



(v) Borrower shall pay in connection with any prepayment hereunder, whether voluntary or
mandatory, (a) all interest accrued but unpaid on that portion of the Loan to which such prepayment
is applied (which interest, if such prepayment is made on a date other than a Payment Date, shall
be deemed to have accrued on such portion of the Loan through the end of the Interest Period in
which such prepayment occurs), (b) with respect to voluntary or involuntary prepayments prior to
the Restricted Prepayment Date (other than due to a casualty or condemnation and other than by
application of amounts on deposit in the Cash Sweep Reserve Account to the outstanding Principal
Amount), the Prepayment Premium, (c) all amounts payable pursuant to Section 2.2.8 above,
and (d) all costs and expenses of Administrative Agent and Lenders incurred in connection with the
prepayment (including without limitation, any costs and expenses associated with a release of any
Liens as well as reasonable attorneys’ fees and expenses), in each case concurrently with payment
of any principal amounts.




2.3.4 Allocation of Payments Received.



(i) Prior to the occurrence of an Event of Default and acceleration of the Obligations, and
unless otherwise expressly provided herein, all amounts received by Administrative Agent on account
of the Obligations shall be disbursed by Administrative Agent to Lenders pro rata in accordance
with their respective Percentage Shares, by wire transfer of like funds received on the date of
receipt if received by Administrative Agent before 2:00 p.m. (New York time) or if received later,
by 2:00 p.m. (New York time) on the next succeeding Business Day, without further interest payable
by Administrative Agent.


 


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(ii) Following the occurrence of an Event of Default and acceleration of the Obligations, all
amounts received by Administrative Agent on account of the Obligations, shall be promptly disbursed
by Administrative Agent as follows:




(A) First, to the payment of out-of-pocket third party expenses and fees
incurred by Administrative Agent in the performance of its duties and the
enforcement of the rights of Lenders under the Loan Documents, including, without
limitation, all costs and expenses of collection, “workout”, reasonable attorneys’
fees, court costs and other amounts payable as provided in Section 14.7
below;




(B) Then, to Lenders, pro rata in accordance with their respective Percentage
Shares, until interest accrued on the Loan has been paid in full;




(C) Then, to Lenders, pro rata in accordance with their respective Percentage
Shares, until principal under the Loan has been paid in full;




(D) Then, to Lenders, pro rata to each Lender in accordance with the amount
expressed in a percentage, which the amount of remaining Obligations owed to such
Lender bears to all remaining Obligations held by all Lenders, until all other
Obligations have been paid in full.



(iii) The order of priority set forth in Section 2.3.4(ii) and the related provisions
of this Agreement are set forth solely to determine the rights and priorities of Administrative
Agent and the other Lenders as among themselves. The order of priority set forth in clauses (B)
through (D) of Section 2.3.4(ii) may at any time and from time to time be changed by the
Required Lenders without necessity of notice to or consent of or approval by Borrower or any other
Person. The order of priority set forth in clause (A) of Section 2.3.4(ii) may be changed
only with the prior written consent of Administrative Agent.



2.3.5 Prepayments After Event of Default. If, following an Event of Default,
Administrative Agent shall accelerate the Indebtedness and Borrower thereafter tenders payment of
all or any part of the Indebtedness, or if all or any portion of the Indebtedness is recovered by
Lenders after such Event of Default, (a) such payment may be made only on the next occurring
Payment Date together with all unpaid interest thereon as calculated through the end of the
Interest Period during which such Payment Date occurs (even if such period extends beyond such
Payment Date and calculated as if such payment had not been made on such Payment Date), and all
other fees and sums payable hereunder or under the Loan Documents, including without limitation,
interest that has accrued at the Default Rate, any Late Payment Charges, and the payment of any
Prepayment Premium, if any), and (b) such payment shall be deemed a voluntary prepayment by
Borrower.


 


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2.3.6 Release of Property. Administrative Agent shall, at the expense of Borrower,
upon payment in full of the Principal Amount and interest on the Loan and all other amounts due and
payable under the Loan Documents in accordance with the terms and provisions of this Agreement and
the other Loan Documents, release the Lien of (i) this Agreement upon the Account Collateral and
the Rate Cap Collateral and (ii) the Security Instrument on the Property or assign it, in whole or
in part, to a new lender without recourse, representation or warranty of any kind. In such event,
Borrower shall submit to Administrative Agent, on a date prior to the date of such release or
assignment sufficient to provide a reasonable period for review thereof, a release of lien or
assignment of lien, as applicable, for such property for execution by Administrative Agent. Such
release or assignment, as applicable, shall be in a form appropriate in each jurisdiction in which
the Property is located and satisfactory to Administrative Agent in its reasonable discretion. In
addition, Borrower shall provide all other documentation Administrative Agent reasonably requires
to be delivered by Borrower in connection with such release or assignment, as applicable. Borrower
shall not be entitled to any release of the Lien on any Collateral as a result of any partial
prepayment of the Loan.



2.3.7 Voluntary Commitment Reductions. Notwithstanding anything else contained in
this Agreement, Borrower may reduce the Delayed Draw Term Loan Commitments, in whole or in part, at
any time.



Section 2.4 Conditions Precedent to Closing. The obligation of Lenders to make the
Term Loans to be funded on the Closing Date hereunder is subject to the fulfillment by, or on
behalf of, Borrower or waiver by Administrative Agent of the following conditions precedent no
later than the Closing Date; provided, however, that unless a condition precedent
shall expressly survive the Closing Date pursuant to a separate agreement, by funding the Loan,
Administrative Agent shall be deemed to have waived any such conditions not theretofore fulfilled
or satisfied solely in connection with the funding of the Term Loans on the Closing Date:



2.4.1 Representations and Warranties; Compliance with Conditions. The representations
and warranties contained in this Agreement and the other Loan Documents shall be true and correct
in all material respects on and as of the Closing Date with the same effect as if made on and as of
such date, and no Default or Event of Default shall have occurred and be continuing; and Borrower
shall be in compliance with all terms and conditions set forth in this Agreement and in each other
Loan Document on its part to be observed or performed.




2.4.2 Delivery of Loan Documents; Title Policy; Reports; Leases.



(A) Loan Documents. Administrative Agent shall have received an original of each of
this Agreement, the Notes and all of the other Loan Documents, in each case, duly executed (and to
the extent required, acknowledged) and delivered on behalf of Borrower and any other parties
thereto.


 


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(B) Security Instrument, Assignment of Leases. Administrative Agent shall have
received evidence that original counterparts of the Security Instrument and Assignment of Leases,
in proper form for recordation, have been delivered to the Title Company for recording, so as
effectively to create, in the reasonable judgment of Administrative Agent, upon such recording
valid and enforceable first priority Liens upon the Property, in favor of Administrative Agent (or
such other trustee as may be required or desired under local law), subject only to Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan Documents.



(C) UCC Financing Statements. Administrative Agent shall have received evidence that
the UCC financing statements relating to the Security Instrument and this Agreement have been
delivered to the Title Company for filing in the applicable jurisdictions.



(D) Title Insurance. Administrative Agent shall have received a pro forma Title
Policy or a Title Policy issued by the Title Company and dated as of the Closing Date, with
reinsurance and direct access agreements acceptable to Administrative Agent. Such Title Policy
shall (i) provide coverage in the amount of the Loan, (ii) insure Administrative Agent that the
Security Instrument creates a valid, first priority Lien on the Property, free and clear of all
exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions
from coverage (as modified by the terms of any endorsements), (iii) contain the endorsements and
affirmative coverages set forth on Exhibit A (or such other endorsements and affirmative coverages
approved by Administrative Agent) and such additional endorsements and affirmative coverages as
Administrative Agent may reasonably request, and (iv) name Administrative Agent as the insured.
The Title Policy shall be assignable. Administrative Agent also shall have received evidence that
all premiums in respect of such Title Policy have been paid.



(E) Survey. Administrative Agent shall have received a current or recertified Survey
for the Property, containing the survey certification substantially in the form attached hereto as
Exhibit B or such other form as approved by Administrative Agent. Such Survey shall reflect the
same legal description contained in the Title Policy referred to in clause (d) above. The
surveyor’s seal shall be affixed to the Survey and the surveyor shall provide a certification for
such Survey in form and substance acceptable to Administrative Agent.



(F) Insurance. Administrative Agent shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to Administrative Agent in
its reasonable discretion, and evidence of the payment of all insurance premiums currently due and
payable for the existing policy period.



(G) Environmental Reports. Administrative Agent shall have received an Environmental
Report in respect of the Property satisfactory to Administrative Agent.




(H) Zoning. Administrative Agent shall have received a PZR Report.



(I) Certificate of Occupancy. Administrative Agent shall have received a copy of the
valid certificates of occupancy for the Property or evidence acceptable to Administrative Agent
that a certificate of occupancy is not required by applicable law.



(J) Encumbrances. Borrower shall have taken or caused to be taken such actions in
such a manner so that Administrative Agent has a valid and perfected first Lien as of the Closing
Date on the Property, subject only to Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents, and Administrative Agent shall have received satisfactory evidence
thereof.


 


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2.4.3 Related Documents. Each additional document not specifically referenced herein,
but relating to the transactions contemplated herein, shall have been duly authorized, executed and
delivered by all parties thereto and Administrative Agent shall have received and approved
certified copies thereof.



2.4.4 Delivery of Organizational Documents. On or before the Closing Date, Borrower
shall deliver, or cause to be delivered, to Administrative Agent copies certified by an Officer’s
Certificate, of all organizational documentation related to Borrower, each other Transaction Party
and Manager and certain of its Affiliates as have been requested by Administrative Agent and/or the
formation, structure, existence, good standing and/or qualification to do business of Borrower,
each other Transaction Party, Manager and such Affiliates, as Administrative Agent may request in
its sole discretion, including, without limitation, good standing certificates, qualifications to
do business in the appropriate jurisdictions, resolutions authorizing the entering into of the Loan
and incumbency certificates as may be requested by Administrative Agent. Each of the
organizational documents of Borrower shall contain provisions having a substantive effect
materially similar to that of the language set forth in Exhibit C or such other language as
approved by Administrative Agent. Administrative Agent hereby approves the organizational
documents of Borrower delivered to Administrative Agent on the date hereof.




2.4.5 Opinions of Borrower’s Counsel.



(A) Administrative Agent shall have received a Non-Consolidation Opinion substantially in
compliance with the requirements set forth in Exhibit E or in such other form approved by
Administrative Agent (the “Non-Consolidation Opinion”).



(B) Administrative Agent shall have received the Opinions of Counsel in such form as is
approved by Administrative Agent.



(C) Administrative Agent shall have received from Counterparty the Counterparty Opinion
substantially in compliance with the requirements set forth in Exhibit F or in such other form
approved by Administrative Agent.



2.4.6 Budget. Borrower shall have delivered the Budget for the current Fiscal Year,
which Budget shall be certified by an Officer’s Certificate and approved by Administrative Agent.



2.4.7 Completion of Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated by this Agreement and other Loan Documents
and all documents incidental thereto shall be satisfactory in form and substance to Administrative
Agent, and Administrative Agent shall have received all such counterpart originals or certified
copies of such documents as Administrative Agent may reasonably request.


 


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2.4.8 Payments. All payments, deposits or escrows, if any, required to be made or
established by Borrower under this Agreement, the Notes and the other Loan Documents on or before
the Closing Date shall have been paid.



2.4.9 Interest Rate Cap Agreement. Administrative Agent shall have received an
original Interest Rate Cap Agreement which shall be in form and substance satisfactory to
Administrative Agent and an original counterpart of the Acknowledgment executed and delivered by
the Counterparty.



2.4.10 Collection Account Agreement. Administrative Agent shall have received an
executed copy of the Collection Account Agreement executed by each of Collection Bank and Operating
Lessee.



2.4.11 Independent Director Certificate. Administrative Agent shall have received
executed Independent Director certificates substantially in the form attached as Exhibit O.



2.4.12 Transaction Costs. Borrower shall have paid or reimbursed Administrative Agent
for all title insurance premiums, recording and filing fees, costs of Environmental Reports,
Physical Conditions Reports, appraisals and other reports, the reasonable fees and costs of
Administrative Agent’s counsel and all other third party out-of-pocket expenses incurred by
Administrative Agent in connection with the origination of the Loan.



2.4.13 Material Adverse Effect. No event or condition shall have occurred since the
date of Borrower’s most recent financial statements previously delivered to Administrative Agent
which has or could reasonably be expected to have a Material Adverse Effect. The Operating
Revenues and Operating Expenses of the Property and all other features of the transaction shall be
as represented to Administrative Agent without material adverse change. Neither Borrower nor any
of its constituent Persons shall be the subject of any bankruptcy, reorganization, or insolvency
proceeding.



2.4.14 Leases and Rent Roll. Administrative Agent shall have received copies of all
Leases, certified as requested by Administrative Agent. Administrative Agent shall have received a
certified rent roll of the Property dated within thirty (30) days prior to the Closing Date.


 


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2.4.15 Tax Lot. Administrative Agent shall have received evidence that the Property
constitutes one (1) or more separate tax lots, which evidence shall be reasonably satisfactory in
form and substance to Administrative Agent.



2.4.16 Physical Conditions Report. Administrative Agent shall have received a
Physical Conditions Report (or re-certified Physical Conditions Report) with respect to the
Property, which report shall be satisfactory in form and substance to Administrative Agent.




2.4.17 Appraisal. Administrative Agent shall have received an Appraisal.



2.4.18 Financial Statements. Administrative Agent shall have received certified
copies of financial statements with respect to the Property for the three most recent Fiscal Years,
each in form and substance satisfactory to Administrative Agent.



2.4.19 Additional Deliveries. In addition, Administrative Agent shall receive, the
following documents:




(A) Certified copies of the Operating Lease, the Bar Lease and the Condominium
Declaration, each in form and substance to Administrative Agent.




(B) A certified copy of the Management Agreement which shall be satisfactory in form
and substance to Administrative Agent.



2.4.20 Further Documents. Administrative Agent or its counsel shall have received
such other and further approvals, opinions, documents and information as Administrative Agent or
its counsel may have requested including the Loan Documents in form and substance satisfactory to
Administrative Agent and its counsel.


 


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Section 2.5 Delayed Draw Term Loan Conditions Precedent. The obligation of Lenders to
make any Delayed Draw Term Loans during the Delayed Draw Term Loans Availability Period is subject
to the satisfaction by or on behalf of Borrower of the following conditions precedent no later than
the applicable Funding Date: (A) there shall exist no Default or Event of Default on such Funding
Date or immediately after giving effect to the making of the Delayed Draw Term Loans on such
Funding Date; (B) Borrower shall have delivered a Funding Notice no later than ten (10) Business
Days prior to such Funding Date which shall set forth (i) a calculation of Net Operating Income for
the immediately preceding 12 calendar months (which calculation shall be made by assuming Allocable
Chain Expenses equal to 1.00% of Hotel Revenues for such period and a Management Fee equal to 3.00%
of Hotel Revenues for such period), (ii) Borrower’s calculation of the then Delayed Draw Term Loan
Available Amount, (iii) the principal amount of Delayed Draw Term Loans requested pursuant to such
Funding Notice (which principal amount shall not exceed the Delayed Draw Term Loan Available Amount
(it being agreed that the calculation of such Delayed Draw Term Loan Available Amount must be
satisfactory to and approved by Administrative Agent)) and (iv) that the conditions precedent set
forth in subclauses (C), (D) and (E) of this Section 2.5 have been satisfied; (C) the conditions
precedent set forth in Section 2.4 shall be and remain satisfied; (D) the representations and
warranties made by the Transaction Parties in the Loan Documents shall be true and correct in all
material respects on such Funding Date (provided, however, that any factual matters
disclosed in the Schedules referenced in Article 4 may be updated in accordance with clause (E)
below); (E) Borrower shall have delivered updates to Administrative Agent of all of the Schedules
set forth in Article 4 hereof, and such updated Schedules shall not disclose any materially adverse
facts or conditions not disclosed to Lenders as of the Closing Date which are not permitted by the
Loan Documents, or which were not consented to by Lenders, with respect to the Collateral or the
Transaction Parties; (F) Borrower shall have paid all reasonable out-of-pocket third party costs
and expenses incurred by Administrative Agent and of which Administrative Agent has notified
Borrower (including reasonable attorneys’ fees and expenses) in connection with such Delayed Draw
Term Loan or as otherwise then due under this Agreement; (G) Guarantor and each other Transaction
Party shall have acknowledged and ratified that its obligations under the Recourse Guaranty,
Environmental Indemnity and other Loan Documents (as applicable) remain in full force and effect,
and continue to guaranty, evidence or secure (as applicable) the Obligations under the Loan
Documents; (H) Sections 2.4.2(D) (with such Title Policy dated as of the Funding Date),
2.4.2(I), 2.4.2(J), 2.4.12 and 2.4.13 shall have been satisfied
with respect to such Delayed Draw Term Loan; and (I) Administrative Agent or its counsel shall have
received such other and further approvals, opinions, documents and information as Administrative
Agent or its counsel may have requested including, without limitation, Modifications to the Loan
Documents, new notes, a new mortgage and estoppel certificates, each in form and substance
satisfactory to Administrative Agent and its counsel.


 


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ARTICLE III




Cash Management





Section 3.1 Cash Management.



3.1.1 Establishment of Accounts. Borrower hereby confirms that pursuant to the
Collection Account Agreement, Borrower has established with Collection Bank, in the name of
Operating Lessee for the benefit of Administrative Agent, as secured party, a collection account
(the “Collection Account”), which has been established as an interest-bearing deposit
account. Following the Closing Date, Borrower will establish (i) in the name of Operating Lessee
for the benefit of Administrative Agent, as secured party, the Hotel Operating Account, which will
be an interest-bearing deposit account and (ii) in the name of Borrower for the benefit of
Administrative Agent, as secured party, a holding account (the “Holding Account”), which
will be a securities account. Each of the Collection Account, the Hotel Operating Account and the
Holding Account and each sub-account of the Holding Account and the funds deposited therein and the
securities and other assets credited thereto shall serve as security for the Obligations. Pursuant
to the Collection Account Agreement, Borrower shall irrevocably instruct and authorize Collection
Bank to disregard any and all orders for withdrawal from the Collection Account made by, or at the
direction of, Borrower other than to transfer all amounts on deposit in the Collection Account on a
daily basis to the Hotel Operating Account. Pursuant to the Hotel Operating Account Agreement,
Hotel Operating Account Bank shall comply with instructions of Manager or Operating Lessee with
respect to funds held in the Hotel Operating Account until such time as Hotel Operating Account
Bank receives an instruction from Administrative Agent, in accordance with the Hotel Operating
Account Agreement, directing the Hotel Operating Account Bank to cease to comply with the
instructions of Manager or Operating Lessee with respect to such funds. Pursuant to the Holding
Account Agreement, Borrower shall irrevocably instruct and authorize Cash Management Bank to
disregard any and all orders for withdrawal from the Holding Account made by, or at the direction
of, Borrower. Borrower agrees that, prior to the payment in full of the Obligations, the terms and
conditions of the Hotel Operating Account Agreement, the Collection Account Agreement and the
Holding Account Agreement shall not be amended or modified without the prior written consent of
Administrative Agent (which consent Administrative Agent may grant or withhold in its sole
discretion). In recognition of Administrative Agent’s security interest in the funds deposited
into and the securities and other assets credited to the Collection Account, the Hotel Operating
Account and the Holding Account, Borrower shall identify each of the Collection Account, the Hotel
Operating Account and the Holding Account with the name of Administrative Agent, as secured party.
The Collection Account shall be named as follows: “Hudson Hotel, New York, NY f/b/o Deutsche Bank
Trust Company Americas, as Administrative Agent Collection Account”. The Hotel Operating Account
shall be named as follows: “Hudson Hotel, New York, NY f/b/o Deutsche Bank Trust Company
Americas, as Administrative Agent Hotel Operating Account”. The Holding Account shall be named as
follows: “Hudson Hotel, New York, NY f/b/o Deutsche Bank Trust Company Americas, as Administrative
Agent Holding Account”. The following sub-accounts shall be established in the Holding Account
(each, a “Sub-Account” and, collectively, the “Sub-Accounts” and together with the
Holding Account and the Collection Account, the “Collateral Accounts”), which (i) may be
ledger or book entry sub-accounts and need not be actual sub-accounts, (ii) shall each be linked to
the Holding Account, (iii) shall each be a “Securities Account” pursuant to Article 8 of
the UCC and (iv) shall each be an account to which certain funds shall be allocated and from which
disbursements shall be made pursuant to the terms of this Agreement:




(A) a sub-account for the retention of Account Collateral in respect of Impositions and
Other Charges for the Property (the “Tax Reserve Account”);


 


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(B) a sub-account for the retention of Account Collateral in respect of insurance
premiums for the Property (the “Insurance Reserve Account”);




(C) a sub-account for the retention of Account Collateral in respect of Approved
Operating Expenses after the occurrence and during the continuance of a Cash Sweep Period
(the “Operating Expense Reserve Account”);




(D) a sub-account for the retention of Account Collateral in respect of current Debt
Service on the Loan (the “Current Debt Service Reserve Account”);




(E) a sub-account for the retention of Account Collateral in respect of certain
Proceeds as more fully set forth in Section 6.2 (the “Proceeds Reserve
Account”);




(F) a sub-account for the retention of Account Collateral in respect of FF&E (the
“FF&E Reserve Account”);




(G) a sub-account for the retention of Account Collateral in respect of reserves for
the payment of Ground Rent (the “Ground Rent Reserve Account”);




(H) a sub-account for the retention of Account Collateral in respect of reserves
relating to a Cash Sweep Period (the “Cash Sweep Reserve Account”); and




(I) a sub-account in respect of Required Repairs (the “Required Repairs Reserve
Account”).



3.1.2 Pledge of Account Collateral. To secure the full and punctual payment and
performance of the Obligations, Borrower hereby collaterally assigns, grants a security interest in
and pledges to Administrative Agent, to the extent not prohibited by applicable law (and shall
cause the other Transaction Parties to execute the Accommodation Security Documents with respect
thereto), a first priority continuing security interest in and to the following property of
Borrower whether now owned or existing or hereafter acquired or arising and regardless of where
located (all of the same, collectively, the “Account Collateral”):




(A) the Collateral Accounts and the Hotel Operating Account and all cash, checks,
drafts, securities entitlements, certificates, instruments and other property, including,
without limitation, all deposits and/or wire transfers from time to time deposited or held
in, credited to or made to the Collateral Accounts and the Hotel Operating Account;




(B) any and all amounts invested in Permitted Investments;




(C) all interest, dividends, cash, instruments, securities entitlements and other
property from time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing or purchased with funds from the Collateral
Accounts and the Hotel Operating Account; and


 


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(D) to the extent not covered by clauses (A), (B) or (C) above, all proceeds (as
defined under the UCC) of any or all of the foregoing.



In addition to the rights and remedies herein set forth, Administrative Agent shall have all
of the rights and remedies with respect to the Account Collateral available to a secured party at
law or in equity, including, without limitation, the rights of a secured party under the UCC, as if
such rights and remedies were fully set forth herein.



This Agreement shall constitute a security agreement for purposes of the Uniform Commercial
Code and other applicable law.




3.1.3 Maintenance of Collateral Accounts.



(A) Borrower agrees that each of the Collection Account and the Hotel Operating Account is and
shall be maintained (i) as a “deposit account” (as such term is defined in Section 9-102(a) of the
UCC), (ii) in such a manner that Administrative Agent shall have control (within the meaning of
Section 9-104(a) of the UCC) over the Collection Account and the Hotel Operating Account and
(iii) such that neither Borrower nor Manager shall have any right of withdrawal from the Collection
Account and, except as provided herein, no Account Collateral shall be released to Borrower or
Manager from the Collection Account or the Hotel Operating Account. Without limiting Borrower’s
obligations under the immediately preceding sentence, Borrower shall only establish and maintain
the Collection Account with a financial institution that has executed an agreement substantially in
the form of the Collection Account Agreement or in such other form acceptable to Administrative
Agent in its sole discretion.



(B) Borrower agrees that each of the Holding Account and the Sub-Accounts is and shall be
maintained (i) as a “securities account” (as such term is defined in Section 8-501(a) of the UCC),
(ii) in such a manner that Administrative Agent shall have control (within the meaning of
Section 8-106(d)(2) of the UCC) over the Holding Account and any Sub-Account, (iii) such that
neither Borrower nor Manager shall have any right of withdrawal from the Holding Account or the
Sub-Accounts and, except as provided herein, no Account Collateral shall be released to Borrower
from the Holding Account or the Sub-Accounts, (iv) in such a manner that the Cash Management Bank
shall agree to treat all property credited to the Holding Account or the Sub-Accounts as “financial
assets” and (v) such that all securities or other property underlying any financial assets credited
to the Collateral Accounts shall be registered in the name of Cash Management Bank, indorsed to
Cash Management Bank or in blank or credited to another securities account maintained in the name
of Cash Management Bank and in no case will any financial asset credited to any of the Collateral
Accounts be registered in the name of Borrower or Manager, payable to the order of Borrower or
Manager or specially indorsed to Borrower or Manager except to the extent the foregoing have been
specially indorsed to Cash Management Bank or in blank.


 


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(C) The Collateral Accounts and the Hotel Operating Account shall be subject to such
applicable laws, and such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other banking or governmental authority, as may now or hereafter be in effect.
Income and interest accruing on the Collateral Accounts and the Hotel Operating Account or any
investments held in such accounts shall be periodically added to the principal amount of such
accounts and shall be held, disbursed and applied in accordance with the provisions of this
Agreement, the Holding Account Agreement, the Collection Account Agreement and the Hotel Operating
Account Agreement. Borrower shall be the beneficial owner of the Collateral Accounts and the Hotel
Operating Account for federal income tax purposes and shall report all income on the Collateral
Accounts and the Hotel Operating Account.




3.1.4 Deposits into Sub-Accounts.




(a) On the date hereof, Borrower has deposited the following amounts into the Sub-Accounts:




(i) $0 into the Tax Reserve Account;




(ii) $0 into the Insurance Reserve Account;




(iii) $0 into the Operating Expense Reserve Account;




(iv) $0 into the Current Debt Service Reserve Account;




(v) $0 into the FF&E Reserve Account;




(vi) $0 into the Proceeds Reserve Account;




(vii) $0 into the Required Repairs Reserve Account;




(viii) $0 into the Ground Rent Reserve Account; and




(ix) $0 into the Cash Sweep Reserve Account.




3.1.5 Monthly Funding of Sub-Accounts.



(A) Borrower hereby irrevocably authorizes Administrative Agent to transfer (and, pursuant to
the Holding Account Agreement shall irrevocably authorize Cash Management Bank to execute any
corresponding instructions of Administrative Agent), and Administrative Agent shall transfer or
make ledger or book entries (or cause Cash Management Bank to make the applicable transfer or
ledger or book entries pursuant to disbursement instructions from Administrative Agent), from the
Holding Account on the same Business Day on which Holding Account Bank receives any such
instructions, or as soon thereafter as sufficient funds are in the Holding Account to make the
applicable transfers or ledger or book entries, funds in the following amounts and in the following
order of priority:




(i) at any such time that Manager does not reserve for or otherwise set aside and pay
Impositions and Other Charges directly, funds in an amount equal to the Monthly Tax Reserve
Amount and any other amounts required pursuant to Section 16.1 for the month in
which the Payment Date immediately following the date of the transfer from the Holding
Account occurs and transfer the same to the Tax Reserve Account;


 


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(ii) at any time when the insurance required to be maintained pursuant to this
Agreement is provided under a blanket policy in accordance with Article VI hereof
and the premiums in respect of such blanket policy are not paid or caused to be paid at
least 3 months before such premiums become due and payable or at any time that Manager does
not reserve for or otherwise set aside and pay, in no more than four (4) installments per
year, premiums with respect to the Insurance Requirements, funds in an amount equal to the
Monthly Insurance Reserve Amount for the month in which the Payment Date immediately
following the date of the transfer from the Holding Account occurs and transfer the same to
the Insurance Reserve Account, or following an Insurance Reserve Trigger, funds sufficient
(calculated on a monthly basis from the Insurance Reserve Trigger until the month in which
the premium is due) to permit Administrative Agent to pay insurance premiums for the
insurance required to be maintained pursuant to the terms of this Agreement and the Security
Instrument on the respective due dates therefor (up to a maximum amount equal to the
aggregate annual insurance premium required hereunder), and Administrative Agent shall so
pay such funds to the insurance company having the right to receive such funds;




(iii) at any such time that Manager does not reserve for or otherwise set aside and pay
Ground Rent, funds in an amount equal to the Monthly Ground Rent Reserve Amount and any
other amounts required pursuant to Section 16.6 for the month in which the Payment
Date immediately following the date of the transfer from the Holding Account occurs and
transfer the same to the Ground Rent Reserve Account;




(iv) during the continuance of a Cash Sweep Period, funds in an amount equal to the
Approved Operating Expenses for the month in which the Payment Date immediately following
the date of the transfer from the Holding Account occurs, and transfer the same to the
Operating Expense Reserve Account; provided, however, that to the extent
that the Officer’s Certificate delivered to Administrative Agent on a monthly or quarterly
basis by Borrower pursuant to Article XI certifies that actual Operating Expenses
for such calendar month or quarter were either less than or greater than Approved Operating
Expenses, and Administrative Agent receives such other evidence thereof reasonably
satisfactory to Administrative Agent, then Administrative Agent may direct Cash Management
Bank to increase or decrease the amount of the Approved Operating Expense transfer to be
made for the month following the month in which such Officer’s Certificate was delivered,
such adjustment to be in an amount determined by Administrative Agent to appropriately
reflect such difference between actual Operating Expenses and Approved Operating Expenses;




(v) funds in an amount equal to the amount of Debt Service due on the Payment Date for
the month in which the Payment Date immediately following the date of the transfer from the
Holding Account occurs and transfer the same to the Current Debt Service Reserve Account;


 


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(vi) provided no Event of Default has occurred and is then continuing, during a Cash
Sweep Period, funds in an amount set forth in a written notice from Borrower to
Administrative Agent equal to the amount of the Management Fees and the Allocable Chain
Expenses due to the Manager for the month in which the transfer from the Holding Account
occurs and transfer the same to the Borrower’s Account;




(vii) funds in an amount equal to the amount of any sums previously withdrawn from the
Cash Sweep Reserve Account and deposited into the Current Debt Service Reserve Account due
to a shortfall therein, and transfer the same to the Cash Sweep Reserve Account, until such
Cash Sweep Reserve Account has been replenished;




(viii) at any such time that Manager does not reserve or otherwise set aside for FF&E
in accordance with the terms of the Management Agreement, funds in an amount equal to the
Monthly FF&E Reserve Amount for the month in which the Payment Date immediately following
the date of the transfer from the Holding Account occurs and transfer the same to the FF&E
Reserve Account;




(ix) during any Cash Sweep Period, all remaining funds shall be transferred to the Cash
Sweep Reserve Account (subject to Section 16.3);




(x) provided no Event of Default has occurred and is then continuing and subject to the
provisions of Section 3.1.5(B), funds from the Cash Sweep Reserve Account sufficient
to pay any shortfalls in the Current Debt Service Reserve Account for Debt Service due with
respect to the Loan on each Payment Date, and Administrative Agent, on each Payment Date,
shall apply such funds to the payment of the Debt Service shortfall payable on such Payment
Date; and




(xi) provided no Cash Sweep Period or Event of Default has occurred and is then
continuing and subject to the provisions of Section 3.1.5(B), funds in an amount
equal to the balance (if any) remaining or deposited in the Holding Account after the
foregoing deposits (such remainder being hereinafter referred to as “Excess Cash
Flow”) and transfer the same to Borrower’s Account, free of any Lien or continuing
security interest.



(B) If Administrative Agent shall determine in good faith that there will be insufficient
amounts in the Holding Account to make any of the transfers pursuant to Section 3.1.5(A) on
the date required hereunder, Administrative Agent shall provide notice to Borrower of such
insufficiency (except that in no event shall Administrative Agent be required to notify Borrower of
any deficiency in the Current Debt Service Reserve Account, such deficiency on any Payment Date
being an Event of Default) and, within five (5) Business Days after receipt of said notice Borrower
shall deposit into the Holding Account an amount equal to the shortfall of available funds in the
Holding Account taking into account any funds which accumulate in the Holding Account during such
five (5) day Business Day period. Upon the occurrence of an Event of Default due to a deficiency
in the Current Debt Service Reserve Account on any Payment Date, Administrative Agent shall notify
Borrower of said Event of Default within five (5) Business Days thereafter; provided,
however, Administrative Agent’s failure to notify Borrower shall not be deemed a waiver of
said Event of Default. Notwithstanding anything to the contrary contained in this Agreement or in
the other Loan Documents, Borrower shall not be deemed to be in Default hereunder (and no Default
Rate or Late Payment Charge shall be applicable) in the event (i) no other Default or Event of
Default is then continuing; (ii) funds sufficient for a required transfer are held in an
appropriate Sub-Account; (iii) Borrower is not contesting the application of such funds as
determined by Administrative Agent; and (iv) Administrative Agent or Cash Management Bank fails to
timely make any transfer from such Sub-Account as contemplated by this Agreement.


 


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(C) Notwithstanding anything to the contrary contained herein or in the Security Instrument,
but subject to Section 7.3, to the extent that Borrower shall fail to pay any mortgage
recording tax, costs, expenses or other amounts pursuant to Section 19.14 of this Agreement
within the time period set forth therein, Administrative Agent shall have the right, at any time,
upon five (5) Business Days’ notice to Borrower, to withdraw from the Holding Account, an amount
equal to such unpaid taxes, costs, expenses and/or other amounts and pay such amounts to the
Person(s) entitled thereto.



3.1.6 Payments from Sub-Accounts. Borrower irrevocably authorizes Administrative
Agent to make and, provided no Event of Default shall have occurred and be continuing,
Administrative Agent hereby agrees to make, the following payments from the Sub- Accounts to the
extent of the monies on deposit therefor:




(i) if notified (timely) by Borrower or otherwise determined by Administrative Agent
that Manager will not pay Impositions or Other Charges, funds from the Tax Reserve Account
to Administrative Agent sufficient to permit Administrative Agent to pay (or otherwise to
Borrower to reimburse Borrower for its payment of) (A) Impositions and (B) Other Charges, on
the respective due dates therefor, and Administrative Agent shall so pay such funds to the
Governmental Authority or such other Person having the right to receive such funds (or shall
reimburse Borrower upon confirmation of payment);




(ii) at any time when the insurance required to be maintained pursuant to this
Agreement is provided under a blanket policy in accordance with Article VI hereof
and the premiums in respect of such blanket policy are not paid or caused to be paid at
least 3 months before such premiums become due and payable or at any time that Manager does
not reserve for or otherwise set aside and pay, in no more than four (4) installments per
year, premiums with respect to the Insurance Requirements and otherwise following an
Insurance Reserve Trigger, funds from the Insurance Reserve Account to Administrative Agent
sufficient to permit Administrative Agent to pay insurance premiums for the insurance
required to be maintained pursuant to the terms of this Agreement and the Security
Instrument, on the respective due dates therefor, and Administrative Agent shall so pay such
funds to the insurance company having the right to receive such funds;




(iii) during the continuance of a Cash Sweep Period, and no more frequently than twice
a month, funds from the Operating Expense Reserve Account in an amount equal to the Approved
Operating Expenses for the month in which the transfer is made (subject to monthly or
quarterly adjustment in accordance with Section 3.1.5), and transfer the same to
Borrower’s Account and Borrower shall then pay such Approved Operating Expenses;


 


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(iv) funds from the Current Debt Service Reserve Account to Administrative Agent
sufficient to pay Debt Service on each Payment Date, and Administrative Agent, on each
Payment Date, shall apply such funds to the payment of the Debt Service payable on such
Payment Date;




(v) if notified (timely) by Borrower or otherwise determined by Administrative Agent
that Manager will not reserve for FF&E as required under the Management Agreement, no more
frequently than once in any calendar month, and provided Borrower shall have complied with
the procedures set forth in Section 16.5, funds from the FF&E Reserve Account to
Borrower’s Account to pay for FF&E and Borrower shall then pay such FF&E;




(vi) no more frequently than once in any calendar month, and provided Borrower shall
have complied with the procedures set forth in Section 16.4, funds from the Required
Repairs Reserve Account to Borrower’s Account to pay for Required Repairs and Borrower shall
then pay such Required Repairs;




(vii) if notified (timely) by Borrower or otherwise determined by Administrative Agent
that Manager will not pay Ground Rent, no more frequently than once in any calendar month,
and provided Borrower shall have complied with the procedures set forth in
Section 16.6, funds from the Ground Rent Reserve Account to Borrower’s Account to
pay for ground rent and Borrower shall then pay such ground rent; and




(viii) in the event a Cash Sweep Period is then in effect, but no other Event of
Default is continuing, funds in the Cash Sweep Reserve Account on each Payment Date shall be
paid to Administrative Agent and shall be applied to the amortization of the Principal
Amount outstanding on such Payment Date.




3.1.7 Cash Management Bank.



(A) Administrative Agent shall, at Borrower’s sole cost and expense, have the right to replace
the Cash Management Bank with a financial institution reasonably satisfactory to Borrower (so long
as no Event of Default has occurred and is continuing) in the event that (i) the Cash Management
Bank fails, in any material respect, to comply with the Holding Account Agreement or (ii) the Cash
Management Bank named herein is no longer the Cash Management Bank. Upon the occurrence and during
the continuance of an Event of Default, Administrative Agent shall have the right at Borrower’s
sole cost and expense to replace Cash Management Bank at any time, without notice to Borrower.
Borrower shall cooperate with Administrative Agent in connection with the appointment of any
replacement Cash Management Bank and the execution by the Cash Management Bank and Borrower of an
Account Agreement and delivery of same to Administrative Agent.


 


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(B) So long as no Event of Default shall have occurred and be continuing, Borrower shall have
the right at its sole cost and expense to replace the Cash Management Bank with a financial
institution that is approved by Administrative Agent, provided that such financial
institution and Borrower shall execute and deliver to Administrative Agent an Account Agreement
substantially similar to the Account Agreement executed as of the Closing Date.



3.1.8 Borrower’s Account Representations, Warranties and Covenants. Borrower
represents, warrants and covenants that (i) as of the date hereof, Borrower has directed all
Tenants under the Leases to mail all checks and wire all funds with respect to any payments due
under such Leases directly to Manager, (ii) Borrower shall cause Manager to deposit all amounts
collected by Manager pursuant to the Management Agreement directly into the Collection Account,
(iii) Borrower shall pay or cause to be paid all Rents, Cash and Cash Equivalents or other items of
Operating Revenues not otherwise collected by Manager within two Business Days after receipt
thereof by Borrower or its Affiliates directly into the Collection Account and, until so deposited,
any such amounts held by Borrower, Manager or their Affiliates shall be deemed to be Account
Collateral and shall be held in trust by it for the benefit, and as the property, of Administrative
Agent and shall not be commingled with any other funds or property of Borrower, Manager or their
Affiliates, (iv) Borrower shall, and shall cause Manager to, deposit all amounts payable to
Borrower pursuant to the Management Agreement or the Operating Lease directly into the Collection
Account, (v) other than the Hotel Operating Account, there are no accounts other than the
Collateral Accounts maintained by Borrower, Manager or their Affiliates with respect to the
Property or the collection of Rents and credit card company receivables with respect to the
Property and (vi) so long as the Obligations shall be outstanding, neither Borrower, Manager, nor
any other Person shall open any other operating accounts with respect to the Property or the
collection of Rents or credit card company receivables with respect to the Property, except for the
Collateral Accounts and the Hotel Operating Account; provided that, Borrower and Manager
shall not be prohibited from utilizing one or more separate accounts for the disbursement or
retention of funds that have been transferred to Borrower’s Account pursuant to
Section 3.1.5.



3.1.9 Hotel Operating Account. So long as no Cash Sweep Period or Event of Default
has occurred and is continuing, all amounts in the Collection Account shall be transferred to the
Hotel Operating Account on a daily basis and Borrower shall, and shall cause Manager to, pay Hotel
Operating Expenses, Management Fees and Allocable Chain Expenses from funds on deposit in the Hotel
Operating Account. Notwithstanding the foregoing, commencing September 2011, on the Business Day
closest to the 25th day of each month, Borrower shall, and shall cause Manager to, transfer from
the Hotel Operating Account funds in excess of the amount of funds set forth in a written notice
from Borrower to Administrative Agent which are sufficient to cover all outstanding checks drawn
against the Hotel Operating Account that have not yet cleared to the Holding Account. In no event
shall funds be transferred directly from the Hotel Operating Account to the Borrower’s Account or
any other account of the Borrower or its Affiliates. During the continuance of a Cash Sweep Period
or Event of Default, all funds in the Collection Account at the direction of Administrative Agent
will be transferred to the Holding Account.


 


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3.1.10 Account Collateral and Remedies.



(A) Upon the occurrence and during the continuance of an Event of Default, without additional
notice from Administrative Agent to Borrower, (i) Administrative Agent may, in addition to and not
in limitation of Administrative Agent’s other rights, make any and all withdrawals from, and
transfers between and among, the Collateral Accounts and the Hotel Operating Account as
Administrative Agent shall determine in its sole and absolute discretion to pay any Obligations;
(ii) all Excess Cash Flow shall be retained in the Holding Account or applicable Sub-Accounts
pending further transfer and application in accordance with this Section 3.1.10, and
(iii) Administrative Agent may liquidate and transfer any amounts then invested in Permitted
Investments to the Collateral Accounts to which they relate or reinvest such amounts in other
Permitted Investments as Administrative Agent may determine in its sole and absolute discretion is
necessary to perfect or protect any security interest granted or purported to be granted hereby or
to enable Administrative Agent to exercise and enforce Administrative Agent’s rights and remedies
hereunder with respect to any Account Collateral or to preserve the value of the Account
Collateral.



(B) Borrower hereby irrevocably constitutes and appoints Administrative Agent as Borrower’s
true and lawful attorney-in-fact, with full power of substitution, to do the following upon the
occurrence and during the continuance of an Event of Default: execute, acknowledge and deliver any
instruments and exercise and enforce every right, power, remedy, option and privilege of Borrower
with respect to the Account Collateral, and do in the name, place and stead of Borrower, all such
acts, things and deeds for and on behalf of and in the name of Borrower, which Borrower could or
might do or which Administrative Agent may deem necessary or desirable to more fully vest in
Administrative Agent the rights and remedies provided for herein and to accomplish the purposes of
this Agreement. The foregoing powers of attorney are irrevocable and coupled with an interest.
Upon the occurrence and during the continuance of an Event of Default, Administrative Agent may
perform or cause performance of any such agreement, and any reasonable expenses of Administrative
Agent incurred in connection therewith shall be paid by Borrower as provided in
Section 5.1.16.



(C) Borrower hereby expressly waives, to the fullest extent permitted by law, presentment,
demand, protest or any notice of any kind (except as expressly required under the Loan
Documents) in connection with this Agreement or the Account Collateral. Borrower acknowledges and
agrees that ten (10) Business Days’ prior written notice of the time and place of any public sale
of the Account Collateral or any other intended disposition thereof shall be reasonable and
sufficient notice to Borrower within the meaning of the UCC.



3.1.11 Transfers and Other Liens. Borrower agrees that it will not (i) sell or
otherwise dispose of any of the Account Collateral except as may be expressly permitted under the
Loan Documents, or (ii) create or permit to exist any Lien upon or with respect to all or any of
the Account Collateral, except for the Lien granted to Administrative Agent under this Agreement.


 


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3.1.12 Reasonable Care. Beyond the exercise of reasonable care in the custody
thereof, Administrative Agent shall have no duty as to any Account Collateral in its possession or
control as agent therefor or bailee thereof or any income thereon or the preservation of rights
against any person or otherwise with respect thereto. Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Account Collateral in its
possession if the Account Collateral is accorded treatment substantially equal to that which
Administrative Agent accords its own property, it being understood that Administrative Agent shall
not be liable or responsible for any loss or damage to any of the Account Collateral, or for any
diminution in value thereof, by reason of the act or omission of Administrative Agent, its
Affiliates, agents, employees or bailees, except to the extent that such loss or damage results
from Administrative Agent’s gross negligence or willful misconduct. In no event shall
Administrative Agent be liable either directly or indirectly for losses or delays resulting from
any event which may be the basis of an Excusable Delay, computer malfunctions, interruption of
communication facilities, labor difficulties or other causes beyond Administrative Agent’s
reasonable control or for indirect, special or consequential damages except to the extent of
Administrative Agent’s gross negligence or willful misconduct. Notwithstanding the foregoing,
Borrower acknowledges and agrees that (i) Administrative Agent does not have custody of the Account
Collateral, (ii) Cash Management Bank has custody of the Account Collateral, (iii) the initial Cash
Management Bank was chosen by Borrower and (iv) Administrative Agent has no obligation or duty to
supervise Cash Management Bank or to see to the safe custody of the Account Collateral.




3.1.13 Administrative Agent’s Liability.



(A) Administrative Agent shall be responsible for the performance only of such duties with
respect to the Account Collateral as are specifically set forth in this Section 3.1 or
elsewhere in the Loan Documents, and no other duty shall be implied from any provision hereof.
Administrative Agent shall not be under any obligation or duty to perform any act with respect to
the Account Collateral which would cause it to incur any expense or liability or to institute or
defend any suit in respect hereof, or to advance any of its own monies. Borrower shall indemnify
and hold Administrative Agent, its employees and officers harmless from and against any loss, cost
or damage (including, without limitation, reasonable attorneys’ fees and disbursements) incurred by
Administrative Agent in connection with the transactions contemplated hereby with respect to the
Account Collateral (excluding losses on Permitted Investments) except as such may be caused by the
gross negligence or willful misconduct of Administrative Agent, its employees, officers or agents.



(B) Administrative Agent shall be protected in acting upon any notice, resolution, request,
consent, order, certificate, report, opinion, bond or other paper, document or signature believed
by it in good faith to be genuine, and, in so acting, it may be assumed that any person purporting
to give any of the foregoing in connection with the provisions hereof has been duly authorized to
do so. Administrative Agent may consult with counsel, and the opinion of such counsel shall be
full and complete authorization and protection in respect of any action taken or suffered by it
hereunder and in good faith in accordance therewith.


 


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3.1.14 Continuing Security Interest. This Agreement shall create a continuing
security interest in the Account Collateral and shall remain in full force and effect until payment
in full of the Indebtedness; provided, however, such security interest shall
automatically terminate with respect to funds which were duly deposited into Borrower’s Account in
accordance with the terms hereof. Upon payment in full of the Indebtedness, this security interest
shall automatically terminate without further notice from any party and Borrower shall be entitled
to the return, upon its request, of such of the Account Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and Administrative Agent shall execute such
instruments and documents as may be reasonably requested by Borrower to evidence such termination
and the release of the Account Collateral.



ARTICLE IV




Representations and Warranties




Section 4.1 Borrower Representations. Borrower represents and warrants as of the
Closing Date that:



4.1.1 Organization. Each of Borrower (other than Operating Lessee) and Guarantor is a
Delaware limited liability company, and each has been duly organized and is validly existing and in
good standing pursuant to the laws of the State of Delaware with requisite power and authority to
own its properties and to transact the businesses in which it is now engaged. Operating Lessee is a
New York limited liability company, and has been duly organized and is validly existing and in good
standing pursuant to the laws of the State of New York with requisite power and authority to own
its properties and to transact the businesses in which it is now engaged. Each of Borrower and
Guarantor has duly qualified to do business and is in good standing in each jurisdiction where it
is required to be so qualified in connection with its properties, businesses and operations. Each
Transaction Party possesses all rights, licenses, permits and authorizations, governmental or
otherwise, necessary to entitle it to own its properties and to transact the businesses in which it
is now engaged, and the sole business of Borrower is the use and ownership of the Property. The
organizational structure of Borrower upon the closing is accurately depicted by the schematic
diagram attached hereto as Exhibit H. Borrower shall not change its name, identity, corporate
structure or jurisdiction of organization unless it shall have given Administrative Agent thirty
(30) days prior written notice of any such change and shall have taken all steps reasonably
requested by Administrative Agent to grant, perfect, protect and/or preserve the security interests
granted hereunder and under the other Loan Documents to Administrative Agent.



4.1.2 Proceedings. Each of Borrower and each other Transaction Party, has full power
to and has taken all necessary action to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents. This Agreement and the other Loan Documents have been duly
executed and delivered by, or on behalf of, each of Borrower and each other Transaction Party, as
applicable, and constitute legal, valid and binding obligations of Borrower and such Transaction
Party, as applicable, enforceable against Borrower and such Transaction Party, as applicable, in
accordance with their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at
law).


 


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4.1.3 No Conflicts. The execution, delivery and performance of this Agreement and the
other Loan Documents by Borrower and each other Transaction Party, as applicable, will not conflict
with or result in a breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance (other than pursuant to the
Loan Documents) upon any of the property or assets of Borrower or such Transaction Party, pursuant
to the terms of any indenture, mortgage, deed of trust, loan agreement, partnership agreement or
other agreement or instrument to which Borrower or such Transaction Party, is a party or by which
any of Borrower’s or such Transaction Party’s, property or assets is subject, nor will such action
result in any violation of the provisions of any statute or any order, rule or regulation of any
Governmental Authority, and any consent, approval, authorization, order, registration or
qualification of or with any Governmental Authority required for the execution, delivery and
performance by Borrower and such Transaction Party, of this Agreement or any other Loan Documents
has been obtained and is in full force and effect.



4.1.4 Litigation. There are no lawsuits, administrative proceedings, arbitration
proceedings, or other such legal proceedings that have been filed and served upon Borrower (or with
respect to which Borrower has otherwise received proper notice) or, to the Best of Borrower’s
Knowledge, otherwise pending or threatened against or affecting Borrower, Manager, or the Property
whose outcome, if determined against Borrower, Manager or the Property, would have a Material
Adverse Effect. To the Best of Borrower’s Knowledge, Schedule I includes each pending action
against Borrower or otherwise affecting the Property that involves a claim or claims for
(a) monetary damages exceeding $250,000, or (b) injunctive relief; or (c) or other equitable remedy
that could have a Material Adverse Effect, excluding: (i) actions for monetary damages only that
have been tendered to, and accepted without reservation of rights by, the liability insurance
carrier for the Property, (ii) worker’s compensation claims, and (iii) any proceedings by employees
working at the Property where the amount claimed in such proceeding is less than $250,000; to the
Best of Borrower’s Knowledge, the aggregate amount of such claims described in subclause (iii) of
this sentence is less than $1,000,000.



4.1.5 Agreements. Neither Borrower nor Manager is a party to any agreement or
instrument or subject to any restriction which is reasonably likely to have a Material Adverse
Effect. Neither Borrower nor Manager is in default in any respect in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower or the Property is bound, which default is
reasonably likely to have a Material Adverse Effect. Borrower has no financial obligation
(contingent or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Borrower is a party or by which Borrower or the Property is
otherwise bound, other than (a) obligations incurred in the ordinary course of the operation of the
Property, (b) obligations under the Loan Documents, and (c) obligations disclosed in the financial
statements delivered to Administrative Agent prior to the Closing Date.


 


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4.1.6 Title(a). Borrower has (i) good, marketable and insurable (a) fee simple to the
Owned Units and has an undivided interest in the Common Elements appurtenant thereto and (b)
leasehold title to the Leasehold Units and to the undivided interest in the Common Elements
appurtenant thereto and (ii) good and marketable title to the balance of the Property (not
comprising real property) owned by it, in each case, free and clear of all Liens whatsoever except
Permitted Encumbrances. The Security Instrument, when properly recorded in the appropriate
records, together with any Uniform Commercial Code financing statements required to be filed in
connection therewith, will create (i) a valid, first priority, perfected Lien on Borrower’s
interest in the Property, subject only to Permitted Encumbrances, and (ii) perfected security
interests in and to, and perfected collateral assignments of, all personalty (including the
Leases), all in accordance with the terms thereof, in each case subject only to the Permitted
Encumbrances and in each case to the extent a Lien can be perfected by such recording and filings.
There are no mechanics’, materialman’s or other similar Liens or claims which have been filed for
work, labor or materials affecting the Property which are or may be Liens prior to, or equal or
coordinate with, the Lien of the Security Instrument. None of the Permitted Encumbrances,
individually or in the aggregate, (a) materially interfere with the benefits of the security
intended to be provided by the Security Instrument and this Agreement, (b) materially and adversely
affect the value of the Property, (c) impair the use or operations of the Property (as currently
used), or (d) impair Borrower’s ability to pay its Obligations in a timely manner.



4.1.7 No Bankruptcy Filing. None of Borrower or any Transaction Party, is
contemplating either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of such entity’s assets or property,
and Borrower has no knowledge of any Person contemplating the filing of any such petition against
Borrower or any Transaction Party.



4.1.8 Full and Accurate Disclosure. To the Best of Borrower’s Knowledge, no statement
of fact made by Borrower in this Agreement and, no statement of fact made by any other Transaction
Party in any of the other Loan Documents, contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements contained herein or therein not
misleading. There is no fact presently known to Borrower which has not been disclosed which has a
Material Adverse Effect, or to the Best of Borrower’s Knowledge, could reasonably be expected to
have a Material Adverse Effect.



4.1.9 All Property. The Property constitutes all of the real property, personal
property, equipment and fixtures currently (i) owned or leased by Borrower or (ii) used in the
operation of the business located on the Property, other than items owned by Manager or any Tenants
(excluding items owned by Operating Lessee).


 


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4.1.10 ERISA.



(A) Borrower does not maintain or contribute to and is not required to contribute to, an
“employee benefit plan” as defined by Section 3(3) of ERISA, which is subject to Title IV of ERISA
(other than a “multiemployer plan” as defined by Section 3(37) of ERISA), and Borrower (i) has no
knowledge of any material liability which has been incurred or is expected to be incurred by
Borrower which is reasonably likely to result in a Material Adverse Effect and is or remains
unsatisfied for any taxes or penalties or unfunded contributions with respect to any “employee
benefit plan” or any “plan,” within the meaning of Section 4975(e)(1) of the Internal Revenue Code
or any other benefit plan (other than a “multiemployer plan”) maintained, contributed to, or
required to be contributed to by Borrower or by any entity that is under common control with
Borrower within the meaning Section 4001(a)(14) of ERISA (each, an “ERISA Affiliate”)
(each, a “Plan”) or any plan that would be a Plan but for the fact that it is a
multiemployer plan within the meaning of ERISA Section 3(37); and (ii) has made and shall continue
to make when due all required contributions to all such Plans (other than Plans relating to ERISA
Affiliates), if any, where the failure to so contribute is reasonably likely to result in a
Material Adverse Effect. Each such Plan (other than Plans relating to ERISA Affiliates), if any,
has been and will be administered in material compliance with its terms and the applicable
provisions of ERISA, the Internal Revenue Code, and any other applicable federal or state law; and
no action shall be taken or fail to be taken that would result in the disqualification or loss of
tax-exempt status of any such Plan intended to be qualified and/or tax exempt; and



(B) With respect to any “multiemployer plan,” (i) Borrower has not, since September 26, 1980,
made or suffered a “complete withdrawal” or a “partial withdrawal,” as such terms are respectively
defined in Sections 4203 and 4205 of ERISA, (ii) Borrower has made and shall continue to make when
due all required contributions to all such “multiemployer plans” and (iii) no ERISA Affiliate has,
since September 26, 1980, made or suffered a “complete withdrawal” or a “partial withdrawal,” as
such terms are respectively defined in Sections 4203 and 4205 of ERISA which withdrawal is
reasonably expected to have a Material Adverse Effect.



(C) Borrower is not an employee benefit plan, as defined in Section 3(3) of ERISA, whether or
not subject to Title I of ERISA, none of the assets of Borrower constitutes or will constitute plan
assets of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101 and
transactions by or with Borrower are not subject to similar laws regulating investment of, and
fiduciary obligations with respect to, plans similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code currently in effect (“Similar Laws”), which prohibit or otherwise
restrict the transactions contemplated by this Agreement.


 


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4.1.11 Compliance. Borrower and the Property and the use thereof comply in all
material respects with all applicable Legal Requirements, including, without limitation, building
and zoning ordinances and codes except where the failure to so comply could not reasonably be
expected to result in a Material Adverse Effect. To the Best of Borrower’s Knowledge, Borrower is
not in default or in violation in any material respect of any order, writ, injunction, decree or
demand of any Governmental Authority. There has not been committed by Borrower or Manager any act
or omission affording the federal government or any other Governmental Authority the right of
forfeiture as against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents.



4.1.12 Financial Information. All financial data including, without limitation, the
statements of profit and loss and balance sheet, that have been delivered by or on behalf of
Borrower to Administrative Agent in respect of the Property (i) are true, complete and correct in
all material respects, (ii) fairly represent the financial condition of the Property as of the date
of such reports in all material respects, and (iii) have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. Borrower does not have any material
contingent liabilities, liabilities for delinquent taxes, unusual forward or long-term commitments
or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and
could reasonably be expected to have a Material Adverse Effect, except as referred to or reflected
in said financial statements and operating statements. Since the date of such financial
statements, there has been no material adverse change in the financial condition, operations or
business of Borrower from that set forth in said financial statements.



4.1.13 Condemnation. No Condemnation has been commenced or, to the Best of Borrower’s
Knowledge, is contemplated with respect to all or any portion of the Property.



4.1.14 Federal Reserve Regulations. None of the proceeds of the Loan will be used for
the purpose of purchasing or carrying any “margin stock” as defined in Regulation U, Regulation X
or Regulation T or for the purpose of reducing or retiring any Debt which was originally incurred
to purchase or carry “margin stock” or for any other purpose which might constitute this
transaction a “purpose credit” within the meaning of Regulation U or Regulation X. Borrower does
not own any “margin stock.”



4.1.15 Utilities and Public Access. The Property has rights of access to public ways
and is served by water, sewer, sanitary sewer and storm drain facilities adequate to service the
Property for its intended uses. To the Best of Borrower’s Knowledge, all utilities necessary to the
existing use of the Property are located either in the public right-of-way abutting the Property
(which are connected so as to serve the Property without passing over other property) or in
recorded easements serving the Property. All roads necessary for the use of the Property for its
current purposes have been completed and, if necessary, dedicated to public use.


 


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



4.1.17 Separate Lots. The Property is comprised of one (1) or more contiguous parcels
which constitute a separate tax lot or lots and does not constitute or include a portion of any
other tax lot not a part of the Property.



4.1.18 Assessments. To the Best of Borrower’s Knowledge, there are no pending or
proposed special or other assessments for public improvements or otherwise affecting the Property,
nor are there any contemplated improvements to the Property that may result in such special or
other assessments.



4.1.19 Enforceability. The Loan Documents are not subject to any existing right of
rescission, set-off, counterclaim or defense by Borrower, including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder,
render the Loan Documents unenforceable (subject to applicable bankruptcy, insolvency and similar
laws affecting rights of creditors generally, and subject as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at
law)), and Borrower has not asserted any right of rescission, set-off, counterclaim or defense with
respect thereto.



4.1.20 No Prior Assignment. There are no prior sales, transfers or assignments of the
Leases or any portion of the Rents due and payable or to become due and payable which are presently
outstanding following the funding of the Loan, other than those being terminated or assigned to
Administrative Agent concurrently herewith.



4.1.21 Insurance. Borrower has obtained and has delivered to Administrative Agent
certified copies or certificates of all insurance policies required under this Agreement,
reflecting the insurance coverages, amounts and other requirements set forth in this Agreement.
Borrower has not, and to the Best of Borrower’s Knowledge no Person has, done by act or omission
anything which would impair the coverage of any such policy.



4.1.22 Use of Property. The Property is used exclusively for hotel purposes and other
appurtenant and related uses and for the SRO Tenancies.


 


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4.1.23 Certificate of Occupancy; Licenses. All material certifications, permits,
licenses (including, without limitation, a license to serve alcohol on the Property) and approvals,
including without limitation, certificates of completion and occupancy permits required of Borrower
for the legal use, occupancy and operation of the Property for hotel purposes (collectively, the
“Licenses”), have been obtained and are in full force and effect. Borrower shall keep and
maintain all Licenses necessary for the operation of the Property for hotel purposes. The use
being made of the Property is in conformity with the certificate of occupancy issued for the
Property.



4.1.24 Flood Zone. None of the Improvements on the Property are located in an area
identified by the Federal Emergency Management Agency as an area having special flood hazards.



4.1.25 Physical Condition. To the Best of Borrower’s Knowledge, except as expressly
disclosed in the Physical Conditions Report, the Property, including, without limitation, all
buildings, Improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing
systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior
sidings and doors, landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; to the Best of Borrower’s Knowledge there
exists no structural or other material defects or damages in or to the Property, whether latent or
otherwise, and Borrower has not received any written notice from any insurance company or bonding
company of any defects or inadequacies in the Property, or any part thereof, which would adversely
affect the insurability of the same or cause the imposition of extraordinary premiums or charges
thereon or of any termination or threatened termination of any policy of insurance or bond.



4.1.26 Boundaries. All of the Improvements lie wholly within the boundaries and
building restriction lines of the Real Property, and no improvements on adjoining properties
encroach upon the Real Property, and no easements or other encumbrances upon the Real Property
encroach upon any of the Improvements, so as to have a material adverse effect on the value or
marketability of the Real Property except those which are insured against by the Title Policy.


 


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4.1.27 Leases(a). The Property is not subject to any Leases other than the Leases
described in the certified rent roll delivered in connection with the origination of the Loan.
Such certified rent roll is true, complete and correct in all material respects as of the date set
forth therein. No Person has any possessory interest in the Property or right to occupy the same
(other than typical short-term occupancy rights of hotel guests, occupancy agreements or other
occupancy rights for groups of hotel guests for transitory periods of time and agreements for
catering, business and similar special events or functions at the Property) except under and
pursuant to the provisions of the Leases and the SRO Agreements. The current Leases are in full
force and effect there are no material defaults thereunder by Borrower, and to the Best of
Borrower’s Knowledge, there are no material defaults thereunder by any other either party (other
than as expressly disclosed on the certified rent roll delivered to Administrative Agent or the
Tenant estoppel certificates delivered to Administrative Agent in connection with the closing of
the Loan) and there are no conditions that, with the passage of time or the giving of notice, or
both, would constitute material defaults thereunder. No Rent has been paid more than one (1) month
in advance of its due date. There has been no prior sale, transfer or assignment, hypothecation or
pledge by Borrower of any Lease or of the Rents received therein, which will be outstanding
following the funding of the Loan, other than those being assigned to Administrative Agent
concurrently herewith. No Tenant under any Lease has a right or option pursuant to such Lease or
otherwise to purchase all or any part of the property of which the leased premises are a part.
Attached hereto as Schedule V is a list of all SRO Units and the current rent payable with
respect to each SRO Unit. There are no written agreements with respect to leasing any of the SRO
Units and Borrower shall not enter into any written agreements with respect to leasing any SRO Unit
other than any such written agreement that is (i) required by Legal Requirements, (ii) in respect
of a termination of such SRO Unit in accordance with Legal Requirements or (iii) consented to by
Administrative Agent, provided that in no event shall Borrower increase the number of SRO Units
beyond those set forth in the list attached as Schedule V. Borrower and the Property are
in compliance in all material respects with all Legal Requirements applicable to the SRO Units.
Borrower will not enter into any additional agreements with respect to SRO Units. Borrower will
promptly notify Administrative Agent of any vacancy of an SRO Unit. Upon request of Administrative
Agent from time to time, Borrower shall provide Administrative Agent with a report relating to the
SRO Units listing the occupancy status, current rent, copies of any material filings with the New
York City Department of Housing Preservation and Development as respects each such unit, and
evidence that Borrower is in compliance in all material respects with all Legal Requirements
pertaining thereto. Prior to commencing any material alterations of any such SRO Units, Borrower
shall make all required filings and take all actions required under applicable Legal Requirements
and shall furnish Administrative Agent with evidence of such compliance.



4.1.28 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes
or other amounts in the nature of transfer taxes required to be paid by any Person under applicable
Legal Requirements currently in effect in connection with the transfer of the Property to Borrower
have been paid and the granting and recording of the Accommodation Security Documents required to
be filed in connection with the Loan. All mortgage, mortgage recording, stamp, intangible or other
similar tax required to be paid by any Person under applicable Legal Requirements currently in
effect in connection with the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the Security Instrument,
have been paid, and, under current Legal Requirements, the Security Instrument is enforceable
against Borrower in accordance with its terms by Administrative Agent (or any subsequent holder
thereof) subject only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).


 


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4.1.29 Single Purpose Entity/Separateness.



(A) Borrower hereby represents, warrants and covenants that each Borrower is and has been
since the date of its respective formation, a Single Purpose Entity.



(B) All of the assumptions made in the Non-Consolidation Opinion, including, but not limited
to, any exhibits attached thereto and any certificates delivered by Borrower or any other
Transaction Party in connection with the issuance of the Non-Consolidation Opinion, are true and
correct in all material respects and any assumptions made in any subsequent non-consolidation
opinion delivered in connection with the Loan Documents (an “Additional Non-Consolidation
Opinion”), including, but not limited to, any exhibits attached thereto, which shall be
certified by Borrower or any other Transaction Party, as applicable, will be true and correct in
all material respects on the date that any Additional Non-Consolidation Opinion is delivered. Each
Transaction Party has complied with all of the assumptions made with respect to it in the
Non-Consolidation Opinion. To the Best of Borrower’s Knowledge, each entity other than a
Transaction Party with respect to which an assumption shall be made in any Additional
Non-Consolidation Opinion will have complied and will comply with all of the assumptions made with
respect to it in any Additional Non-Consolidation Opinion.



4.1.30 Management Agreement. As of the Closing Date, the Management Agreement is in
full force and effect and there is no default thereunder by any party thereto and no event has
occurred that, with the passage of time and/or the giving of notice would constitute a default
thereunder. The Manager is an Affiliate of Borrower.



4.1.31 Illegal Activity. No portion of the Property has been or will be purchased
with proceeds of any illegal activity.



4.1.32 Tax Filings. Borrower has filed (or has obtained effective extensions for
filing) all federal, state and local tax returns required to be filed and has paid or made adequate
provision for the payment of all federal, state and local taxes, charges and assessments payable by
Borrower.



4.1.33 Solvency/Fraudulent Conveyance. Each Borrower and Guarantor (a) has not
entered into the transaction contemplated by this Agreement or any Loan Document with the actual
intent to hinder, delay, or defraud any creditor and (b) has received reasonably equivalent value
in exchange for its obligations under the Loan Documents. Immediately after giving effect to the
Loan, each Borrower and Guarantor is Solvent.


 


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4.1.34 Investment Company Act. Borrower is not (a) an investment company or a company
Controlled by an investment company, within the meaning of the Investment Company Act of 1940, as
amended, (b) a holding company or a subsidiary company of a holding company or an affiliate of
either a holding company or a subsidiary company within the mean of the Public Utility Holding
Company Act of 1935, as amended or (c) subject to any other federal or state law or regulation
which purports to restrict or regulate its ability to borrow money.



4.1.35 Interest Rate Cap Agreement. The Interest Rate Cap Agreement is in full force
and effect and enforceable against Borrower in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws generally affecting the enforcement of creditors’ rights and
subject as to enforceability to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).



4.1.36 Labor. Except as described on Schedule II, no work stoppage, labor strike,
slowdown or lockout is pending or threatened by employees and other laborers at the Property.
Except as described on Schedule II, neither Borrower nor Manager (i) is involved in or, to the Best
of Borrower’s Knowledge, threatened with any material labor dispute, material grievance or
litigation relating to labor matters involving any employees and other laborers at the Property,
including, without limitation, violation of any federal, state or local labor, safety or employment
laws (domestic or foreign) and/or charges of unfair labor practices or discrimination complaints,
(ii) has engaged with respect to the Property, in any unfair labor practices within the meaning of
the National Labor Relations Act or the Railway Labor Act, or (iii) is a party to, or bound by, any
existing collective bargaining agreement or union contract with respect to employees and other
laborers at the Property.



4.1.37 Brokers. Borrower has not dealt with any broker or finder with respect to the
loan transactions contemplated by the Loan Documents and Borrower has not done any acts, had any
negotiations or conversations, or made any agreements or promises which will in any way create or
give rise to any obligation or liability for the payment by either party of any brokerage fee,
charge, commission or other compensation to any Person with respect to the transactions
contemplated by the Loan Documents. Borrower covenants and agrees that it shall pay as and when
due any and all brokerage fees, charges, commissions or other compensation or reimbursement due to
any broker of Borrower with respect to the transactions contemplated by the Loan Documents.
Borrower shall indemnify and hold harmless Administrative Agent, Lenders, and each other
Indemnified Party from and against any loss, liability, cost or expense, including any judgments,
attorneys’ fees, or costs of appeal, incurred by them and arising out of or relating to any claim
for brokerage commissions or finder’s fees alleged to be due as a result of the agreements or
actions of any Transaction Party. The provisions of this Section 4.1.38 shall survive the
expiration and termination of this Agreement and the payment of the Indebtedness.


 


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4.1.38 No Other Debt. Borrower has not borrowed or received debt financing that has
not been heretofore repaid in full, other than the Permitted Debt.



4.1.39 Taxpayer Identification Number. Owner’s taxpayer identification number is
13-4035148. Bar Lessee’s taxpayer identification number is 03-0373311. Operating Lessee’s taxpayer
identification number is 13-4130496.




4.1.40 Compliance with Anti-Terrorism, Embargo and Anti- Money Laundering Laws.



(a) Neither Borrower nor any owner of a direct or indirect ownership interest in Borrower
(i) is listed on any Government Lists, (ii) is a person who has been determined by competent
authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224
(Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OFAC
or in any enabling legislation or other Presidential Executive Orders in respect thereof, (iii) has
been previously indicted for or convicted of any felony involving a crime or crimes of moral
turpitude or for any Patriot Act Offense, or (iv) is currently under investigation by any
Governmental Authority for alleged criminal activity. For purposes hereof, the term “Patriot
Act Offense” means any violation of the criminal laws of the United States of America or of any
of the several states, or that would be a criminal violation if committed within the jurisdiction
of the United States of America or any of the several states, relating to terrorism or the
laundering of monetary instruments, including any offense under (A) the criminal laws against
terrorism; (B) the criminal laws against money laundering, (C) the Bank Secrecy Act, as amended,
(D) the Money Laundering Control Act of 1986, as amended, or (E) the Patriot Act. “Patriot Act
Offense” also includes the crimes of conspiracy to commit, or aiding and abetting another to
commit, a Patriot Act Offense. For purposes hereof, the term “Government Lists” means
(1) the Specially Designated Nationals and Blocked Persons Lists maintained by the Office of
Foreign Assets Control (“OFAC”), (2) any other list of terrorists, terrorist organizations
or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that
Administrative Agent notified Borrower in writing is now included in “Government Lists”, or
(3) any similar lists maintained by the United States Department of State, the United States
Department of Commerce or any other Governmental Authority or pursuant to any Executive Order of
the President of the United States of America that Administrative Agent notified Borrower in
writing is now included in “Government Lists”.



(b) At all times throughout the term of the Loan, including after giving effect to any
Transfers permitted pursuant to the Loan Documents, (a) none of the funds or other assets of
Borrower shall to the Best Knowledge of Borrower constitute property of, or shall be beneficially
owned, directly or indirectly, by any Person subject to trade restrictions under United States law,
including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701
et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or
regulations promulgated thereunder, with the result that the investment in Borrower (whether
directly or indirectly), would be prohibited by law (each, an “Embargoed Person”), or the
Loan made by Lenders would be in violation of law, (b) no Embargoed Person shall have any interest
of any nature whatsoever in Borrower with the result that the investment in Borrower (whether
directly or indirectly), would be prohibited by law or the Loan would be in violation of law, and
(c) none of the funds of Borrower shall be derived from any unlawful activity with the result that
the investment in Borrower (whether directly or indirectly), would be prohibited by law or the Loan
would be in violation of law.


 


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4.1.41 Knowledge Qualifications. Borrower represents that Richard Szymanski and
Daniel Flannery are in a position to have meaningful knowledge with respect to the matters set
forth in the Loan Documents which have been qualified to the knowledge of such Persons.



4.1.42 Leases. Borrower represents that it has heretofore delivered to Administrative
Agent true and complete copies of all Leases and any and all amendments or modifications thereof.




4.1.43 Intentionally Omitted.



4.1.44 Intellectual Property. All the Intellectual Property used in, held for use in,
or necessary for the use, ownership, management, leasing, renovation, financing, development,
operation and maintenance of the Property by Borrower or Manager (including, without limitation the
trademark “Hudson Hotel” and the reservations system at the Property) is owned or licensed by
Manager or Affiliates of Manager and is used in connection with the use, ownership, management,
leasing, renovation, financing, development, operation and maintenance of the Property by Borrower
and Manager with the consent of the owners thereof consistent with past practices. As of the
Closing Date, no Person other than Manager owns any Intellectual Property that is necessary for or
used in the current use, ownership, management, leasing, renovation, financing, development,
operation and maintenance of the Property consistent with past practices except as may be licensed
to Borrower or the Manager under the IP Licenses. Borrower is duly qualified under applicable law
in each jurisdiction in which it is required to be qualified pursuant to applicable Legal
Requirements in order to act as a licensor of the Intellectual Property and sublicensor to the
extent they are permitted to do so under the IP License Agreements. Attached hereto as Schedule IX
is a complete and accurate list of all of the registered and pending applications for registration,
anywhere in the world, for all Intellectual Property owned by Borrower and all IP Licenses to which
Borrower is a party (the “IP Schedule”). Except as set forth on Schedule I, there is no
action or proceeding pending, or to the Best of Borrower’s Knowledge, threatened by or against
Borrower or any Affiliate thereof: (x) alleging the infringement, dilution, misappropriation, or
other violation of any Intellectual Property or (y) seeking to limit, cancel, or question the
validity or enforceability of any IP Collateral (including, without limitation, the right to
proceeds therefrom and the right to bring an action at law or in equity for any infringement,
dilution, or violation of such Intellectual Property and to collect all damages, settlements, and
proceeds relating to such Intellectual Property), or Borrower’s rights or interests therein, or use
thereof. To the Best of Borrower’s Knowledge, no Person has interfered with, infringed upon,
diluted, misappropriated, or otherwise come into conflict with any Intellectual Property of
Borrower. Neither the Intellectual Property owned by Borrower nor Borrower’s use of the
Intellectual Property is subject to any outstanding injunction, judgment, order, decree, ruling, or
charge. Borrower, in its reasonable discretion, has made all filings and recordations in the
United States and in all foreign jurisdictions, as applicable, necessary to adequately effect,
reflect, and protect its ownership in, right to use, or its license of Intellectual Property used
or held for the use, ownership, management, leasing, renovation, financing, development, operation
and maintenance of the Property by Borrower or Manager. All Intellectual Property set forth on the
IP Schedule, is subsisting, unexpired, has not been abandoned in any applicable jurisdiction, and
is valid and enforceable and, to Borrower’s knowledge, the use of the IP Collateral in the manner
in which it is currently used or planned to be used does not infringe, dilute, misappropriate, or
otherwise violate the rights of any Person.


 


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4.1.45 Ground Lease(a).



(a) Recording; Modification. A memorandum of each Ground Lease has been duly
recorded. The Ground Lease permits the interest of Borrower to be encumbered by a mortgage.
Except as set forth on Schedule VIII, there have not been amendments or modifications to
the terms of the Ground Lease since its recordation, with the exception of written instruments
which have been recorded. The Ground Lease may not be canceled, terminated, surrendered or amended
without the prior written consent of Administrative Agent.



(b) No Liens. Except for the Permitted Encumbrances, Borrower’s interest in the
Ground Lease is not subject to any Liens or encumbrances superior to, or of equal priority with,
the Security Instrument other than the ground lessor’s related fee interest. Such Ground Lease is,
and shall remain, prior to any mortgage or Lien upon the ground lessor’s related fee interest.



(c) Ground Lease Assignable. Borrower’s interest in the Ground Lease is assignable to
Administrative Agent upon notice to, but without the consent of, the ground lessor (or, if any such
consent is required, it has been obtained prior to the Closing Date). The Ground Lease is further
assignable by Administrative Agent, its successors and assigns without the consent of the ground
lessor.



(d) Default. As of the date hereof, the Ground Lease is in full force and effect and
no default has occurred under the Ground Lease and, to the Best of Borrower’s Knowledge, there is
no existing condition which, but for the passage of time and/or the giving of notice, could result
in a default under the terms of the Ground Lease. All rents, additional rents and other sums due
and payable under the Ground Lease have been paid in full. Neither Borrower nor the ground lessor
under the Ground Lease has commenced any action or given or received any notice for the purpose of
terminating the Ground Lease.


 


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(e) Notice. The Ground Lease requires the ground lessor to give notice of any default
by Borrower to Administrative Agent. The Ground Lease, or estoppel letters received by
Administrative Agent from the ground lessor, further provides that notice of termination given
under the Ground Lease is not effective against Administrative Agent unless a copy of the notice
has been delivered to Administrative Agent in the manner described in the Ground Lease.



(f) Cure. Administrative Agent is permitted the opportunity (including, where
necessary, sufficient time to gain possession of the interest of Borrower under the Ground Lease)
to cure any default under the Ground Lease, after the receipt of notice of the default, before the
ground lessor thereunder may terminate the Ground Lease.



(g) Term. The Ground Lease has a term which extends not less than twenty (20) years
beyond the Final Extended Maturity Date.



(h) New Lease. The Ground Lease requires the ground lessor to enter into a new lease
with Administrative Agent upon termination of the Ground Lease for any reason, including rejection
of the Ground Lease in a bankruptcy proceeding.



(i) Insurance Proceeds. Under the terms of the Ground Lease and the Security
Instrument, taken together, any related insurance and condemnation proceeds will be applied either
to the repair or restoration of all or part of the Property, with Administrative Agent having the
right to hold and disburse the proceeds as the repair or restoration progresses, or to the payment
of the Principal Amount together with any accrued interest thereon.



(j) Subleasing. The Ground Lease does not impose commercially unreasonable
restrictions on subleasing.



4.1.46 Survival of Representations. Borrower agrees that all of the representations
and warranties of Borrower set forth in Section 4.1 and elsewhere in this Agreement and in
the other Loan Documents shall be deemed given and made as of the date of the funding of the Loan
and survive for so long as any amount remains owing to Lenders under this Agreement or any of the
other Loan Documents by Borrower or any Transaction Party unless a longer survival period is
expressly stated in a Loan Document with respect to a specific representation or warranty, in which
case, for such longer period. All representations, warranties, covenants and agreements made in
this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Administrative Agent and Lenders notwithstanding any investigation heretofore or hereafter made
by Administrative Agent or Lenders or on each of their behalf.


 


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ARTICLE V




Borrower Covenants




Section 5.1 Affirmative Covenants. From the Closing Date and until payment and
performance in full of all Obligations or the earlier release of the Lien of this Agreement and the
other Accommodation Security Documents in accordance with the terms of this Agreement and the other
Loan Documents, Borrower hereby covenants and agrees with Administrative Agent to comply with and
to cause Manager to comply with, the following covenants:



5.1.1 Performance by Borrower. Borrower shall observe, perform and fulfill each and
every covenant, term and provision of each Loan Document executed and delivered by, or applicable
to, Borrower, in accordance with the provisions of each Loan Document.



5.1.2 Existence; Compliance with Legal Requirements; Insurance. Subject to Borrower’s
right of contest pursuant to Section 7.3, Borrower shall comply and cause the Property to
be in compliance in all material respects with all Legal Requirements applicable to Borrower and
the Property and the uses permitted upon the Property. Borrower shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises necessary to comply in all material respects with all Legal
Requirements applicable to it and the Property. There shall never be committed by Borrower, and
Borrower shall not knowingly permit any other Person in occupancy of or involved with the operation
or use of the Property to commit, any act or omission affording the federal government or any state
or local government the right of forfeiture as against the Property or any part thereof or any
monies paid in performance of Borrower’s obligations under any of the Loan Documents. Borrower
hereby covenants and agrees not to commit, knowingly permit or suffer to exist any act or omission
affording such right of forfeiture. Borrower shall at all times maintain, preserve and protect all
material franchises and trade names and preserve all the remainder of its property used in the
conduct of its business and shall keep the Property in good working order and repair, and from time
to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements,
betterments and improvements thereto. Borrower shall keep the Property insured at all times to
such extent and against such risks, and maintain liability and such other insurance, as set forth
in this Agreement.



5.1.3 Litigation. Borrower shall give prompt written notice to Administrative Agent
of any litigation or governmental proceedings pending or threatened in writing against Borrower
which, if determined adversely to Borrower, could reasonably be expected to have a Material Adverse
Effect.




5.1.4 Single Purpose Entity.




(A) Each Borrower is and shall remain a Single Purpose Entity.


 


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(B) Each Borrower shall continue to maintain its own deposit account or accounts, separate
from those of any Affiliate, with commercial banking institutions. None of the funds of any
Borrower will be commingled with the funds of any other Affiliate.



(C) To the extent that any Borrower shares the same officers or other employees as any of its
Affiliates, the salaries of and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated among such entities, and each such entity shall bear its
fair share of the salary and benefit costs associated with all such common officers and employees.



(D) To the extent that any Borrower jointly contracts with any of its Affiliates to do
business with vendors or service providers or to share overhead expenses, the costs incurred in so
doing shall be allocated fairly among such entities, and each such entity shall bear its fair share
of such costs. To the extent that any Borrower contracts or does business with vendors or service
providers where the goods and services provided are partially for the benefit of any other Person,
the costs incurred in so doing shall be fairly allocated to or among such entities for whose
benefit the goods and services are provided, and each such entity shall bear its fair share of such
costs. All material transactions between (or among) Borrower and any of their Affiliates shall be
conducted on substantially the same terms (or on more favorable terms for Borrower) as would be
conducted with third parties.



(E) To the extent that any Borrower or any of its Affiliates have offices in the same
location, there shall be a fair and appropriate allocation of overhead costs among them, and each
such entity shall bear its fair share of such expenses.



(F) Each Borrower shall conduct its affairs strictly in accordance with its organizational
documents, and observe all necessary, appropriate and customary corporate, limited liability
company or partnership formalities, as applicable, including, but not limited to, obtaining any and
all consents necessary to authorize actions taken or to be taken, and maintaining accurate and
separate books, records and accounts, including, without limitation, payroll and intercompany
transaction accounts.



(G) In addition, each Borrower shall: (i) maintain books and records separate from those of
any other Person; (ii) maintain its assets in such a manner that it is not costly or difficult to
segregate, identify or ascertain such assets; (iii)  observe all corporate, partnership or limited
liability company, as the case may be, formalities; (iv) hold itself out to creditors and the
public as a legal entity separate and distinct from any other entity; (v) except to the extent such
entity is treated as a “disregarded entity” for tax purposes and not required to file tax returns
under applicable law or to the extent that it is required by Legal Requirements to file
consolidated federal or unitary state tax returns (or any analogous combined state tax returns),
prepare separate tax returns and financial statements, provided that each Borrower may be included
in a consolidated financial statement of its Affiliates provided that appropriate notation shall be
made on such consolidated financial statements to indicate the separateness of each Borrower and
such Affiliates and to indicate that such Borrower’s assets and credit are not available to satisfy
the debts and other obligations of such Affiliates or any other Person; (vi) except as permitted by
the Loan Documents, transact all business with its Affiliates on an arm’s-length basis;
(vii) conduct business in its name and, to the extent reasonably necessary for the operation of its
business, use separate stationery, invoices and checks; (viii) not commingle its assets or funds
with those of any other Person, other than as permitted by the Loan Documents; and (ix) not assume,
guarantee or pay the debts or obligations of any other Person, other than as permitted by the Loan
Documents.


 


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5.1.5 Consents. If Borrower is a corporation, the board of directors of such Person
may not take any action requiring the unanimous affirmative vote of 100% of the members of the
board of directors unless all of the directors, including the Independent Directors, shall have
participated in such vote if such vote relates to a Material Action (as such term is defined in
Borrower’s organizational documents). If Borrower is a limited liability company, (a) if such
Person is managed by a board of managers, the board of managers of such Person may not take any
action requiring the unanimous affirmative vote of 100% of the members of the board of managers
unless all of the managers, including the Independent Managers, shall have participated in such
vote if such vote relates to a Material Action (as such term is defined in Borrower’s
organizational documents), (b) if such Person is not managed by a board of managers, the members of
such Person may not take any action requiring the affirmative vote of 100% of the members of such
Person unless all of the members, including the Independent Members, shall have participated in
such vote if such vote relates to a Material Action (as such term is defined in Borrower’s
organizational documents). An affirmative vote of 100% of the directors, board of managers or
members, as applicable, including without limitation the Independent Directors or Independent
Members, as applicable, of Borrower shall be required to (i) file a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings or to authorize Borrower to do so or
(ii) file an involuntary bankruptcy petition against any Transaction Party, Manager, or any of
their Affiliates. Furthermore, Borrower’s formation documents shall expressly state that for so
long as the Loan is outstanding, Borrower shall not be permitted to (i) dissolve, liquidate,
consolidate, merge or sell all or substantially all of Borrower’s assets other than in connection
with the repayment of the Loan or as expressly permitted in Article VIII hereof or
(ii) engage in any other business activity other than as permitted pursuant to Section
5.2.3 hereof and such restrictions shall not be modified or violated for so long as the
Obligations are outstanding.



5.1.6 Access to Property. Borrower shall permit agents, representatives and employees
of Administrative Agent and each Lender to inspect the Property or any part thereof during normal
business hours on Business Days upon reasonable advance notice, subject to the rights of tenants
and guests at the Property.



5.1.7 Notice of Default. Borrower shall promptly advise Administrative Agent (a) of
any event or condition that has or is likely to have a Material Adverse Effect and (b) of the
occurrence of any Default or Event of Default of which Borrower has knowledge.



5.1.8 Cooperate in Legal Proceedings. Borrower shall cooperate fully with
Administrative Agent with respect to any proceedings before any court, board or other Governmental
Authority which would reasonably be expected to affect in any material adverse way the rights of
Administrative Agent or Lenders hereunder or under any of the other Loan Documents and, in
connection therewith, permit Administrative Agent, at its election, to participate in any such
proceedings which could reasonably be expected to have a Material Adverse Effect.


 


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5.1.9 Perform Loan Documents. Borrower shall observe, perform and satisfy all the
terms, provisions, covenants and conditions of, and shall pay when due all costs, fees and expenses
to the extent required, under the Loan Documents executed and delivered by, or applicable to,
Borrower.




5.1.10 Insurance.



(A) Borrower shall cooperate with Administrative Agent in obtaining for Lenders the benefits
of any Proceeds lawfully or equitably payable in connection with the Property, and Administrative
Agent shall be reimbursed for any expenses incurred in connection therewith (including reasonable
attorneys’ fees and disbursements) out of such Proceeds.



(B) Borrower shall comply with all Insurance Requirements and shall not bring or keep or
permit to be brought or kept any article upon any of the Property or cause or permit any condition
to exist thereon which would be prohibited by any Insurance Requirement, or would invalidate
insurance coverage required hereunder to be maintained by Borrower on or with respect to any part
of the Property pursuant to Section 6.1.




5.1.11 Further Assurances; Substitute Notes.



(A) Borrower shall execute and acknowledge (or cause to be executed and acknowledged) and
deliver to Administrative Agent all documents, and take all actions, reasonably required by
Administrative Agent from time to time to confirm the rights created or now or hereafter intended
to be created under this Agreement and the other Loan Documents and any security interest created
or purported to be created hereunder or thereunder, to protect and further the validity, priority
and enforceability of this Agreement and the other Loan Documents, to subject to the Loan Documents
any property of Borrower intended by the terms of any one or more of the Loan Documents to be
encumbered by the Loan Documents, or otherwise to carry out the purposes of the Loan Documents and
the transactions contemplated thereunder. Borrower agrees that it shall, upon request, reasonably
cooperate with Administrative Agent in connection with any request by Administrative Agent to
reallocate the LIBO Rate Spread among one or more Notes or to sever one or more Notes into two
(2) or more separate substitute or component notes in an aggregate principal amount equal to the
Principal Amount and to reapportion the Loan among such separate substitute notes, including,
without limitation, by executing and delivering to Administrative Agent new substitute or component
notes to replace the subject Notes, amendments to or replacements of existing Loan Documents to
reflect such severance and/or Opinions of Counsel with respect to such substitute or component
notes, amendments and/or replacements, provided that Borrower shall bear no costs or
expenses in connection therewith (other than administrative costs and expenses of Borrower and
legal fees of counsel to Borrower and each Transaction Party). Any such substitute or component
notes may have varying principal amounts and economic terms, provided, however,
that (i) the maturity date of any such substitute or component notes shall be the same as the
scheduled Maturity Date of the Notes immediately prior to the issuance of such substitute notes,
(ii) the substitute notes shall provide for amortization of the Principal Amount on a weighted
average basis over a period not less than the amortization period provided under the Notes, if any,
immediately prior to the issuance of the substitute notes, (iii) the weighted average LIBO Rate
Spread for the term of the substitute notes shall not exceed the LIBO Rate Spread under the Notes
immediately prior to the issuance of such substitute notes, (iv) the economics of the Loan, taken
as a whole, shall not change in a manner which is adverse to Borrower and (v) Borrower shall not
have (except to a de minimis extent) any more restrictive covenants than currently set forth in the
Loan Documents. Upon the occurrence and during the continuance of an Event of Default,
Administrative Agent may apply payment of all sums due under such substitute notes in such order
and priority as Administrative Agent shall elect in its sole and absolute discretion.


 


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(B) In addition, Borrower shall, at Borrower’s sole cost and expense:




(i) furnish to Administrative Agent, to the extent not otherwise already
furnished to Administrative Agent and reasonably acceptable to Administrative Agent,
all instruments, documents, boundary surveys, footing or foundation surveys,
certificates, plans and specifications, appraisals, title and other insurance
reports and agreements, and each and every other document, certificate, agreement
and instrument required to be furnished by Borrower pursuant to the terms of the
Loan Documents;




(ii) execute and deliver, from time to time, such further instruments
(including, without limitation, delivery of any financing statements under the
UCC) as may be reasonably requested by Administrative Agent to confirm the Lien of
the Security Instrument;




(iii) execute and deliver to Administrative Agent such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary to
evidence, preserve and/or protect the collateral at any time securing or intended to
secure the Obligations, as Administrative Agent may reasonably require; and




(iv) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the carrying out of the terms and conditions of this
Agreement and the other Loan Documents, as Administrative Agent shall reasonably
require from time to time.



5.1.12 Mortgage Taxes. Borrower shall pay all taxes, charges, filing, registration
and recording fees, excises and levies payable with respect to the Notes or the Liens created or
secured by the Loan Documents, other than income, franchise and doing business taxes imposed on
Administrative Agent or Lenders.


 


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5.1.13 Operation. Borrower shall, and shall cause Manager to, (i) promptly perform
and/or observe all of the covenants and agreements required to be performed and observed by it
under the Management Agreement and do all things necessary to preserve and to keep unimpaired its
material rights thereunder; (ii) promptly notify Administrative Agent of any “event of default”
under the Management Agreement of which it is aware; and (iii) enforce in a commercially reasonable
manner the performance and observance of all of the covenants and agreements required to be
performed and/or observed by the Manager under the Management Agreement.



5.1.14 Business and Operations. Borrower shall continue to engage in the businesses
presently conducted by it as and to the extent the same are necessary for the use, ownership,
maintenance, management and operation of the Property. Borrower shall qualify to do business and
shall remain in good standing under the laws of the State in which the Property is located and as
and to the extent required for the ownership, maintenance, management and operation of the
Property.



5.1.15 Title to the Property. Borrower shall warrant and defend (a) its title to the
Property and every part thereof, subject only to Liens permitted hereunder (including Permitted
Encumbrances) and (b) the validity and priority of the Liens of the Loan Documents, subject only to
Liens permitted hereunder (including Permitted Encumbrances), in each case against the claims of
all Persons whomsoever. Borrower shall reimburse Administrative Agent and Lenders for any losses,
costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by
Administrative Agent and Lenders if an interest in the Property, other than as permitted hereunder,
is claimed by another Person.



5.1.16 Costs of Enforcement. In the event (a) that this Agreement or any other Loan
Document is foreclosed upon in whole or in part or that this Agreement or any other Loan Document
is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the
foreclosure of any security agreement prior to or subsequent to this Agreement in which proceeding
Administrative Agent and/or Lenders are made a party, or a mortgage prior to or subsequent to the
Security Instrument in which proceeding Administrative Agent and/or Lenders are made a party, or
(c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of
Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent
Persons for the benefit of its creditors, Borrower, its successors or assigns, shall be chargeable
with and agrees to pay all costs of collection and defense, including reasonable attorneys’ fees
and costs, incurred by Administrative Agent, Lenders or Borrower in connection therewith and in
connection with any appellate proceeding or post-judgment action involved therein, together with
all required service or use taxes.


 


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5.1.17 Estoppel Certificates.



(A) From time to time but not more than four (4) times in any calendar year, upon thirty (30)
days’ prior written request from Administrative Agent, Borrower shall execute, acknowledge and
deliver to Administrative Agent, an Officer’s Certificate, stating that this Agreement and the
other Loan Documents are unmodified and in full force and effect (or, if there have been
modifications, that this Agreement and the other Loan Documents are in full force and effect as
modified and setting forth such modifications), stating the amount of accrued and unpaid interest
and the outstanding principal amount of the Notes and containing such other information, qualified
to the Best of Borrower’s Knowledge, with respect to Borrower, the Property and the Loan as
Administrative Agent shall reasonably request. The estoppel certificate shall also state either
that no Default or Event of Default exists hereunder or, if any Default or Event of Default shall
exist hereunder, specify such Default or Event of Default and the steps being taken to cure such
Default or Event of Default. Notwithstanding the foregoing to the contrary, upon the occurrence
and during the continuance of an Event of Default, Borrower shall from time to time upon thirty
(30) days’ prior written request from Administrative Agent, execute, acknowledge and deliver to
Administrative Agent, the foregoing Officer’s Certificate.



(B) Borrower shall use commercially reasonable efforts to deliver to Administrative Agent,
within thirty (30) days of Administrative Agent’s request, tenant estoppel certificates from each
Tenant under Material Leases in substantially the form and substance of the estoppel certificate
set forth in Exhibit G; provided that Borrower shall not be required to deliver such
certificates more frequently than one time in any calendar year; provided, however,
that there shall be no limit on the number of times Borrower may be required to obtain such
certificates if a Default or an Event of Default hereunder or under any of the Loan Documents has
occurred and is continuing.



(C) Borrower shall use commercially reasonable efforts to deliver to Administrative Agent,
within thirty (30) days of Administrative Agent’s request, an estoppel certificate from the ground
lessor under a Ground Lease, in form and substance reasonably satisfactory to Administrative Agent;
provided, that Borrower shall not be required to deliver such certificates more than three
(3) times during the Term and not more frequently than once per calendar year with respect to each
Ground Lease; provided, however, that there shall be no limit on the number of
times Borrower may be required to obtain such certificates if a Default or an Event of Default
hereunder or under any of the Loan Documents has occurred and is continuing.



(D) Borrower shall use commercially reasonable efforts to deliver to Administrative Agent,
within thirty (30) days of Administrative Agent’s request, an estoppel certificate from the
Condominium Board, in form and substance reasonably satisfactory to Administrative Agent;
provided, that Borrower shall not be required to deliver such certificates more frequently
than once per calendar year; provided, however, that there shall be no limit on the
number of times Borrower may be required to obtain such certificates if a Default or an Event of
Default hereunder or under any of the Loan Documents has occurred and is continuing.



5.1.18 Loan Proceeds. Borrower shall use the proceeds of the Loan only for the
purposes set forth in Section 2.1.4.




 


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5.1.19 No Joint Assessment. Borrower shall not suffer, permit or initiate the joint
assessment of the Property (a) with any other real property constituting a tax lot separate from
the Property and (b) which constitutes real property with any portion of the Property which may be
deemed to constitute personal property, or any other procedure whereby the lien of any taxes which
may be levied against such personal property shall be assessed or levied or charged to such real
property portion of the Property.



5.1.20 No Further Encumbrances. Borrower shall do, or cause to be done, all things
necessary to keep and protect the Property and all portions thereof unencumbered from any Liens,
easements or agreements granting rights in or restricting the use or development of the Property,
except for (a) Permitted Encumbrances and (b) Liens permitted pursuant to the Loan Documents.



5.1.21 Leases. Borrower shall promptly after receipt thereof deliver to
Administrative Agent a copy of any notice received with respect to the Leases claiming that
Borrower is in default in the performance or observance of any of the material terms, covenants or
conditions of any of the Leases, if such default is reasonably likely to have a Material Adverse
Effect.




5.1.22 Intentionally Omitted.




5.1.23 Intentionally Omitted.



5.1.24 FF&E. Borrower shall cause Manager to reserve for FF&E on a monthly basis in
accordance with the Management Agreement not less than an amount equal to four percent (4%) of
gross revenues with respect to the Property, provided however, this Section
5.1.24 shall not affect Borrower’s obligations hereunder to set aside reserves for FF&E.




5.1.25 IP Activities.



(a) Borrower agrees that it will not do any act, or omit to do any act (and will exercise
commercially reasonable efforts to prevent its licensees from doing any act or omitting to do any
act), whereby any IP Collateral may become invalidated, abandoned or dedicated to the public.


 


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(b) Borrower (either through itself or its licensees or sublicensees) will, as to each
Trademark included in the IP Collateral, reasonably maintain the quality of the products and
services offered under such Trademark.



(c) If Borrower shall, at any time after the date hereof, obtain any additional Intellectual
Property or IP Licenses, then the provisions of this Agreement shall automatically apply thereto
and any such Intellectual Property and/or IP Licenses shall automatically constitute IP Collateral
and shall be subject to the lien and security interest created by this Agreement or any other Loan
Document without further action by any party.



(d) Borrower shall promptly notify Administrative Agent if it knows or has reason to know that
any IP Collateral that is material to the use, ownership, management, leasing, renovation,
financing, development, operation and maintenance of the Property may become abandoned or dedicated
to the public, or of any adverse determination or development (including the institution of, or any
such determination or development in, any proceeding in the United States Patent and Trademark
Office, United States Copyright Office, or any court or similar office of any other country)
regarding Borrower’s ownership of such IP Collateral or, its right to register or maintain the
same.



(e) If Borrower knows that any IP Collateral, has been or is being misappropriated, diluted,
infringed, or otherwise violated by a third party, then Borrower shall promptly notify
Administrative Agent and shall use commercially reasonable efforts to protect its rights in such IP
Collateral including, and, if consistent with its reasonable business judgment, to promptly sue for
infringement, misappropriation, or dilution and to recover any and all damages for such
infringement, misappropriation or dilution.



(f) Upon the occurrence and during the continuance of any Event of Default, Borrower shall use
commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of
each IP License to effect the assignment of the relevant Borrower’s right, title, and interest
thereunder to Administrative Agent.



(g) There shall be no Liens with respect to, or upon, or no restrictions on the
transferability of the IP Collateral, other than the Permitted Encumbrances and as set forth in the
IP Licenses.




5.1.26 Ground Lease.





(a) Borrower shall:




(i) pay all rents, additional rents and other sums required to be paid by Borrower, as
tenant under and pursuant to the provisions of the Ground Lease, as and when such rent,
additional rents and other sums are payable;


 


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(ii) diligently perform and observe all of the other terms, covenants and conditions of
the Ground Lease on the part of Borrower, as tenant thereunder, to be performed and
observed, at least three (3) days prior to the expiration of any applicable grace period
therein provided; and




(iii) promptly notify Administrative Agent of the receipt by Borrower of any written
notice by the lessor under the Ground Lease to Borrower of any default by Borrower in the
performance or observance of any of the material terms, covenants or conditions of the
Ground Lease on the part of Borrower, as tenant thereunder, to be performed or observed, and
deliver to Administrative Agent a true copy of each such notice.



(b) Borrower shall not, without the prior consent of Administrative Agent, surrender the
leasehold estate created by the Ground Lease or terminate or cancel the Ground Lease or modify,
change, supplement, alter or amend the Ground Lease, in any material respect, either orally or in
writing, and Borrower hereby assigns to Administrative Agent, as further security for the payment
and performance of the Obligations, all of the rights, privileges and prerogatives of Borrower, as
tenant under the Ground Lease, to surrender the leasehold estate created by the Ground Lease or to
terminate, cancel, modify, change, supplement, alter or amend the Ground Lease in any material
respect, and any such surrender of the leasehold estate created by the Ground Lease or termination,
cancellation, modification, change, supplement, alteration or amendment of the Ground Lease in any
material respect without the prior consent of Administrative Agent shall be void and of no force
and effect.



(c) If Borrower shall default in the performance or observance of any material term, covenant
or condition of the Ground Lease on the part of Borrower, as tenant thereunder, to be performed or
observed, then, without limiting the generality of the other provisions of the Security Instrument,
this Agreement and the other Loan Documents, and without waiving or releasing Borrower from any of
its Obligations, Administrative Agent shall have the right, but shall be under no obligation, to
pay any sums and to perform any act or take any action as may be appropriate to cause all of the
material terms, covenants and conditions of the Ground Lease on the part of Borrower, as tenant
thereunder, to be performed or observed or to be promptly performed or observed on behalf of
Borrower, to the end that the rights of Borrower in, to and under the Ground Lease shall be kept
unimpaired as a result thereof and free from default, even though the existence of such event of
default or the nature thereof be questioned or denied by Borrower or by any party on behalf of
Borrower. If Administrative Agent shall make any payment or perform any act or take action in
accordance with the preceding sentence, Administrative Agent will notify Borrower of the making of
any such payment, the performance of any such act or the taking of any such action. In any such
event, subject to the rights of Tenants, subtenants and other occupants under the Leases or of
parties to any reciprocal easement agreement, Administrative Agent and any Person designated as
Administrative Agent’s agent by Administrative Agent shall have, and are hereby granted, the right
to enter upon the Property at any reasonable time, on reasonable notice (which may be given
verbally) and from time to time for the purpose of taking any such action. Administrative Agent
may pay and expend such sums of money as Administrative Agent reasonably deems necessary for any
such purpose and upon so doing shall be subrogated to any and all rights of the landlord under the
Ground Lease. Borrower hereby agrees to pay to Administrative Agent within five (5) days after
demand, all such sums so paid and expended by Administrative Agent, together with interest
thereon from the day of such payment at the Default Rate. All sums so paid and expended by
Administrative Agent and the interest thereon shall be secured by the Security Instrument and the
other Loan Documents.


 


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(d) If the lessor under the Ground Lease shall deliver to Administrative Agent a copy of any
notice of default sent by said lessor to Borrower, as tenant under the Ground Lease, such notice
shall constitute full protection to Administrative Agent for any action taken or omitted to be
taken by Administrative Agent, in good faith, in reliance thereon. Borrower shall exercise each
individual option, if any, to extend or renew the term of the Ground Lease upon demand by
Administrative Agent made at any time within one (1) year prior to the last day upon which any such
option may be exercised, and if Borrower shall fail to do so, Borrower hereby expressly authorizes
and appoints Administrative Agent its attorney-in-fact to exercise any such option in the name of
and upon behalf of Borrower, which power of attorney shall be irrevocable and shall be deemed to be
coupled with an interest. Borrower will not subordinate or consent to the subordination of the
Ground Lease to any mortgage, security deed, lease or other interest on or in the landlord’s
interest in all or any part of the Property, unless, in each such case, the written consent of
Administrative Agent shall have been first had and obtained.



5.1.27 Condominium Declaration.





(a) Borrower shall comply with all material terms,
conditions and covenants of the Condominium Declaration and all by-laws, rules and regulations
promulgated or otherwise existing with respect to the Condominium Regime (collectively, the
“Condominium Rules”) as those are in force and effect.



(b) Borrower shall not, without Administrative Agent’s prior written consent (not to be
unreasonably withheld), modify, amend, supplement or in any other manner change the terms,
conditions and covenants of the Condominium Declaration or the Condominium Rules in any material
respect, nor waive or consent to the waiver of any enforcement of the provisions thereof with
respect to another unit owner.



(c) Borrower shall promptly deliver to Administrative Agent a true and full copy of each and
every written notice of default or notice requiring the performance of any act by Borrower received
by Borrower with respect to any obligation of Borrower under the provisions of the Condominium
Declaration or the Condominium Rules.



(d) Borrower shall not, except with the prior written consent of Administrative Agent, (i)
institute any action or proceeding for partition of the Condominium Regime; (ii) vote for or
consent to any modification of, amendment to or relaxation in the enforcement of any provision of
the Condominium Declaration or the Condominium Rules; (iii) in the event of damage to or
destruction of the Property, vote in opposition to a motion to repair, restore, or rebuild; or (iv)
notwithstanding anything contained in the Declaration or Condominium Rules to the contrary,
subdivide any of the Condominium Units.


 


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(e) In each and every case in which, under the provisions of the Condominium Declaration or
the Condominium Rules, the consent or the vote of the owners of Condominium Units is required,
Borrower shall not vote or give such consent so as to impair the lien of the Security Instrument or
the security therefor without, in each and every case, the prior written consent of Administrative
Agent.



(f) Borrower shall promptly pay, as the same become due and payable, all common charges or
other payments for maintenance and reserve funds and all assessments as required by the Condominium
Declaration or the Condominium Rules or any resolutions adopted pursuant thereto, and shall
promptly upon demand deliver to Administrative Agent receipts for all such payments. In the event
that Borrower fails to make such payments as the same become due and payable, Administrative Agent
may from time to time at its option, but without any obligation to do so and only after five (5)
Business Days’ written notice to Borrower of its intent to do so, make such payments, and the same
shall be added to the debt secured by the Loan Documents, and shall bear interest until repaid at
the Default Rate; provided, however, that the failure of Borrower to make any such payment
or to exhibit such receipts shall, at the election of Administrative Agent constitute an Event of
Default.



(g) In the event of the failure of Borrower to perform any of its obligations relating to the
Property under the Condominium Declaration or Condominium Rules within a period of five (5)
Business Days (unless the Condominium Board requires sooner performance) after notice from the
Condominium Board or from Administrative Agent of such failure, or in the case of any such default
which cannot with due diligence be cured or remedied within such period, if Borrower fails to
proceed promptly after such notice to cure or remedy the same with due diligence, then in any such
case, Administrative Agent may from time to time at its option, but without any obligation so to
do, cure or remedy any such default of Borrower (Borrower hereby authorizing Administrative Agent
to enter upon the Property as may be necessary for such purposes), and all sums expended by
Administrative Agent for such purposes, including reasonable counsel fees, shall be added to the
debt secured by the Loan Documents, shall become due and payable on demand and shall bear interest
until repaid at the Default Rate and shall be added to the indebtedness secured by the Loan
Documents; provided, however, that the failure of Borrower to cure or remedy such default
within such five (5) Business Day period, or, in the case in which such cannot be kept or performed
within such five (5) Business Day period, provided Borrower has commenced to cure such default and
is diligently pursuing same to completion, such additional time as is needed to so complete, shall,
at the election of Administrative Agent, not constitute an Event of Default.



(h) Subject to all Legal Requirements, the terms of the Condominium Declaration and the
Condominium Rules, from and after the occurrence and during the continuance of an Event of Default,
Administrative Agent shall have the right to require that any members (or representatives) of the
Condominium Board or any other condominium or owners association created under the Condominium
Regime and any officers thereof, that are in each case elected (or appointed) by Borrower tender
their written resignation and Administrative Agent shall have the right to replace such members or
representatives with persons elected or appointed by Administrative Agent. Further, Borrower shall
cooperate with Administrative Agent in all respects to replace said members and officers elected or
appointed by Borrower with members and officers of Administrative Agent’s choosing.


 


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(i) Borrower shall, at the option of Administrative Agent exercisable at any time during the
existence of an Event of Default hereunder, pay to Administrative Agent at the time of each payment
of an installment of interest under the Notes, an additional amount sufficient to discharge the
obligations under clause (f) when they become due. The determination of the amount so payable and
of the fractional part thereof to be deposited with Administrative Agent, so that the aggregate of
such deposits shall be sufficient for this purpose, shall be made by Administrative Agent in its
sole discretion. Such amounts shall be held by Administrative Agent without interest and applied
to the payment of the obligations in respect of which such amounts were deposited or, at
Administrative Agent’s option, to the payment of said obligations in such order or priority as
Administrative Agent shall determine, on or before the respective dates on which the same or any of
them would become delinquent. If one month prior to the due date of any of the aforementioned
obligations the amounts then on deposit therefor shall be insufficient for the payment of such
obligation in full, Borrower shall, within five (5) Business Days after demand, deposit the amount
of the deficiency with Administrative Agent. Nothing herein contained shall be deemed to affect
any right or remedy of Administrative Agent under any provisions of this Agreement or any of the
Loan Documents or of any statute or rule of law to pay any such amount and to add the amount so
paid, together with interest at the Default Rate, to the Obligations secured by the Loan Documents.



5.1.28 Franchise Agreements.





As of the date hereof, no Franchise Agreement exists.
Borrower shall not enter into any Franchise Agreement without first obtaining Administrative
Agent’s prior written approval of such Franchise Agreement and the applicable Franchisor. As a
condition to Administrative Agent’s approval of any proposed Franchise Agreement, the applicable
Franchisor shall execute and deliver to Administrative Agent a franchisor “comfort letter” and
estoppel in form and substance acceptable to Administrative Agent. In the event that a Franchise
Agreement is entered into after the date hereof, Borrower shall, and shall cause Franchisor to, (i)
promptly perform and/or observe all of the covenants and agreements required to be performed and
observed by it under the Franchise Agreement and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (ii) promptly notify Administrative Agent of any
“default” under the Franchise Agreement of which it is aware; (iii) promptly deliver to
Administrative Agent a copy of each financial statement, business plan, capital expenditures plan,
property improvement plan and any other notice, report and estimate received by it under the
Franchise Agreement; and (iv) promptly enforce the performance and observance of all of the
covenants and agreements required to be performed and/or observed by the Franchisor under the
Franchise Agreement.



5.1.29 Compliance with Patriot Act. Borrower will use its good faith and commercially
reasonable efforts to comply with the Patriot Act and all applicable requirements of Governmental
Authorities having jurisdiction over Borrower and/or the Property, including those relating to
money laundering and terrorism. Administrative Agent shall have the right to audit Borrower’s
compliance with the Patriot Act and all applicable requirements of Governmental Authorities having
jurisdiction over Borrower and/or the Property, including those relating to money laundering and
terrorism. In the event that Borrower fails to comply with the
Patriot Act or any such requirements of Governmental Authorities, then Administrative Agent
may, at its option, cause Borrower to comply therewith and any and all costs and expenses incurred
by Administrative Agent in connection therewith shall be secured by the Security Instrument and the
other Loan Documents and shall be immediately due and payable.


 


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5.1.30 Remediation. Within thirty (30) days after the Closing Date, Borrower shall
undertake an engineering survey of the basement of the Property to identify any remediation
necessary with respect to the water damage therein. Upon completion of such engineering survey,
Borrower shall promptly (i) deliver such engineering survey to Administrative Agent and (ii)
perform, or cause to be performed, any remediation required in connection with such water damage;
provided, that Administrative Agent, in its sole discretion, may require that Borrower
deposit an amount equal to the funds required to remediate such water damage into the Required
Repairs Reserve Account prior to commencing any such remediation.



Section 5.2 Negative Covenants. From the Closing Date until payment and performance
in full of all Obligations or the earlier release of the Lien of this Agreement or the
Accommodation Security Documents in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Administrative Agent that it will not do, or
permit to be done, directly or indirectly, any of the following:



5.2.1 Incur Debt; Transfer Property. Incur, create or assume any Debt other than
Permitted Debt or Transfer all or any part of the Property or any interest therein, except as
permitted in the Loan Documents.



5.2.2 Encumbrances. Incur, create or assume or permit the incurrence, creation or
assumption of any Debt secured by an interest in Borrower and shall not Transfer or permit the
Transfer of any interest in Borrower except as permitted pursuant to Article VIII.



5.2.3 Engage in Different Business. Engage, directly or indirectly, in any business
other than that of entering into this Agreement and the other Loan Documents to which Borrower is a
party and the use, ownership, management, leasing, renovation, financing, development, operation
and maintenance of the Property and activities related thereto.



5.2.4 Make Advances. Make advances or make loans to any Person, or hold any
investments, except as expressly permitted pursuant to the terms of this Agreement or any other
Loan Document.



5.2.5 Partition. Partition or permit the partition of the Property, except as
permitted hereunder.


 


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5.2.6 Commingle. Commingle its assets with the assets of any of Borrower’s
Affiliates.




5.2.7 Guarantee Obligations. Guarantee any obligations of any Person.



5.2.8 Transfer Assets. Transfer any asset other than in the Ordinary Course of
Business or Transfer any interest in the Property except as may be permitted hereby or in the other
Loan Documents.



5.2.9 Amend Organizational Documents. Modify any of its organizational documents
without Administrative Agent’s consent, other than in connection with any Transfer permitted
pursuant to Article VIII or to reflect any change in capital accounts, contributions,
distributions, allocations or other provisions that do not and could not reasonably be expected to
have a Material Adverse Effect and provided that each such Person remain a Single Purpose
Entity.



5.2.10 Dissolve. Dissolve, wind-up, terminate, liquidate, merge with or consolidate
into another Person, except following or simultaneously with a repayment of the Obligations in
full.



5.2.11 Bankruptcy. (i) File a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings, (ii) dissolve, liquidate, consolidate, merge or sell all or
substantially all of Borrower’s assets other than in connection with the repayment of the
Obligations or (iii) file or solicit the filing of an involuntary bankruptcy petition against
Borrower, Manager, any Transaction Party or any Affiliate of any such Person without obtaining the
prior consent of all of the directors, managers, or members of Borrower, as applicable, including,
without limitation, the Independent Directors, Independent Managers, or Independent Members, as
applicable.



5.2.12 ERISA. Engage in any activity that would subject it to regulation under ERISA
or qualify it as an “employee benefit plan” (within the meaning of Section 3(3) of ERISA) to which
ERISA applies or permit any of Borrower’s assets to constitute plan assets within the meaning of 29
C.F.R. Section 2510.3-101.



5.2.13 Distributions. From and after the occurrence and during the continuance of an
Event of Default, make any distributions to or for the benefit of any of Borrower’s shareholders,
partners or members, as the case may be, or its or their Affiliates (provided, without limiting any
of the
terms of the Assignment of Management Agreement, Administrative Agent hereby agrees that
payment of any Management Fees or Manager Reimbursable Expenses is not deemed a “distribution”).


 


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5.2.14 Manager.



(A) Borrower covenants that the Property shall at all times be managed by an Acceptable
Manager pursuant to an Acceptable Management Agreement. As of the date hereof, Manager is the sole
manager of the Property.



(B) Notwithstanding any provision to the contrary contained herein or in the other Loan
Documents, Borrower shall not Modify or waive any right under the Management Agreement (or permit
any such action) without the prior written consent of Administrative Agent in its sole discretion,
except as provided in the next sentence. Administrative Agent shall not unreasonably withhold,
delay or condition its consent to non-material Modifications to the Management Agreement (and its
review shall be solely limited to determine whether such Modification is material) provided that
such Modification shall not affect the cash management procedures set forth in the Management
Agreement, decrease the cash flow of the Property, adversely affect the marketability of the
Property, change the definitions of “default” or “event of default,” change the definitions of
“operating expense” or words of similar meaning, change the definitions of “owner’s distribution”
or “owner’s equity” or “debt service amount” or words of similar meaning so as to reduce the
payments due Borrower thereunder, change the timing of remittances to Borrower thereunder, increase
or decrease reserve requirements, change the term of the Management Agreement or increase any
management fees payable under the Management Agreement.



(C) Borrower may enter into a new Management Agreement with an Acceptable Manager upon
delivery of an acceptable Non-Consolidation Opinion covering such replacement manager if such
Person (i) is not covered by the Non-Consolidation Opinion or an Additional Non-Consolidation
Opinion, and (ii) is an Affiliate of Borrower.



(D) Borrower hereby agrees that, subject to the terms of the Management Agreement and any
non-disturbance provisions of the Assignment of Management Agreement, Administrative Agent shall
have the right to terminate the Manager subsequent to (i) the occurrence of an Event of Default and
the acceleration of the Loan, (ii) a monetary default or any other material default by Manager
under the Management Agreement beyond any applicable notice and cure period, (iii) Manager becoming
insolvent or a debtor in any bankruptcy or insolvency proceeding, or (iv) Manager engaging in gross
negligence, fraud, willful misconduct or misappropriation of funds.



5.2.15 Franchise Fee and Management Fee. Borrower shall not, without the prior
written consent of Administrative Agent (which may be withheld in its sole and absolute discretion)
take or permit to be taken any action that would increase the percentage amount of the Management
Fee, or add a new type of fee
payable to Manager relating to the Property, including, without limitation, a Third Party
Franchise Fee.


 


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5.2.16 Operating Lease. Without the prior written consent of Administrative Agent,
Borrower shall not surrender, terminate or Modify the Operating Lease.



5.2.17 Modify Account Agreement. Without the prior written consent of Administrative
Agent, which shall not be unreasonably withheld, delayed or conditioned, Borrower shall not execute
any modification to the Account Agreement.



5.2.18 Zoning Reclassification. Without the prior written consent of Administrative
Agent, which shall not be unreasonably withheld, delayed or conditioned, Borrower shall not (a)
initiate or consent to any zoning reclassification of any portion of the Property, (b) seek any
variance under any existing zoning ordinance that would result in the use of the Property becoming
a non-conforming use under any zoning ordinance or any other applicable land use law, rule or
regulation, or (c) allow any portion of the Property to be used in any manner that could result in
the use of the Property becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation;



5.2.19 Debt Cancellation. Cancel or otherwise forgive or release any material claim
or debt owed to it by any Person, except for adequate consideration or in the Ordinary Course of
Business and except for termination of a Lease as permitted by Section 8.7;



5.2.20 Misapplication of Funds. Distribute any revenue from the Property or any
Proceeds in violation of the provisions of this Agreement, fail to remit amounts to the Collection
Accounts or Holding Account, as applicable, as required by Section 3.1, misappropriate any
security deposit or portion thereof or apply the proceeds of the Loan in violation of Section
2.1.4; or



5.2.21 Single-Purpose Entity. Fail to be a Single-Purpose Entity or take or suffer
any action or inaction the result of which would be to cause such Person to cease to be a
Single-Purpose Entity.


 


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5.2.22 Allocable Chain Expenses and Management Fees. Borrower’s obligation to pay (i) Allocable Chain Expenses and (ii) Management Fees under
the Management Agreement shall not be increased above 0% and 3%, respectively, of Hotel Revenues
for any calendar year unless Borrower delivers to Administrative Agent an Officer’s Certificate
which sets forth a Debt Yield Ratio of 11.00% or more. Notwithstanding the foregoing, in no event
shall the Allocable Chain Expenses payable by Borrower exceed 2.50% of Hotel Revenues for any
calendar year.



ARTICLE VI




Insurance; Casualty; Condemnation; Restoration




Section 6.1 Insurance Coverage Requirements. Borrower shall, at its sole cost and
expense, keep in full force and effect insurance coverage of the types and minimum limits as
follows during the term of this Agreement for the mutual benefit of Borrower and Administrative
Agent:



6.1.1 Property Insurance. Insurance insuring against loss or damage by standard
perils included within the classification “All Risks (or special form) of Physical Loss”.
Except as otherwise provided in Section 6.1.11, such insurance (i) shall be Replacement
Cost Coverage in an amount equal to the full replacement cost of the Property or such lesser
amounts approved by Administrative Agent in its reasonable discretion, and (ii) shall have
deductibles no greater than $250,000 for insurance required hereunder. The policies of insurance
carried in accordance with this paragraph shall be paid annually in advance, unless financed, and
shall contain an “Agreed Amount Endorsement”;



6.1.2 Liability Insurance. Commercial general liability insurance, including broad
form property damage, blanket contractual and personal injuries (including death resulting
therefrom) coverages and containing minimum limits per occurrence of $1,000,000 with a $2,000,000
general aggregate for any policy year and including liquor liability coverage. In addition, at
least $50,000,000 excess and/or umbrella liability insurance shall be obtained and maintained for
claims, including legal liability imposed upon Borrower and all related court costs and attorneys’
fees and disbursements;



6.1.3 Workers’ Compensation Insurance. Worker’s compensation insurance with respect
to all employees of Borrower as and to the extent required by any Governmental Authority or Legal
Requirement and employer’s liability coverage of at least $1,000,000 which is scheduled to the
excess and/or umbrella liability insurance as referenced in Section 6.1.2 above;


 


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6.1.4 Business Interruption Insurance. Business interruption insurance in an amount
sufficient to avoid any co-insurance penalty and equal to the greater of (A) the estimated gross
revenues (minus
estimated variable costs which will no longer be incurred due to the business interruption)
from the operation of the Property (including (x) the total payable under the Leases and all Rents
and (y) the total of all other amounts to be received by Borrower or third parties that are the
legal obligation of the Tenants), net of non-recurring expenses, for a period of up to the next
succeeding eighteen (18) months (subject to adjustment for each such 18 month period) plus
a twelve (12) month extended period of indemnity (if available at commercially reasonable rates),
or (B) the projected Operating Expenses (including Debt Service) for the maintenance and operation
of the Property for a period of up to the next succeeding eighteen (18) months plus a
twelve (12) month extended period of indemnity as the same may be reduced or increased from time to
time due to changes in such Operating Expenses. The amount of such insurance shall be (a)
increased from time to time as and when the Rents increase or the estimates of (or the actual)
gross revenue (minus estimated (or actual) variable costs which will no longer be incurred
due to the business interruption) increases or (b) decreased from time to time to the extent Rents
or the estimates of such gross revenue or variable costs decreases;



6.1.5 Builder’s All-Risk Insurance. During any period of repair or restoration,
builder’s “all risk” insurance in amounts equal to not less than the full insurable value of the
applicable Improvements and insuring against such risks (including fire and extended coverage and
collapse of the Improvements to agreed limits) as Administrative Agent may request, in form and
substance acceptable to Administrative Agent;



6.1.6 Boiler and Machinery Insurance. Insurance against loss or damage from explosion
of steam boilers, air conditioning equipment, high pressure piping, machinery and equipment,
pressure vessels or similar apparatus now or hereafter installed in any of the Improvements and
insurance against loss of occupancy or use arising from any breakdown, in such amounts as are
generally available at reasonable premiums and are generally required by institutional lenders for
properties comparable to the Property;



6.1.7 Flood Insurance. Flood insurance if any part of any structure or improvement
comprising the Property is located in an area identified by the Federal Emergency Management Agency
as an area federally designated a “100 year flood plain” and (a) flood insurance is generally
available at reasonable premiums and in such amount as generally required by institutional lenders
for similar properties or (b) if not so available from a private carrier, from the federal
government at commercially reasonable premiums to the extent available;


 


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6.1.8 Terrorism Insurance. Provided that insurance coverage (“Terrorism
Insurance”) relating to the acts of terrorism is either (i) commercially available, or (ii)
commonly obtained by owners of commercial properties in the same geographic area as the Property
and which are similar to the Property, Borrower shall be required to carry Terrorism Insurance
throughout the term of the Loan (including any extension terms) on a per occurrence basis in an
amount equal to the Total
Insurable Value (the “Required Terrorism Amount”), with a maximum deductible of two
percent (2%) of the Required Terrorism Amount, unless a greater deductible is approved by
Administrative Agent in writing in its reasonable discretion); provided, however;
if Borrower maintains a Terrorism Insurance deductible of less than two percent (2%) of the
Required Terrorism Amount, the Required Terrorism Amount may be reduced by the difference between
(i) two percent (2%) of the Required Terrorism Amount and (ii) the actual amount of the Terrorism
Insurance deductible. Notwithstanding the foregoing, Borrower shall at all times maintain
Terrorism Insurance in an amount not less than that which can be purchased for a sum equal to
$500,000, provided that Borrower shall not be obligated to purchase more than the Required
Terrorism Amount. Administrative Agent agrees that Terrorism Insurance coverage may be provided
under a blanket policy that is acceptable to Administrative Agent and that such coverage may cover
foreign acts of terrorism and domestic acts of terrorism for the Required Terrorism Amount.



6.1.9 Demolition and Increased Construction Costs. Coverage to compensate for the
undamaged portion of the full replacement cost of the Property plus coverage to compensate
for the cost of demolition and increased cost of construction in an amount no less than
$25,000,000;



6.1.10 Law and Ordinance Insurance. Law and ordinance insurance coverage in an amount
no less than $25,000,000; and



6.1.11 Other Insurance. If the Property is in an area prone to hurricanes and
windstorms, as reasonably determined by Administrative Agent, Borrower shall provide windstorm
insurance (including coverage for wind driven water), including business interruption coverage for
at least eighteen (18) months. Within thirty (30) days after the date hereof, Borrower shall cause
Manager to procure a Fidelity Bond in an amount equal to not less than $2,000,000 with a maximum
deductible of $250,000.



6.1.12 Ratings of Insurers. Borrower shall maintain insurance coverage with one or
more domestic primary insurers reasonably acceptable to Administrative Agent, having
claims-paying-ability and financial strength ratings by S&P of not less than “A-” (and its
equivalent by the other Rating Agencies); provided, however, such rating
requirements will deemed to be satisfied if (A) the required insurance is provided by a syndicate
of five (5) or more insurers with (i) at least sixty percent (60%) of the total coverage under such
policies provided by carriers having claims-paying-ability and financial strength ratings by S&P of
not less than “A-” (and its equivalent by the other Rating Agencies), (ii) at least thirty percent
(30%) of the total coverage under such policies provided by carriers having claims-paying-ability
and financial strength ratings by S&P of not less than “BBB+” (and its equivalent by the other
Rating Agencies) (without duplication with the carriers having ratings by S&P of not less than “A-”
(and its equivalent by


 


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the other Rating Agencies)), and (iii) the remaining ten percent (10%) of
the total coverage under policies provided by carriers having an AM Best Rating of at least “A-VIII”
(without duplication with the carriers having ratings by S&P of not less than “A-” or “BBB+” (and
their equivalents by the other Rating Agencies)); or (B) the required insurance is provided by a
syndicate of four (4) or fewer insurers with (i) at least seventy-five percent (75%) of the total
coverage under such policies provided by carriers having claims-paying-ability and financial
strength ratings by S&P of not less than “A-” (and its equivalent by the other Rating Agencies),
(ii) at least fifteen percent (15%) of the total coverage under such policies provided by carriers
having claims-paying-ability and financial strength ratings by S&P of not less than “BBB+” (and its
equivalent by the other Rating Agencies) (without duplication with the carriers having ratings by
S&P of not less than “A-” (and its equivalent by the other Rating Agencies)), and (iii) the
remaining ten percent (10%)of the total coverage under policies under such policies provided by
carriers having an AM Best Rating of at least “A-VIII (without duplication with the carriers having
ratings by S&P of not less than “A-” or “BBB+” (and their equivalents by the other Rating
Agencies)). All insurers providing insurance required by this Agreement shall be authorized to
issue insurance in the applicable State, however, non-admitted issuers may be utilized if they meet
or exceed the rating requirements of this clause.



6.1.13 Form of Insurance Policies; Endorsements. The insurance policies (i) shall
name Administrative Agent and its successors and/or assigns as their interest may appear as an
additional insured or as a loss payee (except that in the case of general liability insurance,
Administrative Agent shall be named an additional insured and not a loss payee); (ii) shall contain
a Non-Contributory Standard Lender Clause and, except with respect to general liability insurance
and workers’ compensation insurance, a Lender’s Loss Payable Endorsement, or their equivalents;
(iii) shall include effective waivers by the insurer of all claims for insurance premiums against
all loss payees, additional insureds and named insureds (other than Borrower) and all rights of
subrogation against any loss payee, additional insured or named insured; (iv) except as otherwise
provided above, shall be subject to a deductible, if any, not greater in any material respect than
the deductible for such coverage on the date hereof; (v) shall contain such provisions as
Administrative Agent deems reasonably necessary or desirable to protect its interest, including
endorsements providing that neither Borrower, Administrative Agent nor any other party shall be a
Contributor-insurer (except deductibles) under said Policies and that no material modification,
reduction, cancellation or termination in amount of, or material change (other than an increase)
in, coverage of any of the Policies shall be effective until at least thirty (30) days after
receipt by each named insured, additional insured and loss payee of written notice thereof or ten
(10) days after receipt of such notice with respect to nonpayment of premium; (vi) shall permit
Administrative Agent to pay the premiums and continue any insurance upon failure of Borrower to pay
premiums within a period of time that could result in policy cancellation, upon the insolvency of
Borrower or through foreclosure or other transfer of title to the Property (it being understood
that Borrower’s rights to coverage under such policies may not be assignable without the consent of
the insurer); and (vii) shall provide that the insurance shall not be impaired or invalidated by
virtue of (A) any act, failure to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by Borrower, Administrative Agent or any other named insured,
additional insured or loss payee, except for the willful misconduct of Administrative Agent
knowingly in violation of the conditions of such policy, (B) the occupation, use, operation or
maintenance of the Property for purposes more hazardous than permitted by the terms of the Policy,
(C) any
foreclosure or other proceeding or notice of sale relating to the Property, or (D) any change
in the possession of the Property without a change in the identity of the holder of actual title to
the Property (provided that with respect to items (C) and (D), any notice requirements of
the applicable Policies are satisfied). Notwithstanding the foregoing, for purposes hereof,
Administrative Agent hereby approves the existing insurance policies as of the Closing Date and any
renewals thereof with the same insurance ratings and terms.


 


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6.1.14 Premiums; Certificates; Renewals.



(A) Borrower shall pay or cause to be paid the premiums for such Policies (the “Insurance
Premiums”) as the same become due and payable and shall furnish to Administrative Agent upon
request the receipts for the payment of the Insurance Premiums or other evidence of such payment
reasonably satisfactory to Administrative Agent (provided, however, that Borrower
is not required to furnish such evidence of payment to Administrative Agent if such Insurance
Premiums are to be paid by Administrative Agent pursuant to the terms of this Agreement). Within
thirty (30) days after request by Administrative Agent, Borrower shall obtain such increases in the
amounts of coverage required hereunder as may be reasonably requested in writing by Administrative
Agent (except with respect to the Terrorism Insurance required hereunder), taking into
consideration changes in liability laws, changes in prudent customs and practices, and the like for
hotels similar to the Property. In the event Borrower satisfies the requirements under this
Section 6.1.14 through the use of a Policy covering properties in addition to the Property,
then (unless such policy is provided in substantially the same manner as it is as of the date
hereof), Borrower shall provide evidence satisfactory to Administrative Agent that the Insurance
Premiums for the Property are separately allocated under such Policy to the Property and that
payment of such allocated amount (A) shall maintain the effectiveness of such Policy as to the
Property and (B) shall otherwise provide the same protection as would a separate policy that
complies with the terms of this Agreement as to the Property, notwithstanding the failure of
payment of any other portion of the insurance premiums. If no such allocation is available,
Administrative Agent shall have the right to increase the amount required to be deposited into the
Insurance Reserve Account in an amount sufficient to purchase a nonblanket Policy covering the
Property from insurance companies which qualify under this Agreement.



(B) Borrower shall deliver to Administrative Agent on or prior to the Closing Date
certificates setting forth in reasonable detail the material terms (including any applicable notice
requirements) of all Policies from the respective insurance companies (or their authorized agents)
that issued the Policies, including that such Policies may not be cancelled or modified in any
material respect without thirty (30) days’ prior notice to Administrative Agent, or ten (10) days’
notice with respect to nonpayment of premium. Borrower shall deliver to Administrative Agent,
concurrently with each change in any Policy, a certificate with respect to such changed Policy
certified by the insurance company issuing that Policy, in substantially the same form and
containing substantially the same information as the certificates required to be delivered by
Borrower pursuant to the first sentence of this clause (i) and stating that all premiums then due
thereon have been paid to the applicable insurers and that the same are in full force and effect
(or
if such certificate and/or other information described in this clause (ii) shall not be
obtainable by Borrower, Borrower may deliver an Officer’s Certificate to such effect in lieu
thereof).


 


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(C) Within one (1) Business Day prior to the expiration, termination or cancellation of any
Policy, Borrower shall renew such policy or obtain a replacement policy or policies (or a binding
commitment for such replacement policy or policies), which shall be effective no later than the
date of the expiration, termination or cancellation of the previous policy, and shall deliver to
Administrative Agent a certificate in respect of such policy or policies (A) containing the same
information as the certificates required to be delivered by Borrower pursuant to clause (b) above,
or a copy of the binding commitment for such policy or policies and (B) confirming that such policy
complies with all requirements hereof.



(D) If Borrower does not furnish to Administrative Agent the certificates as required under
clause (C) above, upon five (5) Business Days prior notice to the risk management contact for
Borrower, Administrative Agent may procure, but shall not be obligated to procure, such replacement
policy or policies and pay the Insurance Premiums therefor, and Borrower agrees to reimburse
Administrative Agent for the cost of such Insurance Premiums promptly on demand. Notwithstanding
the above, Administrative Agent, in its sole discretion and at its own expense, for the five (5)
day specified cure period, may obtain such replacement policy or policies if Borrower does not
timely furnish to Administrative Agent the certificates of insurance as required under clause (C)
above.



(E) Concurrently, and upon request from the Administrative Agent, with the delivery of each
replacement policy or a binding commitment for the same, Borrower shall deliver to Administrative
Agent a report or attestation from a duly licensed or authorized insurance broker or from the
insurer, setting forth the particulars as to all insurance obtained by Borrower pursuant to this
Section 6.1 and then in effect and stating that all Insurance Premiums that are currently
due have been paid to the applicable insurers, that such insurance policies are in full force and
effect and that, in the opinion of such insurance broker or insurer, such insurance otherwise
complies with the requirements of this Section 6.1 (or if such report shall not be
available after Borrower shall have used reasonable efforts to provide the same, Borrower will
deliver to Administrative Agent an Officer’s Certificate containing the information to be provided
in such report).



6.1.15 Separate Insurance. Borrower shall not take out separate insurance
contributing in the event of loss with that required to be maintained pursuant to this Section
6.1 unless such insurance complies with this Section 6.1.



 


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6.1.16 Blanket Policies. The insurance coverage required under this Section
6.1 may be effected under a blanket policy or policies covering the Property and other
properties and assets not constituting a part of the Property; provided that any such
blanket policy shall specify, except in the case of public liability insurance, the portion of the
total coverage of such policy that is allocated to the Property, and any sublimits in such blanket
policy applicable to the Property, which amounts

shall not be less than the amounts required pursuant to this Section 6.1 and which
shall in any case comply in all other respects with the requirements of this Section 6.1.
Upon Administrative Agent’s request, Borrower shall deliver to Administrative Agent an Officer’s
Certificate setting forth (i) the number of properties covered by such policy, (ii) the location by
city (if available, otherwise, county) and state of the properties, (iii) the average square
footage of the properties (or the aggregate square footage), (iv) a brief description of the
typical construction type included in the blanket policy and (v) such other information as
Administrative Agent may reasonably request.



Section 6.2 Condemnation and Insurance Proceeds.



6.2.1 Right to Adjust.



(A) If the Property is damaged or destroyed, in whole or in part, by a Casualty, Borrower
shall give prompt written notice thereof to Administrative Agent, generally describing the nature
and extent of such Casualty. Following the occurrence of a Casualty, Borrower, regardless of
whether proceeds are available, shall in a reasonably prompt manner proceed to restore, repair,
replace or rebuild the Property to the extent practicable to be of at least equal value and of
substantially the same character as prior to the Casualty, all in accordance with the terms hereof
applicable to Alterations.



(B) Subject to clause (E) below, in the event of a Casualty where the loss does not exceed the
Threshold Amount, Borrower may settle and adjust such claim; provided that such adjustment
is carried out in a competent and timely manner. In such case, Borrower is hereby authorized to
collect and receive for Administrative Agent any Proceeds.



(C) Subject to clause (E) below, in the event of a Casualty where the loss exceeds the
Threshold Amount, Borrower may settle and adjust such claim only with the consent of Administrative
Agent (which consent shall not be unreasonably withheld, delayed or conditioned) and Administrative
Agent shall have the opportunity to participate, at Borrower’s cost, in any such adjustments.



(D) Except as provided in clause (B) and (E) hereof, the proceeds of any Policy shall be due
and payable solely to Administrative Agent and held and applied in accordance with the terms hereof
(or, if mistakenly paid to Borrower, shall be held in trust by Borrower for the benefit of
Administrative Agent and shall be paid over to Administrative Agent by Borrower within two (2)
Business Days of receipt).



(E) Notwithstanding any other provisions in this Section 6.2.1 or otherwise in this
Agreement or the Loan Documents, Administrative Agent shall have the sole authority to adjust any
claim with respect to a Casualty and to collect all Proceeds if an Event of Default shall have
occurred and is continuing.


 


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6.2.2 Right of Borrower to Apply to Restoration. In the event of (a) a Casualty that does not constitute a Material Casualty, or (b) a
Condemnation that does not constitute a Material Condemnation, Administrative Agent shall permit
the application of the Proceeds (after reimbursement of any expenses incurred by Administrative
Agent) to reimburse or pay Borrower for the cost of restoring, repairing, replacing or rebuilding
or otherwise curing title defects at the Property (the “Restoration”), in the manner
required hereby, provided and on the condition that (1) no Event of Default shall have occurred and
be continuing and (2) in the reasonable good faith judgment of Administrative Agent:




(i) the Property can, with diligent restoration, be returned to a condition at least
equal to the condition that existed prior to the Casualty or Condemnation,




(ii) the Property, after such Restoration and stabilization, will adequately secure the
Obligations,




(iii) the Restoration can be completed by the earliest to occur of:




(A) the 120th day prior to the Maturity Date, and




(B) with respect to a Casualty, the expiration of the payment period on the
rental loss or business interruption insurance coverage in respect of such Casualty;
and




(iv) after receiving evidence satisfactory to Administrative Agent, during the period
of the Restoration, the sum of (A) income derived from the Property, plus (B)
projected proceeds of rental loss insurance or business interruption insurance, if any,
payable together with such other monies as Borrower may irrevocably make available for the
Restoration, will equal or exceed 100% of the sum of (x) Operating Expenses for such period
and (y) the Debt Service for such period.



Notwithstanding the foregoing, if any of the conditions set forth in sub-clauses (1) and (2)
of the proviso in this Section 6.2.2 is not satisfied within 90 days of such Casualty or
Condemnation, whichever the case may be, then, unless Administrative Agent shall otherwise elect,
at its sole option, the Proceeds shall be applied in the following order of priority: (A) first,
to prepay the principal of the Loan without the payment of any Prepayment Premium; (B) second, to
pay the amount of (1) all accrued and unpaid interest in respect of the Principal Amount of the
Indebtedness so prepaid through the date which is the final day of the Interest Period in which
such prepayment is made (including, if an Event of Default has occurred and is then continuing,
interest owed at the Default Rate), and (2) all other sums (excluding any Prepayment Premium) then
due and owing under the Loan Documents and (C) third, to reimburse Administrative Agent and Lenders
for any fees and expenses of Administrative Agent and Lenders incurred in connection therewith (it
being agreed that, upon satisfaction in full of the entitlements under clauses (A), (B) and (C) of
this sentence, Borrower shall be entitled to receive a release of the Lien of the Security
Instrument and the other Loan Documents with respect to the Property in accordance with and subject
to the terms of Section 2.3.3 hereof and any surplus Proceeds shall be paid over to
Borrower). Notwithstanding the foregoing, or anything else to the contrary contained herein, all
Proceeds with respect to the insurance determined pursuant to
Section 6.1.4 shall be deposited directly into the Collection Account and shall be
disbursed in accordance with Article III.



 


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6.2.3 Material Casualty or Condemnation and Administrative Agent’s Right to Apply
Proceeds. In the event of a Material Casualty or a Material Condemnation, Administrative Agent
shall permit the application of the Proceeds (after reimbursement of any expenses incurred by
Administrative Agent) to reimburse or pay Borrower for the cost of the Restoration, in the manner
required hereby, provided and on the condition that (1) no Event of Default shall have occurred and
be continuing and (2) in the reasonable good faith judgment of Administrative Agent:




(i) the Property can, with diligent restoration, be returned to a condition at least
equal to the condition that existed prior to the Material Casualty or the Material
Condemnation,




(ii) the Property, after such Restoration and stabilization, will adequately secure the
Obligations,




(iii) the Restoration can be completed by the earliest to occur of:




(A) the 60th day prior to the Maturity Date, and




(B) with respect to a Material Casualty, the expiration of the payment period
on the rental loss or business interruption insurance coverage in respect of such
Material Casualty;




(iv) (1) with respect to a Material Casualty, less than twenty-five percent (25%) of
the total floor area of the Improvements on the Property has been damaged, destroyed or
rendered unusable as a result of such Material Casualty or (2) with respect to a Material
Condemnation, less than ten percent (10%) of the land constituting the Property is taken,
and such land is located along the perimeter or periphery of the Property, and no portion of
the Improvements is located on such land;




(v) Borrower shall commence the Restoration as soon as reasonably practicable (but in
no event later than ninety (90) days after such Material Casualty or Material Condemnation,
whichever the case may be, occurs) and shall diligently pursue the same to satisfactory
completion;




(vi) any operating deficits, including all scheduled payments of principal and interest
under the Loan, which will be incurred with respect to the Property as a result of the
occurrence of any such Material Casualty or Material Condemnation, whichever the case may
be, will be covered out of (1) the Proceeds, (2) the insurance coverage referred to in
Section 6.2.3(iii)(B), if applicable, or (3) by other funds of Borrower;




(vii) the Property and the use thereof after the Restoration will be in compliance with
and permitted under all applicable Legal Requirements;


 


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(viii) the Restoration shall be done and completed by Borrower in an expeditious and
diligent fashion and in compliance with all applicable Legal Requirements;




(ix) such Casualty or Condemnation, as applicable, does not result in the loss of
access to the Property or the related Improvements;




(x) such Casualty or Condemnation, as applicable, is for a loss in an aggregate amount
equal to or less than $100,000,000;




(xi) pursuant to an Appraisal of the Property after such Material Casualty or Material
Condemnation, whichever the case may be, the “as completed” appraised value of the Property
following Restoration pursuant to such Appraisal shall be at least equal to or greater than
two times the Principal Amount at such time;




(xii) Borrower shall deliver, or cause to be delivered, to Administrative Agent a
signed detailed budget approved in writing by Borrower’s architect or engineer stating the
entire cost of completing the Restoration, which budget shall be acceptable to
Administrative Agent;




(xiii) the Proceeds together with any cash or cash equivalent deposited by Borrower
with Administrative Agent are sufficient in Administrative Agent’s discretion to cover the
cost of the Restoration; and




(xiv) after receiving evidence satisfactory to Administrative Agent, during the period
of the Restoration, the sum of (A) income derived from the Property, plus (B)
projected proceeds of rental loss insurance or business interruption insurance, if any,
payable together with such other monies as Borrower may irrevocably make available for the
Restoration, will equal or exceed 100% of the sum of (x) Operating Expenses for such period
and (y) the Debt Service for such period.



Notwithstanding the foregoing, if any of the conditions set forth in sub-clauses (1) and (2)
of the proviso in this Section 6.2.3 is not satisfied within 90 days of such Material
Casualty or Material Condemnation, whichever the case may be, then, unless Administrative Agent
shall otherwise elect, at its sole option, the Proceeds shall be applied in the following order of
priority: (A) first, to prepay the principal of the Loan without the payment of any Prepayment
Premium; (B) second, to pay the amount of (1) all accrued and unpaid interest in respect of the
Principal Amount of the Indebtedness so prepaid through the date which is the final day of the
Interest Period in which such prepayment is made (including, if an Event of Default has occurred
and is then continuing, interest owed at the Default Rate), and (2) all other sums (excluding any
Prepayment Premium) then due and owing under the Loan Documents and (C) third, to reimburse
Administrative Agent and Lenders for any fees and expenses of Administrative Agent and Lenders
incurred in connection therewith (it being agreed that, upon satisfaction in full of the
entitlements under clauses (A), (B) and (C) of this sentence, Borrower shall be entitled to receive
a release of the Lien of the Security Instrument and the other Loan Documents with respect to the
Property in accordance with and subject to the terms of Section 2.3.3 hereof and any
surplus Proceeds


 


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shall be paid over to Borrower). Notwithstanding anything to the contrary contained herein, in the event of a Material Casualty or a Material
Condemnation, where Borrower cannot restore, repair, replace or rebuild the Property to be of at
least substantially equal value and of substantially the same character as prior to the Material
Casualty or Material Condemnation or title defect because the Property is a legally non-conforming
use or as a result of any other Legal Requirement, Borrower hereby agrees that Administrative Agent
may apply the Proceeds payable in connection therewith in accordance with clauses (A), (B) and (C).



6.2.4 Manner of Restoration and Reimbursement. If Borrower is entitled pursuant to
Sections 6.2.2 or 6.2.3 above to reimbursement out of Proceeds (and the conditions
specified therein shall have been satisfied), such Proceeds shall be disbursed on a monthly basis
upon Administrative Agent being furnished with (i) such architect’s certificates, waivers of lien,
contractor’s sworn statements, title insurance endorsements, bonds, plats of survey and such other
evidences of cost, payment and performance as Administrative Agent may reasonably require and
approve, and (ii) all plans and specifications for such Restoration, such plans and specifications
to be approved by Administrative Agent prior to commencement of any work (such approval not to be
unreasonably withheld, delayed or conditioned). In addition, no payment made prior to the Final
Completion of the Restoration (excluding punch-list items) shall exceed ninety percent (90%) of the
aggregate value of the work performed from time to time; funds other than Proceeds shall be
disbursed prior to disbursement of such Proceeds; and at all times, the undisbursed balance of such
Proceeds remaining in the hands of Administrative Agent, together with funds deposited for that
purpose or irrevocably committed to the satisfaction of Administrative Agent by or on behalf of
Borrower for that purpose, shall be at least sufficient in the reasonable judgment of
Administrative Agent to pay for the cost of completion of the Restoration, free and clear of all
Liens or claims for Lien. Prior to any disbursement, Administrative Agent shall have received
evidence satisfactory to Administrative Agent in its good faith judgment of the estimated cost of
completion of the Restoration (such estimate to be made by Borrower’s architect or contractor and
approved by Administrative Agent), and Borrower shall have deposited with Administrative Agent
Eligible Collateral in an amount equal to the excess (if any) of such estimated cost of completion
over the net Proceeds.




6.2.5 Condemnation.



(A) Borrower shall promptly give Administrative Agent written notice of the actual
commencement or written threat of commencement of any Condemnation and shall deliver to
Administrative Agent copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Borrower, regardless of whether Proceeds are available,
shall promptly proceed to restore, repair, replace or rebuild the same to the extent practicable to
be of at least equal value and of substantially the same character as prior to such Condemnation,
all to be effected in accordance with the terms hereof applicable to Alterations.


 


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(B) Administrative Agent is hereby irrevocably appointed as Borrower’s attorney-in-fact,
coupled with an interest, with exclusive power to collect, receive and retain any Proceeds in
respect of a Condemnation and to make any compromise or settlement in connection with such
Condemnation, subject to the provisions of this Section. Provided no Event of Default has occurred
and is continuing, (x) in the event of a Condemnation where the loss does not exceed the Threshold
Amount, Borrower may settle and compromise such Proceeds; provided that the same is
effected in a competent and timely manner, and (y) in the event of a Condemnation, where the loss
exceeds the Threshold Amount, Borrower may settle and compromise the Proceeds only with the consent
of Administrative Agent (which consent shall not be unreasonably withheld, delayed or conditioned)
and Administrative Agent shall have the opportunity to participate, at Borrower’s sole cost and
expense, in any litigation and settlement discussions in respect thereof. Notwithstanding any
Condemnation by any public or quasi-public authority (including any transfer made in lieu of or in
anticipation of such a Condemnation), Borrower shall continue to pay the Indebtedness at the time
and in the manner provided for in the Notes, this Agreement and the other Loan Documents, and the
Indebtedness shall not be reduced unless and until any Proceeds shall have been actually received
and applied by Administrative Agent to discharge the Indebtedness, pay required interest and pay
any other required amounts, in each case, pursuant to the terms of Sections 6.2.2 or
6.2.3 above. Administrative Agent shall not be limited to the interest paid on the
Proceeds by the condemning authority but shall be entitled to receive out of the Proceeds interest
at the rate or rates provided in the Notes and this Agreement. Borrower shall cause any Proceeds
that are payable to Borrower to be paid directly to Administrative Agent to be held and applied in
accordance with the terms hereof.



ARTICLE VII




Impositions, Other Charges, Liens and Other Items




Section 7.1 Impositions and Other Charges. To the extent Manager does not reserve
for or otherwise set aside and pay Impositions and Other Charges directly, and subject to the third
sentence of this Section 7.1, Borrower shall pay all Impositions now or hereafter levied or
assessed or imposed against the Property or any part thereof prior to the imposition of any
interest, charges or expenses for the non-payment thereof and shall pay all Other Charges on or
before the date they are due. Subject to Borrower’s right of contest set forth in Section
7.3, as set forth in the next two sentences and provided that there are sufficient
funds available in the Tax Reserve Account, Administrative Agent, on behalf of Borrower, shall pay
all Impositions and Other Charges, prior to the date such Impositions or Other Charges shall become
delinquent or late charges may be imposed thereon, directly to the applicable taxing authority with
respect thereto. Administrative Agent shall, or Administrative Agent shall direct the Cash
Management Bank to, pay to the taxing authority such amounts to the extent funds in the Tax Reserve
Account are sufficient to pay such Impositions. Nothing contained in this Agreement or the
Security Instrument shall be construed to require Borrower to pay any tax, assessment, levy or
charge imposed on Administrative Agent in the nature of a franchise, capital levy, estate,
inheritance, succession, income or net revenue tax.


 


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Section 7.2 No Liens. Subject to its right of contest set forth in Section 7.3, Borrower shall at all
times keep, or cause to be kept, the Property free from all Liens (other than Permitted
Encumbrances) and shall pay when due and payable (or bond over) all claims and demands of
mechanics, materialmen, laborers and others which, if unpaid, might result in or permit the
creation of a Lien on the Property or any portion thereof and shall in any event cause the prompt,
full and unconditional discharge of all Liens imposed on or against the Property or any portion
thereof within forty-five (45) days after receiving written notice of the filing (whether from
Administrative Agent, the lien holder or any other Person) thereof. Borrower shall do or cause to
be done, at the sole cost of Borrower, everything reasonably necessary to fully preserve the first
priority of the Lien of the Security Instrument against the Property, subject to Permitted
Encumbrances. Upon the occurrence and during the continuance of an Event of Default, with respect
to Borrower’s Obligations as set forth in this Article VII, Administrative Agent may (but
shall not be obligated to) make such payment or discharge such Lien, and Borrower shall reimburse
Administrative Agent within three (3) Business Days following demand for all such advances pursuant
to Section 19.14 (together with interest thereon at the Default Rate).



Section 7.3 Contest. Nothing contained herein shall be deemed to require Borrower to
pay, or cause to be paid, any Imposition or to satisfy any Lien, or to comply with any Legal
Requirement or Insurance Requirement, so long as Borrower is in good faith diligently contesting
(including, without limitation, by instituting appropriate legal proceedings, when necessary) the
validity, amount or application thereof, provided that in each case, at the time of the
commencement of any such action or contest, and during the pendency of such action or contest (i)
Borrower shall keep Administrative Agent informed of the status of such contest at reasonable
intervals, (ii) if Borrower is not providing security as provided in clause (iii) below, adequate
reserves with respect thereto are maintained on Borrower’s books in accordance with GAAP or in the
Tax Reserve Account or Insurance Reserve Account, as applicable, (iii) such contest is maintained
and prosecuted continuously and with diligence or the Imposition or Lien is fully bonded to the
satisfaction of Administrative Agent, (iv) in the case of any Insurance Requirement, the failure of
Borrower to comply therewith shall not impair the validity of any insurance required to be
maintained by Borrower under Section 6.1 or the right to full payment of any claims
thereunder, and (v) in the case of Impositions and Liens which are not bonded in excess of $500,000
individually, or in the aggregate, during such contest, Borrower, shall deposit with or deliver to
Administrative Agent Cash and Cash Equivalents in an amount equal to 125% of (A) the amount of
Borrower’s obligations being contested plus (B) any additional interest, charge, or penalty
arising from such contest, or, if the obligations being contested are less than $500,000, may, in
lieu of delivering such Cash or Cash Equivalents, deliver a guaranty of the payment of such amounts
from the Guarantor in a form reasonably satisfactory to Administrative Agent. Notwithstanding the
foregoing, the creation of any such reserves or the furnishing of any bond or other security,
Borrower promptly shall comply with any contested Legal Requirement or Insurance Requirement or
shall pay any contested Imposition or Lien, and compliance therewith or payment thereof shall not
be deferred, if, at any time the Property or any portion thereof shall be, in Administrative
Agent’s reasonable judgment, in imminent danger of being forfeited or lost or Administrative Agent
is likely to be subject to civil or criminal damages as a result thereof. If such action or
proceeding is terminated or discontinued adversely to Borrower, Borrower shall promptly deliver to
Administrative Agent reasonable evidence of Borrower’s compliance with
such contested Imposition, Lien, Legal Requirements or Insurance Requirements, as the case may
be.


 


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ARTICLE VIII




Transfers and Leases




Section 8.1 Restrictions on Transfers. Unless such action is permitted by the
subsequent provisions of this Article VIII, Borrower shall not and shall not permit any
Person to, without Administrative Agent’s prior written consent, in its absolute and sole
discretion, to the Transfer or other matter in question, (i) Transfer any direct or indirect
ownership interest in the Property, Borrower or Guarantor, (ii) permit or suffer any owner of a
direct or indirect ownership interest in the Property, Borrower or Guarantor, to Transfer any such
ownership interest, whether by transfer of stock or other ownership interest in any entity or
otherwise or (iii) mortgage, hypothecate or otherwise encumber or grant a security interest in all
or any part of the Property or any direct or indirect ownership interests in all or any part of the
Property, Borrower or Guarantor. Notwithstanding any provision in this Article VIII to the
contrary, nothing contained in this Article VIII shall be deemed to restrict or otherwise
interfere with (i) the ability of the holders of direct or indirect ownership interests in
Guarantor to Transfer such interests, whether in connection with an initial public offering of
shares in Guarantor or any Person owning direct or indirect ownership interests therein, Transfers
by direct or indirect investors in Guarantor or otherwise or (ii) the issuance, conversion,
exchange, redemption or other Transfer of direct or indirect ownership interests in (x) Guarantor
or (y) a Joint Venture Partner or any Person owning direct or indirect ownership interests therein.



Section 8.2 Sale of Equipment. Borrower may Transfer or dispose of Equipment which
is being replaced or which is no longer necessary in connection with the operation of the Property
free from the Lien of the Security Instrument; provided that such Transfer or disposal is
in the Ordinary Course of Business, will not have a Material Adverse Effect on the value of the
Property taken as a whole, will not materially impair the utility of the Property, and will not
result in a reduction or abatement of, or right of offset against, the Rents payable under any
Lease, in either case as a result thereof, and provided further that any new
Equipment acquired by Borrower (and not so disposed of) shall be subject to the Lien of the
Security Instrument. Administrative Agent shall, from time to time, upon receipt of an Officer’s
Certificate requesting the same and confirming satisfaction of the conditions set forth above,
execute a written instrument in form reasonably satisfactory to Administrative Agent to confirm
that such Equipment which is to be, or has been, sold or disposed of is free from the Lien of the
Security Instrument.


 


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Section 8.3 Immaterial Transfers and Easements, etc.



(a) Borrower may, without the
consent of Administrative Agent, (i) make immaterial Transfers of portions of the Property to
Governmental Authorities for dedication or public use (subject to the provisions of Section
6.2), and (ii) grant easements, restrictions,
covenants, reservations and rights of way in the Ordinary Course of Business for access, water
and sewer lines, telephone and telegraph lines, electric lines or other utilities or for other
similar purposes, provided that no such Transfer, conveyance or encumbrance set forth in
the foregoing clauses (i) and (ii) shall materially impair the utility and operation of the
Property or materially reduce the value of the Property or otherwise result in a Material Adverse
Effect. In connection with any Transfer permitted pursuant to this Section 8.3,
Administrative Agent shall execute and deliver any instrument reasonably necessary or appropriate,
in the case of the Transfers referred to in clause (i) above, to release the portion of the
Property affected by such Condemnation or such Transfer from the Lien of the Security Instrument
or, in the case of clause (ii) above, to subordinate the Lien of the Security Instrument to such
easements, restrictions, covenants, reservations and rights of way or other similar grants upon
receipt by Administrative Agent of:




(A) thirty (30) days prior written notice thereof;




(B) a copy of the instrument or instruments of Transfer;




(C) an Officer’s Certificate stating (x) with respect to any Transfer, the
consideration, if any, being paid for the Transfer and (y) that such Transfer does not
materially impair the utility and operation of the Property, materially reduce the value of
the Property or have a Material Adverse Effect; and




(D) reimbursement of all of Administrative Agent’s reasonable costs and expenses
incurred in connection with such Transfer.




(b) Notwithstanding anything to the contrary contained in the Loan Documents, the
following Transfers shall be permitted hereunder:


(i) a Lease, or any other Transfer of the Property or any portion
thereof, entered into in accordance with the Loan Documents; and



(ii) Transfers in connection with a Permitted Encumbrance.



Section 8.4 Transfers of Interests in Borrower. Each holder of any direct or
indirect ownership interest in Borrower shall have the right to transfer (but not pledge,
hypothecate or encumber) its direct or indirect ownership interest in Borrower to any Person who is
not a Disqualified Transferee without Administrative Agent’s consent if Section 8.6 is
complied with and, after giving effect to such transfer:




(a) the Property will be directly owned by a Single Purpose Entity in compliance with
the representations, warranties and covenants in Section 4.1.29 hereof (as if
Borrower shall have remade all of such representations, warranties and covenants as of, and
after giving effect to, the Transfer), and which shall have executed and delivered to
Administrative Agent an assumption agreement in form and substance acceptable to
Administrative Agent, evidencing the continuing agreement of Borrower to abide and be bound
by all the terms, covenants and conditions set forth in this Agreement, the Notes, the
Security Instrument and the other Loan Documents and all other outstanding
obligations under the Loan, together with such legal opinions and title insurance
endorsements as may be reasonably requested by Administrative Agent;


 


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(b) an Acceptable Manager shall continue to act as Manager for the Property pursuant to
the Management Agreement or an Acceptable Management Agreement; and




(c) Guarantor shall continue to own directly or indirectly at least fifty percent (50%)
of the ownership interests in Borrower; provided that, (i) after giving effect to
any such transfer, in no event shall any Person other than Guarantor or a Close Affiliate of
Guarantor which is Controlled by Guarantor be the Manager of the Property and (ii) so long
as Guarantor or a Close Affiliate of Guarantor which is Controlled by Guarantor has equal or
greater voting and approval rights with respect to Management Control, Management Control
may be exercisable jointly by Guarantor or a Close Affiliate of Guarantor together with one
or more other Persons.



Section 8.5 Loan Assumption. Borrower shall not have the right to sell, assign,
convey or otherwise transfer (i) legal or equitable title to any part of the Property or (ii) their
respective interests in, to and under the Loan and the Loan Documents.



Section 8.6 Notice Required; Legal Opinions. Not less than five (5) Business Days
prior to the closing of any transaction permitted under the provisions of Section 8.4
(other than a Transfer permitted under the last sentence of Section 8.1), Borrower shall
deliver or cause to be delivered to Administrative Agent (A) an Officer’s Certificate describing
the proposed transaction and stating that such transaction is permitted hereunder and under the
other Loan Documents, together with any documents upon which such Officer’s Certificate is based,
and (B) upon the reasonable request of Administrative Agent, legal opinion(s) of counsel to
Borrower or the transferee selected by either of them (to the extent approved by Administrative
Agent), in form and substance reasonably acceptable to Administrative Agent, confirming, among
other things, that the assets of Borrower, and of its managing general partner or managing member,
as applicable, will not be substantively consolidated with the assets of such owners or Controlling
Persons of Borrower as Administrative Agent may specify, in the event of a bankruptcy or similar
proceeding involving such owners or Controlling Persons.




Section 8.7 Leases.



8.7.1 New Leases and Lease Modifications. Except as otherwise provided in this
Section 8.7, Borrower shall not (i) enter into any Lease other than on “market” terms and
with “market” rental rates (in Borrower’s good faith judgment), or (ii) enter into any Material
Lease (a “New Lease”), or (iii) consent to the assignment of any Material Lease (unless
required to do so by the terms of such Material Lease) that releases the original Tenant from its
obligations under the Material Lease, or (iv) Modify or
terminate

 


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 any Material Lease (including, without limitation, accept a surrender of any portion
of the Property subject to a Material Lease (unless otherwise permitted or required by law), allow
a reduction in the term of any Material Lease or a reduction in the Rent payable under any Material
Lease, change any renewal provisions of any Material Lease, materially increase the obligations of
the landlord or materially decrease the obligations of any Tenant) or terminate any Material Lease)
(any such action referred to in clauses (iii) and (iv) being referred to herein as a “Lease
Modification”) without the prior written consent of Administrative Agent which consent, so long
as no Event of Default is then continuing, shall not be unreasonably withheld, delayed or
conditioned. Any New Lease or Lease Modification that requires Administrative Agent’s consent
shall be delivered to Administrative Agent for approval not less than ten (10) Business Days prior
to the effective date of such New Lease or Lease Modification.



8.7.2 Leasing Conditions. Subject to terms of this Section 8.7, provided no
Event of Default shall have occurred and be continuing, Borrower may enter into a New Lease or
Lease Modification, without Administrative Agent’s prior written consent, that satisfies each of
the following conditions (as evidenced by an Officer’s Certificate delivered to Administrative
Agent prior to entry into such New Lease or Lease Modification):




(A) with respect to a New Lease or Lease Modification, the premises demised thereunder
is not more than 5,000 net rentable square feet of the Property;




(B) the term of such New Lease or Lease Modification, as applicable, does not exceed
120 months (inclusive of all extension and renewal options), provided that the initial term
of such New Lease or Lease Modification is no longer than 60 months;




(C) the New Lease or Lease Modification provides for “market” rental rates and other
terms and does not contain any terms which would adversely affect Administrative Agent’s
rights under the Loan Documents or that would have a Material Adverse Effect;




(D) the New Lease or Lease Modification, as applicable, provides that the premises
demised thereby cannot be used for any of the following uses: any pornographic or obscene
purposes, any commercial sex establishment, any pornographic, obscene, nude or semi-nude
performances, modeling, materials, activities or sexual conduct or any other use that has or
could reasonably be expected to have a Material Adverse Effect;




(E) the New Lease or Lease Modification, as applicable, is not for the spaces at the
Property known as: Hudson Bar, Hudson Library, Hudson Hall, Private Park or Sky Terrace.




(F) the Tenant under such New Lease or Lease Modification, as applicable, is not an
Affiliate of Borrower;


 


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(G) the New Lease or Lease Modification, as applicable, does not prevent Proceeds from
being held and disbursed by Administrative Agent in accordance with the
terms hereof and does not entitle any Tenant to receive and retain Proceeds except
those that may be specifically awarded to it in condemnation proceedings because of the
Condemnation of its trade fixtures and its leasehold improvements which have not become part
of the Property and such business loss as Tenant may specifically and separately establish;
and




(H) the New Lease or Lease Modification, as applicable satisfies the requirements of
Section 8.7.7 and Section 8.7.8.



8.7.3 Delivery of New Lease or Lease Modification. Upon the execution of any New
Lease or Lease Modification, as applicable, Borrower shall deliver to Administrative Agent an
executed copy of the Lease.



8.7.4 Lease Amendments. Borrower agrees that it shall not have the right or power, as
against Administrative Agent without its consent, to cancel, abridge, or otherwise Modify any Lease
unless such modification complies with this Section 8.7.



8.7.5 Security Deposits. All security or other deposits of Tenants of the Property
shall be treated as trust funds and shall, if required by law or the applicable Lease not be
commingled with any other funds of Borrower, and such deposits shall be deposited, upon receipt of
the same by Borrower in a separate trust account maintained by Borrower expressly for such purpose.
Within ten (10) Business Days after written request by Administrative Agent, Borrower shall
furnish to Administrative Agent reasonably satisfactory evidence of compliance with this
Section 8.7.5, together with a statement of all lease securities deposited with Borrower by
the Tenants and the location and account number of the account in which such security deposits are
held.



8.7.6 No Default Under Leases. Borrower shall (i) promptly perform and observe all of
the material terms, covenants and conditions required to be performed and observed by Borrower
under the Leases; (ii) exercise, within ten (10) Business Days after a written request by
Administrative Agent, any right to request from the Tenant under any Lease a certificate with
respect to the status thereof and (iii) not collect any of the Rents, more than one (1) month in
advance (except that Borrower may collect such security deposits and last month’s Rents as are
permitted by Legal Requirements and are commercially reasonable in the prevailing market and
collect other charges in accordance with the terms of each Lease).



8.7.7 Subordination. All Lease Modifications and New Leases entered into by Borrower
after the date hereof shall by their express terms be subject and subordinate to this Agreement and
the Security Instrument (through a subordination provision contained in such Lease or otherwise)
and shall provide that the Person holding any rights thereunder shall attorn to Administrative
Agent or any other Person succeeding to the interests of Administrative Agent upon the
exercise of its remedies hereunder or any transfer in lieu thereof on the terms set forth in this
Section 8.7.


 


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8.7.8 Attornment. Each Lease Modification and New Lease entered into from and after
the date hereof shall provide that in the event of the enforcement by Administrative Agent of any
remedy under this Agreement or the Security Instrument, the Tenant under such Lease shall, at the
option of Administrative Agent or of any other Person succeeding to the interest of Administrative
Agent as a result of such enforcement, attorn to Administrative Agent or to such Person and shall
recognize Administrative Agent or such successor in the interest as lessor under such Lease without
change in the provisions thereof; provided, however, Administrative Agent or such
successor in interest shall not be liable for or bound by (i) any payment of an installment of rent
or additional rent made more than thirty (30) days before the due date of such installment, (ii)
any act or omission of or default by Borrower under any such Lease (but Administrative Agent, or
such successor, shall be subject to the continuing obligations of the landlord to the extent
arising from and after such succession to the extent of Administrative Agent’s, or such
successor’s, interest in the Property), (iii) any credits, claims, setoffs or defenses which any
Tenant may have against Borrower, (iv) any obligation on Borrower’s part, pursuant to such Lease,
to perform any tenant improvement work or (v) any obligation on Borrower’s part, pursuant to such
Lease, to pay any sum of money to any Tenant. Each such New Lease shall also provide that, upon
the reasonable request by Administrative Agent or such successor in interest, the Tenant shall
execute and deliver an instrument or instruments confirming such attornment.



8.7.9 Non-Disturbance Agreements. Administrative Agent shall enter into, and, if
required by applicable law to provide constructive notice or requested by a Tenant, record in the
county where the subject Property is located, a subordination, attornment and non-disturbance
agreement, in form and substance substantially similar to the form attached hereto as Exhibit K (a
“Non-Disturbance Agreement”), with any Tenant (other than an Affiliate of Borrower)
entering into a New Lease permitted hereunder or otherwise consented to by Administrative Agent
within ten (10) Business Days after written request therefor by Borrower, provided that,
such request is accompanied by an Officer’s Certificate stating that such Lease complies in all
material respects with this Section 8.7. All reasonable third party costs and expenses
incurred by Administrative Agent in connection with the negotiation, preparation, execution and
delivery of any Non-Disturbance Agreement, including, without limitation, reasonable attorneys’
fees and disbursements, shall be paid by Borrower (in advance, if requested by Administrative
Agent).


 


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ARTICLE IX




Interest Rate Cap Agreement




Section 9.1 Interest Rate Cap Agreement. Borrower shall maintain the Interest Rate Cap Agreement with an Acceptable Counterparty in
effect and having a term extending through the last day of the accrual period in which the
applicable Maturity Date occurs, and an initial notional amount equal to the Principal Amount. The
Interest Rate Cap Agreement shall have a strike rate equal to the LIBOR Cap Strike Rate. The
notional amount of the Interest Rate Cap Agreement may be reduced from time to time in amounts
equal to any prepayment of the principal of the Loan made in accordance with the Loan Documents,
provided that the strike rate shall be equal to the LIBOR Cap Strike Rate.



Section 9.2 Pledge and Collateral Assignment. Borrower hereby pledges, assigns,
transfers, delivers and grants a continuing first priority lien to Administrative Agent, as
security for the payment and the performance of all Obligations, in, to and under all of Borrower’s
right, title and interest whether now owned or hereafter acquired and whether now existing or
hereafter arising (collectively, the “Rate Cap Collateral”): (i) in the Interest Rate Cap
Agreement (as soon as such agreement is effective or when and if any replacement agreement becomes
effective, any Replacement Interest Rate Cap Agreement or Extension Interest Rate Cap Agreement);
(ii) to receive any and all payments under the Interest Rate Cap Agreement (or, when and if any
such agreement becomes effective, any Replacement Interest Rate Cap Agreement or Extension Interest
Rate Cap Agreement), whether as contractual obligations, damages or otherwise; and (iii) to all
claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if
any, under or arising out of the Interest Rate Cap Agreement (as soon as such agreement is
effective or when and if any such agreement becomes effective, any Replacement Interest Rate Cap
Agreement or Extension Interest Rate Cap Agreement), in each case including all accessions and
additions to, substitutions for and replacements, products and proceeds of any of the foregoing.
Borrower shall deliver to Administrative Agent an executed counterpart of such Interest Rate Cap
Agreement, Replacement Interest Rate Cap Agreement or Extension Interest Rate Cap Agreement (which
shall, by its terms, authorize the assignment to Administrative Agent and require that payments be
made directly to Administrative Agent) and notify the Counterparty of such assignment (either in
such Interest Rate Cap Agreement, Replacement Interest Rate Cap Agreement or Extension Interest
Rate Cap Agreement or by separate instrument). Borrower shall not, without obtaining the prior
written consent of Administrative Agent, further pledge, transfer, deliver, assign or grant any
security interest in the Interest Rate Cap Agreement (or, when and if any such agreement becomes
effective, any Replacement Interest Rate Cap Agreement or Extension Interest Rate Cap Agreement),
or permit any Lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements or any other notice or instrument as may be required under the UCC, as
appropriate, except those naming Administrative Agent as the secured party, to be filed with
respect thereto.


 


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Section 9.3 Covenants.



(A) Borrower shall comply with all of its obligations under the terms and provisions of the
Interest Rate Cap Agreement. All amounts paid by the Counterparty under the Interest Rate Cap
Agreement to Borrower or Administrative Agent shall be deposited
immediately into the Holding Account pursuant to Section 3.1. Borrower shall take all
actions reasonably requested by Administrative Agent to enforce Borrower’s rights under the
Interest Rate Cap Agreement in the event of a default by the Counterparty thereunder and shall not
waive or Modify any of its rights thereunder.



(B) Borrower shall defend Administrative Agent’s right, title and interest in and to the Rate
Cap Collateral pledged by Borrower pursuant hereto or in which it has granted a security interest
pursuant hereto against the claims and demands of all other Persons.



(C) In the event of (x) any downgrade, withdrawal or qualification (each, a
“Downgrade”) of the rating of the Counterparty such that, thereafter, the Counterparty
shall cease to be an Acceptable Counterparty and (y) the Counterparty shall fail to comply with the
requirements contained in the Interest Rate Cap Agreement which are described in Exhibit I upon
such occurrence, Borrower shall either (i) replace the Interest Rate Cap Agreement with a
Replacement Interest Cap Agreement, (x) having a term extending through the end of the then current
Interest Period in which the Maturity Date occurs, (y) in a notional amount at least equal to the
Principal Amount of the Loan then outstanding, and (z) having a strike rate equal to the LIBOR Cap
Strike Rate, or (ii) cause the Counterparty to deliver collateral or other credit enhancement to
secure Borrower’s exposure under the Interest Rate Cap Agreement in such amount and pursuant to
such terms as are acceptable to Administrative Agent, in its sole discretion; provided that
Borrower acknowledges that a Downgrade of the Counterparty to A- or lower (or its equivalent by
Moody’s and, if the counterparty is rated by Fitch, by Fitch), shall not be susceptible to a cure
by the posting of collateral or other credit enhancement.



(D) In the event that Borrower fails to purchase and deliver to Administrative Agent the
Interest Rate Cap Agreement as and when required hereunder, Administrative Agent may purchase the
Interest Rate Cap Agreement and the cost incurred by Administrative Agent in purchasing the
Interest Rate Cap Agreement shall be paid by Borrower to Administrative Agent with interest thereon
at the Default Rate from the date such cost was incurred by Administrative Agent until such cost is
paid by Borrower to Administrative Agent.



(E) Borrower shall not (i) without the prior written consent of Administrative Agent, Modify
the terms of the Interest Rate Cap Agreement, (ii) without the prior written consent of
Administrative Agent, except in accordance with the terms of the Interest Rate Cap Agreement, cause
the termination of the Interest Rate Cap Agreement prior to its stated maturity date, (iii) without
the prior written consent of Administrative Agent, except as aforesaid, waive or release any
obligation of the Counterparty (or any successor or substitute party to the Interest Rate Cap
Agreement) under the Interest Rate Cap Agreement, (iv) without the prior written consent of
Administrative Agent, consent or agree to any act or omission to act on the part of the
Counterparty (or any successor or substitute party to the Interest Rate Cap Agreement) which,
without such consent or agreement, would constitute a default under the Interest Rate Cap
Agreement, (v) fail to exercise promptly and diligently each and every material right which it may
have under the Interest Rate Cap Agreement, (vi) take or intentionally omit to take any action or
intentionally suffer or permit any action to be omitted or taken, the taking or omission of which
would result in any right of offset against sums payable under the Interest Rate Cap Agreement or
any defense by the Counterparty (or any successor or substitute party to the Interest Rate Cap
Agreement) to payment or (vii) fail to give prompt notice to Administrative
Agent of any notice of default given by or to Borrower under or with respect to the Interest
Rate Cap Agreement, together with a complete copy of such notice.


 


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In connection with an Interest Rate Cap Agreement, Borrower shall obtain and deliver to
Administrative Agent an Opinion of Counsel from counsel (which counsel may be in-house counsel for
the Counterparty) for the Counterparty upon which Administrative Agent and its successors and
assigns may rely (the “Counterparty Opinion”), under New York law and, if the Counterparty
is a non-U.S. entity, the applicable foreign law, substantially in compliance with the requirements
set forth in Exhibit F or in such other form approved by Administrative Agent.



Section 9.4 Representations and Warranties. Borrower hereby covenants with, and
represents and warrants to, Administrative Agent as follows:




(A) The Interest Rate Cap Agreement constitutes the legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with its terms, subject only to
applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and subject, as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).




(B) The Rate Cap Collateral is free and clear of all claims or security interests of
every nature whatsoever, except such as are created pursuant to this Agreement and the other
Loan Documents, and Borrower has the right to pledge and grant a security interest in the
same as herein provided without the consent of any other Person other than any such consent
that has been obtained and is in full force and effect.




(C) The Rate Cap Collateral has been duly and validly pledged hereunder. All consents
and approvals required to be obtained by Borrower for the consummation of the transactions
contemplated by this Agreement have been obtained.




(D) Giving effect to the aforesaid grant and assignment to Administrative Agent,
Administrative Agent has, as of the date of this Agreement, and as to Rate Cap Collateral
acquired from time to time after such date, shall have, a valid, and upon proper filing,
perfected and continuing first priority lien upon and security interest in the Rate Cap
Collateral; provided that no representation or warranty is made with respect to the
perfected status of the security interest of Administrative Agent in the proceeds of Rate
Cap Collateral consisting of “cash proceeds” or “non-cash proceeds” as defined in the UCC
except if, and to the extent, the provisions of Section 9-306 of the UCC shall be complied
with.




(E) Except for financing statements filed or to be filed in favor of Administrative
Agent as secured party, there are no financing statements under the UCC covering any or all
of the Rate Cap Collateral and Borrower shall not, without the prior written consent of
Administrative Agent, until payment in full of all of the Obligations, execute and file in
any public office, any enforceable financing statement or statements
covering any or all of the Rate Cap Collateral, except financing statements filed or to
be filed in favor of Administrative Agent as secured party.


 


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Section 9.5 Payments. If Borrower at any time shall be entitled to receive any
payments with respect to the Interest Rate Cap Agreement, such amounts shall, immediately upon
becoming payable to Borrower, be deposited by Counterparty into the Holding Account.



Section 9.6 Remedies. Subject to the provisions of the Interest Rate Cap Agreement,
if an Event of Default shall occur and be continuing:




(A) Administrative Agent, without obligation to resort to any other security, right or
remedy granted under any other agreement or instrument, shall have the right to, in addition
to all rights, powers and remedies of a secured party pursuant to the UCC, at any time and
from time to time, sell, resell, assign and deliver, in its sole discretion, any or all of
the Rate Cap Collateral (in one or more parcels and at the same or different times) and all
right, title and interest, claim and demand therein and right of redemption thereof, at
public or private sale, for cash, upon credit or for future delivery, and in connection
therewith Administrative Agent may grant options and may impose reasonable conditions such
as requiring any purchaser to represent that any “securities” constituting any part of the
Rate Cap Collateral are being purchased for investment only, Borrower hereby waiving and
releasing any and all equity or right of redemption to the fullest extent permitted by the
UCC or applicable law. If all or any of the Rate Cap Collateral is sold by Administrative
Agent upon credit or for future delivery, Administrative Agent shall not be liable for the
failure of the purchaser to purchase or pay for the same and, in the event of any such
failure, Administrative Agent may resell such Rate Cap Collateral. It is expressly agreed
that Administrative Agent may exercise its rights with respect to less than all of the Rate
Cap Collateral, leaving unexercised its rights with respect to the remainder of the Rate Cap
Collateral, provided, however, that such partial exercise shall in no way
restrict or jeopardize Administrative Agent’s right to exercise its rights with respect to
all or any other portion of the Rate Cap Collateral at a later time or times.




(B) Administrative Agent may exercise, either by itself or by its nominee or designee,
in the name of Borrower, all of Administrative Agent’s rights, powers and remedies in
respect of the Rate Cap Collateral, hereunder and under law.




(C) Borrower hereby irrevocably, in the name of Borrower or otherwise, authorizes and
empowers Administrative Agent and assigns and transfers unto Administrative Agent, and
constitutes and appoints Administrative Agent its true and lawful attorney-in-fact, and as
its agent, irrevocably, with full power of substitution for Borrower and in the name of
Borrower, upon the occurrence and during the continuance of an Event of Default, (i) to
exercise and enforce every right, power, remedy, authority,


 


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option and privilege of Borrower
under the Interest Rate Cap Agreement, including any power to subordinate or Modify the Interest Rate Cap Agreement (but not, unless an
Event of Default exists and is continuing, the right to terminate or cancel the Interest
Rate Cap Agreement), or to give any notices, or to take any action resulting in such
subordination, termination, cancellation or modification and (ii) in order to more fully
vest in Administrative Agent the rights and remedies provided for herein, to exercise all of
the rights, remedies and powers granted to Administrative Agent in this Agreement, and
Borrower further authorizes and empowers Administrative Agent, as Borrower’s
attorney-in-fact, and as its agent, irrevocably, with full power of substitution for
Borrower and in the name of Borrower, upon the occurrence and during the continuance of an
Event of Default, to give any authorization, to furnish any information, to make any
demands, to execute any instruments and to take any and all other action on behalf of and in
the name of Borrower which in the opinion of Administrative Agent may be necessary or
appropriate to be given, furnished, made, exercised or taken under the Interest Rate Cap
Agreement, in order to comply therewith, to perform the conditions thereof or to prevent or
remedy any default by Borrower thereunder or to enforce any of the rights of Borrower
thereunder. These powers-of-attorney are irrevocable and coupled with an interest, and any
similar or dissimilar powers heretofore given by Borrower in respect of the Rate Cap
Collateral to any other Person are hereby revoked.




(D) Upon the occurrence and during the continuance of an Event of Default,
Administrative Agent may, without notice to, or assent by, Borrower or any other Person (to
the extent permitted by law), but without affecting any of the Obligations, in the name of
Borrower or in the name of Administrative Agent, notify the Counterparty, or if applicable,
any other counterparty to the Interest Rate Cap Agreement, to make payment and performance
directly to Administrative Agent; extend the time of payment and performance of, compromise
or settle for cash, credit or otherwise, and upon any terms and conditions, any obligations
owing to Borrower, or claims of Borrower, under the Interest Rate Cap Agreement; file any
claims, commence, maintain or discontinue any actions, suits or other proceedings deemed by
Administrative Agent necessary or advisable for the purpose of collecting upon or enforcing
the Interest Rate Cap Agreement; and execute any instrument and do all other things deemed
necessary and proper by Administrative Agent to protect and preserve and realize upon the
Rate Cap Collateral and the other rights contemplated hereby.




(E) Pursuant to the powers-of-attorney provided for above, Administrative Agent may
take any action and exercise and execute any instrument which it may deem necessary or
advisable to accomplish the purposes hereof; provided, however, that
Administrative Agent shall not be permitted to take any action pursuant to said
power-of-attorney that would conflict with any limitation on Administrative Agent’s rights
with respect to the Rate Cap Collateral. Without limiting the generality of the foregoing,
Administrative Agent, after the occurrence of an Event of Default, shall have the right and
power to receive, endorse and collect all checks and other orders for the payment of money
made payable to Borrower representing: (i) any payment of obligations owed pursuant to the
Interest Rate Cap Agreement, (ii) interest accruing on any of the Rate Cap Collateral or
(iii) any other payment or distribution payable in respect of the Rate Cap Collateral or any
part thereof, and for and in the name, place and stead of Borrower, to execute endorsements,
assignments or other instruments of
conveyance or transfer in respect of any property which is or may become a part of the
Rate Cap Collateral hereunder.


 


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(F) Administrative Agent may exercise all of the rights and remedies of a secured party
under the UCC.




(G) Without limiting any other provision of this Agreement or any of Borrower’s rights
hereunder, and without waiving or releasing Borrower from any obligation or default
hereunder, Administrative Agent shall have the right, but not the obligation, to perform any
act or take any appropriate action, as it, in its reasonable judgment, may deem necessary to
protect the security of this Agreement, to cure such Event of Default or to cause any term,
covenant, condition or obligation required under this Agreement or the Interest Rate Cap
Agreement to be performed or observed by Borrower to be promptly performed or observed on
behalf of Borrower. All amounts advanced by, or on behalf of, Administrative Agent in
exercising its rights under this Section 9.7(g) (including, but not limited to,
reasonable legal expenses and disbursements incurred in connection therewith), together with
interest thereon at the Default Rate from the date of each such advance, shall be payable by
Borrower to Administrative Agent upon demand and shall be secured by this Agreement.



Section 9.7 Sales of Rate Cap Collateral. No demand, advertisement or notice, all of
which are, to the fullest extent permitted by law, hereby expressly waived by Borrower, shall be
required in connection with any sale or other disposition of all or any part of the Rate Cap
Collateral, except that Administrative Agent shall give Borrower at least thirty (30) Business
Days’ prior written notice of the time and place of any public sale or of the time when and the
place where any private sale or other disposition is to be made, which notice Borrower hereby
agrees is reasonable, all other demands, advertisements and notices being hereby waived. To the
extent permitted by law, Administrative Agent shall not be obligated to make any sale of the Rate
Cap Collateral if it shall determine not to do so, regardless of the fact that notice of sale may
have been given, and Administrative Agent may without notice or publication adjourn any public or
private sale, and such sale may, without further notice, be made at the time and place to which the
same was so adjourned. Upon each private sale of the Rate Cap Collateral of a type customarily
sold in a recognized market and upon each public sale, unless prohibited by any applicable statute
which cannot be waived, Administrative Agent (or its nominee or designee) may purchase any or all
of the Rate Cap Collateral being sold, free and discharged from any trusts, claims, equity or right
of redemption of Borrower, all of which are hereby waived and released to the extent permitted by
law, and may make payment therefor by credit against any of the Obligations in lieu of cash or any
other obligations. In the case of all sales of the Rate Cap Collateral, public or private,
Borrower shall pay all reasonable costs and expenses of every kind for sale or delivery, including
brokers’ and attorneys’ fees and disbursements and any tax imposed thereon. However, the proceeds
of sale of Rate Cap Collateral shall be available to cover such costs and expenses, and, after
deducting such costs and expenses from the proceeds of sale, Administrative Agent shall apply any
residue to the payment of the Obligations in the order of priority as set forth in Section 11 of
the Security Instrument.


 


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Section 9.8 Public Sales Not Possible. Borrower acknowledges that the terms of the
Interest Rate Cap Agreement may prohibit public sales, that the Rate Cap Collateral may not be of
the type appropriately sold at public sales, and that such sales may be prohibited by law. In
light of these considerations, Borrower agrees that private sales of the Rate Cap Collateral shall
not be deemed to have been made in a commercially unreasonably manner by mere virtue of having been
made privately.



Section 9.9 Receipt of Sale Proceeds. Upon any sale of the Rate Cap Collateral by
Administrative Agent hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt by Administrative Agent or the officer making the sale
or the proceeds of such sale shall be a sufficient discharge to the purchaser or purchasers of the
Rate Cap Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to Administrative Agent or such officer or
be answerable in any way for the misapplication or non- application thereof.



Section 9.10 Extension Interest Rate Cap Agreement. If Borrower exercises any of its
options to extend the Maturity Date pursuant to Section 2.1.6, then, on or prior to the
Maturity Date being extended, Borrower shall obtain or have in place an Extension Interest Rate Cap
Agreement (i) having a term through the end of the Interest Period in which the extended Maturity
Date occurs, (ii) in a notional amount at least equal to the Principal Amount of the Loan as of the
Maturity Date being extended, and (iii) having a strike rate equal to an amount such that the
maximum interest rate paid by Borrower after giving effect to payments made under such Extension
Interest Rate Cap Agreement shall equal no more than the applicable LIBOR Cap Strike Rate.



Section 9.11 Filing of Financing Statements Authorized. Borrower hereby authorizes
the filing of a form UCC-1 financing statement naming Borrower as debtors and Administrative Agent
as secured party in any office (including the office of the Secretary of State of the State of
Delaware) covering all property of Borrower (including, but not limited to, the Account Collateral
and the Rate Cap Collateral, but excluding Excess Cash Flow).



ARTICLE X




Maintenance of Property; Alterations




Section 10.1 Maintenance of Property. Borrower shall keep and maintain, or cause to
be kept and maintained, the Property and every part thereof in good condition and repair, subject
to ordinary wear and tear, Excusable Delays, and the provisions of this Agreement with respect to
damage or destruction caused by a Casualty or Condemnation, shall not permit or commit any waste,
impairment, or deterioration of any portion of the Property in any material respect. Borrower
further covenants
to do all other acts which from the character or use of the Property may be reasonably
necessary to protect the security hereof, the specific enumerations herein not excluding the
general. Borrower shall not demolish any Improvement on the Property except as the same may be
necessary in connection with an Alteration or a restoration in connection with a Condemnation or
Casualty, or as otherwise permitted herein, in each case in accordance with the terms and
conditions hereof.


 


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Section 10.2 Alterations and Expansions. Borrower shall not perform or undertake or
consent to or permit any other Person to perform or undertake any Alteration or Expansion, except
in accordance with the following terms and conditions:




(A) The Alteration or Expansion shall be undertaken in accordance with the applicable
provisions of this Agreement, the other Loan Documents, the Leases and all Legal
Requirements.




(B) No Event of Default shall have occurred and be continuing or shall occur as a
result of such action.




(C) A Material Alteration, to the extent architects are customarily used for
alterations or expansions of those types, but including any structural change to any of the
Property or the Improvements, shall be conducted under the supervision of an Independent
Architect and shall not be undertaken until ten (10) Business Days after there shall have
been filed with Administrative Agent, for information purposes only and not for approval by
Administrative Agent, detailed plans and specifications and cost estimates therefor,
prepared and approved in writing by such Independent Architect. Such plans and
specifications may be revised at any time and from time to time, provided that
revisions of such plans and specifications shall be filed with Administrative Agent, for
information purposes only.




(D) The Alteration or Expansion may not in and of itself, either during the Alteration
or Expansion or upon completion, be reasonably expected to have a Material Adverse Effect
with respect to the Property or, if a Cash Sweep Period then exists, adversely affect the
annual Net Operating Income by more than $500,000, taking into account the required escrows
(or completion bond) provided under clause (h)(i) below; provided that if, as
reasonably determined by Borrower in good faith, such Alteration or Expansion would reduce
annual Net Operating Income by $500,000 or more and a Cash Sweep Period then exists, then in
order to proceed with the Alteration or Expansion Borrower shall deliver to Administrative
Agent Eligible Collateral in the amount that the projected reduction in Net Operating Income
resulting from the Alteration or Expansion exceeds $500,000 as additional security for the
Indebtedness, which Eligible Collateral shall be returned to Borrower after evidence of
completion of the applicable Alteration or Expansion and no Event of Default has occurred
and is continuing.


 


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(E) All work done in connection with any Alteration or Expansion shall be performed
with due diligence to Final Completion in a good and workmanlike manner,
all materials used in connection with any Alteration or Expansion shall be not less
than the standard of quality of the materials generally used at the Property as of the date
hereof (or, if greater, the then-current customary quality in the sub-market in which the
Property is located) and all work shall be performed and all materials used in accordance
with all applicable Legal Requirements and Insurance Requirements.




(F) The cost of any Alteration or Expansion shall be promptly and fully paid for by
Borrower, subject to the next succeeding sentence. No payment made prior to the Final
Completion (excluding punch-list items) of an Alteration or Expansion or Restoration to any
contractor, subcontractor, materialman, supplier, engineer, architect, project manager or
other Person who renders services or furnishes materials in connection with such Alteration
shall exceed ninety percent (90%) of the aggregate value of the work performed by such
Person from time to time and materials furnished and incorporated into the Improvements.




(G) Intentionally Omitted.




(H) With respect to any Material Alteration:




(i) Borrower shall have delivered to Administrative Agent Eligible Collateral
in an amount equal to at least the total estimated remaining unpaid costs of such
Material Alteration which is in excess of the Threshold Amount, which Eligible
Collateral shall be held by Administrative Agent as security for the Indebtedness
and released to Borrower as such work progresses in accordance with Section
10.2(H)(iii); provided, however, in the event that any Material
Alteration shall be made in conjunction with any Restoration with respect to which
Borrower shall be entitled to withdraw Proceeds pursuant to Section 6.2
hereof (including any Proceeds remaining after completion of such Restoration), the
amount of the Eligible Collateral to be furnished pursuant hereto need not exceed
the aggregate cost of such Restoration and such Material Alteration (in either case,
as estimated by the Independent Architect) less the sum of the amount of any
Proceeds which Borrower is entitled to withdraw pursuant to Section 6.2
hereof and the Threshold Amount;




(ii) Prior to commencement of construction of such Material Alteration,
Borrower shall deliver to Administrative Agent a schedule (with the concurrence of
the Independent Architect) setting forth the projected stages of completion of such
Alteration or Expansion and the corresponding amounts expected to be due and payable
by or on behalf of Borrower in connection with such completion, such schedule to be
updated quarterly by Borrower (and with the concurrence of the Independent
Architect) during the performance of such Alteration or Expansion.


 


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(iii) Any Eligible Collateral that a Borrower delivers to Administrative Agent
pursuant hereto (and the proceeds of any such Eligible Collateral) shall be invested
(to the extent such Eligible Collateral can be invested) by Administrative Agent in
Permitted Investments for a period of time consistent with the date on
which Borrower notifies Administrative Agent that Borrower expects to request a
release of such Eligible Collateral in accordance with the next succeeding sentence.
From time to time as the Material Alteration progresses, the amount of any Eligible
Collateral so furnished may, upon the written request of Borrower to Administrative
Agent, be withdrawn by Borrower and paid or otherwise applied by or returned to
Borrower in an amount equal to the amount Borrower would be entitled to so withdraw
if Section 6.2.4 were applicable, subject to the satisfaction of the
conditions precedent to withdrawal of funds set forth in Section 6.2.4
hereof. In connection with the above-described quarterly update of the projected
stages of completion of the Material Alteration (as concurred with by an Independent
Architect), Borrower shall increase (or be permitted to decrease, as applicable) the
Eligible Collateral then deposited with Administrative Agent as necessary to comply
with Section 10.2(H)(i) hereof.




(iv) At any time after Final Completion of such Material Alterations, the whole
balance of any Cash deposited with Administrative Agent pursuant to Section
10.2(H) hereof then remaining on deposit may be withdrawn by Borrower and shall
be paid by Administrative Agent to Borrower, and any Eligible Collateral so
deposited shall, to the extent it has not been called upon, reduced or theretofore
released, be released by Administrative Agent to Borrower, within ten (10) days
after receipt by Administrative Agent of an application for such withdrawal and/or
release and satisfaction of each of the following conditions, as certified by an
Officer’s Certificate that such statements are true, and as to the following clauses
(A) and (B) of this clause also a certificate of the Independent Architect:




(A) such Material Alteration(s) shall have been completed in all
material respects in accordance with any plans and specifications therefor
previously filed with Administrative Agent under Section 10.2(C)
hereof;




(B) that to the Best of Borrower’s Knowledge (x) such Material
Alteration(s) has been completed in compliance with all Legal Requirements,
and (y) to the extent required for the legal use or occupancy of the portion
of the Property affected by such Alteration(s) or Expansion(s), the
applicable Borrower has obtained a temporary or permanent certificate of
occupancy (or similar certificate) or, if no such certificate is required, a
statement to that effect;




(C) that to the Best of Borrower’s Knowledge, all amounts that a
Borrower is or may become liable to pay in respect of such Material
Alteration(s) through the date of the certification have been paid in full
or adequately provided for and, to the extent that such are customary and
reasonably obtainable by prudent property owners in the area where the
applicable Property is located, that Lien waivers have been obtained from
the general contractor and subcontractors performing such Alteration(s) or
Expansion(s) or at its sole cost and expense, at the request of



 


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Administrative Agent Borrower shall cause a nationally recognized title insurance company to deliver to Administrative Agent an endorsement to
the Title Policy, updating such policy and insuring over such Liens without
further exceptions to such policy other than Permitted Encumbrances, or
shall, at its sole cost and expense, cause a reputable title insurance
company to deliver a lender’s title insurance policy, in such form, in such
amounts and with such endorsements as the Title Policy, which policy shall
be dated the date of completion of the Material Alteration (or later) and
shall contain no exceptions other than Permitted Encumbrances;
provided, however, that if, for any reason, Borrower are
unable to deliver the certification required by this clause (C) with respect
to any costs or expenses relating to the Alteration(s) or Expansion(s),
then, assuming Borrower are able to satisfy each of the other requirements
set forth in clauses (A) and (B) above, Borrower shall be entitled to the
release of the difference between the whole balance of such Eligible
Collateral and the total of all costs and expenses to which Borrower are
unable to certify; and




(D) that to the Best of Borrower’s Knowledge, no Event of Default has
occurred and is continuing.



ARTICLE XI




Books and Records, Financial Statements, Reports and Other Information




Section 11.1 Books and Records. Borrower shall keep and maintain on a fiscal year
basis proper books and records separate from any other Person, in which accurate and complete
entries shall be made of all dealings or transactions of or in relation to the Notes, the Property
and the business and affairs of Borrower relating to the Property which shall reflect all items of
income and expense in connection with the operation on an individual basis of the Property and in
connection with any services, equipment or furnishings provided in connection with the operation of
the Property, in accordance with GAAP. Administrative Agent and its authorized representatives
shall have the right at reasonable times and upon reasonable notice to examine the books and
records of Borrower relating to the operation of the Property and to make such copies or extracts
thereof as Administrative Agent may reasonably require.




Section 11.2 Financial Statements.



11.2.1 Monthly Reports. Borrower shall furnish to Administrative Agent, within thirty
(30) days after the end of each calendar month, unaudited operating statements, aged accounts
receivable reports, rent rolls, STAR Reports, PACE Reports and occupancy and ADR reports for the
Property, in each case accompanied by an Officer’s Certificate certifying (i) with respect to the
operating statements, that such statements are true, correct, accurate and complete and fairly
present the results of the operations of


 


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 Borrower and the Property, (ii) with respect to the aged accounts
receivable reports, rent rolls, occupancy and ADR reports, that such items are true, correct,
accurate and complete and fairly present the results of the operations of Borrower and the
Property, (iii) a calculation of the Debt Yield Ratio for the immediately preceding month and (iv)
a cash flow statement and summary accounting of activity in the Hotel Operating Account for the
immediately preceding month. Borrower will also provide Administrative Agent copies of all flash
reports as to monthly revenues upon request.



11.2.2 Quarterly Reports. Borrower will furnish, or cause to be furnished, to
Administrative Agent on or before the forty-fifth (45th) day after the end of each
Fiscal Quarter (other than the fourth Fiscal Quarter), the following items, accompanied by an
Officer’s Certificate, certifying that to the Best of Borrower’s Knowledge and the best of such
officer’s knowledge, such items are true, correct, accurate and complete and fairly present the
financial condition and results of the operations of Borrower and the Property in a manner
consistent with GAAP to the extent applicable:




(A) quarterly and year to date financial statements prepared for such fiscal quarter
with respect to Borrower, including a balance sheet and operating statement for such quarter
for Borrower for such quarter;




(B) during a Cash Sweep Period, a comparison of the budgeted income and expenses and
the actual income and expenses for such quarter for the Property, together with a detailed
explanation of any variances of five percent (5%) or more between budgeted and actual
amounts in the aggregate and on a line-item basis for such period and year to date;
provided, however, that Borrower shall not be obligated to provide such
detailed explanation for line items the actual amounts for such quarter of which are less
than $100,000;




(C) occupancy levels at the Property for such period, including average daily room
rates and the average revenue per available room;




(D) concurrently with the provision of such reports, Borrower shall also furnish a
report of Operating Revenues and Operating Expenses (as well as a calculation of Net
Operating Income based thereon) with respect to Borrower and the Property for the most
recently completed quarter;




(E) a STAR Report and to the extent provided by Manager a PACE Report for the most
recently completed quarter;




(F) a calculation of DSCR for the trailing four (4) Fiscal Quarters; and




(G) to the extent prepared by or on behalf of Borrower or provided by Manager, a report
of aged accounts receivable relating to the Property as of the most recently completed
quarter and a list of Security Deposits and the aggregate amount of all Security Deposits.


 


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11.2.3 Annual Reports. Borrower shall furnish to Administrative Agent within ninety (90) days following the end of
each Fiscal Year a complete copy of the annual financial statements of Borrower, audited by BDO USA
LLP, a “Big Four” accounting firm or another independent certified public accounting firm
acceptable to Administrative Agent in accordance with GAAP for such Fiscal Year and containing a
balance sheet, a statement of operations and a statement of cash flows. The annual financial
statements of Borrower shall be accompanied by (i) an Officer’s Certificate certifying that each
such annual financial statement presents fairly, in all material respects, the financial condition
and results of operation of the Property and has been prepared in accordance with GAAP and (ii) a
management report, in form and substance reasonably satisfactory to Administrative Agent,
discussing the reconciliation between the financial statements for such Fiscal Year and the most
recent Budget. Together with Borrower’s annual financial statements, Borrower shall furnish to
Administrative Agent (A) an Officer’s Certificate certifying as of the date thereof whether there
exists a Default or Event of Default, and if such Default or Event of Default exists, the nature
thereof, the period of time it has existed and the action then being taken to remedy the same; and
(B) an annual report, for the most recently completed fiscal year, containing:




(1) Capital Expenditures (including for this purpose any and all additions to, and
replacements of, FF&E,) made in respect of the Property, including separate line items with
respect to any project costing in excess of $250,000;




(2) occupancy levels for the Property for such period; and




(3) average daily room rates at the Property for such period.



11.2.4 Leasing Reports. During any period when any Leases other than the Bar Lease
and Operating Lease are in effect, not later than forty-five (45) days after the end of each fiscal
quarter of Borrower’s operations, Borrower shall deliver to Administrative Agent a true and
complete rent roll for the Property showing the percentage of gross leasable area of the Property,
if any, leased as of the last day of the preceding calendar quarter, the current annual rent for
the Property, the expiration date of each Lease, whether to Borrower’s knowledge any portion of the
Property has been sublet, and if it has, the name of the subtenant, and such rent roll shall be
accompanied by an Officer’s Certificate certifying that such rent roll is true, correct, accurate
and complete in all material respects as of its date and stating whether Borrower, within the past
three (3) months, has issued a notice of default with respect to any Lease which has not been cured
and the nature of such default.



11.2.5 Manager Reports. Borrower shall deliver to Administrative Agent, within ten
(10) Business Days of the receipt thereof by Borrower, a copy of all reports prepared by or on
behalf of Manager, including, without limitation, pursuant to Sections 9(a) and 9(d) of the
Management Agreement (including, without limitation, the annual Budget and profit-loss statements
and any inspection reports).


 


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11.2.6 Budget.



(A) Not later than November 1st of each Fiscal Year hereafter, Borrower shall prepare or cause
to be prepared and deliver to Administrative Agent, for informational purposes only, a Budget in
respect of the Property for the succeeding Fiscal Year, or if no such approved Budget then exists,
the most up to date draft Budget. In all events, Borrower shall deliver to Administrative Agent,
for informational purposes only, a Budget that has been approved under the Management Agreement in
respect of the Property for the Fiscal Year by December 1st of such Fiscal Year.



(B) If Borrower subsequently amends the Budget, Borrower shall promptly deliver the amended
Budget to Administrative Agent.



(C) Notwithstanding the foregoing, any Budget in effect or submitted during a Cash Sweep
Period, and in each case any material amendment thereto, shall be subject to Administrative Agent’s
prior written approval, which approval shall not be unreasonably withheld, delayed or conditioned
so long as no Event of Default is continuing. Until a proposed Budget is approved, the current
Budget shall remain in effect. Borrower shall consult with Administrative Agent and shall afford
Administrative Agent a reasonable opportunity to meet and confer with Borrower to discuss in
reasonable detail such proposed revised Budget and general hotel operations, and Borrower shall
obtain Manager’s approval of the resulting budget revisions as requested by Administrative Agent in
its reasonable discretion.



11.2.7 IP Collateral. Borrower shall provide to Administrative Agent written notice
of any Intellectual Property acquired for the use, ownership, management, leasing, renovation,
financing, development, operation and maintenance of the Property after the date hereof, which is
the subject of a registration or application (including IP Collateral which was theretofore
unregistered and becomes the subject of a registration or application) or any material or exclusive
IP Licenses, and deliver to Administrative Agent an IP Security Agreement and/or such other
instrument in form and substance reasonably acceptable to Administrative Agent. Borrower shall
provide such notice to Administrative Agent promptly upon the acquisition of such Intellectual
Property or IP License. Borrower shall execute and deliver to Administrative Agent all filings
necessary to protect and evidence Administrative Agent’s security interest in such Intellectual
Property and IP Licenses. Further, Borrower authorizes Administrative Agent to modify this
Agreement by amending the IP Schedule to include any applications or registration for IP Collateral
(but the failure to do so modify such IP Schedule shall not be deemed to affect Administrative
Agent’s security interest in or lien upon such IP Collateral).




11.2.8 Intentionally Omitted.


 


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11.2.9 Other Information. Borrower shall, promptly after written request by
Administrative Agent, furnish or cause to be furnished to Administrative Agent, in such manner and
in such detail as may be
reasonably requested by Administrative Agent, such additional information as may be reasonably
requested by Administrative Agent with respect to the Property. The information required to be
furnished by Borrower to Administrative Agent under this Section 11.2 shall be provided in
both hard copy format and electronic format; provided that Borrower shall only be required
to provide the information required under this Section 11.2.8 in electronic format if such
information is so available in the ordinary course of the operations of Borrower and Manager and
without significant expense.



ARTICLE XII




Environmental Matters




Section 12.1 Representations. Borrower hereby represents and warrants that except as
set forth in the environmental reports and studies delivered to Administrative Agent (the
“Environmental Reports”), (i) Borrower has not engaged in or knowingly permitted any
operations or activities upon, or any use or occupancy of the Property, or any portion thereof, for
the purpose of or in any way involving the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping or disposal of any Hazardous Materials on, under,
in or about the Property, or transported any Hazardous Materials to, from or across the Property,
except in all cases in material compliance with Environmental Laws and only in the Ordinary Course
of Business at the Property; (ii) to the Best of Borrower’s Knowledge, no tenant, occupant or user
of the Property, or any other Person, has engaged in or permitted any operations or activities
upon, or any use or occupancy of the Property, or any portion thereof, for the purpose of or in any
material way involving the handling, manufacture, treatment, storage, use, generation, release,
discharge, refining, dumping or disposal of any Hazardous Materials on, in or about the Property,
or transported any Hazardous Materials to, from or across the Property, except in all cases in
material compliance with Environmental Laws and only in the course of the Ordinary Course of
Business at the Property; (iii) to the Best of Borrower’s Knowledge, no Hazardous Materials are
presently constructed, deposited, stored, or otherwise located on, under, in or about the Property
except in material compliance with Environmental Laws; (iv) to the Best of Borrower’s Knowledge, no
Hazardous Materials have migrated from the Property upon or beneath other properties which would
reasonably be expected to result in material liability for Borrower or the Property; and (v) to the
Best of Borrower’s Knowledge, no Hazardous Materials have migrated or threaten to migrate from
other properties upon, about or beneath the Property which would reasonably be expected to result
in material liability for Borrower or the Property.



Section 12.2 Covenant; Compliance with Environmental Laws. Subject to Borrower’s
right to contest under Section 7.3, Borrower covenants and agrees with Administrative Agent
that it shall comply with all Environmental Laws. If at any time during the continuance of the
Lien of the Security Instrument, a Governmental Authority having jurisdiction over the Property
requires remedial action to correct the presence of Hazardous Materials in, around, or under the
Property (an “Environmental Event”), Borrower
shall

 


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 deliver prompt notice of the occurrence of such Environmental Event to Administrative
Agent. Within thirty (30) days after Borrower has knowledge of the occurrence of an Environmental
Event, Borrower shall deliver to Administrative Agent an Officer’s Certificate (an
“Environmental Certificate”) explaining the Environmental Event in reasonable detail and
setting forth the proposed remedial action. Borrower shall promptly provide Administrative Agent
with copies of all notices from any Governmental Authority which allege or identify any actual or
potential violation or noncompliance received by or prepared by or for Borrower in connection with
any Environmental Law. For purposes of this paragraph, the term “notice” shall mean any summons,
citation, directive, order, claim, pleading, letter, application, filing, report, findings,
declarations or other materials provided by any Governmental Authority pertinent to compliance of
the Property and Borrower with such Environmental Laws.



Section 12.3 Environmental Reports. Upon the occurrence and during the continuance
of an Environmental Event with respect to the Property or an Event of Default, Administrative Agent
shall have the right to direct Borrower to obtain consultants reasonably approved by Administrative
Agent to perform a comprehensive environmental audit of the Property. Such audit shall be
conducted by an environmental consultant chosen by Administrative Agent and may include a visual
survey, a record review, an area reconnaissance assessing the presence of hazardous or toxic waste
or substances, PCBs or storage tanks at the Property, an asbestos survey of the Property, which may
include random sampling of the Improvements and air quality testing, and such further site
assessments as Administrative Agent may reasonably require due to the results obtained from the
foregoing. Borrower grants Administrative Agent, its agents, consultants and contractors the right
to enter the Property as reasonable or appropriate for the circumstances for the purposes of
performing such studies and the reasonable cost of such studies shall be due and payable by
Borrower to Administrative Agent upon demand and shall be secured by the Lien of the Security
Instrument. Administrative Agent shall not unreasonably interfere with, and Administrative Agent
shall direct the environmental consultant to use its commercially reasonable efforts not to hinder,
Borrower’s or any Tenant’s, other occupant’s or Manager’s operations upon the Property when
conducting such audit, sampling or inspections. By undertaking any of the measures identified in
and pursuant to this Section 12.3, Administrative Agent shall not be deemed to be
exercising any control over the operations of Borrower or the handling of any environmental matter
or hazardous wastes or substances of Borrower for purposes of incurring or being subject to
liability therefor.




Section 12.4 Environmental Indemnification.



(A) Borrower shall protect, indemnify, save, defend, and hold harmless the Indemnified Parties
from and against any and all Liabilities which any Indemnified Party may suffer, as a result of or
with respect to: (a) any Environmental Claim relating to or arising from the Property; (b) the
violation of any Environmental Law in connection with the Property; (c) any release, spill, or the
presence of any Hazardous Materials affecting the Property; and (d) the presence at, in, on or
under, or the release, escape, seepage, leakage, discharge or migration at or
from, the Property of any Hazardous Materials, whether or not such condition was known or
unknown to Borrower.


 


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(B) Notwithstanding Section 12.4(A) above, or any other provision of this Agreement,
Borrower shall not be liable for any Hazardous Materials first placed on or under the Property (or
any portion thereof) after ownership and control of the Property has been transferred to a third
party following foreclosure or conveyance in lieu of foreclosure (“Transfer of Ownership”);
provided, however, that (i) the existence of any Hazardous Materials placed in,
under, over, from or affecting the Property (or such portion thereof), which materials were present
prior to Transfer of Ownership, shall remain subject to Borrower’s indemnification obligations; and
(ii) Borrower shall have the burden of proving that such environmental condition occurred
subsequent to Transfer of Ownership.



(C) If any such action or other proceeding shall be brought against Administrative Agent, upon
written notice from Borrower to Administrative Agent (given reasonably promptly following
Administrative Agent’s notice to Borrower of such action or proceeding), Borrower shall be entitled
to assume the defense thereof, at Borrower’s expense, with counsel reasonably acceptable to
Administrative Agent; provided, however, Administrative Agent may, at its own
expense, retain separate counsel to participate in such defense, but such participation shall not
be deemed to give Administrative Agent a right to control such defense, which right Borrower
expressly retains. Notwithstanding the foregoing, each Indemnified Party shall have the right to
employ separate counsel at Borrower’s expense if, in the reasonable opinion of legal counsel, a
conflict or potential conflict exists between the Indemnified Party and Borrower that would make
such separate representation advisable. Borrower shall have no obligation to indemnify an
Indemnified Party for damage or loss resulting from such Indemnified Party’s gross negligence or
willful misconduct.



Section 12.5 Recourse Nature of Certain Indemnifications. Notwithstanding anything
to the contrary provided in this Agreement or in any other Loan Document, the indemnification
provided in Section 12.4 shall be fully recourse to Borrower (but not its constituent
members, except as provided in the Environmental Indemnity) and shall be independent of, and shall
survive, the discharge of the Indebtedness, the release of the Lien created by the Security
Instrument, and/or the conveyance of title to the Property to Administrative Agent or any purchaser
or designee in connection with a foreclosure of the Security Instrument or conveyance in lieu of
foreclosure.


 


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ARTICLE XIII




Reserved


ARTICLE XIV




Administrative Agent




Section 14.1 Appointment. Each Lender hereby irrevocably designates and appoints Administrative Agent as the agent of
such Lender under the Loan Documents and each such Lender hereby irrevocably authorizes
Administrative Agent, as the agent for such Lender, to take such action on its behalf under the
provisions of the Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to Administrative Agent by the terms of the Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in the Loan Documents, Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein or therein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist against Administrative Agent.



Section 14.2 Delegation of Duties. Administrative Agent may execute any of its
duties under the Loan Documents by or through agents (“Agents”) or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such duties.
Administrative Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.



Section 14.3 Exculpatory Provisions. None of Administrative Agent, the other Agents,
nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (1) liable for any action lawfully taken or omitted to be taken by it or such Person under
or in connection with the Loan Documents (except for its or such Person’s own gross negligence or
willful misconduct), or (2) responsible in any manner to any of Lenders for any recitals,
statements, representations or warranties made by the Transaction Parties or any officer thereof
contained in the Loan Documents or in any certificate, report, statement or other document referred
to or provided for in, or received by Administrative Agent under or in connection with the Loan
Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of
the Loan Documents or for any failure of the Transaction Parties to perform their obligations
hereunder or thereunder. Administrative Agent and the other Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, the Loan Documents or to inspect the properties,
books or records of the Transaction Parties.



Section 14.4 Reliance by the Agents. Each of Administrative Agent and the Agents
shall be entitled to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certification, affidavit, letter, cablegram, telegram, telecopy, telex
or teletype message, statement, order or other document or conversation reasonably believed by it
to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without limitation, counsel to Borrower),
independent accountants and other experts selected by such Agent. As to Lenders: (1)
Administrative Agent shall be fully justified in failing or refusing to take any action under the
Loan Documents unless it


 


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 shall first receive such advice or concurrence of one hundred percent (100%) of Lenders (or, if a
provision of this Agreement expressly provides that a lesser number of Lenders may direct the
action of Administrative Agent, such lesser number of Lenders) or it shall first be indemnified to
its satisfaction by Lenders ratably in accordance with their respective Percentage Shares against
any and all liability and expense which may be incurred by it by reason of taking or continuing to
take any action (except for liabilities and expenses resulting from Administrative Agent’s gross
negligence or willful misconduct), and (2) Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan Documents in accordance with a
request of one hundred percent (100%) of Lenders (or, if a provision of this Agreement expressly
provides that Administrative Agent shall be required to act or refrain from acting at the request
of a lesser number of Lenders, such lesser number of Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all Lenders.



Section 14.5 Notice of Default. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default hereunder unless
Administrative Agent has received notice from a Lender or Borrower referring to the Loan Documents,
describing such Default or Event of Default and stating that such notice is a “notice of default.”
In the event that Administrative Agent receives such a notice and a Default has occurred,
Administrative Agent shall promptly give notice thereof to Lenders. Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that, unless and until Administrative Agent shall have
received such directions, Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interest of Lenders (except to the extent that this Agreement or
the Recourse Guaranty expressly requires that such action be taken or not taken by Administrative
Agent with the consent or upon the authorization of the Required Lenders or such other group of
Lenders, in which case such action will be taken or not taken as directed by the Required Lenders
or such other group of Lenders or Lenders).



Section 14.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that none of Administrative Agent, the other Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by Administrative Agent or the other Agents
hereinafter taken, including any review of the affairs of the Transaction Parties, shall be deemed
to constitute any representation or warranty by Administrative Agent or the other Agents to any
Lender. Each Lender represents to Administrative Agent and the other Agents that it has,
independently and without reliance upon Administrative Agent, the other Agents or any other Lender,
and based on such documents and information as it has deemed appropriate, made its own appraisal of
and investigation into the business, operations, property, financial and other condition and
creditworthiness of the Transaction Parties and made its own decision to make its loans hereunder
and enter into this Agreement. Each Lender also represents that it will, independently and without
reliance upon Administrative Agent, the other Agents or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to make its own


 


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credit
analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such
investigation as it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Transaction Parties. Except for notices,
reports and other documents expressly required to be furnished to Lenders by Administrative Agent
hereunder, Administrative Agent and the other Agents shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Transaction Parties which may
come into the possession of Administrative Agent or any other Agent or any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates.




Section 14.7 Indemnification; Reimbursement of Protective Advances.



14.7.1 Indemnification. Lenders agree to indemnify Administrative Agent and the other
Agents in their respective capacity as such (to the extent not reimbursed by Borrower and without
limiting the obligation of Borrower to do so), ratably according to the respective amounts of their
Percentage Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following the payment of the Obligations)
be imposed on, incurred by or asserted against Administrative Agent or the other Agents in any way
relating to or arising out of the Loan Documents or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or omitted by Administrative
Agent or the other Agents under or in connection with any of the foregoing; provided that
no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from
Administrative Agent’s or any other Agent’s gross negligence or willful misconduct, respectively.
The provisions of this Section 14.7 shall survive the payment of the Obligations and the
termination of this Agreement.



14.7.2 Reimbursement of Protective Advances. If Administrative Agent incurs any
reasonable costs or expenses (including, without limitation, those for legal services) after the
date of this Agreement and with respect to any actual or proposed Modification or waiver of any
term of the Loan Documents or restructuring or refinancing thereof or with any effort to enforce or
protect Lenders’ rights or interests with respect thereto (including any protective advances made
in accordance with Section 8 of the Security Instrument), or otherwise with respect to the
performance of its role as administrative agent under this Agreement, each in accordance with the
terms of this Agreement, then, if such costs are not reimbursed by or on behalf of Borrower,
Lenders shall reimburse Administrative Agent for their Percentage Share of such costs promptly
after request therefor. If Administrative Agent recovers any amounts for which Administrative
Agent has previously been reimbursed by Lenders hereunder, Administrative Agent shall promptly
distribute to Lenders their Percentage Share thereof.


 


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14.7.3 Lender Failure to Indemnify. In the event a Lender fails to reimburse
Administrative Agent for its Percentage Share of costs pursuant to this Section 14.7 and
such failure continues for a period of three (3) Business Days after notice from Administrative
Agent, such Lender shall cease to be entitled to any voting, consent or approval rights hereunder
or under any other Loan Document, until such time such Lender reimburses Administrative Agent for
its Percentage Share of such costs.



Section 14.8 Agents in Their Individual Capacity. Administrative Agent, the other
Agents and their affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any of the Transaction Parties or any of their respective Subsidiaries and
Affiliates as though Administrative Agent and the other Agents were not, respectively,
Administrative Agent, or an Agent hereunder. With respect to such loans made or renewed by them
and any Note issued to them, Administrative Agent and the other Agents shall have the same rights
and powers under the Loan Documents as any Lender and may exercise the same as though it were not
Administrative Agent or an Agent, respectively, and the terms “Lender” and
“Lenders” shall include Administrative Agent and each other Agent in its individual
capacity.



Section 14.9 Successor Administrative Agent. Administrative Agent may resign as
Administrative Agent under the Loan Documents upon thirty (30) days’ notice to Lenders and
Borrower. If Administrative Agent shall resign, then Lenders shall appoint a successor agent or,
if Lenders are unable to agree on the appointment of a successor agent, Administrative Agent shall
appoint a successor agent for Lenders whereupon such successor agent shall succeed to the rights,
powers and duties of Administrative Agent, and the term “Administrative Agent” shall mean
such successor agent effective upon its appointment, and the former Administrative Agent’s rights,
powers and duties as Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to this Agreement or any
of the Loan Documents or successors thereto; provided, however, that so long as no Event of
Default has occurred and is continuing, the appointment of a successor Administrative Agent shall
be subject to the consent of Borrower (such consent not to be unreasonably withheld, conditioned or
delayed). After any retiring Administrative Agent’s resignation hereunder as Administrative Agent,
the provisions of the Loan Documents shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under the Loan Documents.



Section 14.10 Limitations on Agents Liability. No Agent other than Administrative
Agent shall, each in its capacity as an Agent, have any right, power, obligation, liability,
responsibility or duty under this Agreement or the other Loan Documents.


 


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Section 14.11 Approvals of Lenders. All communications from Administrative Agent to
any Lender requesting such Lender’s determination, consent, approval or disapproval (a) shall be
given in the form of a written notice to such Lender, and (b) shall be accompanied by a description
of the matter or
issue as to which such determination, approval, consent or disapproval is requested, or shall
advise such Lender where information, if any, regarding such matter or issue may be inspected, or
shall otherwise describe the matter or issue to be resolved. Unless a Lender shall give written
notice to Administrative Agent that it specifically objects to the recommendation or determination
of Administrative Agent (together with a reasonable written explanation of the reasons behind such
objection) within ten (10) Business Days (or such lesser or greater period as may be specifically
required under the express terms of the Loan Documents) of receipt of such communication, such
Lender shall be deemed to have conclusively approved of or consented to such recommendation or
determination.



ARTICLE XV




Assignments and Participations




Section 15.1 Assignments, Delegations and Pledges. With the prior written consent of
Administrative Agent, such consent not to be unreasonably withheld or delayed, any Lender may at
any time assign, delegate and pledge to one or more Eligible Assignees (provided that no
written consent of Administrative Agent shall be required in connection with any assignment,
delegation and pledge by a Lender to an Affiliate of such Lender or to another Lender or its
Affiliate) (each such assignee, an “Assignee”, and each such pledgee, a “Pledgee”)
all or any part of such Lender’s Percentage Share of the Loan, the Delayed Draw Term Loan
Commitments and the other Obligations held by such Lender hereunder, in a minimum amount of
$3,000,000, which minimum amount may be an aggregated amount in the event of simultaneous
assignments to or by two or more funds under common management (or if such Lender’s Percentage
Share of the Loan is less than $3,000,000, one hundred percent (100%) thereof); provided,
however, that the Transaction Parties, Borrower and Administrative Agent may continue to
deal solely and directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment instructions, addresses
and related information with respect to the Assignee, shall have been given to Borrower and
Administrative Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall have
delivered to Borrower and Administrative Agent an Assignment and Acceptance Agreement, (iii) the
assignment shall have been recorded in the Register, and (iv) the parties to each assignment shall
execute and deliver to Administrative Agent an Assignment Agreement via an electronic settlement
system acceptable to Administrative Agent (or, if previously agreed with Administrative Agent,
manually), and shall pay to Administrative Agent a processing and recordation fee of $3,500.



Section 15.2 Register; Effect of Assignment and Acceptance. Administrative Agent
shall, on behalf of Borrower, maintain a copy of each Assignment and Acceptance Agreement delivered
to it and a register (the “Register”) for the recordation of the names and addresses of
Lenders and the principal amount of the Loan owing to each Lender from time to time. The entries
in the Register shall be conclusive, in the absence of manifest error, and Borrower, each Lender
and Administrative Agent shall treat each person whose name is recorded in the Register as the
owner of the Loans for all purposes of this Agreement. From and after the date that


 


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 Administrative
Agent notifies the assignor Lender and Borrower that it has received an executed Assignment and Acceptance Agreement and payment of
the above-referenced processing fee, and the assignment has been recorded in the Register: (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned to it pursuant to such Assignment
and Acceptance Agreement, shall have the rights and obligations of a Lender under the Loan
Documents, (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance
Agreement, relinquish its rights and be released from its obligations under the Loan Documents (but
shall be entitled to indemnification as otherwise provided in this Agreement with respect to any
events occurring prior to the assignment) and (iii) this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Percentage Shares resulting therefrom.



Section 15.3 Substitute Notes. After its receipt of notice by Administrative Agent
that it has received an executed Assignment and Acceptance Agreement and payment of the processing
fee (which notice shall also be sent by Administrative Agent to each Lender), Borrower shall, if
requested in writing by the Assignee, execute and deliver within five (5) Business Days of receipt
of such request to Administrative Agent, a new Note evidencing such Assignee’s Percentage Share of
the Loan; provided that the obligation to deliver such Note shall be subject to receipt by Borrower
of the existing Note which such new Note replaces (or, if not available, receipt of a lost note
affidavit and indemnity from beneficiary of such existing Note in customary form reasonably
satisfactory to Borrower).



Section 15.4 Participations. Any Lender may at any time sell to one or more
commercial banks, insurance companies or other Persons not Affiliates of Borrower (a
“Participant”) participating interests in the Loan and the other interests of that Lender
(the “Originating Lender”) hereunder and under the other Loan Documents; provided,
however, that (i) the Originating Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such
obligations, and (iii) Borrower and Administrative Agent shall continue to deal solely and directly
with the Originating Lender in connection with the Originating Lender’s rights and obligations
under this Agreement and the other Loan Documents. Any agreement or instrument pursuant to which
an Originating Lender sells such a participation shall provide that such Originating Lender shall
retain the sole right to enforce this Agreement and the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or the other 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 of any provision of any
Loan Document described in clauses (1), (2), (3), (4) or (5) of Section 19.5. In the case
of any such participation, the Participant shall be entitled to the benefit of Sections
2.2.5, 2.2.6, 2.2.8 and 2.2.9 (and subject to the burdens of
Sections 2.2.7, 2.2.9(v) and this Article XV) as though it were also a
Lender thereunder; provided, however, that (i) in no event shall


 


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 any such participation
result in Borrower making payments in excess of those that would be owing to Originating Lender if no participation had taken place unless Borrower is notified of such
participation and such participation is made with Borrower’s prior written consent, and (ii) if
amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each Participant shall be
deemed to have the right of set off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, and Section 19.19 of this Agreement shall
apply to such Participant as if it were a Lender party hereto.



Section 15.5 Security Interest in Favor of Federal Reserve Bank. Notwithstanding any
other provision contained in this Agreement or any other Loan Document to the contrary, any Lender
may assign all or any portion of its Percentage Share of the Loan held by it to any Federal Reserve
Lender or the United States Treasury as collateral security pursuant to Regulation A of the Board
of Governors of the Federal Reserve System and any Operating Circular issued by such Federal
Reserve Lender, provided that any payment in respect of such assigned Percentage Share of
the Loan made by Borrower to or for the account of the assigning and/or pledging Lender in
accordance with the terms of this Agreement shall satisfy Borrower’s obligations hereunder in
respect to such assigned Percentage Share of the Loan to the extent of such payment. No such
assignment shall release the assigning Lender from its obligations hereunder.



Section 15.6 Redirection Notice. Upon Administrative Agent’s receipt of written
notice (a “Redirection Notice”) by a Pledgee that the pledging Lender is in default, beyond
applicable cure periods, under pledging Lender’s obligations to Pledgee pursuant to the applicable
credit agreement between pledging Lender and Pledgee (which notice need not be joined in or
confirmed by pledging Lender), and until such Redirection Notice is withdrawn or rescinded by
Pledgee, Administrative Agent shall remit to Pledgee and not to pledging Lender, any payments that
Administrative Agent would otherwise be obligated to pay to pledging Lender from time to time
pursuant to this Agreement or any Loan Document. Each pledging Lender hereby unconditionally and
absolutely releases Administrative Agent from any liability to pledging Lender on account of
Administrative Agent’s compliance with any Redirection Notice believed by Administrative Agent to
have been delivered by Pledgee.



Section 15.7 Syndication. Subject to Section 15.1 above, DBTCA or its
affiliates may syndicate, securitize, sell, assign and/or participate the Loan and the other
Obligations held by Lenders hereunder, in whole or in part (any such transaction, a “Loan
Sale”), before or after the Closing Date, without any consent from Borrower or any other
Transaction Party, and DBTCA (or its affiliates) shall manage all aspects of such Loan Sale,
including the number and identity of the potential Lenders participating in the Loan Sale and the
Loan amounts and compensation offered in connection therewith. Borrower agrees to take all actions
as DBTCA (or its affiliates) may reasonably request to assist in any such Loan Sale, including:
(i) making its senior management and representatives available to participate in informational
meetings with potential Lenders,
investors and/or Rating Agencies at such times and places as DBTCA (or its affiliates) may
reasonably request; (ii) using its reasonable efforts to ensure that the Loan Sale efforts benefit
from Borrower’s lending relationships; and (iii) providing DBTCA (or its affiliates) with all
information reasonably deemed necessary by DBTCA to successfully complete the Loan Sale.


 


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Section 15.8 Pfandbrief Appraisal. In connection with any assignment, pledge or
transfer of a Lender’s interest in the Loan to a Pfandbrief, such Lender, at its own expense, may
order an Appraisal, and Administrative Agent will reasonably cooperate, at such Lender’s expense,
in coordinating the same with Borrower to the extent necessary to obtain such Appraisal.



ARTICLE XVI




Reserve Accounts




Section 16.1 Tax Reserve Account. In accordance with the time periods set forth in
Section 3.1, and during any period when the Manager is not reserving for Impositions and
Other Charges, Borrower shall deposit into the Tax Reserve Account an amount equal to (a)
one-twelfth of the annual Impositions that Administrative Agent reasonably estimates, based on the
most recent tax bill for the Property, will be payable during the next ensuing twelve (12) months
in order to accumulate with Administrative Agent sufficient funds to pay all such Impositions at
least twenty (20) days prior to the imposition of any interest, charges or expenses for the
non-payment thereof and (b) one-twelfth of the annual Other Charges that Administrative Agent
reasonably estimates will be payable during the next ensuing twelve (12) months (said monthly
amounts in (a) and (b) above hereinafter called the “Monthly Tax Reserve Amount”, and the
aggregate amount of funds held in the Tax Reserve Account being the “Tax Reserve Amount”).
If applicable, the Monthly Tax Reserve Amount shall be paid by Borrower to Administrative Agent on
each Payment Date. Administrative Agent will apply the Monthly Tax Reserve Amount to payments of
Impositions and Other Charges required to be made by Borrower pursuant to Article V and
Article VII and under the Security Instrument, subject to Borrower’s right to contest
Impositions in accordance with Section 7.3. In making any payment relating to the Tax
Reserve Account, Administrative Agent may do so according to any bill, statement or estimate
procured from the appropriate public office, without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or
title or claim thereof. If the amount of funds in the Tax Reserve Account shall exceed the amounts
due for Impositions and Other Charges pursuant to Article V and Article VII,
Administrative Agent shall credit such excess against future payments to be made to the Tax Reserve
Account. If at any time Administrative Agent reasonably determines that the Tax Reserve Amount is
not or will not be sufficient to pay Impositions and Other Charges by the dates set forth above,
Administrative Agent shall notify Borrower of such determination and Borrower shall increase its
monthly payments to Administrative Agent by the amount that Administrative Agent reasonably
estimates is sufficient to make up the deficiency at least thirty (30) days prior to the imposition
of any interest, charges or expenses for the non-payment of the Impositions and Other Charges.
Upon payment of the Impositions and Other Charges, Administrative Agent shall reassess the amount
necessary to be
deposited in the Tax Reserve Account for the succeeding period, which calculation shall take
into account any excess amounts remaining in the Tax Reserve Account.


 


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Section 16.2 Insurance Reserve Account. At any time when the insurance required to
be maintained pursuant to this Agreement is provided under a blanket policy in accordance with
Article VI hereof and the premiums in respect of such blanket policy are not paid or caused
to be paid at least 3 months before such premiums become due and payable or at any time that
Manager does not reserve for or otherwise set aside and pay, in no more than four (4) installments
per year, premiums with respect to the Insurance Requirements or following an Insurance Reserve
Trigger, Borrower will immediately pay to Administrative Agent for transfer by Administrative Agent
to the Holding Account (or if Borrower fails to so pay Administrative Agent, Administrative Agent
will transfer from the Holding Account) an amount (the “Insurance Reserve Amount”) equal to
payments of insurance premiums required to be made by Borrower to pay (or to reimburse Borrower
for) the insurance required pursuant to Article VI and under the Security Instrument. In
addition, at any time when the insurance required to be maintained pursuant to this Agreement is
provided under a blanket policy in accordance with Article VI hereof and the premiums in
respect of such blanket policy are not paid or caused to be paid at least 3 months before such
premiums become due and payable or at any time that Manager does not reserve for or otherwise set
aside and pay, in no more than four (4) installments per year, premiums with respect to the
Insurance Requirements, and otherwise following an Insurance Reserve Trigger, in accordance with
the time periods set forth in Section 3.1, Borrower shall deposit into the Insurance
Reserve Account an amount equal to one-twelfth of the insurance premiums that Administrative Agent
reasonably estimates based on the most recent bill, will be payable for the renewal of the coverage
afforded by the insurance policies upon the expiration thereof in order to accumulate with
Administrative Agent sufficient funds to pay all such insurance premiums at least twenty (20) days
prior to the expiration of the policies required to be maintained by Borrower pursuant to the terms
hereof (said monthly amounts hereinafter called the “Monthly Insurance Reserve Amount”);
provided, however, that immediately following an Insurance Reserve Trigger,
Borrower will pay to Administrative Agent for transfer by Administrative Agent to the Insurance
Reserve Account (or if Borrower fails to so pay Administrative Agent, Administrative Agent will
transfer from the Holding Account) an amount equal to payments of insurance premiums required to be
made by Borrower to pay (or to reimburse Borrower) for the insurance required pursuant to
Article VI and under the Security Instrument. The Monthly Insurance Reserve Amount, if same
is payable pursuant to this Section 16.2, shall be paid by Borrower to Administrative Agent
on each Payment Date. Administrative Agent will apply the Monthly Insurance Reserve Amount to
payments of insurance premiums required to be made by Borrower to pay for the insurance required
pursuant to Article VI and under the Security Instrument. In making any payment relating
to the Insurance Reserve Account, Administrative Agent may do so according to any bill, statement
or estimate procured from the insurer or agent, without inquiry into the accuracy of such bill,
statement or estimate or into the validity thereof. If at any time Administrative Agent reasonably
determines that the Insurance Reserve Amount is not or will not be sufficient to pay insurance
premiums (up to a maximum amount equal to the aggregate annual insurance premium required
hereunder), Administrative Agent shall notify Borrower of such determination and Borrower shall
increase the Insurance Reserve Amount by the amount that Administrative Agent reasonably estimates
is sufficient to make up the deficiency at least thirty (30) days prior
to expiration of the applicable insurance policies. Upon payment of such insurance premiums,
Administrative Agent shall reassess the amount necessary to be deposited in the Insurance Reserve
Account for the succeeding period, which calculation shall take into account any excess amounts
remaining in the Insurance Reserve Account.


 


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Section 16.3 Cash Sweep Reserve Account. During any Cash Sweep Period, certain
monies shall be transferred in accordance with Section 3.1.1 hereof from the Holding
Account into the Cash Sweep Reserve Account and retained by Administrative Agent as additional
security for the Indebtedness and shall be applied or disbursed as provided in Section
3.1.5 and below. From and after the occurrence and continuation of an Event of Default,
Administrative Agent shall have the right to apply any amounts then remaining in the Cash Sweep
Reserve Accounts to repay the Indebtedness or any other amounts due hereunder or under the other
Loan Documents in such order, manner and amount as Administrative Agent shall determine in its sole
discretion. Provided no Default or Event of Default shall have occurred and be continuing,
Administrative Agent shall instruct the Cash Management Bank to transfer to Borrower’s Account free
and clear of all Liens, any amounts remaining in the Cash Sweep Reserve Account within ten (10)
Business Days after Borrower provides Administrative Agent with evidence satisfactory to
Administrative Agent indicating that the Cash Sweep Period has ended.



Section 16.4 Required Repairs Reserve Account. (a) Borrower shall perform the repairs
and other work at the Property as set forth on Schedule VI (such repairs and other work
hereinafter referred to as “Required Repairs”) and shall complete each of the Required
Repairs on or before the respective deadline for each repair as set forth on Schedule VI.
On the Closing Date, Borrower shall deposit with or on behalf of Administrative Agent the amount
set forth on such Schedule VI as the estimated cost to complete the Required Repairs
multiplied by 125% (the “Required Repairs Funds”), which Required Repairs Funds shall be
transferred by the Cash Management Bank into the Required Repairs Reserve Account.



(b) Release of Required Repairs Funds. Provided no Event of Default is continuing,
Administrative Agent shall direct the Cash Management Bank to disburse Required Repairs Funds to
Borrower out of the Required Repairs Reserve Account, within twenty (20) days after the delivery by
Borrower to Administrative Agent of a request therefor (but not more often than once per month), in
increments of at least $10,000 (or a lesser amount if the total amount in the Required Repairs
Reserve Account is less than $10,000, in which case only one disbursement of the amount remaining
in the account shall be made), accompanied by the following items (which items shall be in form and
substance satisfactory to Administrative Agent): (i) an Officer’s Certificate (A) stating that the
Required Repairs (or relevant portion thereof) to be funded by the requested disbursement have been
completed in a good and workmanlike manner and in accordance with all applicable Legal
Requirements, (B) identifying each Person that supplied materials or labor in connection with the
Required Repairs to be funded by the requested disbursement, (C) stating that each such Person has
been paid in full or will be paid in full upon such disbursement, or if such payment is a progress
payment, that such payment represents full


 


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payment to such Person, less any applicable retention
amount, for work completed through the date of the relevant invoice from such Person, (D) stating that the
Required Repairs (or relevant portion thereof) to be funded have not been the subject of a previous
disbursement, (E) stating that all previous disbursements of Required Repairs Funds have been used
to pay the previously identified Required Repairs, and (F) stating that all outstanding trade
payables (other than those to be paid from the requested disbursement or those constituting
Permitted Indebtedness) have been paid in full other than any applicable retention amount, (ii) as
to any completed Required Repair a copy of any license, permit or other approval by any
Governmental Authority required, if any, in connection with the Required Repairs and not previously
delivered to Administrative Agent, (iii) copies of appropriate lien waivers (or conditional lien
waivers) or other evidence of payment satisfactory to Administrative Agent, (iv) at Administrative
Agent’s option, for Required Repairs in excess of $25,000 a title search for the Property
indicating that the Property is free from all Liens, claims and other encumbrances not previously
approved by Administrative Agent, and (v) such other evidence as Administrative Agent shall
reasonably request to demonstrate that the Required Repairs to be funded by the requested
disbursement have been completed (or completed to the extent of the requested payment) and are paid
for or will be paid upon such disbursement to Borrower. Upon Borrower’s completion of all Required
Repairs in accordance with this Section 16.4, Administrative Agent shall direct the Cash
Management Bank to release any remaining Required Repairs Funds, if any, in the Required Repairs
Reserve Account to Borrower.



Section 16.5 FF&E Reserve Account. In accordance with Section 3.1, and
during any period when Manager is not reserving for FF&E or FF&E is not otherwise reserved pursuant
to the terms of the Management Agreement, upon the request of Borrower, Administrative Agent will,
within ten (10) Business Days (or such shorter time as may be appropriate in Administrative Agent’s
reasonable discretion during emergency situations identified to Administrative Agent by Borrower in
writing) after the receipt of such request and the satisfaction of the other conditions set forth
in this Section, cause disbursements to Borrower from the FF&E Reserve Account to pay or to
reimburse Borrower or Manager for actual costs incurred in connection with capital expenditures
relating to FF&E at the Property of the type customarily utilized in hotel properties in New York
similar to the Property (to the extent such expenditures are permitted hereunder), provided
that (A) Administrative Agent has received invoices evidencing that the costs for which such
disbursements are requested are due and payable and are in respect of capital expenditures relating
to FF&E at the property, (B) Borrower has applied any amounts previously received by it in
accordance with this Section for the expenses to which specific draws made hereunder relate and
received any Lien waivers or other releases which would customarily be obtained with respect to the
work in question and (C) Administrative Agent has received an Officer’s Certificate confirming that
the conditions in the foregoing clauses (A) and (B) have been satisfied and that the copies of
invoices and evidence of Lien waivers (to the extent required above) attached to such Officer’s
Certificate are true, complete and correct. Subject to the terms of the Assignment of Management
Agreement, in no event shall Administrative Agent be obligated to disburse funds from the FF&E
Reserve Account if a monetary Default or an Event of Default exists.


 


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Section 16.6 Ground Rent Reserve Account. (a) During any period when the Manager is not reserving for Ground Rent, Borrower shall deposit
with or on behalf of Administrative Agent, on each Monthly Payment Date, an amount equal to the
Ground Rent that will be payable under the Ground Lease for the month immediately following the
month in which such Payment Date occurs (said monthly amounts hereinafter called the “Monthly
Ground Rent Reserve Amount”), which amounts shall be transferred into the Ground Rent Account.
Such deposit may be increased from time to time by Administrative Agent in such amount as
Administrative Agent shall deem to be necessary in its reasonable discretion to reflect any
increases in the Ground Rent. Amounts deposited from time to time into the Ground Rent Account
pursuant to this Section 16.6 are referred to herein as the “Ground Rent Funds”.



(b) Provided no Event of Default has occurred and is continuing, Administrative Agent shall
direct the Cash Management Bank to apply Ground Rent Funds on deposit in the Ground Rent Account to
payments of Ground Rent. Borrower shall furnish Administrative Agent with all bills, invoices and
statements for the Ground Rent at least thirty (30) days prior to the date on which such Ground
Rent first becomes payable. In making any payment relating to Ground Rent, Administrative Agent
may do so according to any bill or statement given by or on behalf of the ground lessor without
inquiry into the accuracy of such bill or statement or into the validity of any rent, additional
rent or other charge thereof. If the amount of the Ground Rent Funds shall exceed the amounts due
for Ground Rent, Administrative Agent shall credit such excess against future payments to be made
to the Ground Rent Funds. Any Ground Rent Funds remaining after the Obligations have been paid in
full shall be returned to Borrower.



ARTICLE XVII




Defaults




Section 17.1 Event of Default. Each of the following events shall constitute an
event of default hereunder (an “Event of Default”):




(i) if (A) the Indebtedness is not paid in full on the Maturity Date (subject to the
last sentence of Section 3.1.5(B)), (B) any Debt Service is not paid in full on the
applicable Payment Date (subject to the last sentence of Section 3.1.5(B)), (C) any
prepayment of principal due under this Agreement or the Notes is not paid when due, (D) the
Prepayment Premium is not paid when due, (E) any deposit to the Holding Account or any of
the other Collateral Accounts required to be made by or on behalf of Borrower or any of its
Affiliates is not made on the required deposit date therefor; or (F) except as to any amount
included in (A), (B), (C), (D), and/or (E) of this clause (i), any other amount payable
pursuant to this Agreement, the Notes or any other Loan Document is not paid in full when
due and payable in accordance with the provisions of the applicable Loan Document, with such
failure as described in subclauses (C), (D), (E) and (F) continuing for five (5) Business
Days after Administrative Agent delivers written notice thereof to Borrower;


 


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(ii) subject to Borrower’s right to contest as set forth in Section 7.3, if any
of the Impositions or Other Charges are not paid prior to the imposition of any interest,
penalty, charge or expense for the non-payment thereof;




(iii) in the event Administrative Agent is not responsible for paying for insurance
with the funds held in the Insurance Reserve Account, if the insurance policies required by
Section 6.1 are not kept in full force and effect, or if certificates for any of
such insurance policies are not delivered to Administrative Agent within ten (10) Business
Days following Administrative Agent’s request therefor;




(iv) if, except as permitted pursuant to Article VIII, (a) any Transfer of any
direct or indirect ownership interest in all or any portion of the Property, (b) any
Transfer of any direct or indirect ownership interest in Borrower, any Transaction Party or
other Person restricted by the terms of Article VIII, (c) any Lien or encumbrance on
all or any portion of the Property or (d) any pledge, hypothecation, creation of a security
interest in or other encumbrance of any direct or indirect ownership interests in Borrower,
any Transaction Party, or other Person restricted by the terms of Article VIII;




(v) if any representation or warranty made by Borrower herein, any Transaction Party,
or any Affiliate of Borrower in any Loan Document, or in any report, certificate (including,
but not limited to, any certificate by Borrower delivered in connection with the issuance of
the Non-Consolidation Opinion), financial statement or other instrument, agreement or
document furnished to Administrative Agent shall have been false or misleading in any
material respect as of the date the representation or warranty was made; provided,
however, that if such representation or warranty which was false or misleading in
any material respect is, by its nature, curable and is not reasonably likely to have a
Material Adverse Effect, and such representation or warranty was not, to the Best of
Borrower’s Knowledge, false or misleading in any material respect when made, then same shall
not constitute an Event of Default unless Borrower has not cured same within ten (10)
Business Days after receipt by Borrower of notice from Administrative Agent in writing of
such breach;




(vi) if Borrower, Guarantor or any Transaction Party shall make an assignment for the
benefit of creditors;




(vii) if a receiver, liquidator or trustee shall be appointed for Borrower, Guarantor
or any Transaction Party or if Borrower, Guarantor or any Transaction Party shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall
be filed by or against, consented to, or acquiesced in by, Borrower, Guarantor or any
Transaction Party, or if any proceeding for the dissolution or liquidation of Borrower,
Guarantor or any Transaction Party shall be instituted; provided, however,
if such appointment, adjudication, petition or proceeding was involuntary and not consented
to by Borrower, Guarantor or any Transaction Party upon the same not being discharged,
stayed or dismissed within ninety (90) days;


 


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(viii) if Borrower, Guarantor or any Transaction Party, as applicable, Transfers its
rights under this Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;




(ix) with respect to any term, covenant or provision set forth in any Loan Document
(other than the other subsections of this Section 17.1) which specifically contains
a notice requirement or grace period, if Borrower, Guarantor or any Transaction Party shall
be in default under such term, covenant or condition after the giving of such notice or the
expiration of such grace period;




(x) if Borrower, having notified Administrative Agent of its election to extend the
Maturity Date as set forth in Section 2.1.6, fails to deliver the Extension Interest
Rate Cap Agreement to Administrative Agent prior to the first day of the extended term of
the Loan and Borrower has not repaid the Loan pursuant to the terms of the Notes prior to
such first day of the extended term;




(xi) if Borrower shall fail to comply with (a) any covenants set forth in Section
5.2 or (b) any covenants set forth in Section 5.1 or Article XI and in
the case of this clause (b) only, such failure shall continue unremedied for a period of 10
days after Administrative Agent delivers written notice thereof to Borrower;




(xii) if Borrower or any of its Affiliates shall fail to deposit any sums required to
be deposited in the Holding Account or any Sub-Accounts thereof pursuant to the requirements
herein when due;




(xiii) if this Agreement or any other Loan Document or any Lien granted hereunder or
thereunder, in whole or in part, shall terminate or shall cease to be effective or shall
cease to be a legally valid, binding and enforceable obligation of Borrower or any
Transaction Party, or any Lien securing the Indebtedness shall, in whole or in part, cease
to be a perfected first priority Lien, subject to the Permitted Encumbrances (except in any
of the foregoing cases in accordance with the terms hereof or under any other Loan Document
or by reason of any affirmative act or omission of Administrative Agent);




(xiv) if the Management Agreement is terminated and an Acceptable Manager is not
appointed as a replacement manager pursuant to the provisions of Section 5.2.14
within sixty (60) days after such termination;




(xv) if Borrower shall default beyond the expiration of any applicable cure period
under any existing easement, covenant or restriction which affects the Property, the default
of which shall have a Material Adverse Effect;




(xvi) if there exists any fact or circumstance that reasonably could be expected to
result in the (a) imposition of a Lien or security interest under Section 412(n) of the Code
or under ERISA or (b) the complete or partial withdrawal by Borrower or any ERISA Affiliate
from any “multiemployer plan” that is reasonably expected to result in any material
liability to Borrower; provided, however that the existence of such fact or
circumstance under clause (xvii)(b) shall not constitute an Event of Default if such
material withdrawal liability (x) in the case of a withdrawal by an ERISA Affiliate that is
reasonably expected to cause a Material Adverse Effect or any withdrawal by Borrower,
is paid within thirty (30) days after the date incurred or is contested in accordance with
Section 7.3 hereof or (y) in the case of a withdrawal by an ERISA Affiliate that is
not reasonably expected to cause a Material Adverse Effect, is paid within the period
required under applicable ERISA statutes or is contested in accordance with Section
7.3 hereof;


 


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(xvii) if Guarantor breaches any of the Financial Covenants (as defined in the Recourse
Guaranty);




(xviii) if Borrower fails to apply any funds received by Borrower pursuant to Section
3.1.6 for the purpose such funds were transferred to Borrower; and




(xix) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement or of any Loan Document not specified in
subsections (i) to (xviii) above, for thirty (30) days after written notice from
Administrative Agent; provided, however, that if such Default is susceptible
of cure but cannot reasonably be cured within such thirty (30) day period and
provided further that Borrower shall have commenced to cure such Default
within such thirty (30) day period and thereafter diligently proceeds to cure the same, such
thirty (30) day period shall be extended for such time as is reasonably necessary for
Borrower in the exercise of due diligence to cure such Default, such additional period not
to exceed ninety (90) days.




Section 17.2 Remedies.



(A) Unless waived in writing by Administrative Agent (with the consent of the Required Lenders
or Lenders as otherwise provided in this Agreement), upon the occurrence and during the continuance
of an Event of Default (other than an Event of Default described in clauses (a)(vi) or (vii) above)
Administrative Agent may (and at the request of the Required Lenders shall), from time to time
without notice or demand, exercise, on behalf of Lenders, all rights and remedies available to it
under this Agreement and the other Loan Documents or at law or in equity, take such action that
Administrative Agent deems advisable to protect and enforce its and Lenders rights against
Borrower, the other Transaction Parties and the Property, including, without limitation, (i)
declaring immediately due and payable the entire Principal Amount together with interest thereon
and all other sums due by Borrower and the other Transaction Parties under the Loan Documents, (ii)
collecting interest on the Principal Amount at the Default Rate whether or not the Loan has been
accelerated, and (iii) enforcing or availing itself of any or all rights or remedies set forth in
the Loan Documents against Borrower, the other Transaction Parties and the Property, including,
without limitation, all rights or remedies available at law or in equity; and upon any Event of
Default described in subsections (a)(vi) or (a)(vii) above, the Indebtedness and all other
obligations of Borrower and the other Transaction Parties hereunder and under the other Loan
Documents shall immediately and automatically become due and payable, without notice or demand, and
Borrower hereby expressly waives any such notice or demand, anything contained herein or in any
other Loan Document to the contrary notwithstanding. The foregoing provisions shall not be
construed as a waiver by Administrative
Agent of its right to pursue any other remedies available to it under this Agreement, the
Security Instrument or any other Loan Document. Any payment hereunder may be enforced and
recovered in whole or in part at such time by one or more of the remedies provided to
Administrative Agent in the Loan Documents.


 


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(B) Unless waived in writing by Administrative Agent, upon the occurrence and during the
continuance of an Event of Default, all or any one or more of the rights, powers, privileges and
other remedies available to Administrative Agent and Lenders against Borrower under this Agreement
or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law
or in equity may be exercised by Administrative Agent and Lenders at any time and from time to
time, whether or not all or any of the Indebtedness shall be declared due and payable, and whether
or not Administrative Agent shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with respect to the
Property. Any enforcement or remedial actions taken by Administrative Agent shall be cumulative
and concurrent and may be pursued independently, singly, successively, together or otherwise, at
such time and in such order as Administrative Agent may determine in its sole discretion, to the
fullest extent permitted by law, without impairing or otherwise affecting the other rights and
remedies of Administrative Agent permitted by law, equity or contract or as set forth herein or in
the other Loan Documents. Without limiting the generality of the foregoing, Borrower agrees that
if an Event of Default is continuing (i) Administrative Agent shall not be subject to any one
action or election of remedies law or rule and (ii) all liens and other rights, remedies or
privileges provided to Administrative Agent shall remain in full force and effect until
Administrative Agent has exhausted all of its remedies against the Property and the Security
Instrument has been foreclosed, sold and/or otherwise realized upon in satisfaction of the
Indebtedness or the Indebtedness has been paid in full.



(C) Upon the occurrence and during the continuance of an Event of Default, with respect to the
Account Collateral, Administrative Agent may:




(i) without notice to Borrower, except as required by law, and at any time or
from time to time, charge, set-off and otherwise apply all or any part of the
Account Collateral against the Obligations, Operating Expenses and/or Capital
Expenditures for the Property or any part thereof;




(ii) in Administrative Agent’s sole discretion, at any time and from time to
time, exercise any and all rights and remedies available to it under this Agreement
and/or as a secured party under the UCC;




(iii) demand, collect, take possession of or receipt for, settle, compromise,
adjust, sue for, foreclose or realize upon the Account Collateral (or any portion
thereof) as Administrative Agent may determine in its sole discretion; and




(iv) take all other actions provided in, or contemplated by, this Agreement.


 


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(D) With respect to Borrower, the Account Collateral, the Rate Cap Collateral and the
Property, nothing contained herein or in any other Loan Document shall be construed as requiring
Administrative Agent to resort to the Property for the satisfaction of any of the Indebtedness, and
Administrative Agent may seek satisfaction out of the Property or any part thereof, in its absolute
discretion in respect of the Indebtedness. In addition, Administrative Agent shall have the right
from time to time to partially foreclose the Security Instrument in any manner and for any amounts
secured by this Agreement or the Security Instrument then due and payable as determined by
Administrative Agent in its sole discretion including, without limitation, the following
circumstances: (i) in the event Borrower defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal or interest, Administrative Agent may
foreclose this Agreement and the Security Instrument to recover such delinquent payments, or (ii)
in the event Administrative Agent elects to accelerate less than the entire outstanding principal
balance of the Loan, Administrative Agent may foreclose this Agreement and the Security Instrument
to recover so much of the principal balance of the Loan as Administrative Agent may accelerate and
such other sums secured by this Agreement or the Security Instrument as Administrative Agent may
elect. Notwithstanding one or more partial foreclosures, the Property shall remain subject to this
Agreement and the Security Instrument to secure payment of sums secured by this Agreement and the
Security Instrument and not previously recovered.



Section 17.3 Remedies Cumulative; Waivers. The rights, powers and remedies of
Administrative Agent under this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any other right, power or remedy which Administrative Agent may have against Borrower
or any other Person pursuant to this Agreement or the other Loan Documents, or existing at law or
in equity or otherwise. Administrative Agent’s rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Administrative Agent may determine in
Administrative Agent’s sole discretion. No delay or omission to exercise any remedy, right or
power accruing upon an Event of Default shall impair any such remedy, right or power or shall be
construed as a waiver thereof, but any such remedy, right or power may be exercised from time to
time and as often as may be deemed expedient. A waiver of one Default or Event of Default with
respect to Borrower, Guarantor or any Transaction Party shall not be construed to be a waiver of
any subsequent Default or Event of Default by Borrower, Guarantor or any Transaction Party or to
impair any remedy, right or power consequent thereon.



Section 17.4 Costs of Collection. In the event that after an Event of Default: (i)
the Notes or any of the other Loan Documents are placed in the hands of an attorney for collection
or enforcement or are collected or enforced through any legal proceeding; (ii) an attorney is
retained to represent Administrative Agent and/or Lenders in any bankruptcy, reorganization,
receivership, or other proceedings affecting creditors’ rights and involving a claim under the
Notes or any of the Loan Documents; or (iii) an attorney is retained to protect or enforce the lien
or any of the terms of this Agreement, the Security Instrument or any of the other Loan Documents;
then Borrower shall pay to Administrative Agent upon demand all reasonable attorney’s fees, costs
and expenses
actually incurred in connection therewith, including costs of appeal, together with interest
on any judgment obtained by Administrative Agent at the Default Rate.


 


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ARTICLE XVIII




Special Provisions





Section 18.1 Exculpation.



18.1.1 Exculpated Parties. The Loan (as it may be severed, resized, bifurcated or
otherwise modified) and the Obligations shall be fully recourse to Borrower. Except as set forth
in this Section 18.1, the Recourse Guaranty, and the Environmental Indemnity, no personal
liability shall be asserted, sought or obtained by Administrative Agent or any of Lenders or
enforceable against (i) any Affiliate of Borrower, (ii) any Person owning, directly or indirectly,
any legal or beneficial interest in Borrower or any Affiliate of Borrower or (iii) any direct or
indirect partner, member, principal, officer, Controlling Person, beneficiary, trustee, advisor,
shareholder, employee, agent, manager, Affiliate or director of any Persons described in clauses
(i) and (ii) above (collectively, the “Exculpated Parties”) and none of the Exculpated
Parties shall have any personal liability (whether by suit deficiency judgment or otherwise) in
respect of the Obligations, this Agreement, the Security Instrument, the Notes, the Property or any
other Loan Document, or the making, issuance or transfer thereof, all such liability, if any, being
expressly waived by Administrative Agent and Lenders. The foregoing limitation shall not in any
way limit or affect Administrative Agent’s and Lenders’ right to any of the following and neither
Administrative Agent nor any Lender shall be deemed to have waived any of the following:




(A) foreclosure of the lien of this Agreement and the Security Instrument and the other
Loan Documents in accordance with the terms and provisions set forth herein and in the other
Loan Documents;




(B) action against any other security at any time given to secure the payment of the
Notes and the other Obligations;




(C) exercise of any other remedy set forth in this Agreement or in any other Loan
Document which is not inconsistent with the terms of this Section 18.1;




(D) any right which Administrative Agent may have under Sections 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount
of the Indebtedness secured by this Agreement, the Security Instrument and the other Loan
Documents or to require that all collateral shall continue to secure all of the Indebtedness
owing to Lenders in accordance with the Loan Documents; or




(E) the liability of any given Exculpated Party with respect to any separate written
guaranty or agreement given by any such Exculpated Party in connection with the
Loan (including, without limitation, the Recourse Guaranty and the Environmental
Indemnity).


 


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18.1.2 Carveouts From Non-Recourse Limitations. Notwithstanding the foregoing or
anything in this Agreement or any of the Loan Documents to the contrary, there shall at no time be
any limitation on any Guarantor’s liability for, and Guarantor and Borrower shall be jointly and
severally liable for, the payment, in accordance with the terms of this Agreement, the Notes, the
Security Instrument and the other Loan Documents, to Administrative Agent and Lenders of the
following (“Recourse Liabilities”):




(A) any Liabilities actually incurred by or on behalf of Administrative Agent or any
Lender by reason of (i) the fraudulent acts of or intentional misrepresentations by Borrower
or any Affiliate of Borrower (including, without limitation, transfers from the Hotel
Operating Account made in violation of Section 3.1.9) or (ii) the failure of
Borrower to have a valid and subsisting certificate of occupancy(s) for all or any portion
of the Property if and to the extent such certificate of occupancy(s) is required to comply
with all Legal Requirements;




(B) Proceeds which Borrower or any Affiliate of Borrower has actually received and to
which Administrative Agent is entitled pursuant to the terms of this Agreement or any of the
Loan Documents to the extent the same have not been applied toward payment of the
Indebtedness, or used for the repair or replacement of the Property in accordance with the
provisions of this Agreement;




(C) any security deposits and advance deposits which are not delivered to
Administrative Agent upon a foreclosure of the Property or action in lieu thereof, except to
the extent any such deposits were applied or refunded in accordance with the terms and
conditions of any of the Leases, as applicable, prior to the occurrence of the Event of
Default that gave rise to such foreclosure or action in lieu thereof;




(D) any Liabilities actually incurred by or on behalf of Administrative Agent or any
Lender by reason of all or any part of the Property, the Account Collateral, the IP
Collateral or the Rate Cap Collateral being voluntarily encumbered by a Lien (other than (i)
pursuant to this Agreement and the Security Instrument or (ii) any Lien resulting by reason
of the insufficiency of Net Operating Income to pay trade payables or Impositions or to
discharge worker’s, mechanics’, materialmen’s or similar Liens, except where such
insufficiency of Net Operating Income is due to a breach of the Loan Documents by any of the
Transaction Parties) in violation of the Loan Documents;




(E) after the occurrence and during the continuance of an Event of Default, any Rents,
issues, profits and/or income collected by Borrower or any Affiliate of Borrower (other
than Rents and credit card receivables sent to the applicable Deposit Account or paid
directly to Administrative Agent pursuant to any notice of direction delivered to tenants of
the Property or credit card companies) which are not applied to payment of the Obligations
or used to pay normal and verifiable Operating Expenses of
the Property or otherwise applied in a manner permitted under the Loan Documents, in
each case, as a result of the acts of Borrower or any Affiliate of Borrower;


 


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(F) any Liabilities actually incurred by or on behalf of Administrative Agent or any
Lender by reason of physical damage to the Property from intentional waste or willful
destruction (other than in connection with a permitted alteration) committed by Borrower or
any Affiliate of Borrower;




(G) any actual loss, damage, cost or expense actually incurred by Administrative Agent
or Lenders as a result of the removal or disposal of any collateral for the Loan during the
continuation of an Event of Default other than in the Ordinary Course of Business;




(H) any actual loss, damage, cost or expense actually incurred by Administrative Agent
or Lenders as a result of a violation of the provisions of Section 5.2.1 hereof,
other than (i) de minimis violations of such provisions as a result of incurrence of trade
payables or purchase money indebtedness in excess of the limitations thereon set forth in
clauses (c) and (d) of the definition of Permitted Debt and (ii) any encumbrance resulting
by reason of the insufficiency of Net Operating Income to pay trade payables or Impositions
or to discharge worker’s, mechanics’, materialmen’s or similar Liens, except where such
insufficiency of Net Operating Income is due to a breach of the Loan Documents by any of the
Transaction Parties;




(I) any actual loss, damage, cost or expense actually incurred by or on behalf of
Administrative Agent or any Lender as a result of any distribution in violation of the
provisions of Section 5.2.13 hereof;




(J) any Liabilities incurred by or on behalf of Administrative Agent or any Lender by
reason of the breach of any representation, warranty, covenant or indemnification provision
in the Environmental Indemnity or in the Security Instrument concerning environmental laws,
hazardous substances and asbestos and any indemnification of Administrative Agent or any of
Lenders with respect thereto in either document;




(K) any Liabilities incurred by or on behalf of Administrative Agent or any Lender by
reason of the failure of Borrower to comply with any of the provisions of Article
XV;




(L) any Liabilities incurred by or on behalf of Administrative Agent or any Lender by
reason of Borrower’s failure to obtain Administrative Agent’s prior written consent to any
Transfer (other than a Transfer set forth in clause (N)(ii) below), as required by the Loan
Agreement or the Security Instrument or any other violation of section 8.1 (other than any
involuntary Transfer due to an encumbrance resulting by reason of the insufficiency of Net
Operating Income to pay trade payables or Impositions or to discharge worker’s, mechanics’,
materialmen’s or similar Liens, except where such insufficiency of Net Operating Income is
due to a breach of the Loan Documents by any of the Transaction Parties);


 


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(M) any Liabilities incurred by or on behalf of Administrative Agent or any of Lenders
by reason of Borrower’s failure to perform any of its obligations with respect to the
Condominium Board, the Condominium Declaration, the Condominium Rules or Condominium Regime
as set forth in Section 5.1.27 or if for any reason the Property or the land subject
to the Condominium Declaration is withdrawn from condominium ownership; or if by reason of
damage or destruction of all or any portion of the Improvements the Condominium Board or the
owners of the Condominium Units do not duly and promptly resolve to proceed with the repair
or restoration of the Improvements; or if by reason of the failure of Borrower to perform
any act, as for example notification to the Condominium Board under the Condominium
Declaration or the Condominium Rules, Administrative Agent shall not be entitled to the
protective provisions under the Condominium Declaration or the Condominium Rules.




(N) all of the Indebtedness and the Obligations in the event of: (i) Borrower fails to
obtain Administrative Agent’s prior consent to any subordinate financing secured by the
Property or other voluntary Lien encumbering the Property; (ii) Borrower fails to obtain
Administrative Agent’s prior consent to any Transfer of the Property or any interest therein
or any Transfer of any direct or indirect ownership interest in Borrower, in either case as
required by the Security Instrument or this Agreement (other than any involuntary Transfer
due to an encumbrance resulting by reason of the insufficiency of Net Operating Income to
pay trade payables or Impositions or to discharge worker’s, mechanics’, materialmen’s or
similar Liens, except where such insufficiency of Net Operating Income is due to a breach of
the Loan Documents by any of the Transaction Parties); (iii) Borrower files a voluntary
petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law; (iv) Borrower is substantively consolidated with any other Person (other than any other
Borrower or any subsidiary of any Borrower); unless such consolidation was involuntary and
not consented to by Borrower or Guarantor; (v) the filing of an involuntary petition against
Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law by any other Person in which Borrower colludes with or otherwise assists such Person,
and/or Borrower solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower by any Person; (vi) Borrower files an answer consenting to, or
otherwise acquiescing in, or joining in, any involuntary petition filed against it by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law; (vii) Borrower or any Affiliate, officer, director or representative
controlled by Guarantor which controls Borrower consents to, or acquiesces in, or joins in,
an application for the appointment of a custodian, receiver, trustee or examiner for
Borrower or any portion of the Property; (viii) Borrower makes an assignment for the benefit
of creditors or admits, in writing or in any legal proceeding, its insolvency or inability
to pay its debts as they become due; or (ix) if Guarantor (or any Person comprising
Guarantor), Borrower or any Affiliate of any of the foregoing, in connection with any
enforcement action or exercise or assertion of any right or remedy by or on behalf of
Administrative Agent under or in connection with the Recourse Guaranty, the Notes, the
Security Instrument or any other Loan Document, seeks a defense, judicial intervention or
injunctive or other equitable relief of any kind, or asserts in a pleading filed in
connection with a judicial proceeding any defense against Administrative Agent or any right
in connection with any security for the Loan (except for a defense raised, or
judicial intervention or injunctive or other equitable relief sought, by Borrower,
Guarantor or any Affiliate of any of the foregoing in good faith on the grounds that the
Event of Default giving rise to such enforcement action or exercise or assertion of a right
or remedy by Administrative Agent has not occurred or that Administrative Agent’s exercise
of remedies is not in accordance with applicable law or the Loan Documents);


 


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(O) any Liabilities which may at any time be imposed upon, incurred by or awarded
against Administrative Agent or any Lender in the event (and arising out of such
circumstances) that Borrower should raise any defense, counterclaim or allegation in any
foreclosure action by Administrative Agent relative to the Property, the Account Collateral,
the IP Collateral or the Rate Cap Collateral or any part thereof law (except for a defense
raised, or judicial intervention or injunctive or other equitable relief sought, or a
counterclaim or allegation asserted, by Borrower, Guarantor or any Affiliate of any of the
foregoing in good faith on the grounds that the Event of Default giving rise to such
foreclosure action has not occurred or that Administrative Agent’s exercise of remedies is
not in accordance with Legal Requirements or the Loan Documents);




(P) any Liabilities incurred by or on behalf of Administrative Agent or any Lender by
reason of Borrower or their respective general partners failing to be and have been since
the date of its respective formation, a Single Purpose Entity (other than as a result of (i)
Borrower’s failure to maintain adequate capital or be or remain solvent, (ii) Borrower’s
failure to pay any liability or indebtedness as it becomes due, provided such liability or
indebtedness is not prohibited pursuant to the terms of the Loan Documents or (iii)
involuntary liabilities incurred by Borrower);




(Q) during the continuance of a Cash Sweep Period, any Liabilities incurred by or on
behalf of Administrative Agent or any Lender by reason of Borrower’s failure to apply funds
received by Borrower pursuant to Section 3.1.6(iii) for the purpose such funds were
transferred to Borrower; and




(R) reasonable attorney’s fees and expenses incurred by Administrative Agent or any
Lender in connection with any successful suit filed on account of any of the foregoing
clauses (A) through (Q).



ARTICLE XIX




Miscellaneous




Section 19.1 Survival. This Agreement and all covenants, indemnifications,
agreements, representations and warranties made herein and in the certificates delivered pursuant
hereto shall survive the making by Administrative Agent of the Loan and the execution and delivery
to Administrative Agent of the Notes, and shall continue in full force and effect so long as all or
any of the Indebtedness is outstanding and unpaid unless a longer period is expressly set forth
herein or in the other Loan Documents. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and assigns of such party.

All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the successors and assigns of Administrative Agent. If Borrower consists
of more than one person, the obligations and liabilities of each such person hereunder and under
the other Loan Documents shall be joint and several.


 


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Section 19.2 Administrative Agent’s Discretion. Whenever pursuant to this Agreement,
Administrative Agent exercises any right given to it to approve or disapprove, or any arrangement
or term is to be satisfactory to Administrative Agent, the decision of Administrative Agent to
approve or disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion
of Administrative Agent and shall be final and conclusive.




Section 19.3 Governing Law.



(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDERS AND
ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE
OF NEW YORK. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.



(B) SUBJECT TO CLAUSE (E) OF THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER LOAN DOCUMENTS, OR ANY OF THE OBLIGATIONS,
SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND
CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT OR ANY LOAN DOCUMENT, EACH
TRANSACTION PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS
GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN WITH
RESPECT TO ACTIONS BY ANY AGENT IN RESPECT OF RIGHTS UNDER ANY


 


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SECURITY AGREEMENT GOVERNED BY LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH
RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C)
AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE TRANSACTION PARTY AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH THIS AGREEMENT; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE
(C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE TRANSACTION PARTY IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT; AND (E) AGREES THAT ADMINISTRATIVE AGENT AND LENDERS RETAIN THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY TRANSACTION PARTY
IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY
ACCOMMODATION SECURITY DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT.




(C) BORROWER DOES HEREBY DESIGNATE AND APPOINT:




CORPORATION SERVICE COMPANY

80 STATE STREET

ALBANY, NEW YORK 12207-2543



AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN THE
BOROUGH OF MANHATTAN, STATE OF NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID
AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE
MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER
IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO ADMINISTRATIVE AGENT OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY
AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW
YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT
CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.


 


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Section 19.4 No Assignment by Borrower. Except as otherwise expressly provided in
Section 8.5 of this Agreement, none of the Transaction Parties may assign its rights or
obligations under this Agreement or the other Loan Documents without the prior written consent of
Administrative Agent and the Required
Lenders. Subject to the foregoing, all provisions contained in this Agreement and the other
Loan Documents and in any document or agreement referred to herein or therein or relating hereto or
thereto shall inure to the benefit of Administrative Agent and each Lender, their respective
successors and assigns, and shall be binding upon each of the Transaction Parties and such Person’s
successors and assigns.



Section 19.5 Modification. Neither this Agreement nor any other Loan Document may be
Modified or waived unless such Modification or waiver is in writing and signed by Administrative
Agent, the applicable Transaction Parties, Borrower and, except for the Modifications and waivers
requiring consent of one hundred percent (100%) of Lenders, in each case as provided below, the
Required Lenders. No such Modification or waiver shall, without the prior written consent of one
hundred percent (100%) of Lenders: (1) reduce the principal of, or rate of interest on (other
than a waiver of default interest), the Loan or fees payable hereunder, (2) except as expressly
contemplated by Article XV, modify the Percentage Share of any Lender, (3) Modify the
definition of “Required Lenders”, (4) extend or waive any scheduled payment date for any
principal, interest or fees, (5) release Guarantor from its obligations under the Recourse
Guaranty, release Borrower from its obligation to repay the Loan, or release the Property from the
lien of the Security Instrument (in each case except for such releases as may be specifically
authorized by or otherwise approved in accordance with this Agreement or the other Loan Documents),
(6) Modify this Section 19.5, or (7) Modify any provision of the Loan Documents which by
its terms requires the consent or approval of one hundred percent (100%) of Lenders. It is
expressly agreed and understood that the election by the Required Lenders to accelerate amounts
outstanding hereunder shall not constitute a Modification or waiver of any term or provision of
this Agreement or any other Loan Document. No Modification of any provision of the Loan Documents
relating to Administrative Agent shall be effective without the written consent of Administrative
Agent.



Section 19.6 Modification, Waiver in Writing. No modification, amendment, extension,
discharge, termination or waiver of any provision of this Agreement, or of the Notes, or of any
other Loan Document, or consent to any departure therefrom, shall in any event be effective unless
the same shall be in a writing signed by the party against whom enforcement is sought and then such
waiver or consent shall be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to or demand on Borrower shall
entitle Borrower to any other or future notice or demand in the same, similar or other
circumstances.



Section 19.7 Delay Not a Waiver. Neither any failure nor any delay on the part of
Administrative Agent in insisting upon strict performance of any term, condition, covenant or
agreement, or exercising any right, power, remedy or privilege hereunder, or under the Notes or
under any other Loan Document, or any other instrument given as security therefor, shall operate as
or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege. In particular,
and not by way of
limitation, by accepting payment after the due date of any amount payable under this
Agreement, the Notes or any other Loan Document, Administrative Agent shall not be deemed to have
waived any right either to require prompt payment when due of all other amounts due under this
Agreement, the Notes or the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount.


 


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Section 19.8 Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing and shall be
effective for all purposes if hand delivered or sent by (a) certified or registered United States
mail, postage prepaid, return receipt requested, (b) expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of attempted delivery or (c) telecopier
(with answer back acknowledged), addressed as follows (or at such other address and Person as shall
be designated from time to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Section):




If to Administrative Agent:




c/o Deutsche Bank Securities, Inc.

200 Crescent Court, Suite 550

Dallas, Texas 75201

Attn: Justin Shull

Telephone: (214) 740-7906

Telecopy: (214) 740-7910




with a copy to it at:




60 Wall Street

New York, New York 10005

Attn: George Reynolds

Telephone: (212) 250-2362

Telecopy: (212) 797-4496




If to Borrower:




475 Tenth Avenue

New York, New York 10018

Attn: Richard Szymanski

Telephone: (212) 277-4188

Telecopy: (212) 277-4270




With a copy to:




Hogan Lovells US LLP

555 Thirteenth Street, N.W.

Washington, D.C. 20004

Attention: Bruce Gilchrist, Esq.

Telephone: (202) 637-5686

Telecopy: (202) 637-5910


 


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All notices, elections, requests and demands under this Agreement shall be effective and
deemed received upon the earliest of (i) the actual receipt of the same by personal delivery or
otherwise, (ii) one (1) Business Day after being deposited with a nationally recognized overnight
courier service as required above, or (iii) on the day sent if sent by facsimile with confirmation
on or before 5:00 p.m. New York time on any Business Day or on the next Business Day if so
delivered after 5:00 p.m. New York time or on any day other than a Business Day. Rejection or
other refusal to accept or the inability to deliver because of changed address of which no notice
was given as herein required shall be deemed to be receipt of the notice, election, request, or
demand sent.



Section 19.9 TRIAL BY JURY. EACH OF BORROWER, ADMINISTRATIVE AGENT, EACH LENDER AND
ALL PERSONS CLAIMING BY, THROUGH OR UNDER ANY OF THEM, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I)
ARISING UNDER OR RELATED TO THIS AGREEMENT, THE SECURITY INSTRUMENT, THE NOTES OR ANY OTHER LOAN
DOCUMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT, THE SECURITY INSTRUMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT (AS
NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER HEREBY AGREES AND CONSENTS THAT AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES THAT IT HAS
CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER
IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF
THE LOAN.



Section 19.10 Headings. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.


 


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Section 19.11 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.



Section 19.12 Preferences. To the extent Borrower makes a payment or payments to
Administrative Agent, which payment or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part
thereof intended to be satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Administrative Agent.



Section 19.13 Waiver of Notice. Borrower shall not be entitled to any notices of any
nature whatsoever from Administrative Agent except with respect to matters for which this Agreement
or the other Loan Documents specifically and expressly provide for the giving of notice by
Administrative Agent to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of notice. Borrower
hereby expressly waives the right to receive any notice from Administrative Agent with respect to
any matter for which this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Administrative Agent to Borrower.




Section 19.14 Expenses; Indemnity; No Consequential Damages.



(A) Except as may be otherwise expressly set forth in the Loan Documents, Borrower covenants
and agrees to pay or, if Borrower fails to pay, to reimburse, Administrative Agent (and, where
applicable, each Lender) for all reasonable and documented out-of-pocket costs and expenses
(including reasonable attorneys’ fees and disbursements) (i) incurred by Administrative Agent in
connection with the preparation, negotiation, execution and delivery of this Agreement and the
other Loan Documents and the consummation of the transactions contemplated hereby and thereby; (ii)
incurred by Administrative Agent in connection with Administrative Agent’s ongoing performance of
and compliance with all agreements and conditions contained in this Agreement and the other Loan
Documents on its to be performed or complied with after the Closing Date; (iii) incurred by
Administrative Agent in connection with the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters as required herein or under the other
Loan Documents; (iv) incurred by Administrative Agent in connection with securing Borrower’s
compliance with any requests made pursuant to the provisions of this Agreement; (v) incurred by
Administrative Agent or any Lender in connection with the filing


 


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 and recording fees and expenses,
mortgage recording taxes, title insurance and reasonable fees and expenses of counsel for providing to
Administrative Agent all required legal opinions, and other similar expenses incurred in creating
and perfecting the Lien in favor of Administrative Agent for the benefit of Lenders pursuant to
this Agreement and the other Loan Documents; (vi) incurred by Administrative Agent or any Lender in
connection with enforcing or preserving any rights, in response to third party claims or the
prosecuting or defending of any action or proceeding or other litigation, in each case against,
under or affecting Borrower, this Agreement, the other Loan Documents, the Property, or any other
security given for the Loan; (vii) incurred by Administrative Agent or any Lender in connection
with enforcing any obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property or in connection with any
refinancing or restructuring of the credit arrangements provided under this Agreement in the nature
of a work-out or of any insolvency or bankruptcy proceedings and (viii) incurred by Administrative
Agent in connection with procuring insurance policies pursuant to Section 6.1.11;
provided, however, that Borrower shall not be liable for the payment of any such
costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts,
fraud or willful misconduct of Administrative Agent; provided, further, that, the
obligation to reimburse Lenders and Administrative Agent for the matters described in clause (vii)
above shall be limited to (x) one law firm for Administrative Agent and (y) one other law firm
retained by the Required Lenders, together with (in the case of (x) and (y), as applicable) one
additional counsel in each applicable jurisdiction. Any cost and expenses due and payable to
Administrative Agent or any Lender may be paid from any amounts in the Collateral Accounts or the
Hotel Operating Account if same are not paid by Borrower within ten (10) Business Days after
receipt of written notice from Administrative Agent.



(B) Borrower shall defend (subject to Administrative Agent’s, and in the case of any conflict
of interest, the applicable Indemnified Party’s selection of counsel) indemnify and save harmless
Administrative Agent, Lenders, and all of their respective officers, directors, stockholders,
members, partners, employees, agents, successors and assigns thereof (collectively, the
“Indemnified Parties”) from and against all Liabilities imposed upon or incurred by or
asserted against the Indemnified Parties or the Property or any part of its interest therein as a
result of a claim brought by any Person, including, without limitation, any Governmental Authority,
other than Borrower and its Affiliates, by reason of the occurrence or existence of any of the
following (to the extent Proceeds payable on account of the following shall be inadequate; it being
understood that in no event will the Indemnified Parties be required to actually pay or incur any
costs or expenses as a condition to the effectiveness of the foregoing indemnity: (1) ownership of
Borrower’s interest in the Property, or any interest therein, or receipt of any Rents or other sum
therefrom, (2) any accident, injury to or death of any persons or loss of or damage to property
occurring on or about the Property or any Appurtenances (as defined in the Security Instrument)
thereto, (3) any design, construction, operation, repair, maintenance, use, non-use or condition of
the Property or any Appurtenances (as defined in the Security Instrument) thereto, including claims
or penalties arising from violation of any Legal Requirement or Insurance Requirement, as well as
any claim based on any patent or latent defect, whether or not discoverable by Administrative
Agent, any claim the insurance as to which is inadequate, (4) any Default under this Agreement or
any of the other Loan Documents or any failure on the part of Borrower to perform or comply with
any of the terms of any Lease within the applicable notice or grace periods, (5) any performance of
any labor or services or the furnishing of any materials or other property in respect of


 


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the
Property or any part thereof, (6) any negligence or tortious act or omission on the part of Borrower or any of their respective agents, contractors, servants,
employees, sublessees, licensees or invitees, (7) any contest referred to in Section 7.3
hereof, or (8) any obligation or undertaking relating to the performance or discharge of any of the
terms, covenants and conditions of the landlord contained in the Leases. Any amounts the
Indemnified Parties are legally entitled to receive under this Section which are not paid within
fifteen (15) Business Days after written demand therefor by the Indemnified Parties or
Administrative Agent, shall bear interest from the date of demand at the Default Rate, and shall,
together with such interest, be part of the Indebtedness and secured by the Security Instrument.
In case any action, suit or proceeding is brought against the Indemnified Parties by reason of any
such occurrence, Borrower shall, at Borrower’s expense resist and defend such action, suit or
proceeding or will cause the same to be resisted and defended by counsel at Borrower’s reasonable
expense for the insurer of the liability or by counsel designated by Borrower (unless reasonably
disapproved by Administrative Agent promptly after Administrative Agent has been notified of such
counsel); provided, however, that nothing herein shall compromise the right of
Administrative Agent (or any Indemnified Party) to appoint its own counsel at Borrower’s expense
for its defense with respect to any action which in its reasonable opinion presents a conflict or
potential conflict between Administrative Agent (or any Indemnified Party) and Borrower that would
make such separate representation advisable; provided further that if
Administrative Agent (or any Indemnified Party) shall have appointed separate counsel pursuant to
the foregoing, Borrower shall not be responsible for the expense of additional separate counsel of
any Indemnified Party unless in the reasonable opinion of Administrative Agent (or such Indemnified
Party) a conflict or potential conflict exists between such Indemnified Party and Administrative
Agent (in which case the obligation of Borrower for such separate counsel shall be limited to one
counsel representing all Lenders affected by such conflict or potential conflict). So long as
Borrower is resisting and defending such action, suit or proceeding as provided above in a prudent
and commercially reasonable manner, Administrative Agent and the Indemnified Parties shall not be
entitled to settle such action, suit or proceeding without Borrower’s consent which shall not be
unreasonably withheld, delayed or conditioned, and claim the benefit of this Section with respect
to such action, suit or proceeding and Administrative Agent agrees that it will not settle any such
action, suit or proceeding without the consent of Borrower; provided, however, that
if Borrower is not diligently defending such action, suit or proceeding in a prudent and
commercially reasonable manner as provided above, and Administrative Agent (or applicable
Indemnified Party) has provided Borrower with thirty (30) days’ prior written notice, or shorter
period if mandated by the requirements of applicable law, and opportunity to correct such
determination, Administrative Agent (or applicable Indemnified Party) may settle such action, suit
or proceeding and claim the benefit of this Section 19.14 with respect to settlement of
such action, suit or proceeding. Any Indemnified Party will give Borrower prompt notice after such
Indemnified Party obtains actual knowledge of any potential claim by such Indemnified Party for
indemnification hereunder. The Indemnified Parties shall not settle or compromise any action,
proceeding or claim as to which it is indemnified hereunder without notice to Borrower.
Notwithstanding anything herein to the contrary, an indemnity for Environmental Claims or other
environmental matters shall be governed solely by Section 12.4 hereof and the Environmental
Indemnity and not by this Section 19.14.


 


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(C) To the extent permitted by applicable law, no Transaction Party shall assert, and Borrower
hereby waives, any claim against Administrative Agent, each Lender, each Agent, and their
respective Affiliates, directors, employees, attorneys, agents or sub-agents, on
any theory of liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty
imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or
in any way related to, this Agreement or any Loan Document or any agreement or instrument
contemplated hereby or thereby or referred to herein or therein, the transactions contemplated
hereby or thereby, the Loan or the use of the proceeds thereof or any act or omission or event
occurring in connection therewith, and Borrower hereby waives, releases and agrees not to sue upon
and shall cause each Transaction Party to waive, release and agree not to sue upon any such claim
or any such damages, whether or not accrued and whether or not known or suspected to exist in its
favor.



Section 19.15 Exhibits and Schedules Incorporated. The Exhibits and Schedules
annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.



Section 19.16 Offsets, Counterclaims and Defenses. Any assignee of a Lender’s
interest in and to this Agreement, the Notes and the other Loan Documents shall take the same free
and clear of all offsets, counterclaims or defenses which are unrelated to such documents which
Borrower may otherwise have against any assignor of such documents, and no such unrelated
counterclaim (other than a counterclaim which can only be asserted in the suit, action or
proceeding brought by such assignee on this Agreement, the Notes, the Security Instrument or any
Loan Document and cannot be maintained in a separate action) or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee upon such documents
and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any
such action or proceeding is hereby expressly waived by Borrower.



Section 19.17 Liability of Assignees of Lenders. No assignee of a Lender shall have
any personal liability, directly or indirectly, under or in connection with this Agreement or any
other Loan Document or any amendment or amendments hereto made at any time or times, heretofore or
hereafter, any different than the liability of Lenders hereunder. In addition, no assignee shall
have at any time or times hereafter any personal liability, directly or indirectly, under or in
connection with or secured by any agreement, lease, instrument, encumbrance, claim or right
affecting or relating to the Property or to which the Property is now or hereafter subject any
different than the liability of Lenders hereunder. The limitation of liability provided in this
Section 19.17 is (i) in addition to, and not in limitation of, any limitation of liability
applicable to the assignee provided by law or by any other contract, agreement or instrument, and
(ii) shall not apply to any assignee’s gross negligence or willful misconduct.


 


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Section 19.18 Sharing of Payments. If any Lender shall receive and retain any
payment, whether by setoff, application of deposit balance or security, or otherwise, in respect of
the Obligations in excess of such Lender’s Percentage Share thereof, then such Lender shall
purchase from the other Lenders
for cash and at face value and without recourse, such participation in the Obligations held by
them as shall be necessary to cause such excess payment to be shared ratably as aforesaid with each
of them; provided, that if such excess payment or part thereof is thereafter recovered from
such purchasing Lender, the related purchases from the other Lenders shall be rescinded ratably and
the purchase price restored as to the portion of such excess payment so recovered, but without
interest. Each Lender is hereby authorized by Borrower to exercise any and all rights of setoff,
counterclaim or bankers’ lien against the full amount of the Obligations, whether or not held by
such Lender. Each Lender hereby agrees to exercise any such rights first against the Obligations
and only then to any other Indebtedness of Borrower to such Lender.



Section 19.19 Set-off. In addition to any rights and remedies of Lenders provided by
law, if an Event of Default exists, each Lender is authorized at any time and from time to time,
without prior notice to Borrower, any such notice being waived by Borrower to the fullest extent
permitted by law, to set off and apply in favor of Lenders any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other indebtedness at any
time owing to, such Lender to or for the credit or the account of Borrower against any and all
Obligations owing to Lenders, now or hereafter existing, irrespective of whether or not
Administrative Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly
to (i) notify Borrower and Administrative Agent after any such set-off and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application and (ii) pay such amounts that are set-off to
Administrative Agent for the ratable benefit of Lenders.




Section 19.20 No Joint Venture or Partnership; No Third Party Beneficiaries.



(A) Borrower and Administrative Agent intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lenders. Nothing herein or therein
is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Borrower and Lenders or Administrative Agent nor to grant Administrative Agent
any interest in the Property other than that of mortgagee or beneficiary on behalf of Lenders.



(B) This Agreement and the other Loan Documents are solely for the benefit of Administrative
Agent, Lenders and Borrower and nothing contained in this Agreement or the other Loan Documents
shall be deemed to confer upon anyone other than Administrative Agent, Lenders and Borrower any
right to insist upon or to enforce the performance or observance of any of the obligations
contained herein or therein. All conditions to the obligations of Lenders to make the Loan
hereunder are imposed solely and exclusively for the benefit of Lenders and no other Person (other
than Administrative Agent on behalf of Lenders) shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that Lenders will refuse to make
the Loan in the absence of strict compliance with any or all thereof and no other Person (other
than Administrative Agent on behalf of Lenders) shall under
any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be
freely waived in whole or in part by Administrative Agent if, in Administrative Agent’s sole
discretion, Administrative Agent deems it advisable or desirable to do so.


 


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Section 19.21 Confidentiality. Administrative Agent and each Lender shall assure
that information about the Transaction Parties and their operations, affairs and financial
condition, not generally disclosed to the public, which is furnished to Administrative Agent or any
Lender pursuant to the provisions of this Agreement or any other Loan Document, is used only for
the purposes of this Agreement and the other Loan Documents and shall not be divulged to any Person
other than Administrative Agent, Lenders, and their respective agents who are actively and directly
participating in the evaluation, administration or enforcement of the Loan Documents and other
transactions between Administrative Agent or such Lender, as applicable, and the Transaction
Parties, as applicable, but in any event Administrative Agent and Lenders may make disclosure: (a)
to any of their respective affiliates (provided they shall agree to keep such information
confidential in accordance with the terms of this Section 19.21); (b) as reasonably
requested by any potential or actual Assignee, Participant or other transferee in connection with
the contemplated transfer of any Loan, commitments or participations therein as permitted hereunder
(provided they shall agree to keep such information confidential in accordance with the terms of
this Section); (c) as required or requested by any Governmental Authority or representative thereof
or pursuant to legal process or in connection with any legal proceedings or as otherwise required
by Legal Requirements; (d) to Administrative Agent’s or such Lender’s independent auditors and
other professional advisors (provided they shall be notified of the confidential nature of the
information); (e) following the occurrence and during the continuance of a Default or an Event of
Default, to any other Person in connection with the exercise by Administrative Agent or the Lenders
of remedies hereunder or under any of the other Loan Documents; (f) upon the prior consent (which
consent shall not be unreasonably withheld) of Borrower to any contractual counter-parties to any
swap or similar hedging agreement or to any rating agency; and (g) to the extent such information
(x) becomes publicly available other than as a result of a breach of this Section actually known to
such Lender to be such a breach or (y) becomes available to Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Transaction Parties or any affiliate thereof.
Notwithstanding the foregoing, Administrative Agent and each Lender may disclose any such
confidential information, without notice to Borrower or any other Transaction Party, to
Governmental Authorities in connection with any regulatory examination of Administrative Agent or
such Lender or in accordance with the regulatory compliance policy of Administrative Agent or such
Lender.



Section 19.22 Waiver of Marshalling of Assets. To the fullest extent permitted by
law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the
assets of Borrower, Borrower’s shareholders and others with interests in Borrower and of the
Property, and agrees not to assert any right under any laws pertaining to the marshalling of
assets, the sale in inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the right of
Administrative Agent under the Loan Documents to a sale of the Property for the collection of the
Indebtedness without any prior or
different resort for collection or of the right of Administrative Agent to the payment of the
Indebtedness out of the net proceeds of the Property in preference to every other claimant
whatsoever.


 


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Section 19.23 Waiver of Counterclaim and other Actions. Borrower hereby expressly
and unconditionally waives, in connection with any suit, action or proceeding brought by
Administrative Agent on this Agreement, the Notes, the Security Instrument or any Loan Document,
any and every right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding brought by Administrative
Agent on this Agreement, the Notes, the Security Instrument or any Loan Document and cannot be
maintained in a separate action) and (ii) have any such suit, action or proceeding consolidated
with any other or separate suit, action or proceeding.



Section 19.24 Conflict; Construction of Documents; Reliance. In the event of any
conflict between the provisions of this Agreement and any of the other Loan Documents, the
provisions of this Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting and execution of the
Loan Documents and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that, with respect to
the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or recommendations of
Administrative Agent or Lenders or any parent, subsidiary or Affiliate of Administrative Agent or
Lenders. Administrative Agent shall not be subject to any limitation whatsoever in the exercise of
any rights or remedies available to it under any of the Loan Documents or any other agreements or
instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Administrative Agent or any Lender of any equity interest any of them may acquire in
Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action
on the basis of the foregoing with respect to Administrative Agent’s exercise of any such rights or
remedies. Borrower acknowledges that Lenders engage in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.



Section 19.25 Prior Agreements. This Agreement and the other Loan Documents contain
the entire agreement of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan Documents and unless
specifically set forth in a writing contemporaneous herewith the terms, conditions and provisions
of any and all such prior agreements do not survive execution of this Agreement.


 


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Section 19.26 Reinstatement. This Agreement and the security interests created herein shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the Obligations
hereunder, or any part thereof, is, pursuant to bankruptcy, insolvency or other applicable laws,
rescinded or reduced in amount, or must otherwise be restored or returned by Administrative Agent
or any Lender. In the event that any payment or any part thereof is so rescinded, reduced,
restored or returned, such Obligations and the security interests created herein shall continue to
be effective or be reinstated (except to the extent the related collateral has been sold to a bona
fide purchaser for value) and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.



Section 19.27 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall constitute an original, but all of which shall constitute one document.



Section 19.28 Nature of Borrower Obligations. Notwithstanding anything to the
contrary contained elsewhere in this Agreement, it is understood and agreed by the various parties
to this Agreement that:



(a) all Obligations to repay principal of, interest on, and all other amounts with respect to,
the Loan and all other Obligations pursuant to this Agreement and each other Loan Document
(including, without limitation, all fees, indemnities, Taxes and other Obligations in connection
therewith) shall constitute the joint and several obligations of each Borrower;



(b) The obligations of each Borrower with respect to its respective Obligations are
independent of the obligations of each other Borrower, and a separate action or actions may be
brought and prosecuted against each Borrower, whether or not any other Borrower or any Guarantor is
joined in any such action or actions. Each Borrower waives, to the fullest extent permitted by
law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by any Borrower or other circumstance which operates to toll any statute of
limitations as to any Borrower shall, to the fullest extent permitted by law, operate to toll the
statute of limitations as to each Borrower. (c) Each Borrower authorizes Administrative Agent and
Lenders without notice or demand (except as shall be required by applicable statute and cannot be
waived), and without affecting or impairing its liability hereunder, from time to time to:




(i) exercise or refrain from exercising any rights against any other Borrower or any
other Transaction Party or others or otherwise act or refrain from acting;




(ii) release or substitute any other Borrower, endorsers, Guarantors or other obligors;


 


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(iii) settle or compromise any of the Obligations, any security therefor or any
liability (including any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and may subordinate the payment of all or any part thereof to the
payment of any liability (whether due or not) of any Borrower to its creditors other than
Lenders;




(iv) apply any sums paid by any other Borrower or any other Transaction Party,
howsoever realized to any liability or liabilities of such other Borrower or other Person
regardless of what liability or liabilities of such other Borrower or other Transaction
Party remain unpaid; and/or




(v) consent to or waive any breach of, or act, omission or default under, this Agreement or
any of the instruments or agreements referred to herein, or otherwise, by any other Borrower or any
other Transaction Party.



(d) It is not necessary for Administrative Agent or any Lender to inquire into the capacity or
powers of any Borrower or any of its Affiliates or the officers, directors, members, partners or
agents acting or purporting to act on its behalf, and any Obligations made or created in reliance
upon the professed exercise of such powers shall constitute the joint and several obligations of
the respective Borrower hereunder.



(e) No Borrower shall have any rights of contribution or subrogation with respect to any other
Borrower as a result of payments made by it hereunder, in each case unless and until all of the
Obligations have been paid in full in cash.



(f) Each Borrower waives any right to require Administrative Agent or Lenders to (i) proceed
against any other Borrower or any other Person, (ii) proceed against or exhaust any security held
from any Borrower or any other Person or (iii) pursue any other remedy in Administrative Agent’s or
Lenders’ power whatsoever. Each Borrower waives any defense based on or arising out of suretyship
or any impairment of security held from any Borrower or any other party or on or arising out of any
defense of any other Borrower or any other party other than payment in full in cash of the its
Obligations, including, without limitation, any defense based on or arising out of the disability
of any other Borrower or any other party, or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of any other Borrower, in
each case other than as a result of the payment in full in cash of the Obligations.



(g) Notwithstanding anything herein or in any other Loan Document to the contrary, each
Borrower’s joint and several liability for the Obligations shall be limited to the greater of (i)
the amount for which it is Primarily Liable and (ii) such Borrower’s Allocable Amount (as defined
in Section 13.17(h)). “Primarily Liable” for any Borrower, means liability in amount equal
to the proceeds of the Loans which were made available to such Borrower. The “Allocable
Amount” for any Borrower at any time shall be the maximum amount that could be recovered from
such Borrower at such time under the Loan Documents without rendering such payment voidable under
Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance
act, or similar statute or common law.


 


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(h) If any Borrower makes a payment of any Obligations greater than that for which it is
Primarily Liable, it shall be entitled to receive contribution and indemnification payments from,
and to be reimbursed by, each other Borrower in an amount equal to the lesser of (i) the payment in
excess of the amount for which it is Primarily Liable and (ii) the Allocable Amount which after
giving effect to any Obligations of each other Borrower would not result in such contribution claim
being a fraudulent transfer.



(i) If any Borrower makes a payment of any Obligations (other than amounts for which such
Borrower is primarily liable) (a “Guarantor Payment”) that, taking into account all other
Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that
such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount
bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to
receive contribution and indemnification payments from, and to be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment. The “Allocable Amount” for any
Borrower shall be the maximum amount that could then be recovered from such Borrower without
rendering such payment voidable under Section 548 of the Bankruptcy Code or under any applicable
state fraudulent transfer or conveyance act, or similar statute or common law.



(j) Nothing contained in this Section 19.28 shall limit the liability of any Borrower
to pay the Loan and all accrued interest, fees, expenses and other related Obligations with respect
thereto, for which such Borrower shall be primarily liable for all purposes hereunder.



(k) Each Borrower has requested that Administrative Agent and Lenders make this credit
facility available to Borrower on a combined basis, in order to finance Borrower’s business most
efficiently and economically. Borrower’s business is a mutual and collective enterprise, and
Borrower believes that consolidation of their credit facility will enhance the borrowing power of
each Borrower and ease the administration of their relationship with Administrative Agent and
Lenders, all to the mutual advantage of Borrower. Each Borrower acknowledges and agrees that
Administrative Agent’s and Lender’s willingness to extend credit to Borrower and to administer the
Collateral on a combined basis, as set forth herein, is done solely as an accommodation to Borrower
at its request.



(l) Each Borrower (including, without limitation, Operating Lessee in connection with the
Leaseco Intercompany Loan) hereby subordinates any claims, including any rights at law or in equity
to payment, subrogation, reimbursement, exoneration, contribution, indemnification or set off, that
it may have at any time against any other Borrower, howsoever arising, to full and final payment in
full, in cash, of all Obligations.



(m) Each Borrower hereby restates and makes the waivers made by Guarantor in the Recourse
Guaranty. Such waivers are hereby incorporated by reference as if fully set forth herein (and as
if applicable to each Borrower) and shall be effective for all purposes under the Loan Documents
(including, without limitation, in the event that any Borrower is deemed to be a surety or
guarantor of the Obligations (by virtue of Borrower being co-obligors and jointly and
severally liable hereunder, by virtue of each Borrower encumbering its interest in the
Collateral for the benefit or debts of the other Borrower in connection herewith or otherwise)).



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



	 	 	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	HENRY HUDSON HOLDINGS LLC,	 	 
	 	 	 	 	a Delaware limited liability company,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Henry Hudson Senior Mezz LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Group LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Hotel Group Co.,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Richard Szymanski	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Richard Szymanski	 	 
	 

	 	 	 	Title:
	 	Chief Financial Officer and Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	HUDSON LEASECO LLC,	 	 
	 	 	 	 	a New York limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Hudson Managing Member LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Henry Hudson Holdings LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Henry Hudson Senior Mezz LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Group LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Hotel Group Co.,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Richard Szymanski	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Richard Szymanski	 	 
	 

	 	 	 	Title:
	 	Chief Financial Officer and Secretary	 	 





Signature Page — Loan and Security Agreement




 


 









 





	 	 	 	 	 	 	 	 	 
	 	 	58th STREET BAR COMPANY LLC,	 	 
	 	 	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Hudson Pledgor LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Henry Hudson Holdings LLC	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Henry Hudson Senior Mezz LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Group LLC,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Hotel Group Co.,	 	 
	 	 	 	 	its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Richard Szymanski	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Richard Szymanski	 	 
	 

	 	 	 	Title:
	 	Chief Financial Officer and Secretary	 	 




Signature Page — Loan and Security Agreement




 


 









 





	 	 	 	 	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as	 	 
	 	 	Administrative Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ George R. Reynolds	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	George R. Reynolds	 	 
	 

	 	 	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Alexander B. V. Johnson	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Alexander B. V. Johnson	 	 
	 

	 	 	 	Title:
	 	Managing Director	 	 





Signature Page — Loan and Security Agreement




 


 









 





	 	 	 	 	 	 	 	 	 
	 	 	LENDERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ George R. Reynolds	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	George R. Reynolds	 	 
	 

	 	 	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Alexander B. V. Johnson	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Alexander B. V. Johnson	 	 
	 

	 	 	 	Title:
	 	Managing Director	 	 






Signature Page — Loan and Security Agreement





 


 











 




	 
	EXHIBITS







	 	 	 	 	 
	Exhibit A

	 	—
	 	Title Insurance Requirements
	Exhibit B

	 	—
	 	Survey Requirements
	Exhibit C

	 	—
	 	Single Purpose Entity Provisions
	Exhibit D

	 	—
	 	Intentionally Omitted
	Exhibit E

	 	—
	 	Non-Consolidation Opinion Requirements
	Exhibit F

	 	—
	 	Counterparty Opinion Requirements
	Exhibit G

	 	—
	 	Form of Tenant Estoppel Letter
	Exhibit H

	 	—
	 	Borrower Organizational Structure
	Exhibit I

	 	—
	 	Interest Rate Cap Agreement Requirements
	Exhibit J

	 	—
	 	Form of Assignment and Acceptance Agreement
	Exhibit K

	 	—
	 	Form of Subordination, Non-Disturbance and Attornment Agreement
	Exhibit L

	 	—
	 	Form of Note
	Exhibit M

	 	—
	 	Counterparty Acknowledgment
	Exhibit N

	 	—
	 	Form of Funding Notice
	Exhibit O

	 	—
	 	Form of Independent Director Certificate
	Exhibit P

	 	—
	 	Form of IP Security Agreement






 


 









 







EXHIBIT A




TITLE INSURANCE REQUIREMENTS, ENDORSEMENTS

AND AFFIRMATIVE COVERAGES




1. General. Borrower and/or its counsel is responsible for ordering or updating any
title insurance work. Administrative Agent requires a lender’s title insurance policy insuring
“Deutsche Bank Trust Company Americas, as Administrative Agent. The approved title underwriters,
type and amount of insurance and required endorsements are described below. The list of
endorsements is subject to review by Administrative Agent’s counsel, local counsel and additional
specific coverages may be required after review of the related title commitment.



2. Title Insurer. The Title Company or Title Companies must be approved by
Administrative Agent and licensed to do business in the jurisdiction in which the Property is
located.




3. Primary Title Insurance Requirements.




(a) Amount of Coverage: $115,000,000.00.



(b) Effective Date: The later of the date of recording of the Security Instrument or
the date of funding of the Loan. Borrower shall be required to provide a customary “gap” indemnity
in order to enable the Title Company to provide “gap” coverage.



(c) Insured: “Deutsche Bank Trust Company Americas, as Administrative Agent on behalf
of the Lenders (party to that certain Loan and Security Agreement, dated as of August
 _____, 2011, as
may be amended or otherwise modified from time to time) and its successors and assigns”.



(d) Legal Description: Metes and bounds description to be provided which must conform
to that shown on the Survey, the Security Instrument and any other Loan Documents that require a
legal description of the Property. A lot and block description shall be acceptable in place of a
metes and bounds description in exceptional cases.



(e) Policy Form: An ALTA (or equivalent) lender’s policy of title insurance in form
and substance acceptable to Administrative Agent. Without limiting Administrative Agent’s right to
require specific coverages, endorsements or other title work, the Title Policy shall (i) be in the
1970 ALTA (as amended 84) form or, if not available, ALTA 1992 form (deleting arbitration and
creditor rights exclusions) or, if not available, the form commonly used in the state where the
Property is located, (ii) to the extent available, include the “extended coverage” provisions
described in paragraph 5 below, (iii) include all applicable endorsements described in paragraph 6
below, and (iv) include Schedule B exceptions in a form and to the extent acceptable to
Administrative Agent’s counsel.




5. Extended Coverage Requirements. The Title Policy shall:



(a) not contain any exception for filed or unfilled mechanic, materialmen or similar liens;


 


 









 





Exhibit A

Page 2




(b) limit any general exception for real estate taxes and other charges to real estate or
other similar taxes or assessments that are not yet due and payable or delinquent and are not a
current lien on the Property;



(c) limit any general exception for the rights of persons in possession to the rights of
specified tenants, as tenants only with no right or option to purchase, set forth on the rent roll
for the Property and attached to the Title Policy; and



(d) not contain any general exception as to matters that an accurate Survey of the Property
would disclose, but may contain specific exceptions to matters disclosed on the Survey to be
delivered on the Closing Date, subject to review by Administrative Agent’s counsel.



6. Required Endorsements. The following endorsements are required, to the extent
available in the jurisdiction in which the Property is located:




	 	•	 	Restrictions, Encroachments, Minerals Endorsement ALTA Form 9 or equivalent.







	 	•	 	(If not available, the Title Policy must insure by way of affirmative coverage
statements that there are no encroachments by any of the improvements onto easements,
rights of way or other exceptions to streets or adjacent property, or insure against
loss or damage resulting therefrom.)







	 	•	 	Environmental Protection Lien Endorsement.







	 	•	 	(The Title Policy may make an exception only for specific state statutes that
provide for potential subsequent liens that could take priority over the lien securing
the Loan.)







	 	•	 	Direct Access to Public Road Endorsement.







	 	•	 	Usury Endorsement.







	 	•	 	Land Same As Survey/Legal Description Endorsement.







	 	•	 	Subdivision Endorsement.







	 	•	 	Doing Business Endorsement.







	 	•	 	Deletion of Arbitration Endorsement.







	 	•	 	Separate Tax Lot Endorsement.







	 	•	 	Street Address Endorsement.







	 	•	 	Contiguity Endorsement.







	 	•	 	Variable Rate Endorsement.







	 	•	 	Mortgage Tax Endorsement.




 


 









 










Exhibit A

Page 3





	 	•	 	Mortgage Recording Tax Endorsement.







	 	•	 	Mortgage Assignment Endorsement.







	 	•	 	Any of the following endorsements customary in the state in which the Property
is located or as required by the nature of the transaction:







First Loss / Last Dollar Endorsement

Non-Imputation Endorsement

Blanket Un-located Easements Endorsement

Closure Endorsement



 


 









 







EXHIBIT B




DEUTSCHE BANK TRUST COMPANY AMERICAS, AS ADMINISTRATIVE

AGENT FOR THE LENDERS

SURVEY REQUIREMENTS





The survey shall contain the following:



• The legal description of the Property;



• The courses and measured distances of the exterior boundary lines of the Property and the
identification of owners of abutting parcels;



• The total acreage of the Property to the nearest tenth of an acre;



• The location of any existing improvements, the dimensions thereof at the ground surface
level and their relationship to the facing exterior property lines, streets and set-back lines of
the Property;



• The location, lines and widths of adjoining publicly dedicated and accepted streets showing
the number and location of existing curb cuts, driveways, and fences;



• The location and dimensions of encroachments, if any, upon the Property;



• The location of all set-back lines, restrictions of record, other restrictions established
by zoning or building code ordinance, utilities, easements, rights-of-way and other matters
affecting title to the Property which are to be shown in Schedule B-2 of the Title Policy
identifying each by reference to its recording data, where applicable;



• Evidence that adequate means of ingress and egress to and from the Property exist and that
the Property does not serve any adjoining property for ingress, egress or any other purpose;



• If the Property is described as being on a recorded map or plat, a legend relating the
survey to such map or plat;



• The street address of the Property;



• Parking areas at the Property and, if striped, the striping and type (e.g.,
handicapped, motorcycle, regular, etc.) and number of parking spaces at the Property;



• A statement as to whether the Property is located in a special flood or mudslide hazard area
as determined by a review of a stated and identified Flood Hazard Boundary Map published by the
Federal Insurance Administration of the U.S. Department of Housing and Urban Development;



• A vicinity map showing the property in reference to nearby highways or major street
intersections;


 


 









 





Exhibit B

Page 2




• The exterior dimensions of all buildings at ground level and the square footage of the
exterior footprint of all buildings, or gross floor area of all buildings, at ground level;



• The location of utilities serving or existing on the property as evidenced by on-site
observation or as determined by records provided by client, utility companies and other appropriate
sources (with reference as to the source of information) (for example)




	 	•	 	railroad tracks and sidings;

	 
	 	•	 	manholes, catch basins, valve vaults or other
surface indications of subterranean uses;

	 
	 	•	 	wire and cables (including their function)
crossing the surveyed premises, all poles on or within ten feet of the
surveyed premises, and the dimensions of all crosswires or overhangs
affecting the surveyed premises; and

	 
	 	•	 	utility company installations on the surveyed
premises.







• A certification to DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative Agent,
[NAME OF BORROWING ENTITY] and [INSERT NAME OF TITLE COMPANY], and each of their
respective successors and assigns.



 


 









 







EXHIBIT C




SPECIAL PURPOSE ENTITY PROVISIONS




Each of Owner, Bar Lessee and Operating Lessee hereby represents and warrants to, and
covenants with, the Lenders and Administrative Agent that at all times on and after the date hereof
and until such time as the Obligations shall be paid and performed in full:



(a) (i) Owner’s sole purpose will be to (i) acquire, own, hold, maintain, manage, operate,
improve, develop, finance, refinance, pledge, encumber, mortgage, sell, exchange, lease, dispose of
and otherwise deal with the Property together with such other lawful activities as may be incident,
necessary or advisable in connection with the ownership of the Property, (ii) own, hold and
maintain 100% of the limited liability company interests in each of Hudson Pledgor LLC and Hudson
Managing Member LLC together with such other activities as may be incident, necessary or advisable
in connection with the ownership of such interests, (iii) own, hold and maintain all of the issued
and outstanding stock of Hudson Residual Interests Inc., a Delaware corporation (“Hudson Residual”)
together with such other activities as may be incident, necessary or advisable in connection with
the ownership of such stock, (iv) borrow funds in the amount of the Loan from the Lenders, (v) give
security for the Loan or for any other indebtedness to the extent not expressly prohibited by the
Loan Agreement; and (vi) engage in any lawful act or activity and to exercise any powers permitted
to limited liability companies organized under the laws of the State of Delaware that are related
or incidental to or necessary, convenient or advisable for the accomplishment of the
above-mentioned purposes.



(ii) 58th Street Bar Operating Agreement provides that its sole purpose is to (i)
acquire, own, hold, maintain, manage, operate, improve, develop, finance, refinance, pledge,
encumber, mortgage, sell, exchange, lease, dispose of and otherwise deal with the leasehold
interest in the restaurant and bar space at the Property known as “The Hudson Hall”, “The Hudson
Bar”, the “Library Bar” and “Park Terrace” to be used for a first class bar/lounge, with waiter
and/or waitress service, for banquets and for operation to support said uses (the “Hotel Restaurant
and Bar”), together with such other lawful activities as may be incident, necessary or advisable in
connection with the foregoing, (ii) borrow funds in the amount of the Loan from the Lenders, (iii)
give security for the Loan or for any other indebtedness to the extent not expressly prohibited by
the Loan Agreement; and (iv) engage in any lawful act or activity and to exercise any powers
permitted to limited liability companies organized under the laws of the State of Delaware that are
related or incidental to or necessary, convenient or advisable for the accomplishment of the
above-mentioned purposes.



(iii) Operating Lessee’s sole purpose will be to (i) acquire, own, hold, maintain, manage,
operate, improve, develop, finance, refinance, pledge, encumber, mortgage, sell, exchange, lease,
dispose of and otherwise deal with the Property, together with such other lawful activities as may
be incident, necessary or advisable in connection with the ownership of the Property, (ii) borrow
funds in the amount of the Loan from the Lenders, (iii) give security for the Loan or for any
other indebtedness to the extent not expressly prohibited by the Loan Agreement; and (iv) engage in
any lawful act or activity and to exercise any powers permitted to limited liability companies
organized under the laws of the State of New York that are related or
incidental to or necessary, convenient or advisable for the accomplishment of the
above-mentioned purposes.


 


 









 





Exhibit C

Page 2




(b) (i) (A) Owner will not own any asset or property other than the Property and incidental
personal property necessary for the ownership of the Property, 100% of the limited liability
company interests in each of Hudson Pledgor and Hudson Managing Member and all of the issued and
outstanding stock of Hudson Residual; (B) Operating Lessee will not own any asset or property other
than the leasehold interest in the Property and incidental personal property necessary for the
ownership of the leasehold interest in the Property; and (C) 58th Street Bar will not
own any asset or property other than the leasehold interest in the Hotel Restaurant and Bar and
incidental personal property necessary for the ownership of the leasehold interest in the
Restaurant and Bar.



(ii) (A) Owner will not engage in any business other than the ownership of the Property,
ownership of 100% of the limited liability company interests in each of Hudson Pledgor and Hudson
Managing Member and ownership of all of the issued and outstanding stock of Hudson Residual; (B)
Operating Lessee will not engage in any business other than the ownership of a leasehold interest
in and operation and management of the Property; and (C) 58th Street Bar will not engage in any
business other than the ownership of a leasehold interest in and operation and management of the
Hotel Restaurant and Bar;



(c) Each Borrower has not and will not enter into any contract or agreement with any Affiliate
of Borrower, except upon terms and conditions that are intrinsically fair, commercially reasonable,
and no less favorable to it than would be available on an arms-length basis with third parties
other than any such party.




(d) Each Borrower will not incur any Debt other than Permitted Debt.



(e) Each Borrower has not made and will not make any loans or advances to any third party
(including any Affiliate or constituent party), and has not and shall not acquire obligations or
securities of its Affiliates other than co-Borrower or Managing Member.



(f) Each Borrower has been, is, and intends to remain solvent and each Borrower has paid and
will pay its debts and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets except pursuant to the Loan Documents; provided that the
foregoing shall not require any direct or indirect member, partner or shareholder of any Borrower
to make any additional capital contributions to such Borrower.



(g) Each Borrower has done or caused to be done, and will do, all things necessary to observe
organizational formalities and preserve its existence, and each Borrower has not, will not (i)
terminate or fail to comply with the provisions of its organizational documents, or (ii) unless
Administrative Agent has consented, amend, modify or otherwise change its operating agreement or
other organizational documents, except as provided under this Agreement or under its organizational
documents.


 


 









 





Exhibit C

Page 3




(h) Except to the extent that any Borrower is (i) required to file consolidated tax returns by
law; or (ii) treated as a “disregarded entity” for tax purposes and is not required to file tax
returns under applicable law, (1) each Borrower has maintained and will maintain all of its
books, records, financial statements and bank accounts separate from those of its Affiliates
and any other Person; (2) each Borrower’s assets will not be listed as assets on the financial
statement of any other Person; it being understood that each Borrower’s assets may be included in a
consolidated financial statement of its Affiliates provided that (i) appropriate notation
shall be made on such consolidated financial statements to indicate the separateness of such
Borrower and such Affiliates and to indicate that such Borrower’s assets and credit are not
available to satisfy the debts and other obligations of such Affiliates or any other Person, and
(ii) such assets shall be listed on such Borrower’s own separate balance sheet; and (3) such
Borrower will file its own tax returns (to the extent such Borrower is required to file any tax
returns) and will not file a consolidated federal income tax return with any other Person. Each
Borrower shall maintain its books, records, resolutions and agreements in accordance with this
Agreement.



(i) Each Borrower has been, will be, and at all times has held and will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including any Affiliate of
such Borrower or any constituent party of such Borrower (recognizing that each Borrower (other than
Operating Lessee) may be treated as a “disregarded entity” for tax purposes and is not required to
file tax returns for tax purposes under applicable law)), shall correct any known misunderstanding
regarding its status as a separate entity, shall conduct business in its own name, shall not
identify itself or any of its Affiliates as a division or department or part of the other and
shall, to the extent reasonably necessary for the operation of its business, maintain and utilize
separate stationery, invoices and checks bearing its own name.



(j) Each Borrower has maintained and intends to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and in light of its
contemplated business operations; provided that the foregoing shall not require any direct
or indirect member, partner or shareholder of any Borrower to make any additional capital
contributions to any Borrower.



(k) To the fullest extent permitted by applicable law, neither any Borrower nor any
constituent party of any Borrower has sought or will seek or effect the liquidation, dissolution,
winding up, consolidation or merger, in whole or in part, of such Borrower.



(l) Each Borrower has not and will not commingle the funds and other assets of Borrower with
those of any Affiliate or constituent party or any other Person other than a co-Borrower, and has
held and will hold all of its assets in its own name.



(m) Each Borrower has and will maintain its assets in such a manner that it will not be costly
or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate
or constituent party or any other Person except pursuant to the Loan Agreement.



(n) Except as permitted or contemplated under the Loan Documents, each Borrower will not
assume or guarantee or become obligated for the debts of any other Person and does not and will not
hold itself out to be responsible for or have its credit available to satisfy the debts or
obligations of any other Person .


 


 









 





Exhibit C

Page 4




(o) (i) The organizational documents of each of Owner, Bar Lessee and Managing Member (as
hereinafter defined) (each an “SPC Party”) shall provide that the business
and affairs of such SPC Party shall be (A) managed by or under the direction of a board of one
or more directors designated by such SPC Party’s sole member (a “Sole Member”) or (B) a
committee of managers designated by such Sole Member (a “Committee”) or (C) by such Sole
Member, and at all times there shall be at least two (2) duly appointed Independent Directors or
Independent Managers. The organizational documents of Operating Lessee shall provide that the
business and affairs of Operating Lessee shall be managed solely by its managing member , Hudson
Managing Member LLC, a Delaware limited liability company
(“Managing Member”).



(p) The organizational documents of each Borrower shall also provide an express acknowledgment
that Administrative Agent and Lenders are intended third-party beneficiaries of the “special
purpose” provisions of such organizational documents.



(q) The organizational documents of each SPC Party shall provide that the board of directors,
the Committee or Sole Member (as applicable) of such SPC Party shall not take any action which,
under the terms of any certificate of formation, limited liability company operating agreement or
any voting trust agreement, requires an unanimous vote of the board of directors (or the Committee
as applicable) of such SPC Party unless at the time of such action there shall be (A) at least two
(2) members of the board of directors (or the Committee as applicable) who are Independent
Directors or Independent Managers, as applicable (and such Independent Directors or Independent
Managers, as applicable, have participated in such vote) or (B) if there is no board of directors
or Committee, then such Independent Managers shall have participated in such vote. The
organizational documents of the each such SPC Party shall provide that such SPC Party will not and
each such SPC Party agrees that it will not, without the unanimous written consent of its board of
directors, its Committee or its Sole Member (as applicable), including, or together with, the
Independent Directors or Independent Managers (as applicable) (i) file or consent to the filing of
any petition, either voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, (ii) seek or consent to the appointment of a
receiver, liquidator or any similar official of such SPC Party or a substantial part of its
business, (iii) take any action that might cause such entity to become insolvent, (iv) make an
assignment for the benefit of creditors, (v) admit in writing its inability to pay debts generally
as they become due, or (vi) take any action in furtherance of the foregoing. Each SPC Party shall
not take any of the foregoing actions without the unanimous written consent of its board of
directors, its Committee or its Sole Member, as applicable, including (or together with) all
Independent Directors or Independent Managers, as applicable. In addition, the organizational
documents of each such SPC Party shall provide that, when voting with respect to any matters set
forth in the immediately preceding sentence of this clause (q), the Independent Directors
or Independent Managers (as applicable) shall consider only the interests of such SPC Party,
including its creditors. Without limiting the generality of the foregoing, such documents shall
expressly provide that, to the greatest extent permitted by law, except for duties to such SPC
Party (including duties to SPC Party’s creditors as set forth in the immediately preceding
sentence), such Independent Directors or Independent Managers (as applicable) shall not owe any
fiduciary duties to, and shall not consider, in acting or otherwise voting on any matter for which
their approval is required, the interests of (i) the members of such Borrower, (ii) Affiliates of
such SPC Party, or (iii) any group of Affiliates of which such SPC Party is a part); provided,
however, the foregoing shall not eliminate the implied contractual covenant of good faith and fair
dealing.


 


 









 





Exhibit C

Page 5




(r) The organizational documents of each of SPC Party shall provide that upon the occurrence
of any event that causes a Sole Member to cease to be a member of such SPC Party (other than (i)
upon an assignment by a Sole Member of all of its limited liability company interest in such SPC
Party and the admission of the transferee, if permitted pursuant to the organizational documents of
such SPC Party and the Loan Documents, or (ii) the resignation of a Sole Member and the admission
of an additional member of such SPC Party, if permitted pursuant to the organizational documents of
such SPC Party and the Loan Documents), each of the persons acting as an Independent Director or
Independent Manager (as applicable) of such SPC Party shall, without any action of any Person and
simultaneously with Sole Member ceasing to be a member of such SPC Party, automatically be admitted
as members of such SPC Party (in each case, individually, a “Special Member” and
collectively, the “Special Members”) and shall preserve and continue the existence of such
SPC Party without dissolution. The organizational documents of each such SPC Party shall further
provide that for so long as any portion of the Obligations is outstanding, no Special Member may
resign or transfer its rights as Special Member unless (i) a successor Special Member has been
admitted to such SPC Party as a Special Member, and (ii) such successor Special Member has also
accepted its appointment as an Independent Director or Independent Manager (as applicable).



(s) The organizational documents of each of SPC Party shall provide that, as long as any
portion of the Obligations remains outstanding, except as expressly permitted pursuant to the terms
of this Agreement the Sole Member may not resign, except as provided under the Basic Documents.
The organizational documents of Operating Lessee shall provide that, as long as any portion of the
Obligations remains outstanding, except as expressly permitted pursuant to the terms of this
Agreement Managing Member may not resign, except as provided under the Loan Documents.



(t) (i) The organizational documents of each Borrower and Managing Member shall provide that,:
(i) each such Borrower and Managing Member shall be dissolved, and its affairs shall be wound up,
only upon the first to occur of the following: (A) subject to last subject sentence of this
Section (t), the termination of the legal existence of the last remaining member of such
Borrower or Managing Member or the occurrence of any other event which terminates the continued
membership of the last remaining member of such Borrower or Managing Member in such Borrower or
Managing Member, as applicable, unless the business of such Borrower or Managing Member, as
applicable, is continued in a manner permitted by its operating agreement or the Delaware Limited
Liability Company Act (the “Act”), or (B) the entry of a decree of judicial dissolution
under Section 18-802 of the Act; (ii) the bankruptcy of a Sole Member or a Special Member shall not
cause such Sole Member or Special Member, respectively, to cease to be a member of the applicable
SPC Party and upon the occurrence of such an event, the business of such SPC Party shall continue
without dissolution; (iii) in the event of the dissolution of such Borrower or Managing Member,
such Borrower or Managing Member shall conduct only such activities as are necessary to wind up its
affairs (including the sale of the assets of such Borrower or Managing Member in an orderly
manner), and the assets of such Borrower or Managing Member shall be applied in the manner, and in
the order of priority, set forth in Section 18-804 of the Act; and (iv) to the fullest extent
permitted by law, each of each Sole Member, and the Special Members and Managing Member, as
applicable shall irrevocably waive any right or power that they might have to cause the applicable
Borrower or Managing Member or any of its assets to be partitioned, to cause the appointment of a
receiver for all or any portion of


 


 









 





Exhibit C

Page 6




the
assets of such Borrower or Managing Member to compel any sale of all or any portion of the assets of
such Borrower or Managing Member pursuant to any applicable law or to file a complaint or to
institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or
termination of such Borrower or Managing Member . Upon the occurrence of any event that causes the
last remaining member of a Borrower or Managing Member to cease to be a member of such Borrower or
Managing Member or that causes a Sole Member to cease to be a member of the applicable SPC CParty
(other than (A) upon an assignment by a Sole Member of all of its limited liability company
interest in such SPC Party and the admission of the transferee, if permitted pursuant to the
organizational documents of such SPC Party and the Loan Documents, or (B) the resignation of a Sole
Member and the admission of an additional member of such Borrower, if permitted pursuant to the
organizational documents of such SPC Party and the Loan Documents), to the fullest extent permitted
by law, the personal representative (as defined in the Act) of such last remaining member shall be
authorized to, and shall, within ninety (90) days after the occurrence of the event that terminated
the continued membership of such member in an SPC Party, agree in writing (I) to continue the
existence of such SPC Party, and (II) to the admission of the personal representative or its
nominee or designee, as the case may be, as a substitute member of such SPC Party, effective as of
the occurrence of the event that terminated the continued membership of such member in such SPC
Party.



(u) Each Borrower shall conduct its business so that the assumptions made with respect to such
Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with
the foregoing, each Borrower hereby covenants and agrees that it will comply with or cause the
compliance with, (i) all of the facts and assumptions (whether regarding such Borrower or any other
Person) set forth in the Insolvency Opinion, (ii) all of the representations, warranties and
covenants on this Exhibit C, and (iii) all of the organizational documents of such
Borrower.



(v) Each Borrower has not permitted and will not permit any Affiliate or constituent party
independent access to its bank accounts except for Manager.



(w) Each Borrower has paid and shall pay its own liabilities and expenses, including the
salaries of its own employees (if any) from its own funds, and has maintained and shall maintain a
sufficient number of employees (if any) in light of its contemplated business operations;
provided that the foregoing shall not require direct or indirect any member, partner or
shareholder of any Borrower to make any additional capital contributions to such Borrower.



(x) Each Borrower has compensated and shall compensate each of its consultants and agents from
its funds for services provided to it and pay from its own assets all obligations of any kind
incurred; provided that the foregoing shall not require any direct or indirect member,
partner or shareholder of and Borrower to make any additional capital contributions to such
Borrower.



(y) Each Borrower has allocated and will allocate fairly and reasonably any overhead expenses
that are shared with any Affiliate, including shared office space.



(z) Except in connection with the Loan, each Borrower will not pledge its assets for the
benefit of any other Person.


 


 









 





Exhibit C

Page 7




(aa) Each Borrower has and will have no obligation to indemnify its officers, directors,
members or Special Members, as the case may be, or has such an obligation that is fully
subordinated to the Obligations and will not constitute a claim against it if cash flow in excess
of the amount required to pay the Obligations is insufficient to pay such obligation.



(bb) Each Borrower has not, does not, and will not have any of its obligations guaranteed by
any Affiliate (other than from the Guarantor with respect to the Loan and any co-borrower under the
Loan).




As used herein:



“Cause” shall mean, with respect to an Independent Director or Independent Manager,
(i) acts or omissions by such Independent Director or Independent Manager, as applicable, that
constitute willful disregard of, or gross negligence with respect to, such Independent Director’s
or Independent Manager’s, as applicable, duties, (ii) such Independent Director or Independent
Manager, as applicable, has engaged in or has been charged with or has been indicted or convicted
for any crime or crimes of fraud or other acts constituting a crime under any law applicable to
such Independent Director or Independent Manager, as applicable, (iii) such Independent Director or
Independent Manager, as applicable, has breached its fiduciary duties of loyalty and care as and to
the extent of such duties in accordance with the terms of the Borrower’s organizational documents,
(iv) there is a material increase in the fees charged by such Independent Director or Independent
Manager, as applicable, or a material change to such Independent Director’s or Independent
Manager’s, as applicable, terms of service, (v) such Independent Director or Independent Manager,
as applicable, is unable to perform his or her duties as Independent Director or Independent
Manager, as applicable, due to death, disability or incapacity, or (vi) such Independent Director
or Independent Manager, as applicable, no longer meets the definition of Independent Director or
Independent Manager, as applicable.



 


 









 







EXHIBIT D




INTENTIONALLY OMITTED




 


 









 







EXHIBIT E




NON-CONSOLIDATION OPINION REQUIREMENTS





1. The Nonconsolidation Opinion shall be delivered on the Closing Date.



2. The Nonconsolidation Opinion shall be given by a professional law firm selected by Borrower
and reasonably acceptable to Administrative Agent.



3. The Nonconsolidation Opinion shall be in form and substance acceptable to Administrative
Agent and shall be given in relation to both Borrower and any other SPE Entity relevant to the
Loan. The Nonconsolidation Opinion shall identify each entity (a “Relevant Entity”) which
owns more than a 49% direct or indirect interest in either Borrower and/or such SPE Entity.



4. The Nonconsolidation Opinion shall state that, in the event that any Relevant Entity were
to be a debtor in a case under the Bankruptcy Code, it is counsel’s opinion that, under present
reported decisional authority and statutes applicable to federal bankruptcy cases, in a properly
presented and argued case, a court would not, in the proper exercise of its equitable discretion,
disregard the separate existence of Borrower or any SPE Entity so as to order substantive
consolidation under the Bankruptcy Code of the assets and liabilities of such Relevant Entity with
the assets and liabilities of either Borrower or any SPE Entity and treat such assets and
liabilities as though either Borrower and such Relevant Entity or any SPE Entity and such Relevant
Entity were one entity.



5. The Nonconsolidation Opinion shall be addressed to Administrative Agent, Lenders and their
respective successors and assigns and shall state that it may be relied upon by any assignee of
Lenders’ interests in the Loan.



DELAWARE BANKRUPTCY OPINIONS




As a general rule, the following opinions are required with respect to any single-member
Delaware limited liability companies (having independent members/managers) in the organizational
structure:




	 	1.	 	An opinion of Delaware counsel that federal bankruptcy court would hold that
Delaware law, and not federal law, governs the determination of what persons or
entities have authority to file a voluntary bankruptcy petition on behalf of the
limited liability company.

	 
	 	2.	 	Opinions of Delaware counsel as follows:







	 	a.	 	The limited liability company agreement constitutes a legal,
valid and binding agreement of its member, and is enforceable against such
member, in accordance with its terms.




 


 









 










Exhibit E

Page 2





	 	b.	 	In order for a voluntary bankruptcy petition to be filed on
behalf of the Company, the unanimous consent of all of the independent
managers/members is required and the provision requiring such unanimous
consent in the limited liability company agreement constitutes a legal,
valid and binding agreement of the member, enforceable against the member,
in accordance with its terms.







	 	c.	 	The bankruptcy or dissolution of the limited liability
company’s sole member will not, by itself, cause the limited liability company
to be dissolved or its affairs to be wound up.







	 	d.	 	A judgment creditor of the member may not satisfy its claims
against the member by asserting a claim against the assets of the limited
liability company.







	 	e.	 	The limited liability company is a separate legal entity, and
shall continue as such until the cancellation of the limited liability company
certificate.






 


 









 







EXHIBIT F




COUNTERPARTY OPINION REQUIREMENTS





1. The Counterparty Opinion shall be delivered on the Closing Date.



2. The Counterparty Opinion may be given by a professional law firm selected by Counterparty
and reasonably acceptable to Administrative Agent or by in-house counsel for Counterparty.



3. The Counterparty Opinion shall be in form and substance acceptable to Administrative Agent
and shall contain the following opinions:




	 	(a)	 	Counterparty is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation and has the
organizational power and authority to execute and deliver, and to perform its
obligations under the Interest Rate Cap Agreement and the Acknowledgment.







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







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







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




 


 









 










Exhibit F

Page 2




4. If a Interest Rate Cap Guaranty is delivered in connection with the Interest Rate Cap
Agreement, the Counterparty Opinion shall contain the following additional opinions:




	 	(a)	 	Interest Rate Cap Guarantor is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation and has the organizational power and authority to execute and
deliver, and to perform its obligations under, the Interest Rate Cap Guaranty.







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







	 	(c)	 	All consents, authorizations and approvals required for the
execution and delivery by Interest Rate Cap Guarantor of the Interest Rate Cap
Guaranty, and any other agreement which Interest Rate Cap Guarantor has
executed and delivered pursuant thereto, and the performance of its obligations
thereunder have been obtained and remain in full force and effect, all
conditions thereof have been duly complied with, and no other action by, and no
notice to or filing with any governmental authority or regulatory body is
required for such execution, delivery or performance.







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




 


 









 










Exhibit F

Page 3




5. Depending on the nature of the transaction, the Counterparty Opinion shall contain such
additional opinions on such other matters relating to the Interest Rate Cap Agreement, the Interest
Rate Cap Guaranty and/or the Acknowledgment as Administrative Agent or Lenders shall reasonably
require, including, without limitation, the following additional opinions if the Counterparty or
Interest Rate Cap Guarantor is a foreign entity:




	 	(a)	 	Jurisdiction where Counterparty and/or Interest Rate Cap
Guarantor, as applicable, is located will respect and give effect to the choice
of law provisions of the Interest Rate Cap Agreement and the Acknowledgment.







	 	(b)	 	A judgment obtained in the courts of the State of New York is
enforceable in the jurisdiction where Counterparty and/or Interest Rate Cap
Guarantor, as applicable, is located.






6. The Counterparty Opinion shall be addressed to Administrative Agent, Lenders and their
respective successors and assigns and shall state that it may be relied upon by any assignee of
Lenders’ interests in the Loan.



 


 









 







EXHIBIT G




FORM OF TENANT ESTOPPEL LETTER




                    , 20_____





Deutsche Bank Trust Company Americas, as Administrative Agent on behalf of the Lenders


[                    ]


[                    ]



Re:




Ladies and Gentlemen:



It
is our understanding that you have made a loan to
[                    ], a
[                    ], the landlord, or successor-in-interest to the landlord under our
lease, as evidenced by a loan agreement and secured by a mortgage on the captioned premises and you
have required this certification by the undersigned.



The undersigned, as tenant under that certain lease made with                     , as landlord, dated
                     [, which lease has been modified or amended as follows (list all modifications or
amendments or, if none, so indicate)                     ] (the “Lease”), hereby
ratifies the Lease and certifies that:



1. the undersigned entered into occupancy of the premises described in the Lease on or about
                    ;




2. the lease commencement date was                     ;




3. the square footage of the premises described in the Lease is                     ;




4. the fixed rental in the monthly amount of $                     was payable from                     ;




5. the percentage rental payable monthly is $                    ;



6. there are no rent abatements or free rent periods now or in the future [other than
                    ];



7. the amount of the current monthly expense reimbursements due under the Lease is equal to $
                    ;



8. the Lease is in full force and effect and, except as indicated above, has not been
assigned, modified, supplemented or amended in any way and the undersigned has no notice of any
assignment, pledge or hypothecation by the landlord of the Lease or of the rentals thereunder
except to you;


 


 









 





Exhibit G

Page 2




9. a true and complete copy of the Lease (including all amendments, modifications,
supplements, side letters, surrender, space reduction or rent abatement agreements applicable to
such Lease) is attached hereto as Exhibit A;



10. the Lease represents the entire agreement between the parties with respect to the above
space in the above-mentioned building;



11. the term of the Lease [, as currently extended by means of the exercise of certain options
contained therein,] expires on                     ;



12. all construction and other obligations of a material nature to be performed by the
landlord under the Lease have been satisfied, except as follows: (if none, so indicate);



13. any payments by the landlord to the undersigned for tenant improvements which are required
under the Lease have been made;



14. on this date there are no existing defenses or offsets which the undersigned has against
the enforcement of the Lease by the Landlord and the undersigned has no knowledge of any event
which with the giving of notice, the passage of time or both would constitute a default under said
Lease;



15. the undersigned is not entitled to any offsets, abatements, deductions or otherwise
against the rent payable under the Lease from and after the date hereof, except as follows: (if
none, so indicate);



16. no rental (including expense reimbursements), other than for the current month, has been
paid in advance;



17. the amount of the security deposit presently held under the Lease is $                     (if none,
so indicate);



18. the rentals (including expense reimbursements) under the Lease have been paid through the
month of                     .



This estoppel certificate is binding upon the undersigned and its successors and assigns and
may be relied upon by you and your successors and assigns.



	 	 	 	 	 
	 	Very truly yours,



                                                            

[INSERT NAME OF TENANT]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 



 


 









 







EXHIBIT A

to Form of Tenant Estoppel Letter




LEASE




 


 









 







EXHIBIT H




BORROWER ORGANIZATIONAL STRUCTURE



[Provided Separately]




 


 









 







EXHIBIT I




INTEREST RATE CAP AGREEMENT REQUIREMENTS





	 	•	 	The form of cap agreement should be the 1992 ISDA Agreement (Multicurrency
Cross Border or Local Currency Single Jurisdiction) subject to the 2000 Definitions.

	 
	 	•	 	Once the cap premium is paid by Borrower, it cannot default. (Paragraph 4 of
the May 1989 ISDA Addendum to Schedule to Interest Rate and Currency Exchange Agreement
or similar language must be incorporated by reference).

	 
	 	•	 	“Cross Default” provision of Section 5(a)(vi) of the ISDA Master
Agreement will not apply.

	 
	 	•	 	Grace and cure periods in Section 5 of the ISDA Master Agreement will either
(i) not apply or (ii) if applicable, any grace or cure periods must expire in time to
ensure the availability of cap payments by cap provider on a timely basis for
distribution to the holders of the rated securities.

	 
	 	•	 	“Credit Event Upon Merger” provisions of Section 5(b)(iv) of the ISDA
Master Agreement will not apply.

	 
	 	•	 	“Automatic Early Termination” provision in Section 6(a) of the ISDA
Master Agreement will not apply.

	 
	 	•	 	Termination Events under Sections 5(b)(ii) and 5(b)(iii) of the ISDA Master
Agreement either (i) will only constitute termination events exercisable by Borrower
against cap provider or (ii) if exercisable by both parties, at the time of any event
triggering a termination event under Sections 5(b)(ii) and/or 5(b)(iii), cap provider
must either (a) transfer the cap to a replacement cap provider acceptable to
Administrative Agent at cap provider’s sole cost and expense, or (b) continue to
perform its obligations under the cap agreement including, without limitation, the
obligation to unconditionally “gross up” in the event that a withholding tax is imposed
on payments being made by the cap provider.

	 
	 	•	 	Borrower shall be precluded from payment of any out of pocket expenses required
under Section 11 of the ISDA Master Agreement and incurred by cap provider related to
the enforcement and protection of cap provider’s rights under the cap agreement.

	 
	 	•	 	Market Quotation and Second Method will be used for the purpose of computing
amounts payable on early termination with a provision for loss if Market Quotation is
not available.

	 
	 	•	 	The parties shall be deemed to have no Affiliates for purposes of the ISDA
Master Agreement.

	 
	 	•	 	“Specified Entities” will not apply for purposes of Sections 5(a)(v),
5(a)(vi), 5(a)(vii) and 5(b)(iv) of the ISDA Master Agreement.

	 
	 	•	 	Transaction will be governed by New York law.

	 
	 	•	 	For the purposes of Section 6(e) of the ISDA Master Agreement, set off and
counterclaim will not apply and all payments by cap provider shall be made without set
off or counterclaim.

	 
	 	•	 	The definition of LIBOR will be USD LIBOR BBA and must match the definition of
LIBOR in the loan agreement.




 


 










 






Exhibit I

Page 2





	 	•	 	The definition of Business Day must match the definition of Business Day in the
loan agreement.

	 
	 	•	 	LIBOR must be determined on the LIBOR Determination Date.

	 
	 	•	 	Payments must be made by the cap provider on or prior to the applicable Payment
Date in respect of a period corresponding to the applicable Interest Period.

	 
	 	•	 	The Termination Date of the cap must be no earlier than the last day of the
Interest Period in which the Maturity Date under the loan agreement occurs.

	 
	 	•	 	The Day Count Fraction in the cap must match that contained in the loan
agreement.

	 
	 	•	 	The Notional Amount in the cap must [equal $135,000,000][match the principal
amount of the loan as of the date of the loan agreement].

	 
	 	•	 	US Dollars are selected as the Termination Currency under the cap.

	 
	 	•	 	Section 2(c)(ii) of the ISDA Master Agreement will apply to the Transaction.

	 
	 	•	 	Cap provider and Borrower will represent that it is not a multi branch party.

	 
	 	•	 	Cap provider will covenant that it will not petition Borrower into bankruptcy
(or join in any such petition) for 365 days after all outstanding rated securities have
been paid in full.

	 
	 	•	 	If the ISDA Master Agreement (Multicurrency Cross Border)(“Cross Border
Agreement”) is utilized, additional scheduled items and provisions to address
“indemnifiable taxes” and other related issues present in cross border transactions
must be incorporated:







	 	•	 	Section 2(d)(i)(4) of the Cross Border Agreement must be
amended to require the cap provider to unconditionally “gross up” in the event
that a withholding tax is imposed on payments being made by the cap provider.







	 	•	 	The definition of “indemnifiable tax” must cover any and all
withholding tax.







	 	•	 	Section 2(d)(i)(4) of the Cross Border Agreement will be
deleted such that cap provider is not excused from having to “gross up” due to
Borrower’s breach of a tax representation or failure to notify cap provider of
a breach of a tax representation and (ii) Borrower makes no tax representations
in the cap agreement or schedule.







	 	•	 	Section 2(d)(ii) of the Cross Border Agreement must be amended
to provide that there is no obligation by Borrower to make payments to the cap
provider for any payments made by the cap provider without deduction for taxes
(for which there is no obligation to gross up).







	 	•	 	Section 4(e) of the Cross Border Agreement must be amended to
provide that there are no payment obligations by Borrower to cap provider for
any indemnification resulting from stamp registration or other documentary tax
levied by Borrower’s taxing authority on the cap provider.






 


 









 







EXHIBIT J




FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT1




This Assignment and Acceptance Agreement (this “Assignment”) is dated as of the
Effective Date set forth below and is entered into by and between the Assignor identified in item 1
below (the “Assignor”) and [the] [each] Assignee identified in item [2] [3] below ([the]
[each an] “Assignee”). [It is understood and agreed that the rights and obligations of
such Assignee hereunder are several and not joint]. Capitalized terms used herein but not defined
herein shall have the meanings given to them in the Loan Agreement, receipt of a copy of which is
hereby acknowledged by [the] [each] Assignee. The Standard Terms and Conditions set forth in Annex
1 hereto (the “Standard Terms and Conditions”) are hereby agreed to and incorporated herein
by reference and made a part of this Assignment as if set forth herein in full.



For an agreed consideration, the Assignor hereby irrevocably sells and assigns to [the] [each]
Assignee, and [the] [each] Assignee hereby irrevocably purchases and assumes from the Assignor,
subject to and in accordance with the Standard Terms and Conditions and the Loan Agreement, as of
the Effective Date inserted by the Administrative Agent as contemplated below, the interest in and
to all of the Assignor’s rights and obligations under the Loan Agreement and any other documents or
instruments delivered pursuant thereto that represents the amount and percentage interest
identified below of all of the Assignor’s outstanding rights and obligations under Loan Agreement
(including with respect to any outstanding amounts) (the “Assigned Interest”). [Such]
[Each] sale and assignment is without recourse to the Assignor and, except as expressly provided in
this Assignment, without representation or warranty by the Assignor.



	 	 	 	 	 
	1.

	 	Assignor:
	 	
 _____ 

	 
	 	 	 	 
	2.

	 	Assignee:
	 	
 _____ 

	 
	 	 	 	 
	3.

	 	Loan Agreement:
	 	Loan and Security Agreement, dated as of August

 _____ 
2011 (as amended, supplemented or otherwise
modified from time to time, the “Loan Agreement”)
among HENRY HUDSON HOLDINGS LLC, a Delaware
limited liability company (“Owner”),
58th STREET BAR COMPANY LLC, a
Delaware limited liability company (“Bar
Lessee”), and HUDSON LEASECO LLC, a New York
limited liability company (“Operating Lessee”;
Operating Lessee, Bar Lessee and Owner, together
with their respective successors and assigns,
collectively “Borrower”), the various financial
institutions as are or may become parties
thereto, and Deutsche Bank Trust Company
Americas, as Administrative Agent.






 





	 	 	 
	1	 	This form of Lender Assignment Agreement should be used
by Lenders for an assignment to a single Assignee or to funds managed by the
same or related investment managers.



 


 









 









Exhibit J

Page 2




	 	 	 	 	 
	3. Assigned Interest:
	 	 	 	 
	 
	 	 	 	 
	Percentage interest assigned:
	 	 	                    	%
	 
	 	 	 	 
	Aggregate outstanding principal amount of the Loan assigned:
	 	$	                    	 
	 
	 	 	 	 
	Outstanding Delayed Draw Term Loan Commitments assigned:
	 	$	                    	 
	 
	 	 	 	 
	Principal amount of Note payable to Assignee:
	 	$	                    	 
	 
	 	 	 	 
	Principal amount of Note payable to Assignor:
	 	$	                    	 
	 
	 	 	 	 
	Effective Date (if other than date of acceptance by Lender):
	 	 	 	 







                    
 _____ 
,
                    


Payment Instructions:



	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Reference:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Relationship
Contact:               
            	 	 





 


 









 





Exhibit J

Page 3




The terms set forth in this Assignment are hereby agreed to:



	 	 	 	 	 	 	 	 	 	 	 
	ASSIGNOR	 	 	 	ASSIGNEE2	 	 
	[NAME OF ASSIGNOR]	 	 	 	[NAME OF ASSIGNEE]	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

Name:
	 	 	 	 	 	 

Name:
	 	 
	 

	 	Title:
	 	 	 	 	 	Title:	 	 






[Consented to and]3 Accepted:

DEUTSCHE BANK TRUST COMPANY AMERICAS,




as Administrative Agent



	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 





 







	 	 	 
	2	 	Add additional signature blocks, as needed, if this Form
is being used by funds managed by the same or related investment managers.

	 
	3	 	Insert only if assignment is being made to an Eligible
Assignee that is not an existing Lender, an Affiliate of an existing Lender or
an Approved Fund.



 


 









 









Exhibit J

Page 4




HENRY HUDSON HOLDINGS LLC




58th STREET BAR COMPANY LLC

AND HUDSON LEASECO LLC


LOAN AGREEMENT


STANDARD TERMS AND CONDITIONS

FOR

LENDER ASSIGNMENT AGREEMENT





1. Representations and Warranties.



1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with any Loan Document, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement, any
other Loan Document or any other instrument or document delivered pursuant thereto, other than this
Assignment, or any collateral thereunder, (iii) the financial condition of the Borrower or any of
its Affiliates or any other Person obligated in respect of any Loan Document or (iv) the
performance or observance by the Borrower or any of its Affiliates or any other Person of any of
their respective obligations under any Loan Documents.



1.2 Assignee. [The] [Each] Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver this Assignment and
to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement,
(ii) it meets all requirements of an Eligible Assignee under the Loan Agreement, (iii) from and
after the Effective Date, it shall be bound by the provisions of the Loan Agreement and, to the
extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Loan Agreement, together with copies of such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to enter into this
Assignment and to purchase the Assigned Interest on the basis of which it has made such analysis
and decision and (v) attached to this Assignment is any documentation required to be delivered by
it pursuant to the terms of the Loan Agreement, duly completed and executed by [the] [each]
Assignee; (b) agrees that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be performed by it as a
Lender; and (c) appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto.


 


 









 





Exhibit J

Page 5




2. Payment. From and after the Effective Date, the Administrative Agent shall make
all payment in respect to the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to [the] [each] Assignee for amounts which have accrued from and after the Effective Date.



3. Effect of Assignment. Upon the delivery of a full executed original hereof to the
Administrative Agent, as of the Effective Date, (i) [the][each] Assignee shall be a party to the
Loan Agreement and, to the extent provided in this Assignment, have the rights and obligations of a
Lender thereunder and under the other Loan Documents and (ii) the Assignor shall, to the extent
provided in this Assignment, relinquish its rights and be released from its obligations under the
Loan Agreement and the other Loan Documents.



4. General Provisions. This Assignment shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns. This Assignment may be
executed in any number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment by telecopy shall be effective as
delivery of a manually executed counterpart of the Assignment. THIS ASSIGNMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).



* * * *




 


 









 







EXHIBIT K




FORM OF SUBORDINATION,

NON-DISTURBANCE AND ATTORNMENT AGREEMENT




SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT




                    ,

Tenant




AND




DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative Agent on behalf of

the Lenders




	 	 	 
	County:

	 	[          ]
	Section:

	 	[          ]
	Block:

	 	[          ]
	Lot:

	 	[          ]
	 
	 	 
	Premises:
	 	 
	 
	 	 
	Dated: as of                     , _____






Record and return by mail to:

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036

Attention: Leila Rachlin, Esq.

1111779-2203




 


 









 







Exhibit K

Page 2




SUBORDINATION,

NON-DISTURBANCE AND ATTORNMENT AGREEMENT




THIS AGREEMENT made as of this
 _____ 
day of
                    , 20_____, between DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Administrative Agent on behalf of the Lenders, a New York banking corporation, having
an address at 31 West 52nd Street, New York, New York 10019 (together with its successor and/or
assigns, hereinafter called “Administrative Agent”), and                     , a                     ,
having an address at                      (hereinafter called “Tenant”).



W
I T N E S S E T H :




WHEREAS, by a lease (the “Original Lease”) dated                     , 20_____ 
between
                     (hereinafter called “Landlord”), as landlord, and Tenant, as tenant, as
amended by lease amendment[s] dated                     , 20_____,
 [                    , 20_____
and                     , 20_____] (the
Original Lease, as so amended, is hereinafter the “Lease”), a memorandum of which Lease was
dated                      and was recorded in                      in Reel                     , Page
                    , [add recording data for
memoranda of amendments, if applicable], Landlord leased to Tenant certain premises located in
                    (the “Premises”) on the property described in Schedule
“A” annexed hereto and made a part hereof (the “Property”); and



WHEREAS, pursuant to the Loan and Security Agreement, dated as of August [_____], 2011, (as
amended, restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”), by and among Henry Hudson Holdings LLC, 58th Street Bar Company LLC, Hudson
Leaseco LLC, the lenders party thereto from time to time (collectively, “Lenders”) and
Administrative Agent, Lenders have made a loan to Landlord, which loan is secured by, among other
things, a mortgage (which mortgage, and all amendments, renewals, increases, modifications,
replacements, substitutions, extensions, spreaders and consolidations thereof and all re-advances
thereunder and addictions thereto, is referred to as the “Security Instrument”) encumbering
the Property; and



WHEREAS, Administrative Agent and Tenant desire to confirm their understanding and agreement
with respect to the Lease and the Security Instrument.



NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained,
Administrative Agent and Tenant hereby agree and covenant as follows:



1. The Lease, and all of the terms, covenants, provisions and conditions thereof (including,
without limitation, any right of first refusal, right of first offer, option or any similar right
with respect to the sale or purchase of the Property, or any portion thereof) is, shall be and
shall at all times remain and continue to be subject and subordinate in all respects to the lien,
terms, covenants, provisions and conditions of the Security Instrument and to all advances and
re-advances made thereunder and all sums secured thereby. This provision shall be self-operative
but Tenant shall execute and deliver any additional instruments which Administrative Agent or
Lenders may reasonably require to effect such subordination.


 


 









 





Exhibit K

Page 3




2. So long as (i) Tenant is not in default (beyond any period given in the Lease to Tenant to
cure such default) in the payment of rent, percentage rent or additional rent or
in the performance or observance of any of the other terms, covenants, provisions or
conditions of the Lease on Tenant’s part to be performed or observed, (ii) Tenant is not in default
under this Agreement and (iii) the Lease is in full force and effect: (a) Tenant’s possession of
the Premises and Tenant’s rights and privileges under the Lease, or any extensions or renewals
thereof which may be effected in accordance with any option therefor which is contained in the
Lease, shall not be diminished or interfered with by Administrative Agent or Lenders, and Tenant’s
occupancy of the Premises shall not be disturbed by Administrative Agent or Lenders for any reason
whatsoever during the term of the Lease or any such extensions or renewals thereof and (b) neither
Administrative Agent nor Lenders will join Tenant as a party defendant in any action or proceeding
to foreclose the Security Instrument or to enforce any rights or remedies of Administrative Agent
or Lenders under the Security Instrument which would cut-off, destroy, terminate or extinguish the
Lease or Tenant’s interest and estate under the Lease (except to the extent required so that
Tenant’s right to receive or set-off any monies or obligations owed or to be performed by any of
Lenders’ predecessors-in-interest shall not be enforceable thereafter against Administrative Agent,
Lenders or any of Lenders’ successors-in-interest). Notwithstanding the foregoing provisions of
this paragraph, if it would be procedurally disadvantageous for Administrative Agent or Lenders not
to name or join Tenant as a party in a foreclosure proceeding with respect to the Security
Instrument, Administrative Agent or Lenders may so name or join Tenant without in any way
diminishing or otherwise affecting the rights and privileges granted to, or inuring to the benefit
of, Tenant under this Agreement.



3. (A) After notice is given by Administrative Agent that the Security Instrument is in
default and that the rentals under the Lease should be paid to Lenders, Tenant will attorn to
Lenders and pay to Lenders, or pay in accordance with the directions of Administrative Agent, all
rentals and other monies due and to become due to Landlord under the Lease or otherwise in respect
of the Premises. Such payments shall be made regardless of any right of set-off, counterclaim or
other defense which Tenant may have against Landlord, whether as the tenant under the Lease or
otherwise.



(B) In addition, if Administrative Agent (or its nominee or designee) shall succeed to the
rights of Landlord under the Lease through possession or foreclosure action, delivery of a deed or
otherwise, or another person purchases the Property or the portion thereof containing the Premises
upon or following foreclosure of the Security Instrument or in connection with any bankruptcy case
commenced by or against Landlord, then at the request of Administrative Agent (or its nominee or
designee) or such purchaser (Administrative Agent, its nominees and designees, and such purchaser,
and their respective successors and assigns, each being a “Successor-Landlord”), Tenant
shall attorn to and recognize Successor-Landlord as Tenant’s landlord under the Lease and shall
promptly execute and deliver any instrument that Successor-Landlord may reasonably request to
evidence such attornment. Upon such attornment, the Lease shall continue in full force and effect
as, or as if it were, a direct lease between Successor-Landlord and Tenant upon all terms,
conditions and covenants as are set forth in the Lease. If the Lease shall have terminated by
operation of law or otherwise as a result of or in connection with a bankruptcy case commenced by
or against Landlord or a foreclosure action or proceeding or delivery of a deed in lieu, upon
request of Successor-Landlord, Tenant shall promptly execute and deliver a direct lease with
Successor-Landlord which direct lease shall be on substantially the same terms and conditions as
the Lease (subject, however, to the provisions of clauses (i)-(v) of this paragraph 3(B)) and shall
be effective as of the day the Lease shall have
terminated as aforesaid. Notwithstanding the continuation of the Lease, the attornment of
Tenant thereunder or the execution of a direct lease between Successor-Landlord and Tenant as
aforesaid, Successor-Landlord shall not:


 


 









 





Exhibit K

Page 4





(i) be liable for any previous act or omission of Landlord under the Lease;




(ii) be subject to any off-set, defense or counterclaim which shall have theretofore
accrued to Tenant against Landlord;




(iii) be bound by any modification of the Lease or by any previous prepayment of rent
or additional rent made more than one (1) month prior to the date same was due which Tenant
might have paid to Landlord, unless such modification or prepayment shall have been
expressly approved in writing by Lender or was permitted under the terms of the Loan
Agreement with the consent of Lender;




(iv) be liable for any security deposited under the Lease unless such security has been
physically delivered to Administrative Agent or Successor-Landlord; and




(v) be liable or obligated to comply with or fulfill any of the obligations of the
Landlord under the Lease or any agreement relating thereto with respect to the construction
of, or payment for, improvements on or above the Premises (or any portion thereof),
leasehold improvements, tenant work letters and/or similar items.



4. Tenant agrees that without the prior written consent of Administrative Agent, it shall not
(a) amend, modify, terminate or cancel the Lease or any extensions or renewals thereof except to
the extent permitted under the Loan Agreement without the consent of Lender, (b) tender a surrender
of the Lease, (c) make a prepayment of any rent or additional rent more than one (1) month in
advance of the due date thereof, or (d) subordinate or permit the subordination of the Lease to any
lien subordinate to the Security Instrument. Any such purported action without such consent shall
be void as against the holder of the Security Instrument.



5. (A) Tenant shall promptly notify Administrative Agent of any default by Landlord under the
Lease and of any act or omission of Landlord which would give Tenant the right to cancel or
terminate the Lease or to claim a partial or total eviction.



(B) In the event of a default by Landlord under the Lease which would give Tenant the right,
immediately or after the lapse of a period of time, to cancel or terminate the Lease or to claim a
partial or total eviction, or in the event of any other act or omission of Landlord which would
give Tenant the right to cancel or terminate the Lease, Tenant shall not exercise such right (i)
until Tenant has given written notice of such default, act or omission to Administrative Agent and
(ii) unless Administrative Agent has failed, within sixty (60) days after Administrative Agent
receives such notice, to cure or remedy the default, act or omission or, if such default, act or
omission shall be one which is not reasonably capable of being remedied by Administrative Agent
within such sixty (60) day period, until a reasonable period for remedying such default, act or
omission shall have elapsed following the giving of such notice and following the time when
Administrative Agent shall have become entitled under the Security Instrument to remedy the same
(which reasonable period shall in no event be less than the period
to which Landlord would be entitled under the Lease or otherwise, after similar notice, to
effect such remedy), provided that Administrative Agent shall with due diligence give
Tenant written notice of its intention to and shall commence and continue to, remedy such default,
act or omission. If Administrative Agent cannot reasonably remedy a default, act or omission of
Landlord until after Administrative Agent obtains possession of the Premises, Tenant may not
terminate or cancel the Lease or claim a partial or total eviction by reason of such default, act
or omission until the expiration of a reasonable period necessary for the remedy after
Administrative Agent secures possession of the Premises. To the extent Administrative Agent incurs
any expenses or other costs in curing or remedying such default, act or omission, including,
without limitation, attorneys’ fees and disbursements, Administrative Agent shall be subrogated to
Tenant’s rights against Landlord.


 


 









 





Exhibit K

Page 5




(C) Notwithstanding the foregoing, Administrative Agent shall have no obligation hereunder to
remedy such default, act or omission.



6. To the extent that the Lease shall entitle Tenant to notice of the existence of any
mortgage and the identity of any mortgagee or any ground lessor, this Agreement shall constitute
such notice to Tenant with respect to the Security Instrument and Administrative Agent.



7. Upon and after the occurrence of a default under the Security Instrument, which is not
cured after any applicable notice and/or cure periods, Administrative Agent, for the benefit of
Lenders, shall be entitled, but not obligated, to exercise the claims, rights, powers, privileges
and remedies of Landlord under the Lease and shall be further entitled to the benefits of, and to
receive and enforce performance of, all of the covenants to be performed by Tenant under the Lease
as though Administrative Agent were named therein as Landlord.



8. Anything herein or in the Lease to the contrary notwithstanding, in the event that a
Successor-Landlord shall acquire title to the Property or the portion thereof containing the
Premises, Successor-Landlord shall have no obligation, nor incur any liability, beyond
Successor-Landlord’s then interest, if any, in the Property, and Tenant shall look exclusively to
such interest, if any, of Successor-Landlord in the Property for the payment and discharge of any
obligations imposed upon Successor-Landlord hereunder or under the Lease, and Successor-Landlord is
hereby released or relieved of any other liability hereunder and under the Lease. Tenant agrees
that, with respect to any money judgment which may be obtained or secured by Tenant against
Successor-Landlord, Tenant shall look solely to the estate or interest owned by Successor-Landlord
in the Property, and Tenant will not collect or attempt to collect any such judgement out of any
other assets of Successor-Landlord.




9. Intentionally omitted.



10. If the Lease provides that Tenant is entitled to expansion space, Successor-Landlord shall
have no obligation nor any liability for failure to provide such expansion space if a prior
landlord (including, without limitation, Landlord), by reason of a lease or leases entered into by
such prior landlord with other tenants of the Property, has precluded the availability of such
expansion space.


 


 









 





Exhibit K

Page 6




11. Except as specifically provided in this Agreement, neither Administrative Agent nor
Lenders shall, by virtue of this Agreement, the Security Instrument or any other instrument to
which Administrative Agent or Lenders may be a party, be or become subject to any liability or
obligation to Tenant under the Lease or otherwise.



12. (A) Tenant acknowledges and agrees that this Agreement satisfies and complies in all
respects with the provisions of Article
 _____ 
of the Lease and that this Agreement supersedes (but
only to the extent inconsistent with) the provisions of such Article and any other provision of the
Lease relating to the priority or subordination of the Lease and the interests or estates created
thereby to the Security Instrument.



(B) Tenant agrees to enter into a subordination, non-disturbance and attornment agreement in a
form substantially similar to this Agreement with any person which shall succeed Administrative
Agent with respect to it interests in the Property, or any portion thereof, provided such agreement
is substantially similar to this Agreement. Tenant does herewith irrevocably appoint and
constitute Administrative Agent as its true and lawful attorney-in-fact in its name, place and
stead to execute such subordination, non-disturbance and attornment agreement, without any
obligation on the part of Administrative Agent to do so. This power, being coupled with an
interest, shall be irrevocable as long as the Indebtedness secured by the Security Instrument
remains unpaid. Administrative Agent agrees not to exercise its rights under the preceding two
sentences if Tenant promptly enters into the subordination, non-disturbance and attornment
agreement as required pursuant to the first sentence of this subparagraph (B).



13. (A) Any notice required or permitted to be given by Tenant to Landlord shall be
simultaneously given also to Administrative Agent, and any right to Tenant dependent upon notice
shall take effect only after notice is so given. Performance by Administrative Agent shall satisfy
any conditions of the Lease requiring performance by Landlord, and Administrative Agent shall have
a reasonable time to complete such performance as provided in Paragraph 5 hereof.



(B) All notices or other communications required or permitted to be given to Tenant or to
Administrative Agent pursuant to the provisions of this Agreement shall be in writing and shall be
deemed given only if mailed by United States registered mail, postage prepaid, or if sent by
nationally recognized overnight delivery service (such as Federal Express or United States Postal
Service Express Mail), addressed as follows: to Tenant, at the address first set forth above,
Attention:                     ; to Administrative Agent, at the address first set forth above,
Attention:                      and General Counsel or to such other address or number as such party may
hereafter designate by notice delivered in accordance herewith. All such notices shall be deemed
given three (3) business days after delivery to the United States Post office registry clerk if
given by registered mail, or on the next business day after delivery to an overnight delivery
courier.


 


 









 





Exhibit K

Page 7




14. This Agreement may be modified only by an agreement in writing signed by the parties
hereto, or their respective successors-in-interest. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their respective successors and assigns. The term
“Administrative Agent” shall mean the then holder of the Security Instrument. The
term “Landlord” shall mean the then holder of the landlord’s interest in the Lease.
The term “person” shall mean an individual, joint venture, corporation, partnership, trust,
limited liability company, unincorporated association or other entity. All references herein to
the Lease shall mean the Lease as modified by this Agreement and to any amendments or modifications
to the Lease which are consented to in writing by Administrative Agent. Any inconsistency between
the Lease and the provisions of this Agreement shall be resolved, to the extent of such
inconsistency, in favor of this Agreement.




15. Intentionally omitted.




16. Intentionally omitted.



17. BOTH TENANT AND ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.




18. This Agreement shall be governed by and construed in accordance with the laws of New York.



* * *



 


 









 





Exhibit K

Page 8




IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.



	 	 	 	 	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as
Administrative Agent on behalf of the
Lenders, a New York banking corporation 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	[TENANT]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	AGREED AND CONSENTED TO:



LANDLORD:



[                                        ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 


 









 







Exhibit K

Page 9




	 	 	 
	STATE OF NEW YORK

	 	 )
	 

	 	 ) ss.
	COUNTY OF NEW YORK

	 	 )






On the                      day of                      in the year 20_____ 
before me, the undersigned, a notary public in
and for said state, personally appeared                                         , personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 
	 
	 	 	 	 
	[Notary Seal]

	 	My commission expires:	 	 






	 	 	 
	STATE OF NEW YORK

	 	 )
	 

	 	 ) ss.
	COUNTY OF NEW YORK

	 	 )






On the                      day of                      in the year 20_____ 
before me, the undersigned, a notary public in
and for said state, personally appeared                     , personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 
	 
	 	 	 	 
	[Notary Seal]

	 	My commission expires:	 	 






 


 









 







Exhibit K

Page 10




	 	 	 
	STATE OF NEW YORK

	 	 )
	 

	 	 ) ss.
	COUNTY OF NEW YORK

	 	 )






On the                      day of                      in the year 20_____ 
before me, the undersigned, a notary public
in and for said state, personally appeared                                         , personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 
	 
	 	 	 	 
	[Notary Seal]

	 	My commission expires:	 	 






	 	 	 
	STATE OF NEW YORK

	 	 )
	 

	 	 ) ss.
	COUNTY OF NEW YORK

	 	 )






On the                      day of                      in the year 20_____ 
before me, the undersigned, a notary public
in and for said state, personally appeared                     , personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 
	 
	 	 	 	 
	[Notary Seal]

	 	My commission expires:	 	 






 


 









 







SCHEDULE A 

to Exhibit K




LEGAL DESCRIPTION OF PROPERTY




 


 









 







EXHIBIT L




FORM OF NOTE




[Attached]



 


 









 







AMENDED, RESTATED AND CONSOLIDATED

PROMISSORY NOTE




			
	 	 	 
	$115,000,000.00
	 	New York, New York
	 
	 	August 12, 2011






This AMENDED, RESTATED AND CONSOLIDATED PROMISSORY NOTE, dated as of August 12, 2011 (this
“Note”), is made by HENRY HUDSON HOLDINGS LLC, a Delaware limited liability company, HUDSON
LEASECO LLC, a New York limited liability company, 58th STREET BAR COMPANY LLC, a
Delaware limited liability company, jointly and severally as maker, having an address at c/o
Morgans Hotel Group, 475 Tenth Avenue, New York, New York 10018 (collectively, “Borrower”),
and given to DEUTSCHE BANK TRUST COMPANY AMERICAS, having an address at 60 Wall Street, New York,
New York 10005 (together with its successors and/or assigns, “Lender”).



WHEREAS, Lender is the present owner and holder of, and Borrower is the current obligor under,
those certain notes listed on Schedule I attached hereto and made a part hereof
(collectively, the “Existing Notes”). There is now owing under the Existing Notes the
outstanding principal amount of ONE HUNDRED FIFTEEN MILLION AND 00/100 DOLLARS ($115,000,000.00).



WHEREAS, Borrower confirms that the aggregate principal amount now owing on the Existing Notes
is ONE HUNDRED FIFTEEN MILLION AND 00/100 DOLLARS ($115,000,000.00) and that there are no defenses,
set-offs or counterclaims against payment of said amount.



WHEREAS, Borrower and Lender wish to consolidate, amend and restate in their entirety the
Existing Notes upon the terms and conditions set forth herein.




WHEREAS, Borrower and Lender intend these Recitals to be a material part of this Note.



NOW, THEREFORE, in consideration of the making of the Loan by Lender and for other good and
valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the
Borrower hereby agrees as follows:



A. The terms, covenants and provisions of the Existing Notes are hereby consolidated, amended
and restated in their entirety to be one single consolidated, amended and restated promissory note
in the principal amount of ONE HUNDRED FIFTEEN MILLION AND 00/100 DOLLARS ($115,000,000.00) payable
with interest thereon at the rate of interest and on all of the other terms, covenants and
conditions contained herein and in that certain Loan and Security Agreement, dated as of the date
hereof among Borrower, the lenders party thereto from time to time, and Deutsche Bank Trust
Company Americas, as administrative agent (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the “Loan Agreement”). All
capitalized terms not defined herein shall have the respective meanings set forth in the Loan
Agreement.


 


 









 





B. The terms, provisions and covenants of this Note shall supersede (and constitute a complete
restatement of) the Existing Notes and this Note shall evidence a single indebtedness in the
principal amount of ONE HUNDRED FIFTEEN MILLION AND 00/100 DOLLARS ($115,000,000.00).



C. Borrower agrees to pay the indebtedness evidenced by this Note and further agrees to comply
with and observe all of the terms, covenants and conditions of this Note and the Loan Agreement.



D. Neither this Note nor anything contained herein shall be construed as a substitution or
novation of the indebtedness evidenced by the Existing Notes, or of the Existing Notes, which shall
remain in full force and effect, as hereby consolidated, amended and restated in their entirety.



FOR VALUE RECEIVED Borrower, hereby unconditionally promises to pay to the order of Lender, or
at such other place as the holder hereof may from time to time designate in writing, the principal
sum of ONE HUNDRED FIFTEEN MILLION AND 00/100 DOLLARS ($115,000,000.00) in lawful money of the
United States of America, with interest thereon to be computed from the date of this Note at the
interest rate set forth in the Loan Agreement, and to be paid in accordance with the terms of this
Note and the Loan Agreement.



PAYMENT TERMS




Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum
of this Note and all other amounts due under the Loan Agreement and the other Loan Documents from
time to time outstanding, at the rates and at the times specified in the Loan Agreement, and the
outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon
and all other amounts due under the Loan Agreement and the other Loan Documents shall be due and
payable on the Maturity Date.



DEFAULT AND ACCELERATION




The Debt shall without notice become immediately due and payable at the option of Lender upon
the happening of any Event of Default in accordance with the terms of the Loan Agreement.



LOAN DOCUMENTS




This Note is secured by the Security Instrument and the other Loan Documents. All of the
terms, covenants and conditions contained in the Loan Agreement and the other Loan Documents are
hereby made part of this Note to the same extent and with the same force as if they were fully set
forth herein. In the event of a conflict or inconsistency between the terms of this Note and the
Loan Agreement, the terms and provisions of the Loan Agreement shall govern.


 


 









 





SAVINGS CLAUSE




Notwithstanding anything to the contrary contained herein, (a) all agreements and
communications between Borrower and Lender are hereby and shall automatically be limited so that,
after taking into account all amounts deemed to constitute interest, the interest contracted for,
charged or received by Lender shall never exceed the Maximum Legal Rate, (b) in calculating whether
any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated,
allocated and spread over the full amount and term of all principal indebtedness of Borrower to
Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive
interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied
toward the payment of the principal of any and all then outstanding indebtedness of Borrower to
Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.



NO ORAL CHANGE




This Note may not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement
in writing signed by the party(ies) against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.



WAIVERS




Borrower and all others who may become liable for the payment of all or any part of the Debt
do hereby jointly and severally waive presentment and demand for payment, notice of dishonor,
notice of intention to accelerate, notice of acceleration, protest and notice of protest and
non-payment and all other notices of any kind. No release of any security for the Debt or
extension of time for payment of this Note or any installment hereof, and no alteration, amendment
or waiver of any provision of this Note, the Loan Agreement or the other Loan Documents made by
agreement between Lender and any other Person shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower or any other Person who may become liable
for the payment of all or any part of the Debt under this Note, the Loan Agreement or the other
Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the
obligation of Borrower or of the right of Lender to take further action without further notice or
demand as provided for in this Note, the Loan Agreement or the other Loan Documents. If Borrower
is a partnership or limited liability company, the agreements herein contained shall remain in
force and be applicable, notwithstanding any changes in the individuals or entities comprising the
partnership or limited liability company, and the term “Borrower,” as used herein, shall include
any alternate or successor partnership or limited liability company, but any predecessor
partnership or limited liability company and its partners or members shall not thereby be released
from any liability. If Borrower is a corporation, the agreements contained herein shall remain in
full force and be applicable, notwithstanding any changes in the shareholders comprising, or the
officers and directors relating to, the corporation, and the term “Borrower,” as used herein, shall
include any alternative or successor corporation, but any predecessor corporation shall not be
relieved of liability hereunder. (Nothing in the foregoing two sentences shall be construed as a
consent to, or a waiver of, any prohibition or restriction on transfers of interests in such
partnership, limited
liability company or corporation which may be set forth in the Loan Agreement, the Security
Instrument or any other Loan Document.)


 


 









 





TRANSFER




Upon the transfer of this Note by Lender, Borrower hereby waiving notice of any such transfer,
Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan
Documents, or any part thereof, to the transferee who shall thereupon become vested with all the
rights herein or under applicable law given to Lender with respect thereto, and Lender shall
thereafter forever be relieved and fully discharged from any liability or responsibility in the
matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and
the collateral not so transferred.



EXCULPATION




The provisions of Section 18.1 of the Loan Agreement are hereby incorporated by reference into
this Note to the same extent and with the same force as if fully set forth herein.



GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS




THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWER AND ACCEPTED BY LENDER
IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THIS NOTE WERE DISBURSED FROM THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED
BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF
ANY OTHER JURISDICTION GOVERNS THIS NOTE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.



ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO
THIS NOTE MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW
YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION
OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER AGREES THAT SERVICE OF PROCESS
UPON BORROWER AT THE ADDRESS FOR BORROWER SET FORTH HEREIN AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGE IN THE ADDRESS FOR
BORROWER SET FORTH HEREIN, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE AN AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND
ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE AN AUTHORIZED AGENT IF BORROWER
CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF
LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.


 


 









 





WAIVER OF JURY TRIAL




BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND
FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST, WITH REGARD TO THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS, OR
ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.



SUCCESSORS AND ASSIGNS




This Note shall be binding upon, and shall inure to the benefit of, Borrower and Lender and
their respective successors and permitted assigns. Lender shall have the right to assign or
transfer its rights under this Note in connection with any assignment of the Loan and the Loan
Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to
Lender under this Note. Borrower shall not have the right to assign or transfer its rights or
obligations under this Note without the prior written consent of Lender, as provided in the Loan
Agreement, and any attempted assignment without such consent shall be null and void.



NOTICES




All notices or other written communications hereunder shall be delivered in accordance with
Section 19.8 of the Loan Agreement.



[NO FURTHER TEXT ON THIS PAGE]





 


 












 




IN WITNESS WHEREOF, Borrower has duly executed this Amended, Restated and Consolidated Note as
of the day and year first above written.



	 	 	 	 	 	 	 
	 	 	HENRY HUDSON HOLDINGS LLC,	 	 
	 	 	a Delaware limited liability company,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	HUDSON LEASECO LLC,	 	 
	 	 	a New York limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hudson Managing Member LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Holdings LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 





 


 









 





	 	 	 	 	 	 	 
	 	 	58th STREET BAR COMPANY LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hudson Pledgor LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Holdings LLC

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 





 


 









 





	 	 	 	 	 
	STATE OF NEW YORK

	 	)	 	 
	 
	 	 	 	 
	 

	 	) ss.:

	 
	 	 	 	 
	COUNTY OF NEW YORK

	 	)	 	 






On this
 _____ 
day of August, 2011, before me, a Notary Public in and for said State,
personally appeared  _____, before me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature
on the instrument, the individual, or the person on behalf of which the individual acted, executed
the instrument.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 





 


 









 





LENDER’S ACKNOWLEDGMENT AND CONSENT




Lender is executing this Amended, Restated and Consolidated Promissory Note to signify its
consent to the consolidation, amendment and restatement of the Existing Notes as set forth above.
Nothing herein shall, or shall be deemed to, obligate Lender for repayment of any amount evidenced
by this Note.



	 	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 






	 	 	 	 	 
	STATE OF NEW YORK

	 	)	 	 
	 
	 	 	 	 
	 

	 	) ss.:

	 
	 	 	 	 
	COUNTY OF NEW YORK

	 	)	 	 






On the
 _____ 
day of
 _____ 
in the year 2011 before me, the undersigned, personally appeared _____, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument and acknowledged to
me the he executed the same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed the instrument.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 






[SEAL]




 


 









 







SCHEDULE I




EXISTING NOTES



 


 









 







EXHIBIT M




COUNTERPARTY ACKNOWLEDGMENT




[Attached]




 


 









 







Exhibit M

Page 1




INTEREST RATE PROTECTION AGREEMENT

ACKNOWLEDGEMENT




SMBC CAPITAL MARKETS, INC., having an address at 277 Park Avenue, 5th Floor, New York, New
York 10172 (“Rate Cap Provider”), by executing this acknowledgement in the space provided
below, hereby acknowledges that it has been advised that the interest of HENRY HUDSON HOLDINGS LLC,
a Delaware limited liability company, HUDSON LEASECO LLC, a New York limited liability company,
58th STREET BAR COMPANY LLC, a Delaware limited liability company, jointly and severally
as maker, having an address at c/o Morgans Hotel Group, 475 Tenth Avenue, New York, New York 10018
(collectively, “Borrower”), in and to the interest rate cap agreement (a copy of which is
attached hereto as Exhibit A) entered into between Rate Cap Provider and Borrower (the
“Rate Cap Agreement”) has been pledged and assigned to DEUTSCHE BANK TRUST COMPANY
AMERICAS, as administrative agent, having an address at 60 Wall Street, New York, NY 10005
(together with its successors and/or assigns, “Administrative Agent”) pursuant to the Loan
and Security Agreement, dated as of August 12, 2011, among Borrower, the lenders party thereto and
Administrative Agent. Rate Cap Provider hereby unconditionally consents to such pledge and
assignment, and certifies to Administrative Agent that as of the date hereof (i) the Rate Cap
Agreement is unmodified and in full force and effect, and (ii) all payments now or hereafter
required to be made by Borrower pursuant to the Rate Cap Agreement have been paid in full and
Borrower is not in default thereunder. Rate Cap Provider agrees that it shall not modify, amend or
terminate the Rate Cap Agreement without Administrative Agent’s prior written consent.



Rate Cap Provider hereby agrees that Rate Cap Provider shall deliver to Administrative Agent
a copy of any notice of default given to Borrower under the Rate Cap Agreement and that all
payments made under the Rate Cap Agreement shall be made to the following account (or at such
other address as Administrative Agent shall hereafter notify Rate Cap Provider):



	 	 	 	 	 	 	 
	 

	 	Name:
	 	Hudson Hotel, New York, NY f/b/o DeutscheBank Trust Company

Americas, as Administrative Agent Collection Account

	 

	 	Bank:
	 	JP Morgan Chase

270 Park Avenue

New York, New York

	 

	 	Account No.:
	 	114-917779	 	 
	 

	 	ABA No,
	 	021000021	 	 






In consideration of the foregoing agreement by Rate Cap Provider, Borrower agrees that (i)
Rate Cap Provider shall be entitled to conclusively rely (without any independent investigation)
on Administrative Agent’s statement that Administrative Agent is entitled to payment under the
Rate Cap Agreement, and (ii) Rate Cap Provider shall be held harmless and shall be fully
indemnified by Borrower, from and against any and all claims, other than those ultimately
determined to be founded on gross negligence or willful misconduct of Rate Cap Provider, and from
and against any damages, penalties, judgments, liabilities, losses or expenses (including
reasonable attorneys’ fees and disbursements) incurred by Rate Cap Provider as a result of the
assertion of any claim, by any person or entity, arising out of, or otherwise related
to, any action taken or omitted to be taken by Rate Cap Provider in reliance upon any such notice
provided by the Administrative Agent.



 


 









 







Exhibit M

Page 2




All notices shall be delivered to Administrative Agent at the following address (or at such
other address as Administrative Agent shall hereafter notify Rate Cap Provider):



	 	 	 
	 

	 	do Deutsche Bank Securities, Inc.

200 Crescent Court, Suite 550

Dallas, Texas 75201

Attn: Justin Shull

Telephone: (214) 740-7906

Telecopy: (214) 740-7910


with a copy to it at:


60 Wall Street

New York, New York 10005

Attn: George Reynolds

Telephone: (212) 250-2362

Telecopy: (212) 797-4496






Notwithstanding anything to the contrary contained in the Rate Cap Agreement, Rate Cap
Provider hereby further agrees that Administrative Agent shall have the right to assign its right,
title and interest in the Rate Cap Agreement and hereunder, provided that Administrative
Agent gives Rate Cap Provider notice of any such assignment.



[The rest of this page is left blank intentionally]




 


 









 







Exhibit M

Page 3




The terms and conditions of this Acknowledgement and Agreement shall bind Rate Cap Provider
and its successors and assigns and shall inure to the benefit of Administrative Agent and its
successors and assigns.



Dated
as of: August       2011




	 	 	 	 	 	 	 
	 	 	SMBC CAPITAL MARKETS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 





 


 









 





Exhibit M

Page 4




	 	 	 	 	 	 	 
	 	 	CONSENTED TO BY:	 	 
	 
	 	 	 	 	 	 
	 	 	HENRY HUDSON HOLDINGS LLC,	 	 
	 	 	a Delaware limited liability company,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 





 


 









 




Exhibit M

Page 5



	 	 	 	 	 	 	 
	 	 	HUDSON LEASECO LLC,	 	 
	 	 	a Delaware New York limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hudson Managing Member LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	58th STREET BAR COMPANY LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hudson Managing Member LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 






 


 









 







Exhibit M

Page 6




EXHIBIT A




RATE CAP AGREEMENT


[Attached Hereto]




 


 









 







Exhibit N

Page 1




EXHIBIT N




FORM OF FUNDING NOTICE




Reference is made to the Loan and Security Agreement, dated as of August
 _____ 
2011 (as amended,
supplemented or otherwise modified from time to time, the “Loan Agreement”) among HENRY
HUDSON HOLDINGS LLC, a Delaware limited liability company (“Owner”), 58th STREET
BAR COMPANY LLC, a Delaware limited liability company (“Bar Lessee”), and HUDSON LEASECO
LLC, a New York limited liability company (“Operating Lessee”; Operating Lessee, Bar Lessee
and Owner, together with their respective successors and assigns, collectively “Borrower”),
the lenders party thereto from time to time (“Lenders”), and Deutsche Bank Trust Company
Americas, as Administrative Agent. Capitalized terms used but not defined herein have the meanings
assigned in the Loan Agreement.



Pursuant to Section 2.1.1 of the Loan Agreement, Borrower desires that Lenders make the
following Loans to the Borrower in accordance with the applicable terms and conditions of the Loan
Agreement on [mm/dd/yy] (the “Credit Date”):



	 	 	 	 	 
	1. Term Loans On the Closing Date
	 	$	[___,___,___	 
	 
	 	 	 
	2. Delayed Draw Term Loans
	 	$	[___,___,___	 







Borrower hereby certifies that:



(a) as of the Credit Date, the representations and warranties contained in each of the Loan
Documents are true and correct in all material respects (or, to the extent a representation and
warranty contains a materiality or Material Adverse Effect qualification, in all respects) on and
as of such Credit Date with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date, in which case such
representations and warranties are true and correct in all material respects (or, to the extent a
representation and warranty contains a materiality or Material Adverse Effect qualification, in all
respects) on and as of such earlier date; and



(b) as of the Credit Date, no event has occurred and is continuing or would result from the
consummation of the borrowing contemplated hereby that would constitute an Event of Default or a
Default [.] [and]



(c) [DELAYED DRAW TERM LOANS ONLY] as of the Credit Date, attached as Schedule 1 is the Net
Operating Income calculated pursuant to Section 2.5(B) and a calculation of the Delayed Draw Term
Loan Available Amount which is $[_____]. In addition, Borrower certifies to Administrative Agent
and Lenders that all conditions to the making of the requested Delayed Draw Term Loans contained in
Section 2.5 of the Loan Agreement will have been satisfied at the time such Delayed Draw Term Loans
are made.


 


1









 





Exhibit N

Page 2




[SIGNATURE PAGE FOLLOWS]



 


2









 







Date: __________, 20__




	 	 	 	 	 
	HENRY HUDSON HOLDINGS LLC	 	 
	 
	 	 	 	 
	By:

	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 
	By:

	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 
	By:

	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	58th STREET BAR COMPANY LLC	 	 
	 
	 	 	 	 
	By:

	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 
	By:

	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 
	By:

	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 





 


3









 




Exhibit N

Page 4




	 	 	 	 	 
	HUDSON LEASECO LLC	 	 
	 
	 	 	 	 
	By:

	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 
	By:

	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 
	By:

	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 





 


4









 





Exhibit N

Page 5




SCHEDULE 1




[Calculation of Net Operating Income and Delayed Draw Term Loan Availability Amount]




 


5









 







EXHIBIT O




CERTIFICATE OF INDEPENDENT MANAGER/MEMBER/DIRECTOR




Management Agreement




August __, 2011




For good and valuable consideration, each of the undersigned Persons, who have been designated
as members of [_____], a [_____] limited liability company (the “Company”), in
accordance with the Amended and Restated Operating Agreement of the Company, dated as of August
 _____, 2011 as it may be amended or restated from time to time (the “LLC Agreement”), hereby agree
as follows:



1. Each of the undersigned accepts such Person’s rights and authority as a Member under the
LLC Agreement and agrees to perform and discharge such Person’s duties and obligations as a Member
under the LLC Agreement, and further agrees that such rights, authorities, duties and obligations
under the LLC Agreement shall continue until such Person’s successor as a Member is designated or
until such Person’s resignation or removal as a Member in accordance with the LLC Agreement. Each
of the undersigned agrees and acknowledges that it has been designated as a “manager” of the
Company within the meaning of the [New York Limited Liability Company Law].



2. So long as any Obligation is outstanding, each of the undersigned agrees, solely in its
capacity as a creditor of the Company on account of any indemnification or other payment owing to
the undersigned by the Company, not to acquiesce, petition or otherwise invoke or cause the Company
to invoke the process of any court or governmental authority for the purpose of commencing or
sustaining a case against the Company under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Company or any substantial part of the property of the Company, or ordering
the winding up or liquidation of the affairs of the Company.



3. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF [NEW YORK], AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.



Capitalized terms used and not otherwise defined herein have the meanings set forth in the LLC
Agreement.



This Management Agreement may be executed in any number of counterparts, each of which shall
be deemed an original of this Management Agreement and all of which together shall constitute one
and the same instrument.


 


 









 




Exhibit O

Page 2


IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and
year first above written.



	 	 	 	 	 	 	 
	 	 	INDEPENDENT MANAGER:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 






 


 









 







Exhibit P

Page 1




EXHIBIT P




FORM OF IP SECURITY AGREEMENT




INTELLECTUAL PROPERTY SECURITY AGREEMENT




This INTELLECTUAL PROPERTY SECURITY AGREEMENT (this Agreement), dated as of
[_____], is entered into by HENRY HUDSON HOLDINGS LLC (“Owner”), a Delaware
limited liability company, 58th STREET BAR COMPANY LLC, a Delaware limited liability company
(“Bar Lessee”), and HUDSON LEASECO LLC, a New York limited liability company
(“Operating Lessee” and together with Owner and Bar Lessee, “Assignors”), each
having an office at 475 Tenth Avenue, New York, New York 10018, to DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Administrative Agent for the benefit of the Lenders, a New York banking corporation,
having an address at 60 Wall Street, 10th Floor, New York, New York 10005 (together with its
successors and assigns, “Assignee”). Capitalized terms not otherwise defined herein have
the meanings set forth in the Loan and Security Agreement, dated August
 _____, 2011, among Assignors
and Assignee (together with all amendments, replacements and supplements, the “Loan
Agreement”) or that certain Amended, Restated and Consolidated Mortgage, Assignment of Leases
and Rents, Hotel Revenue and Security Agreement, dated the date hereof, executed and delivered by
Assignors to Assignee (together with all amendments, replacements and supplements, the
“Mortgage”), as applicable.



WHEREAS, Owner is the owner of (i) the real property commonly known as the Hudson Hotel and
located in New York, such ownership interest being comprised of a fee simple and leasehold, as
applicable, interest in the Land and (ii) title to the improvements located thereon (collectively,
the “Hotel”);



WHEREAS, Assignors own Intellectual Property and IP Licenses (each as defined herein) related
to the Hotel;



WHEREAS, pursuant to the Loan Agreement, Lenders have agreed to make loans (collectively, the
“Loan”) subject to the terms and conditions of the Loan Agreement and as evidenced by a
Note (together with all amendments, replacements and supplements, the “Note”), dated the
date hereof, made by Assignors, as maker; and



WHEREAS, Assignors will derive substantial benefits from the extension of the Loan to
Assignors and are willing to execute this Agreement in order to induce Lenders to extend the Loan.



NOW, THEREFORE, in consideration of the Loan to Assignors evidenced by the Note and for other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignors and the Assignee hereby agree as follows:


 


 









 





Exhibit P

Page 2





1.
Grant of Security Interest.



Assignors hereby grant, sell, transfer, set over, assign and convey a security interest in
and pledge to Assignee, in trust with the power of sale and right of entry, in trust and
possession, for the benefit and use of Assignee and its successors and assigns forever, all of
Assignors’ estate, right, title and interest now owned or hereafter acquired in, to and under any
and all the property described in the following granting clauses (all of which being hereinafter
referred to as the “IP Collateral”):




(i) all intellectual property worldwide relating to the ownership or operation of the
Land (“Intellectual Property”), including all:




(a) trademarks, service marks, certification marks, collective marks, business
names set forth on Schedule I, corporate names, trade names, d/b/a’s, the
trademarks set forth on Schedule II, and general intangibles of like nature,
whether registered or unregistered, and all goodwill of any business connected with
the use thereof and symbolized thereby;




(b) patents issued by the United States or the equivalent thereof in any other
country, industrial designs, and applications for any of the foregoing, including
any continuations, divisionals, continuations in part, renewals, extensions and
reissues, and the inventions disclosed or claimed therein;




(c) copyrights in published and unpublished works of authorship, whether
registered or unregistered in the United States or any other country, whether as
author, assignee, or transferee (including, without limitation, copyrights in
databases and other compilations of information, computer software and systems
(including reservations and other Hotel systems), middleware, user interface, source
code, object code, and the like, and user manuals and other training documentation
related thereto), all derivative works, renewals, extensions, restorations, and
reversions thereof;




(d) Domain Names, including, without limitation, the Domain Names set forth on
Schedule III;




(e) trade secrets, proprietary confidential information and operational
systems, including confidential know-how, processes, schematics, concepts, ideas,
inventions, business methods and processes, marketing plans, research and
development, formulae, drawings, prototypes, models, designs, customer and supplier
information and lists, databases and other compilations of information, historical
guest lists, mailing lists, computer software and systems (including reservations
and other Hotel systems), middleware, user interface, source code, object code,
algorithms, and the like, and user manuals and other training documentation related
thereto, and other nonpublic, confidential, or proprietary information;




(f) any registrations, applications for registration or issuance, recordings,
reissues, renewals, divisions, continuations, and extensions relating to any or all
of the foregoing;




(g) income, fees, royalties, damages and payments now and hereafter due and/or
payable thereunder and with respect thereto, including, without
limitation, damages, claims and payments for past, present or future
infringements or other violations thereof relating to any or all of the foregoing;
and


 


2









 





Exhibit P

Page 3





(h) rights to sue for past, present and future infringements and other
violations thereof relating to any of the foregoing.




(ii) all licenses of Intellectual Property and covenants not to sue with respect to
Intellectual Property (including, without limitation those licenses set forth on
Schedule IV), which relate to, are derived from, or are used in connection with the
Property or the use, occupancy, enjoyment, or maintenance thereof or the conduct of any
business or activities thereon, regardless of whether such agreements and covenants are
contained within an agreement that also covers other matters, such as development,
consulting services or distribution of products, and regardless of whether Assignors is a
licensor or licensee, under any such agreement, together with any and all (i) amendments,
renewals, extensions, supplements and continuations thereof, (ii) income, fees, royalties,
damages, claims and payments now and hereafter due and/or payable thereunder and with
respect thereto including damages and payments for past, present or future breaches or
violations thereof, and (iii) the right to sue for past, present and future breaches or
violations thereof (IP Licenses).




(iii) all of Assignors’ right, title, and interest in all proceeds, both cash and
noncash, of the foregoing.



Notwithstanding anything to the contrary contained in this Section 1, Assignors do not
grant, sell, transfer, set over, assign or convey a security interest in or pledge to Assignee any
of the items set forth on Schedule V attached hereto [Schedule V will include all
Hudson/Morgans marks/domain names owned by Morgans Group LLC].




2. Release of IP Collateral.



Assignee shall, at the reasonable expense of Assignors, upon payment in full of the
Principal Amount and interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of the Note and the Loan Agreement, release
the Lien of this Agreement upon the IP Collateral or assign it, in whole or in part, to a new
lender. In such event, Assignors shall submit to Assignee, on a date prior to the date of such
release or assignment sufficient to provide a reasonable period for review thereof, a release of
lien or assignment of lien, as applicable, for such property for execution by Assignee. Such
release or assignment, as applicable, shall be in a form appropriate in each jurisdiction in which
the IP Collateral is located and satisfactory to Assignee in its reasonable discretion. In
addition, Assignors shall provide all other documentation Assignee reasonably requires to be
delivered by Assignors in connection with such release or assignment, as applicable.




3. Remedies.



(A) The grant of security set forth herein is issued in conjunction and concurrently with
the grant of security interest set forth in the Mortgage. The remedies set forth in Article VII of
the Mortgage are incorporated herein by reference and apply with respect to the
IP Collateral, to the extent applicable to the Intellectual Property and IP Licenses, as if
restated herein in full.


 


3









 





Exhibit P

Page 4




(B) For the purpose of enabling the Assignee to exercise rights and remedies hereunder at such
time as Assignee hereby shall be lawfully entitled to exercise such rights and remedies, Assignors
hereby grant Assignee an irrevocable, non-exclusive license (with right to sublicense) and, to the
extent permitted under IP Licenses granting Assignors rights in Intellectual Property, right to
further sublicense (in each case, exercisable without payment of royalties or other compensation to
Assignors) to make, have made, use, sell, copy, distribute, perform, make derivative works,
publish, and exploit in any other manner for which an authorization from the owner of such
Intellectual Property would be required under applicable law, with right to sublicense, any of the
IP Collateral, wherever the same may be located; provided that: (i) such license shall be
subject to the exclusive rights of any licensee of the IP Collateral under a license granted prior
to such Event of Default, to the extent such license is a Permitted Encumbrance, (ii) Assignors
shall have such rights of quality control and inspection which are reasonably necessary under
applicable law to maintain the validity and enforceability of any Trademarks included in the IP
Collateral and (iii) any sublicenses duly granted by Assignee under this license grant shall
survive in accordance with their terms, as direct licenses of Assignors but any revenue thereunder
payable to Assignee, notwithstanding the subsequent cure of any Event of Default that gave rise to
the exercise of the Assignee’s rights and remedies.




4. After-Acquired IP Collateral.



Assignors shall provide to Assignee written notice of any Intellectual Property acquired by
Assignors after the date hereof, which is the subject of a registration or application (including
IP Collateral which was theretofore unregistered and becomes the subject of a registration or
application) or of any material or exclusive IP Licenses, and deliver to Assignee an IP Security
Agreement and/or such other instrument in form and substance reasonably acceptable to Assignee.
Assignors shall provide such notice to Assignee no later than the end of the calendar quarter in
which Assignors’ acquisition of such Intellectual Property or IP License occurred. Assignors shall
execute and deliver to Assignee all filings necessary to protect and evidence Assignee’s security
interest in such IP Collateral. Further, Assignors authorize Assignee to modify the Loan Agreement
by amending the IP Schedule to include any additional IP Collateral (but the failure to do so
modify such IP Schedule shall not be deemed to affect Assignee’s security interest in or Lien upon
such IP Collateral).




5. Governing Law.



THIS AGREEMENT AND THE RIGHTS AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE
STATE OF NEW YORK.


 


4









 





Exhibit P

Page 5




6. Conflict Resolution.



The security interests granted to Assignee herein are granted in furtherance and addition
to, and not in limitation of, the security interests granted to Assignee pursuant to the Mortgage.
In the event of an irrevocable conflict between the terms of this Agreement, the Mortgage, or the
Loan Agreement, the following priority of Agreements shall prevail: first, the Loan
Agreement; second, Mortgage; and third, this Agreement.




7. Counterparts.



This Agreement may be executed in one or more counterparts, each of which, shall be deemed
to be an original, and all of which together shall constitute one and the same instrument.




8. Further Assurances.



Assignors hereby authorizes Assignee to file, from time to time, at Assignors’ sole cost
and expense, such UCC financing statements, naming the Assignors as debtor(s) and the Assignee as
secured party in all applicable recording offices of each applicable jurisdiction (including the
office of the Secretary of State of the State of Delaware) as Assignee deems required to perfect
and maintain the first priority security interest of Assignee in the IP Collateral. In addition,
Assignors shall, at Assignors’ sole cost and expense, execute, acknowledge, record, register, file
and/or deliver to Assignee such other instruments, agreements, certificates and documents as
Assignee may from time to time reasonably request to better assure transfer and confirm into
Assignee the rights now or hereafter intended to be granted to Assignee under this Agreement or
other Loan Documents, and shall fully cooperate with Assignee and perform all additional acts which
are necessary to effect the purposes of the foregoing.



[REMAINDER OF PAGE INTENTIONALLY BLANK]



 


5









 





Exhibit P

Page 6




IN WITNESS WHEREOF, Assignors and Assignee have caused this INTELLECTUAL PROPERTY SECURITY
AGREEMENT to be duly executed and delivered by their respective officers duly authorized as of the
date first above written.



	 	 	 	 	 	 	 
	 	 	ASSIGNORS:	 	 
	 
	 	 	 	 	 	 
	 	 	HENRY HUDSON HOLDINGS LLC,	 	 
	 	 	a Delaware limited liability company,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	HUDSON LEASECO LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hudson Managing Member LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 





 


6









 




Exhibit P

Page 7


	 	 	 	 	 	 	 
	 	 	58th STREET BAR COMPANY LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hudson Managing Member LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Henry Hudson Senior Mezz LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Group LLC,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Morgans Hotel Group Co.,

its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 





 


7









 





Exhibit P

Page 8




	 	 	 	 	 	 	 
	 	 	ASSIGNEE:	 	 
	 
	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as	 	 
	 	 	Administrative Agent, a New York banking corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 






 


8









 







Exhibit P

Page 9




[FOR ASSIGNORS ONLY]




ACKNOWLEDGMENT




	 	 	 	 	 
	STATE OF NEW YORK

	 	 	)	 
	COUNTY OF NEW YORK

	 	 	)	 






On the
 _____ 
day of
 _____, in the year 2011, before me, the undersigned, a Notary Public
in and for said state, personally appeared
 _____, the
 _____ 
of HENRY HUDSON
HOLDINGS LLC, a Delaware limited liability company, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to the within
instrument, and acknowledged to me that she executed the same in her capacity, and that by her
signature on the instrument, the individual, or the entity upon behalf of which the individual
acted, executed the instrument.



	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 






	 	 	 	 	 
	[Notary Seal]

	 	My commission expires:

	 
	 	 	 	 
	 


	 	 	 	 






	 	 	 	 	 
	STATE OF NEW YORK

	 	 	)	 
	COUNTY OF NEW YORK

	 	 	)	 






On the
 _____ 
day of
 _____, in the year 2011, before me, the undersigned, a Notary Public
in and for said state, personally appeared
 _____, the
 _____ 
of HUDSON LEASECO
LLC, a New York limited liability company, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the within instrument, and
acknowledged to me that she executed the same in her capacity, and that by her signature on the
instrument, the individual, or the entity upon behalf of which the individual acted, executed the
instrument.



	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 






	 	 	 	 	 
	[Notary Seal]

	 	My commission expires:

	 
	 	 	 	 
	 


	 	 	 	 





 


9









 





Exhibit P

Page 10



	 	 	 	 	 
	 
	 	 	 	 
	STATE OF NEW YORK

	 	 	)	 
	COUNTY OF NEW YORK

	 	 	)	 






On the
 _____ 
day of
 _____, in the year 2011, before me, the undersigned, a Notary Public
in and for said state, personally appeared
 _____, the
 _____ 
of 58th STREET BAR
COMPANY LLC, a Delaware limited liability company, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to the within
instrument, and acknowledged to me that she executed the same in her capacity, and that by her
signature on the instrument, the individual, or the entity upon behalf of which the individual
acted, executed the instrument.



	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 






	 	 	 	 	 
	[Notary Seal]

	 	My commission expires:

	 
	 	 	 	 
	 


	 	 	 	 






 


10









 







SCHEDULE I

to

IP SECURITY AGREEMENT




FICTITIOUS BUSINESS NAMES




 


 









 







SCHEDULE II

to

IP SECURITY AGREEMENT




TRADEMARKS




 


 









 







SCHEDULE III

to

IP SECURITY AGREEMENT




DOMAIN NAMES




 


 









 







SCHEDULE IV

to

IP SECURITY AGREEMENT




LICENSES




 


 









 







SCHEDULE V

to

IP SECURITY AGREEMENT




EXCLUDED ITEMS




(SEE ATTACHED)



 


 









 







SCHEDULE I




LITIGATION





	1.	 	Thomas Pavese v. Hudson Hotel, et al. (N.Y. Sup. Ct. Docket No. 1116550-08)

	 
	2.	 	Morgans Hotel Group et al., v. John Doe Co. d/b/a Hudson Terrace, et al. (10-cv-5335- 1(MW
(S.D.N.Y.))

	 
	3.	 	Mr. Philippe Starck has initiated arbitration proceedings in the London Court of
International Arbitration regarding an exclusive service agreement that he entered into with
Residual Hotel Interest LLC (formerly known as Morgans Hotel Group LLC) in February 1998
regarding the design of certain hotels now owned by us. We are not a party to these
proceedings at this time. To our knowledge, they have not continued to pursue this
arbitration.






 


 









 







SCHEDULE H




LABOR MATTERS





	1.	 	Agreement dated February 2011 by and between the New York Hotel & Motel Trades Council,
AFL-CIO and Morgans Hotel Group







	2.	 	Voluntary Settlement Agreement dated November 11, 2010 by and between the New York Hotel &
Motel Trades Council, AFL-CIO and the Hudson Hotel







	3.	 	Agreement dated October 2010 by and between the New York Hotel & Motel Trades Council,
AFL-CIO and Hudson Hotel







	4.	 	Agreement dated September 2010 by and between the Morgans Hotel Group Management, LLC, d/b/a
Hudson Hotel on its own behalf and on behalf of the Hudson Hotel and the New York Hotel &
Motel Trades Council, AFL-CIO







	5.	 	Agreement by and between the Morgans Hotel Group, on behalf of the Hudson Hotel and the New
York Hotel & Motel Trades Council, AFL-CIO (May 2010)







	6.	 	Agreement dated May 10, 2010 by and between the New York Hotel & Motel Trades Council,
AFL-CIO and the Hudson Hotel.







	7.	 	Settlement Agreement dated February 9, 2010 by and between the New York Hotel & Motel Trades
Council, AFL-CIO and the Hudson Hotel







	8.	 	Agreement dated September 2010 by and between Hudson Hotel and the New York Hotel & Motel
Trades Council, AFL-CIO







	9.	 	Agreement dated January 2008 by and between the New York Hotel & Motel Trades Council,
AFL-CIO and the Hudson Hotel.







	10.	 	Agreement dated April 25, 2008 be and between the Hudson Hotel and the New York Hotel & Motel
Trades Council, AFL-CIO







	11.	 	Collective Bargaining Agreement, for the period of July 1, 2006 through June 30, 2012, by and
between Hotel Association of New York City, Inc. and the New York Hotel & Motel Trades
Council, AFL-CIO







	12.	 	Letter Agreement dated May 28, 2004 between International Union of Operating Engineers Local
Union No. 94, 94A, 94B







	13.	 	Concessionaire Agreement by and between the New York Hotel and Motel Trades Council, AFL-CIO
and Ian Schrager Hotels, Inc. dated November 9, 2000






 


 









 







SCHEDULE III




RENT ROLL




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	CURRENT	 	 	 	MISC.
	PROPERTY/	 	 	 	 	 	BASE	 	ADDITIONAL	 	PERCENTAGE	 	LEASE	 	 	 	TENANT
	LANDLORD	 	TENANT	 	SPACE	 	RENT	 	RENT	 	RENT	 	EXPIRATION	 	EXTENSION	 	RIGHTS
	Henry Hudson 

Holdings LLC 

356 W 58th
street
 NY 11377

	 	Hudson Leaseco

LLC
	 	Whole building
including
10th
floor and ground
floor retail space.
	 	$45,000,000 + CPI

Adjuster annually
	 	Tenant to pay all
taxes and
assessments.
	 	N/A
	 	December

318, 2035
	 	N/A
	 	N/A
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Henry Hudson 

Holdings LLC 

356 W 58th
street
 NY 11377

	 	58th Street

Bar

Company LLC
	 	Bars (including
Hudson Bar, Hudson
Hall
Library
Bar and
Private
Park)
	 	$1,200.00
annually.
	 	N/A
	 	N/A
	 	Ten year
anniversary of
date of Lease.
	 	Tenant has
two options to
extend for
additional five
year terms.
	 	N/A






 


 









 







SCHEDULE IV




INTENTIONALLY OMITTED



 


 









 







SCHEDULE V


SRO TENANCIES




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1169
	 	$	501.11	 	 	Monthly	 	 	2032	 	 	$	124.35	 	 	weekly	 	 	2150	 	 	$	96.82	 	 	Weekly
	1443
	 	$	372.44	 	 	Monthly	 	 	2034	 	 	$	429.60	 	 	Monthly	 	 	2155	 	 	$	83.47	 	 	Weekly
	1516
	 	$	96.81	 	 	Weekly	 	 	2039	 	 	$	402.57	 	 	Monthly	 	 	2157	 	 	$	419.47	 	 	Monthly
	1546
	 	$	418.79	 	 	Monthly	 	 	2040	 	 	$	570.66	 	 	Monthly	 	 	2205	 	 	$	484.88	 	 	Monthly
	1632
	 	$	112.18	 	 	Weekly	 	 	2045	 	 	$	502.26	 	 	Monthly	 	 	2206	 	 	$	538.19	 	 	Monthly
	1722
	 	$	277.36	 	 	Monthly	 	 	2046	 	 	$	416.47	 	 	Monthly	 	 	2207	 	 	$	419.46	 	 	Monthly
	1753
	 	$	490.18	 	 	Monthly	 	 	2050	 	 	$	96.81	 	 	Weekly	 	 	2211	 	 	$	404.88	 	 	Monthly
	1756
	 	$	536.28	 	 	Monthly	 	 	2102	 	 	$	88.31	 	 	Weekly	 	 	2212	 	 	$	415.32	 	 	Monthly
	1812
	 	$	419.48	 	 	Monthly	 	 	2103	 	 	$	393.02	 	 	Monthly	 	 	2214	 	 	$	609.62	 	 	Monthly
	1839
	 	$	375.26	 	 	Monthly	 	 	2106	 	 	$	419.95	 	 	Monthly	 	 	2227	 	 	$	242.58	 	 	Monthly
	1846
	 	$	86.81	 	 	Weekly	 	 	2107	 	 	$	130.62	 	 	Weekly	 	 	2229	 	 	$	484.88	 	 	Monthly
	1856
	 	$	501.11	 	 	Monthly	 	 	2112	 	 	$	419.45	 	 	Monthly	 	 	2231	 	 	$	484.34	 	 	Monthly
	1916
	 	$	396.69	 	 	Monthly	 	 	2114	 	 	$	543.12	 	 	Monthly	 	 	2232	 	 	$	454.74	 	 	Monthly
	2005
	 	$	431.53	 	 	Monthly	 	 	2115	 	 	$	90.71	 	 	Weekly	 	 	2235	 	 	$	90.71	 	 	Weekly
	2007
	 	$	416.47	 	 	Monthly	 	 	2117	 	 	$	393.02	 	 	Monthly	 	 	2236	 	 	$	96.81	 	 	Weekly
	2016
	 	$	544.04	 	 	Monthly	 	 	2127	 	 	$	453.41	 	 	Monthly	 	 	2239	 	 	$	402.57	 	 	Monthly
	2017
	 	$	96.81	 	 	Monthly	 	 	2133	 	 	$	701.67	 	 	Monthly	 	 	2240	 	 	$	419.96	 	 	Monthly
	2022
	 	$	356.36	 	 	Monthly	 	 	2134	 	 	$	467.48	 	 	Monthly	 	 	2244	 	 	$	506.89	 	 	Monthly
	2023
	 	$	393.02	 	 	Monthly	 	 	2135	 	 	$	183.00	 	 	Monthly	 	 	2245	 	 	$	919.72	 	 	Monthly
	2025
	 	$	419.46	 	 	Monthly	 	 	2138	 	 	$	484.88	 	 	Monthly	 	 	2252	 	 	$	97.40	 	 	Weekly
	2027
	 	$	416.47	 	 	Monthly	 	 	2139	 	 	$	340.37	 	 	Monthly	 	 	2255	 	 	$	475.23	 	 	Monthly
	2030
	 	$	89.57	 	 	Weekly	 	 	2145	 	 	$	255.34	 	 	Monthly	 	 	2253	 	 	$	457.06	 	 	Monthly
	2031
	 	$	422.27	 	 	Monthly	 	 	2146	 	 	$	69.73	 	 	Weekly	 	 	2257	 	 	$	90.71	 	 	Weekly






 


 









 







SCHEDULE VI


REQUIRED REPAIRS




None.



 


 









 







SCHEDULE VII




PERCENTAGE SHARE AND DELAYED DRAW TERM LOAN COMMITMENTS




I. Percentage Share:



100% to DEUTSCHE BANK TRUST COMPANY AMERICAS, as Lender



II. Delayed Draw Term Loan Commitments:



$20,000,000.00 to DEUTSCHE BANK TRUST COMPANY AMERICAS, as Lender



 


 









 







SCHEDULE VIII




GROUND LEASE





	1.	 	Store Unit — Lease dated January 1, 1999 between Adrienne Schatz (a/Ida
Adrienne
Wechsler), an individual and Cheryl Hirsch, an individual, collectively, as landlord, and
Henry Hudson Holdings LLC, as tenant (as the same may be amended or modified from time to
time in accordance with the terms hereof)

	 
	2.	 	Tenth Floor Unit — Lease dated February 11, 1999 between Irving Schatz, as
landlord,
and Henry Hudson Holdings, LLC, successor-in-interest to Ian Schrager Hotels LLC, as tenant
(as the same may be amended or modified from time to time in accordance with the terms
hereof)






 


 









 







SCHEDULE IX




IP SCHEDULE





	1.	 	Hotel Management Agreement, dated as of June 23, 2011, by and between Hudson Leaseco
LLC, a New York limited liability company and Morgans Hotel Group Management LLC, a
Delaware limited liability company (as the same may be amended or modified from time to
time in accordance with the terms hereof)