Exhibit 10.18


 


Morgans
Hotel Portfolio


 


LOAN AND SECURITY AGREEMENT

(Junior Mezzanine Loan)


 


THIS LOAN AND SECURITY
AGREEMENT (this “Agreement”) is made as of the 29th day of June,
2005, between MMRDH JUNIOR MEZZ HOLDING COMPANY LLC, a Delaware limited liability
company, having an address at c/o Morgans Hotel Group LLC, 475 Tenth Avenue,
New York, New York 10018 (“Borrower”) and WACHOVIA BANK, NATIONAL
ASSOCIATION, having an address at Commercial Real Estate Services, 8739
Research Drive URP 4, NC 1075, Charlotte, North Carolina  28262 (“Lender”).


 


W  I
T
N
E
S
S
E
T
H:


 


WHEREAS, Henry Hudson
Holdings LLC, a Delaware limited liability company (“Hudson”), Morgans
Holdings LLC, a Delaware limited liability company (“Morgans”),
Royalton, LLC, a Delaware limited liability company (“Royalton”), Beach
Hotel Associates LLC, a Delaware limited liability company (“Beach”) and
Mondrian Holdings LLC, a Delaware limited liability company (“Mondrian”)
(collectively, “Owner”) are the owners, respectively, of the fee and leasehold
estates in the premises described in Exhibit A attached hereto and all
buildings, foundations, structures, and improvements of any kind or nature now
or hereafter located thereon which premises are commonly known as the Hudson
Hotel located in New York, New York (the “Hudson Premises”), the Morgans
Hotel located in New York, New York (the “Morgans Premises”), the
Royalton Hotel located in New York, New York (the “Royalton Premises”),
the Delano Hotel located in Miami Beach, Florida (the “Delano Premises”)
and the Mondrian Hotel located in Los Angeles, California (the “Mondrian
Premises” and, together with the Hudson Premises, the Morgans Premises, the
Royalton Premises and the Delano Premises, collectively, the “Premises”);


 


WHEREAS, pursuant to that certain
limited liability company agreement (the “Operating Agreement”) of MMRDH
Intermediate Mezz Holding Company LLC, a Delaware limited liability company (“Intermediate
Mezz Borrower”), Borrower is the present owner and holder of one hundred
percent (100%) of the limited liability company interest in Intermediate Mezz
Borrower;


 


WHEREAS, pursuant to that
certain limited liability company agreement (the “Senior Agreement”) of
MMRDH Senior Mezz Holding Company LLC, a Delaware limited liability company (“Senior
Mezz Borrower”), Intermediate Mezz Borrower is the present owner and holder
of one hundred percent (100%) of the limited liability company interest in
Senior Mezz Borrower;


 


WHEREAS, Intermediate Mezz
Borrower delivered a promissory note (the “Intermediate Mezz Note”) to WACHOVIA
BANK, NATIONAL ASSOCIATION (the “Intermediate Mezz Lender”) which
evidences a loan (the “Intermediate Mezz Loan”) in the original
principal amount of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00) which is
secured by a pledge of one hundred percent (100%) of the Intermediate Mezz
Borrower’s indirect limited liability company interests in Owner pursuant to
that certain loan and security agreement by and between Intermediate Mezz
Borrower and Intermediate Mezz Lender (the “Intermediate Mezz 


 





















 


Loan Agreement”, and, together with the Intermediate Mezz
Note and all other documents executed and delivered in connection with the
making of the Intermediate Mezz Loan and/or evidencing, securing or
guaranteeing payment of the obligations evidenced by the Intermediate Mezz
Note, collectively, the “Intermediate Mezz Loan Documents”;


 


WHEREAS, Senior Mezz
Borrower delivered a promissory note (the “Senior Mezz Note”) to
Wachovia Bank, National Association (the “Senior Mezz Lender”) which
evidences a loan (the “Senior Mezz Loan”) in the original principal
amount of FIFTY-ONE MILLION TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($51,250,000.00) which is secured by a pledge of one hundred percent (100%) of
the Senior Mezz Borrower’s direct limited liability company interests in Owner
pursuant to that certain loan and security agreement by and between Senior Mezz
Borrower and Senior Mezz Lender (the “Senior Mezz Loan Agreement”, and,
together with the Senior Mezz Note and all other documents executed and
delivered in connection with the making of the Senior Mezz Loan and/or
evidencing, securing or guaranteeing payment of the obligations evidenced by
the Senior Mezz Note, collectively, the “Senior Mezz Loan Documents”;


 


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


 


WHEREAS, Hudson, Morgans,
Royalton and Mondrian delivered a promissory note (the “New York/California
Mortgage Note”) to Wachovia Bank, National Association (“Mortgage Lender”)
which evidences a loan (the “New York/California Mortgage Loan”) in the
original principal amount of $366,339,439.66 which is secured by (a) certain
mortgages which were amended and consolidated pursuant to that certain
Agreement of Consolidation and Modification of Mortgage, Security Agreement,
Assignment of Rents and Fixture Filing dated as of the date hereof by and
between Mortgage Lender, as lender, and Hudson, Morgans, and Royalton,
collectively as borrowers, encumbering the Hudson Premises, the Morgans
Premises and the Royalton Premises (the “New York Mortgage”) and (b)
that certain Deed of Trust, Security Agreement, Assignment of Rents and Fixture
Filing dated as of the date hereof by Mondrian, as borrower, for the benefit of
Mortgage Lender, as lender, encumbering the Mondrian Premises (the “California
Mortgage” and, together with the New York Mortgage, as same have been and
may hereafter be amended, restated, replaced, supplemented, spread,
consolidated or otherwise modified, from time to time, collectively, the “New
York/California Mortgage”);


 


WHEREAS, Beach delivered a
promissory note (the “Florida Mortgage Note” and, together with the New
York/California Mortgage Note, collectively, the “Mortgage Note”) to
Mortgage Lender which evidences a loan (the “Florida Mortgage Loan” and,
together with the New York/California Mortgage Loan, collectively, the “Mortgage
Loan”) in the original principal amount of $107,410,560.34 which is secured
by that certain Third Amended and Restated Mortgage, Security Agreement,
Assignment of Rents and Fixture Filing dated as of the date hereof by Beach, as
borrower, in favor of Mortgage Lender, as lender, encumbering the Delano
Premises (as same has been and may hereafter be amended, restated, replaced,
supplemented, spread, consolidated or otherwise modified, from time to time,
the “Florida Mortgage” and, together with the New York/California
Mortgage, collectively, the “Mortgage” and, together with the Mortgage
Note and all other documents executed and delivered in 


 


2





















 


connection with the making of the Mortgage
Loan, collectively, the “Mortgage Loan Documents”) encumbering the Premises;


 


WHEREAS, Lender has agreed
to make a loan (the “Loan”) to Borrower, which Loan, together with
interest thereon, shall be evidenced by and payable in accordance with the
provisions of the promissory note issued by Borrower, as maker, to Lender, as
holder (the “Note”, and together with this Agreement and all other documents
executed and delivered in connection with the making of the Loan, collectively,
the “Loan Documents”) in the original principal amount of $25,000,000.00
(the “Loan Amount” and together with interest and all other sums which
may or shall become due under the Note or this Agreement or the other Loan
Documents being hereinafter collectively referred to as the “Debt”); and


 


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


 


NOW, THEREFORE, in
consideration of the making of the Loan and other good and valuable
consideration, the receipt of which is hereby acknowledged, Borrower hereby
grants and assigns to Lender, as security for the payment of the Debt and the
observance and performance by Borrower of all of the terms, covenants and
provisions of the Note on the part of Borrower to be observed or performed, a
security interest in all of Borrower’s right, title and interest in the Collateral
and Borrower hereby represents and warrants to and covenants and agrees with
Lender as follows:


 


ARTICLE I.  DEFINITIONS


 


Section 1.01. 
Defined Terms.  Capitalized
terms used herein that are not otherwise defined shall have the respective
meanings ascribed thereto in the definitions list on Exhibit C attached
hereto and if not defined therein shall have the meaning set forth in the
Mortgage.


 


ARTICLE II.  REPRESENTATIONS, COVENANTS AND 

WARRANTIES OF BORROWER


 


Section 2.01. 
Pledge of Collateral.  (a)  As security for the due and punctual payment
and performance of all of the Debt (whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, including, without
limitation, the payment of amounts that would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. §362(a), whether allowed or allowable as claims), Borrower hereby
(i) pledges, transfers, hypothecates and assigns to Lender the Collateral
in which Borrower now or hereafter has rights, and (ii) grants to Lender a
continuing first priority lien on and security interest in and to all of the
Borrower’s rights, whether now owned or hereafter acquired, in the Collateral.  The inclusion of Proceeds in the definition
of “Collateral” does not authorize Borrower to sell, dispose of or otherwise
use the Collateral in any manner not specifically authorized hereby.  Lender is hereby authorized:  (i) to transfer to the account of Lender
or its designee any Pledged Interests whether in the possession of, or
registered in the name of, The


 


3





















 


Depository Trust Company (the “DTC”) or other
clearing corporation or held otherwise; (ii) to transfer to the account of
Lender or its designee with any Federal Reserve Bank any Pledged Interests held
in book entry form with any such Federal Reserve Bank; and (iii) to
exchange certificates representing or evidencing the Pledged Interests for
certificates of smaller or larger denominations.  To the extent that the Pledged Interests have
not already been transferred to Lender or its designee in a manner sufficient
to perfect Lender’s security interest therein, Borrower shall promptly deliver
or cause to be delivered to Lender all certificates or instruments evidencing
the Pledged Interests, together with duly executed transfer powers or other
appropriate endorsements.  With respect
to any Collateral in the possession of or registered in the name of a custodian
bank or nominee therefor, or any Collateral represented by entries on the books
of any securities intermediary, Borrower agrees to cause such custodian bank or
nominee either to enter into an agreement with Lender satisfactory to Lender in
form and content confirming that the Collateral is held for the account of
Lender, or at the discretion of Lender and subject to the written instructions
of Lender, deliver any such Collateral to Lender and/or cause any such
Collateral to be put in bearer form, registered in the name of Lender or its nominee,
or transferred to the account of Lender with any Federal Reserve Bank, DTC, or
other clearing corporation.  With respect
to any Collateral held in an account maintained by Lender as securities
intermediary, Borrower hereby gives notice to Lender of Lender’s security
interest in such Collateral.  In
addition, Borrower agrees that in the event that any Collateral is held by
Lender in a fiduciary capacity for or on behalf of Borrower as the beneficial
owner thereof, any agreements executed by Borrower in connection therewith are
hereby amended to authorize and direct the pledge, hypothecation and/or
transfer of such Collateral to Lender, as lender, by Lender, as fiduciary, in
accordance with the terms, covenants and conditions of this Agreement.  The rights granted to Lender pursuant to this
Agreement are in addition to the rights granted to Lender pursuant to any such
agreements.  In case of conflict between
the provisions of this Agreement and those of any other such agreement, the
provisions hereof shall prevail.  In the
event that Borrower purchases or otherwise acquires or obtains any additional
Equity Interests in any Corporation, LLC or Partnership, or any rights, or
options, subscriptions or warrants to acquire such Equity Interests, all such
Equity Interests, rights, options, subscriptions or warrants shall
automatically be deemed to be a part of the Collateral pledged by
Borrower.  If any such Equity Interests
are to be evidenced by a certificate, such additional certificates shall be
promptly delivered to Lender, together with Powers related thereto, or other
instruments appropriate to a certificate representing an Equity Interest, duly
executed in blank.  Borrower shall
deliver to Lender all subscriptions, warrants, options and all such other rights,
and upon delivery to Lender, Lender shall hold such subscriptions, warrants,
options and other rights as additional collateral pledged to secure the Debt;
provided, however, that if Lender determines, in its sole discretion, that the
value of any such subscriptions, warrants, options or other rights shall
terminate, expire or be materially reduced in value by holding the same as
Collateral, Lender shall have the right (but not the obligation), in its sole
discretion, to sell or exercise the same, and if exercised, then the monies
disbursed by Lender in connection therewith shall become part of the Debt and
all of the stock, securities, evidences of indebtedness and other items so
acquired shall be titled in the name of Borrower and shall become part of the
Collateral.


 


(b)           Borrower
hereby authorizes Lender to file any financing statements, and amendments to
financing statements, in any jurisdictions and with any filing offices as
Lender may determine, in its sole discretion, are necessary or advisable to
perfect the security interest granted to Lender hereunder. Such financing
statements may describe the collateral in the same


 


4





















 


manner as described in this Agreement or may contain
an indication or description of collateral that describes such property in any
other manner Lender so chooses, including, without limitation, describing such
property as “all assets, whether now owned or hereafter acquired” or “all
personal property, whether now owned or hereafter acquired”.


 


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


 


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


 


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


 


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


 


5





















 


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


 


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


 


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


 


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


 


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


 


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


 


(iv)          Borrower and, if applicable, each General Partner, have at
all times accurately maintained, and will continue to accurately maintain,
their respective financial statements, accounting records and other partnership,
company or corporate documents separate from those of any other Person and
Borrower will file its own tax returns or, if Borrower and/or, if applicable,
General Partner is part of a consolidated group for purposes of filing tax
returns, Borrower and General Partner, as applicable will be shown


 


6





















 


as separate members of such
group.  Borrower and, if applicable, each
General Partner have not at any time since their formation commingled, and will
not commingle, their respective assets with those of any other Person and will
maintain their assets in such a manner such that it will not be costly or
difficult to segregate, ascertain or identify their individual assets from
those of any other Person.  Borrower and,
if applicable, each General Partner will not permit any Affiliate independent
access to their bank accounts.  Borrower and,
if applicable, each General Partner have at all times since their formation
accurately maintained and utilized, and will continue to accurately maintain
and utilize, their own separate bank accounts, payroll and separate books of
account, stationery, invoices and checks.


 


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


 


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


 


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


 


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


 


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


 


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


 


7





















 


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


 


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


 


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


 


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


 


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


 


(xvi)        Borrower shall at all times cause there to be at least two
(2) duly appointed members of Borrower’s board of directors or board of
managers or other governing board or body, as applicable (each an “Independent
Director”), of, if Borrower is a corporation, Borrower, if Borrower is a
limited partnership, of the General Partner, and if Borrower is a limited
liability company, of the General Partner or of Borrower, reasonably
satisfactory to Lender who shall not have been at the time of such individual’s


 


8





















 


appointment, and may not be
or have been at any time (A) a shareholder, officer, director, attorney,
counsel, partner, member or employee of Borrower or any of the foregoing
Persons or Affiliates thereof, (B) a customer or creditor of, or supplier or
service provider to Borrower or any of its shareholders, partners, members or
their Affiliates, (C) a member of the immediate family of any Person referred
to in (A) or (B) above or (D) a Person Controlling, Controlled by or under
common Control with any Person referred to in (A) through (C) above.  A natural person who otherwise satisfies the
foregoing definition except for being the Independent Director of a Single
Purpose Entity Affiliated with Borrower or General Partner shall not be
disqualified from serving as an Independent Director if such individual is at
the time of initial appointment, or at any time while serving as the
Independent Director, an Independent Director of a Single Purpose Entity
Affiliated with Borrower or General Partner if such individual is an
Independent Director provided by a nationally-recognized company that provides
professional independent directors.


 


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


 


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


 


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


 


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


 


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


 


(i)            Consents and
Approvals.  Borrower and, if applicable,
each General Partner, have obtained or made all necessary (i) consents,
approvals and authorizations, and registrations and filings of or with all
Governmental Authorities and (ii) consents, approvals, waivers and


 


9





















 


notifications of partners, stockholders, members, creditors, lessors
and other nongovernmental Persons, in each case, which are required to be
obtained or made by Borrower or, if applicable, the General Partner, in
connection with the execution and delivery of, and the performance by Borrower
of its obligations under, the Loan Documents.


 


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


 


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


 


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


 


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


 


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


 


(o)           Solvency; No
Bankruptcy.  Borrower and, if
applicable, the General Partner, (i) is and has at all times been Solvent and
will remain Solvent immediately upon the consummation of the transactions
contemplated by the Loan Documents and (ii) is free from bankruptcy,
reorganization or arrangement proceedings or a general assignment for the
benefit of creditors and is not contemplating the filing of a petition under
any state or federal bankruptcy or insolvency laws or the liquidation of all or
a major portion of such Person’s assets or property and Borrower has no
knowledge of any Person contemplating the filing of any such petition against
it or, if applicable, the General Partner. 
None of the transactions contemplated hereby will be or have been made
with an intent to hinder, delay or defraud any present or future


 


10





















 


creditors of Borrower and Borrower has received reasonably equivalent
value in exchange for its obligations under the Loan Documents.  Borrower’s assets do not, and immediately
upon consummation of the transaction contemplated in the Loan Documents will
not, constitute unreasonably small capital to carry out its business as
presently conducted or as proposed to be conducted.  Borrower does not intend to, nor believes
that it will, incur debts and liabilities beyond its ability to pay such debts
as they may mature.


 


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


 


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


 


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


 


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


 


(ii)           Borrower will furnish to Lender as soon as possible, and
in any event within ten (10) days after Borrower knows or has reason to believe
that any of the events or conditions specified below with respect to any Plan,
Welfare Plan or Multiemployer Plan has occurred or exists, an Officer’s
Certificate setting forth details respecting such


 


11





















 


event or condition and the
action, if any, that Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with
or given to the PBGC (or any other relevant Governmental Authority)) by
Borrower or an ERISA Affiliate with respect to such event or condition, if such
report or notice is required to be filed with the PBGC or any other relevant
Governmental Authority:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


12





















 


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


 


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


 


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


 


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


 


(v)           Owner’s
Legal Status.  (A)(i) The owner of
the Premises and the maker of the Mortgage Note is and shall be Owner, (ii)
there are no defaults existing under the Mortgage


 


13





















 


Note, the Mortgage or the other Mortgage Loan
Documents, and, to the best of Borrower’s knowledge, there is no event which,
but for the passage of time or the giving of notice, or both, would constitute
an event of default under the Mortgage Loan Documents, (iii) the Mortgage Loan
Documents and the provisions thereof have not been amended, modified or altered
in any manner whatsoever, (iv) the Mortgage constitutes a valid and enforceable
first lien covering the Premises subject only to Permitted Encumbrances (as
defined in the Mortgage), (v) the Premises are improved and income-producing
and the improvements located thereon have not been damaged by fire or other
casualty, (vi) no condemnation or other eminent domain proceedings have been
commenced with respect to the Premises and Borrower has no knowledge that any
such proceedings are contemplated, (vii) Borrower knows of no fact or
circumstance which would affect the enforceability, validity or priority of the
Mortgage Loan Documents, or which would affect the ability or willingness of
Owner and any other Person liable under the Mortgage Loan Documents to continue
to perform and observe the terms, covenants and provisions of the Mortgage Loan
Documents, (viii) the unpaid principal balance of the Mortgage Note as of the
date of this Agreement is as set forth on Exhibit B attached hereto.


 


(B)(i)  there are no defaults existing under the
Senior Mezz Note, the Intermediate Mezz Note, the Senior Mezz Loan Agreement,
the Intermediate Mezz Loan Agreement or the other Senior Mezz Loan Documents or
the other Intermediate Mezz Loan Documents, and, to the best of Borrower’s
knowledge, there is no event which, but for the passage of time or the giving
of notice, or both, would constitute an event of default under the Senior Mezz
Loan Documents and the Intermediate Mezz Loan Documents, (ii) the Senior Mezz
Loan Documents and the Intermediate Mezz Loan Documents and the provisions
thereof have not been amended, modified or altered in any manner whatsoever, (iii)
Borrower knows of no fact or circumstance which would affect the
enforceability, validity or priority of the Senior Mezz Loan Documents or the Intermediate
Mezz Loan Documents, or which would affect the ability or willingness of Senior
Mezz Borrower or Intermediate Mezz Borrower and any other Person liable under
the Senior Mezz Loan Documents or the Intermediate Mezz Loan Documents to
continue to perform and observe the terms, covenants and provisions of the
Senior Mezz Loan Documents or the Intermediate Mezz Loan Documents, (iv) the
unpaid principal balance of the Senior Mezz Note as of the date of this
Agreement is as set forth on Exhibit B attached hereto.


 


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


 


(x)            Securities
Laws.  The transactions contemplated
by this Agreement do not violate and do not require that any filing,
registration or other act be taken with respect to any and all laws pertaining
to the registration or transfer of securities, including without limitation the
Securities Act of 1933, as amended, and the Securities and Exchange Act of
1934, as amended, and any and all rules and regulations promulgated thereunder
(collectively, the “Securities Laws”), as such laws are amended and in
effect from time to time, and none of the Equity Interests in the Partnerships
or LLCs are represented by any “certificated security” as that term is


 


14





















 


defined in Section 8-102 of the UCC.  Borrower shall at all times comply with the
Securities Laws as the same pertain to all or any portion of the Collateral or
any of the transactions contemplated by this Agreement.  Lender agrees not take any action with
respect to the Collateral that, without the consent of Borrower, requires Borrower
to file a registration statement with the SEC or apply to qualify a sale of a
security under the securities laws of any state.


 


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


 


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


 


(aa)         Representations
and Warranties of Owner.  (i)  All of the representations and warranties of
Owner or any Affiliate of Owner under the Mortgage Loan Documents are true,
complete and correct in all material respects, (ii) all of the representations
and warranties of Intermediate Mezz Borrower or any Affiliate of Intermediate Mezz
Borrower under the Intermediate Mezz Loan Documents are true, complete and
correct in all material respects and (iii) all of the representations and
warranties of Senior Mezz Borrower or any Affiliates of the Senior Mezz
Borrower under the Senior Mezz Loan Documents are true, complete and correct in
all material respects.


 


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


 


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


 


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


 


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


 


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


 


15





















 


or possible future lien on, or security interest or
security title in the interest in the Premises or any of the Collateral.


 


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


 


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


 


(ii)           Lockbox
Account.


 


(i)            Pursuant
to the irrevocable direction letter delivered by Borrower to Intermediate Mezz
Borrower on the Closing Date, Borrower shall direct Intermediate Mezz Borrower to
cause all Remaining Rents after payments due under the Intermediate Mezz Loan Documents
have been paid to be deposited into the Lockbox Account;


 


(ii)           neither
Borrower nor Owner nor any other Person other than Senior Mezz Lender and
Intermediate Mezz Lender shall have any right, title or interest in or to any
Remaining Rents from and after the time such Remaining Rents are transferred to
the Lockbox Account;


 


(iii)          there
are no other accounts maintained by Owner, Borrower or any other Person with
respect to the collection of rents, revenues, proceeds or other income from the
Premises or for the collection of Rents, except for the Rent Accounts and the
Central Account (as defined in Article 5 of the Mortgage) and the Lockbox
Account and lockbox accounts established pursuant to the Senior Mezz Loan
Agreement and the Intermediate Mezz Loan Agreement; and


 


(iv)          so
long as any of the Debt shall be outstanding, neither Borrower, Owner


 


16





















 


nor any other Person shall open any other accounts
with respect to the collection of rents, revenues, proceeds or other income
from the Premises or for the collection of Rents.


 


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


 


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


 


Section 2.03. 
Further Acts, Etc. 
Borrower will, at the cost of Borrower, and without expense to Lender,
do, execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, assignments, notices of assignments, transfers and assurances as
Lender shall, from time to time, reasonably require for the better assuring,
conveying, assigning, transferring, and confirming unto Lender the property,
security interest and rights hereby given, granted, bargained, sold, alienated,
enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated, or which
Borrower may be or may hereafter become bound to convey or assign to Lender, or
for carrying out or facilitating the performance of the terms of this Agreement
or for filing, registering or recording this Agreement and, within five (5)
Business Days of written demand, will execute and deliver and hereby authorizes
Lender to execute in the name of Borrower or without the signature of Borrower
to the extent Lender may lawfully do so, one or more financing statements,
chattel mortgages or comparable security instruments to evidence more
effectively the lien hereof upon the Collateral.  Without limiting the generality of the
foregoing, Borrower will:  (i) if any
Collateral shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to Lender hereunder such note or instrument
or chattel paper duly indorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Lender; (ii)
execute or authenticate and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable and as Lender may request, in order to perfect and preserve the
security interest granted or purported to be granted by Borrower hereunder;
(iii) take all action necessary to ensure that Lender has control of any
Collateral consisting of deposit accounts, electronic chattel paper, investment
property and letter-of-credit rights as provided in Sections 9-104, 9-105,
9-106 and 9-107 of the UCC; and (iv) deliver to Lender evidence that all other
action that


 


17





















 


Lender may reasonably deem necessary or desirable in
order to perfect and protect the security interest granted or purported to be
granted by Borrower under this Agreement has been taken.  Borrower grants to Lender an irrevocable
power of attorney coupled with an interest for the purpose of protecting,
perfecting, preserving and realizing upon the interests granted pursuant to
this Agreement and to effect the intent hereof, all as fully and effectually as
Borrower might or could do; and Borrower hereby ratifies all that Lender shall
lawfully do or cause to be done by virtue hereof.  Upon receipt of an affidavit of an officer of
Lender as to the loss, theft, destruction or mutilation of the Note or any
other Loan Document which is not of public record, and, in the case of any such
mutilation, upon surrender and cancellation of such Note or other applicable
Loan Document, Borrower will issue, in lieu thereof, a replacement Note or
other applicable Loan Document, dated the date of such lost, stolen, destroyed
or mutilated Note or other Loan Document in the same principal amount thereof
and otherwise of like tenor.


 


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


 


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


 


Section 2.06. 
Financial Reports. 
Borrower shall keep accurate and complete books, records and accounts in
accordance with generally accepted accounting principles (“GAAP”), the
Uniform System of Accountants (or such other accounting basis reasonably
acceptable to Lender) consistently applied with respect to the financial
affairs of Borrower, including, but not limited to, the financial affairs of
Borrower which relate to the Collateral and all sums due or which may become
due thereunder.  Borrower shall, within ten
(10) Business Days after request and at its sole cost and expense, deliver to
Lender any of such books and records as may be requested by Lender.  Lender shall have the right from time to time
at all times during normal


 


18





















 


business hours to examine such books, records and
accounts at the office of Borrower or other Person maintaining such books,
records and accounts and to make copies or extracts thereof as Lender shall
desire.  Borrower shall, from time to
time, within thirty (30) days after request and at its sole cost and expense,
deliver to Lender such information, reports and additional financial
information with respect to the financial affairs of Borrower as Lender shall
reasonably request.  Borrower will furnish
Lender annually, within one hundred twenty (120) days following the end of each
Fiscal Year of Borrower, with a complete copy of Borrower’s financial statement
audited by an Independent certified public accountant that is acceptable to
Lender in accordance with GAAP, the Uniform System of Accountants (or such
other accounting basis reasonably acceptable to Lender) consistently applied
covering (i) all of the financial affairs of Borrower for such Fiscal Year and
containing a statement of revenues and expenses, a statement of assets and
liabilities and a statement of Borrower’s equity.  Together with Borrower’s annual financial
statements, Borrower shall furnish to Lender an Officer’s Certificate
certifying as of the date thereof (i) that the annual financial statements
accurately represent the results of operations and financial condition of
Borrower all in accordance with GAAP, the Uniform System of Accountants (or
such other accounting basis reasonably acceptable to Lender) consistently
applied, and (ii) whether there exists an event or circumstance which
constitutes, or which upon notice or lapse of time or both would constitute, a
Default under the Note or any other Loan Document executed and delivered by
Borrower, and if such event or circumstance exists, the nature thereof, the
period of time it has existed and the action then being taken to remedy such
event or circumstance.  Borrower shall at
all times, whether or not the Mortgage Loan is outstanding, deliver or shall
cause Owner to deliver to Lender (x) a copy of all financial statements,
reports, books, records and accounts required to be delivered to Mortgage
Lender pursuant to the terms of the Mortgage Loan Documents within the time
frames set forth in the Mortgage Loan Documents for the delivery of such
financial statements, reports, books, records and accounts (and, with each
monthly statement of revenues and expenses delivered or required to be
delivered under the Mortgage Loan Documents, a comparison of such revenues and
expenses to the Annual Budget) and (y) annually, within thirty (30) days
following the end of each calendar year, and within thirty (30) days after
Lender’s request therefor, a true, complete and correct rent roll for the
Premises, including a list of which tenants are in default under their
respective leases, dated as of the end of the preceding month, identifying each
tenant, the monthly rent and additional rent, if any, payable by such tenant,
the expiration date of such tenant’s Lease, the security deposit, if any, held
by Owner under the Lease, the space covered by the Lease, each tenant that has
filed a bankruptcy, insolvency, or reorganization proceeding since delivery of
the last such rent roll, and the
arrearages for such tenant, if any, and such rent roll shall be accompanied by
an Officer’s Certificate, dated as of the date of the delivery of such rent
roll, certifying that such rent roll is true, correct and complete in all
material respects as of its date. 
Borrower shall furnish to Lender, within thirty (30) days after Lender’s
request therefor, such further detailed information with respect to the
operation of the Premises and the financial affairs of Borrower as may be
reasonably requested by Lender.  Borrower
acknowledges that notwithstanding anything to the contrary contained herein or
in the Note, all extension fees and exit fees will be treated as additional
interest.


 


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


 


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Section 2.08. 
Estoppel Certificates. 
Borrower (a) shall, or shall cause Owner to, from time to time, request
from Mortgage Lender such certificates of estoppel with respect to compliance
by Owner with the terms of the Mortgage Loan Documents as may be requested by
Lender and required to be given by Mortgage Lender pursuant to the Mortgage
Loan Documents; and (b) shall, or shall cause Intermediate Mezz Borrower to,
from time to time, request from Intermediate Mezz Lender such certificates of
estoppel with respect to compliance by Intermediate Mezz Borrower with the
terms of the Intermediate Mezz Loan Documents as may be reasonably requested by
Lender and required to be given by Intermediate Mezz Lender pursuant to the Intermediate
Mezz Loan Documents and (c) shall, or shall cause Senior Mezz Borrower to,
from time to time, request from Senior Mezz Lender, such certificates of estoppel
with respect to compliance by Senior Mezz Borrower with the terms of the Senior
Mezz Loan Documents as may be reasonably requested by Lender and required to be
given by Senior Mezz Lender pursuant to the Senior Mezz Loan Documents.


 


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


 


Section 2.10. 
Intentionally Omitted. 


 


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


 


20





















 


the interests of Lender in the Collateral or any
portion thereof or any interest therein.


 


(b)           Notwithstanding the
foregoing provisions of this Section 2.11, solely in connection with a sale of
the Premises permitted pursuant to Section 9.04 of the Mortgage and the sale of
interests in Senior Mezz Borrower pursuant to Section 2.11 of the Senior Mezz
Loan Agreement and the sale of interests in Intermediate Mezz Borrower pursuant
to Section 2.11 of the Intermediate Mezz Loan Agreement, a new borrower (“New
Borrower”), owning 100% of the indirect, unencumbered equity interests in
the proposed new owner of the Premises (the “New Owner”) may assume
Borrower’s obligations hereunder (hereinafter, a “Proposed Loan Assumption”)
provided that each of the following terms and conditions are satisfied:


 


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


 


(ii)           Lender shall have,
in its sole and absolute discretion, consented to the Proposed Loan Assumption;
provided, however, in connection with an IPO with respect to which not less
than $50,000,000 in proceeds have been used to prepay first, the Loan, second,
the Intermediate Mezz Loan and third, the Senior Mezz Loan until an amount of
not less than $50,000,000 in the aggregate has been applied to such
indebtedness, no such consent shall be required;


 


(iii)          Borrower gives
Lender written notice of the terms of the Proposed Loan Assumption not less
than sixty (60) days, or in the case of an IPO, fifteen (15) days, before the
date on which such Proposed Loan Assumption is scheduled to close and,
concurrently therewith, gives Lender all such information concerning the New
Borrower and the New Owner as Lender would require in evaluating an initial
extension of credit to a borrower and Lender determines, in its sole discretion
that the New Borrower and the New Owner are acceptable to Lender in all
respects (other than in connection with an IPO);


 


(iv)          In the event the
applicable Transfer will result in a New Borrower owning the Collateral, Borrower
pays Lender, concurrently with the closing of such Proposed Loan Assumption, a
non-refundable assumption fee in an amount equal to one percent (1%) of the
then outstanding Loan Amount for each Proposed Loan Assumption, together with
all out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys’ fees, incurred by Lender in connection with the Proposed Loan
Assumption, provided, however, that no such assumption fee shall be required in
connection with a Transfer effected in connection with an IPO (but Borrower
shall be required to pay all out-of-pocket costs and expenses of Lender);


 


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


 


(vi)          In the event the
applicable Transfer will result in a New Borrower owning the Collateral, Borrower
and New Borrower execute, without any cost or expense to Lender, new


 


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financing statements or financing statement amendments and any
additional documents reasonably requested by Lender and New Borrower delivers
certificated securities to Lender representing 100% of the equity ownership
interests in Intermediate Mezz Borrower (such interests, along with any other
collateral securing the Loan, the “New Collateral”) and grants Lender a
perfected first priority lien in such New Collateral;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(b)           Borrower shall cause Senior Mezz Borrower to comply with
all of the terms, covenants and conditions set forth in the Senior Mezz Loan
Documents, notwithstanding any waiver or future amendment of such covenants by
Senior Mezz Lender.  Borrower
acknowledges that the obligation to comply with such covenants is separate from,
and may be enforced independently from, the obligations of the Senior Mezz
Borrower under the Senior Mezz Loan Documents.


 


(c)           Borrower shall cause Intermediate Mezz Borrower to comply
with all of the terms, covenants and conditions set forth in the Intermediate
Mezz Loan Documents, notwithstanding any waiver or future amendment of such
covenants by Intermediate Mezz Lender. 
Borrower acknowledges that the obligation to comply with such covenants
is separate from, and may be enforced independently from, the obligations of
the Intermediate Mezz Borrower under the Intermediate Mezz Loan Documents.


 


Section 2.15.  No Change of Accounts. 
Borrower shall not permit (a) Owner to change the Rent Accounts or the
Central Account (as such terms are defined in the Mortgage), without the prior
written consent of Lender and Mortgage Lender, (b) Senior Mezz Borrower to
change the lockbox account established pursuant to the Senior Mezz Loan
Agreement without the prior written consent of Lender, not to be unreasonably
withheld, and Intermediate Mezz Lender or (c) Intermediate Mezz Borrower
to change the lockbox account established pursuant the Intermediate Mezz Loan
Agreement without the prior written consent of Lender, not to be unreasonably
withheld, and Intermediate Mezz Lender.


 


23





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 2.19. 
Voting Rights; Etc.  (a) So
long as an Event of Default shall not have occurred and be continuing, Borrower
shall be permitted (i) to receive any and all regular Distributions and
dividends paid in cash and in the ordinary course of business of the
Partnerships, the LLCs and the Corporations with respect to the Equity
Interests and (ii) to exercise all voting and other rights with respect to the
Equity Interests as long as no vote shall be 


 


24





















 


cast, or right exercised or other action taken which
would, directly or indirectly, materially impair the value of any Collateral or
which would be inconsistent with or result in a default under this Agreement or
any of the other Loan Documents.  Upon
the receipt of a written request from Borrower, Lender shall execute and
deliver (or cause to be executed and delivered) to Borrower all such proxies
and other instruments as Borrower may reasonably request for the purpose of
enabling Borrower to exercise the voting and other rights which it is entitled
to exercise and to receive the dividends or interest payments which it is
authorized to receive and retain pursuant to this Agreement.  Upon the occurrence and during the
continuance of an Event of Default, the aforesaid rights shall immediately and
automatically vest in Lender.


 


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


 


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


 


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


 


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


 


Section 2.23. 
Purchase of Mortgage Loan, Etc. 
(a)  Neither Borrower nor any
Affiliate thereof or any other Person acting upon their direction or request
shall, directly or indirectly, 


 


25


















 


acquire or agree to acquire, obtain, purchase or
control the Mortgage Loan, or any portion thereof or any interest therein, or
any direct or indirect ownership interest in the holder of, or participant in,
the Mortgage Loan in any manner whatsoever. 
If, solely by operation of applicable subrogation law, Borrower or any
Affiliate thereof shall be in breach of or fail to comply with the foregoing,
then such breach or failure shall not be an Event of Default provided
that Borrower (a) shall immediately upon obtaining knowledge thereof notify
Lender of such failure or breach, and (b) shall cause Borrower and Affiliates
thereof acquiring any interest in the Mortgage Loan Documents (i) not to
enforce the Mortgage Loan Documents, and (ii) upon the request of Lender, to
the extent any Borrower or such Affiliate has the power or authority to do so,
to promptly (A) cancel, reconvey and release its interest in the Mortgage Loan
Documents, (B) discontinue and terminate any enforcement proceeding(s) under
the Mortgage Loan Documents and (C) assign and transfer its interest in the
Mortgage Loan Documents to Lender.


 


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


 


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


 


Section 2.24. 
Deed-In-Lieu, etc.  Without
the prior written consent of Lender, Borrower


 


26





















 


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


 


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


 


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


 


Section 2.27. 
Central Cash Management.  (a)  All amounts paid by the issuer of the Rate
Cap Agreement (the “Counterparty”) to Borrower or Lender, together with
all rents, issues, profits, insurance proceeds, condemnation proceeds, refinancing
proceeds and all other sums received with respect to the Premises after all
sums which are then due and payable have been paid to Mortgage Lender pursuant
to the terms of the Mortgage Loan Documents, to Senior Mezz Lender pursuant to
the terms of the Senior Mezz Loan Agreement and to Intermediate Mezz Lender pursuant
to the terms of the Intermediate Mezz Loan Documents (collectively, “Remaining
Rents”), shall be paid by federal wire transfer or automatic clearing house
funds (“ACH”) to Lender and shall be deposited immediately into the
Lockbox Account (as defined below). 
Lender has established the Lockbox Account in the name of Lender as
secured party.  The Lockbox Account shall
be under the sole dominion and control of Lender.  The Lockbox Account shall have a sub-account
on a ledger basis entitled the “Debt Service Payment Account” (the “Debt
Service Sub-Account” and together with the other accounts now or hereafter
required to be established pursuant to this Section 2.27, collectively, the “Accounts”)
to which certain funds shall be allocated and from which disbursements shall be
made pursuant to the terms of the Lockbox Agreement.  Borrower hereby irrevocably directs and
authorizes Lender to withdraw funds from the Lockbox Account, all in accordance
with the terms and conditions of the 


 


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Lockbox Agreement. 
Borrower shall have no right of withdrawal in respect of the Lockbox
Account.  Each transfer of funds to be
made hereunder shall be made only to the extent that funds are on deposit in
the Lockbox Account, and Lender shall have no responsibility to make additional
funds available in the event that funds on deposit are insufficient.  Borrower shall enter into or shall cause
Owner to enter into a substitute cash management agreement and related lockbox
agreement (collectively, the “Substitute CMA Agreements”) with
substantially the same terms as the agreements entered into as of the date
hereof in connection with the Mortgage Loan as a condition to the satisfaction
of the Mortgage Loan or if Mortgage Lender is not requiring that sums be
deposited into any Sub-Accounts or Escrow Accounts (each as defined in the Mortgage).  Such substitute agreements shall provide that
all Remaining Rents shall be deposited into the Lockbox Account for
disbursement in accordance with the terms of the Substitute CMA Agreements, the
Lockbox Agreement (as amended to conform with the Substitute CMA Agreements)
and this Agreement.  Additionally, on or
before the Closing Date, Borrower shall establish or cause Owner to establish
such escrow and reserve accounts and deposit such amounts into such accounts as
required pursuant to the terms of the Mortgage Loan Documents.  After the occurrence and during the
continuance of an Event of Default, the funds on deposit in the Lockbox
Account, and all other funds received by Lender in respect of the Loan, shall
be disbursed and applied in such order and such manner as Lender shall elect in
its sole discretion.  If Borrower shall
receive any Remaining Rents other than in accordance with this Agreement,
Borrower shall hold all such payments in trust for Lender, will not co-mingle
such payments with other funds of Borrower, and will immediately pay and
deliver in kind, all such payments directly to Lender for application by Lender
in accordance with this Agreement.


 


(b)           Borrower
shall maintain the Rate Cap Agreement at all times during the term of the Loan
and pay all fees, charges and expenses incurred in connection therewith.  Borrower shall comply with all of its
obligations under the terms of the Rate Cap Agreement.  All amounts paid by the Counterparty to
Borrower or Lender shall be deposited immediately into the Lockbox Account.  Borrower shall take all actions reasonably
requested by Lender to enforce Lender’s rights under the Rate Cap Agreement in
the event of a default by the Counterparty. 
In the event that (a) the long-term unsecured debt obligations of
the Counterparty are downgraded by the Rating Agency below “A+” or its
equivalent or (b) the Counterparty shall default in any of its obligations
under the Rate Cap Agreement, Borrower shall, at the request of Lender,
promptly but in all events within five (5) Business Days, replace the Rate Cap
Agreement with an agreement having identical payment terms and maturity as the
Rate Cap Agreement and which is otherwise in form and substance substantially
similar to the Rate Cap Agreement and otherwise acceptable to Lender with a cap
provider, the long-term unsecured debt of which is rated at least “AA-” (or its
equivalent) by each Rating Agency, or which will allow each Rating Agency to
reaffirm their then current ratings of all rated certificates issued in
connection with the Securitization.  In
the event that Borrower fails to maintain the Rate Cap Agreement as provided in
this Section, Lender may purchase the Rate Cap Agreement and the cost incurred
by Lender in connection therewith shall be paid by Borrower to Lender with
interest thereon at the Default Rate from the date such cost is incurred until
such cost is paid by Borrower to Lender. 
On or prior to the Payment Date in June, 2007, Borrower shall deliver to
Lender a replacement Rate Cap Agreement with a term expiring not earlier than
the Maturity Date and otherwise in form and substance acceptable to Lender
which is issued by a Counterparty having a long-term unsecured debt rating of “AA-”
(or its equivalent) or better from each Rating Agency (the “Replacement Rate
Cap Agreement”).


 


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


 


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


 


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


 


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


 


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


 


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


 


29





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(c)           any
modification, amendment, consolidation, spread, restatement or waiver of any
provision of the Mortgage Loan Documents, Senior Mezz Loan Documents and/or
Intermediate Mezz Loan Documents.


 


Section 2.30. 
Insurance.  (a) The
insurance described in Section 3.01 of the Mortgage and Section 2.30(c) hereof
(except policies for worker’s compensation) shall be in the form (other than
with respect to Sections 3.01(a)(vi) and (vii) of the Mortgage when insurance
in those two sub-sections is placed with a governmental agency or
instrumentality on such agency’s forms) and amount and with deductibles as,
from time to time, shall be reasonably acceptable to Lender, under valid and
enforceable policies issued by financially responsible insurers authorized to
do business in the State where the Premises is located, with a general
policyholder’s service rating of not less than “A” and a financial rating of
not less than XIII as rated in the most currently available Best’s Insurance
Reports (or the equivalent, if such rating 


 


30





















 


system shall hereafter be altered or replaced) and
shall have a claims paying ability rating and/or financial strength rating, as
applicable, of not less than “A” (or its equivalent), or such lower claims paying
ability rating and/or financial strength rating, as applicable, as Lender
shall, in its reasonable discretion (taking into account then current Rating
Agency guidelines), consent to, from a Rating Agency (one of which after a
Securitization in which Standard & Poor’s rates any securities issued in
connection with such Securitization, shall be Standard & Poor’s) or by a
syndicate of insurers through which at least 90% of the coverage is with
carriers having claims-paying ability or financial strength ratings of “A” (or
its equivalent) from the Ratings Agencies, provided that all members of the
syndicate shall have claims-paying ability ratings and/or financial strength
ratings, as applicable, of not less than “A-” (or its equivalent) from the
Ratings Agencies and Borrower shall cause Owner to carry all such insurance
(whether or not the Mortgage Loan is outstanding) for so long as any portion of
the Debt remains outstanding.  Notwithstanding
the foregoing, Lender approves (i) Continental Casualty Company, (ii) RSUI
Indemnity Company, and (iii) Fidelity National Insurance Company as insurers,
provided that throughout the term of the Loan the claims paying ability rating
and/or financial strength rating, as applicable, from each Rating Agency for
such insurers shall be no less than “A-” (or its equivalent).  All such policies (except policies for worker’s
compensation) shall name Lender as an additional named insured (subject to the
rights of Mortgage Lender, Intermediate Mezz Lender and Senior Mezz Lender), with
respect to the insurance required pursuant to Section 3.01(a)(iii) of the
Mortgage, shall provide, subsequent to the satisfaction of the Mortgage Loan,
for loss payable to Lender (subject to the rights of Senior Mezz Lender and
Intermediate Mezz Lender) and shall contain (or have attached):  (i) standard “non-contributory mortgagee”
endorsement or its equivalent relating, inter  alia, to recovery
by Lender notwithstanding the negligent or willful acts or omissions of
Borrower; (ii) a waiver of subrogation endorsement as to Lender; (iii) an
endorsement indicating that neither Lender nor Borrower shall be or be deemed
to be a co-insurer with respect to any casualty risk insured by such policies
and shall provide for a deductible per loss of an amount not more than that
which is customarily maintained by owners of similar properties similarly
situated, and (iv) a provision that such policies shall not be canceled,
terminated, denied renewal or amended, including, without limitation, any
amendment reducing the scope or limits of coverage, without at least thirty
(30) days’ prior written notice to Lender in each instance.  Not less than thirty (30) days prior to the
expiration dates of the insurance policies obtained pursuant to this Agreement,
originals or certified copies of renewals of such policies (or certificates
evidencing such renewals) bearing notations evidencing the payment of premiums
or accompanied by other reasonable evidence of such payment (which premiums
shall not be paid by Borrower or Owner through or by any financing arrangement
which would entitle an insurer to terminate a policy) provided, however,
premiums for the insurance required pursuant to this Section may be paid
quarterly in advance or as otherwise reasonably acceptable to Lender, it being
acknowledged that paying the premium for such policies by financing the same,
paying twenty percent (20%) of the total annual premium (inclusive of finance
charges) at the time of the applicable policy renewal and paying the remaining
eighty percent (80%) of the total annual premium (inclusive of finance charges)
in nine (9) equal monthly installments is acceptable to Lender) shall be
delivered by Borrower to Lender. 
Borrower shall not carry separate insurance, concurrent in kind or form
or contributing in the event of loss, with any insurance required under Section
3.01 of the Mortgage or Section 2.30(c) hereof.


 


(b)           If
Borrower fails to maintain and deliver to Lender the original policies or 


 


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


 


(c)           Borrower
shall deliver to Lender such other insurance as may from time to time be
required by Lender and which is then customarily required by Institutional
Lenders for similar properties similarly situated, against other insurable
hazards, including, but not limited to, malicious mischief, vandalism, acts of
terrorism, windstorm and/or earthquake, due regard to be given to the size and
type of the Premises, Improvements, Fixtures and Equipment and their location,
construction and use.  Additionally,
Borrower shall carry such insurance coverage as Lender may from time to time
require if the failure to carry such insurance may result in a downgrade,
qualification or withdrawal of any class of securities issued in connection
with a Securitization.


 


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


 


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


 


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


 


Section 2.32. 
Management of Premises.  Borrower
shall cause Owner to operate and manage the Premises or cause the Premises to
be operated and managed in a manner which is consistent with the Approved
Manager Standard (as defined in the Mortgage). 
Borrower covenants and agrees with Lender that (a) the Premises will be
managed at all times by Manager pursuant to the management agreement approved
by Lender (the “Management Agreement”), (b) after Borrower has knowledge
of a fifty percent (50%) or more change in control of the ownership of Manager
(other than in connection with an IPO, provided Manager, directly or
indirectly, is Controlled by the same Person that Controls Borrower, Borrower
will promptly give Lender notice thereof (a “Manager Control Notice”)
and (c) the Management Agreement may be terminated by Lender at any time for
cause (including, but not limited to, Manager’s gross negligence,
misappropriation of funds, willful misconduct or fraud) or at any time
following (A) the occurrence of an Event of Default, or (B) the receipt of a
Manager Control Notice, or (C) the date upon which the trailing twelve (12)
month Debt Service Coverage (as defined in the Mortgage) is less than the Debt
Service Coverage set forth on Exhibit H to the Mortgage and a substitute
managing agent shall be appointed by Lender, subject to Lender’s prior written
approval, which may be given or withheld in Lender’s sole discretion and which
may be conditioned on, inter alia, a letter from the Rating Agency confirming
that any rating issued by the Rating Agency in connection with a Securitization
or Mortgage Securitization will not, as a result of the proposed change of
Manager, be downgraded from the then current ratings thereof, qualified or
withdrawn.  Borrower may from time to
time appoint a successor manager to manage the Premises with Lender’s prior
written consent which consent shall not be unreasonably withheld or delayed,
provided that any such successor manager shall be a reputable management
company which meets the Approved Manager Standard (as defined in the Mortgage)
and each Rating Agency shall have confirmed in writing that any rating issued
by the Rating Agency in connection with a Securitization or in connection with
a Mortgage Securitization will not, as a result of the proposed change of
Manager, be downgraded from the then current ratings thereof, qualified or
withdrawn.  Borrower further covenants
and agrees that Borrower shall require the Manager (or any successor managers)
to maintain at all times during the term of the Loan worker’s compensation
insurance as required by Governmental Authorities.


 


Section 2.33. 
Power of Attorney. 
Borrower hereby irrevocably appoints and instructs Lender as its
attorney-in-fact, with full authority in the place and stead of Borrower and in
the name of Borrower, Lender or otherwise, from time to time in Lender’s
discretion to take any and all actions necessary and proper, to carry out the
intent of this Agreement and (a) to perfect and 


 


33





















 


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


 


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


 


(b)           Subject to the
rights of Mortgage Lender in respect of the Rents under the Mortgage Loan
Documents, the rights of Senior Mezz Lender in respect of the Rents under the
Senior Mezz Loan Documents, and the rights of Intermediate Mezz Lender in
respect of the Rents under the Intermediate Mezz Loan Documents, at any time
that (i) payments are not being made to the Central Account, (ii) following
repayment of the Mortgage Loan or (iii) following the occurrence of an Event of
Default, then Lender shall have the immediate right to notify all tenants and
other third parties to make payments directly to the Lockbox Account.  Borrower hereby authorizes and directs the
tenants and other third parties to make such payments directly to the Lockbox
Account upon notice by Lender.  Subject
to the rights of Mortgage Lender under the Mortgage Loan Documents, Senior Mezz
Lender under the Senior Mezz Loan Documents and Intermediate Mezz Lender under
the Intermediate Mezz Loan Documents, security and other refundable deposits of
tenants, whether held in cash or any other form, shall, after and during the
continuance of an Event of Default, be turned over to Lender (together with any
undisbursed interest earned thereon) upon Lender’s request therefor to be held
by Lender subject to the terms of the Leases. 
Any letter of credit or other instrument which Borrower or Owner holds
in lieu of 


 


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cash security deposit shall be maintained in full force and effect in
the full amount of such deposits unless replaced by cash deposits as
herein-above described and shall in all respects comply with any applicable
Legal Requirements and otherwise be satisfactory to Lender.  Borrower shall, upon request, provide Lender
with evidence satisfactory to Lender of Borrower’s, Senior Mezz Borrower’s,
Intermediate Mezz Borrower’s and Owner’s compliance with the foregoing.


 


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


 


Section 2.35. 
Condemnation.  In the event
that all or any portion of the Premises shall be damaged or taken through
condemnation (which term shall include any damage or taking by any governmental
authority, quasi-governmental authority, any party having the power of
condemnation, or any transfer by private sale in lieu thereof), or any such
condemnation shall be threatened, Borrower shall give prompt written notice to
Lender.  Lender acknowledges that Owner’s
rights to any condemnation award is subject to the terms of the Mortgage.  Notwithstanding the foregoing, Borrower may
not and shall not permit Owner, Senior Mezz Borrower or Intermediate Mezz
Borrower to settle or compromise any claim, action or proceeding relating to
such damage or condemnation without the prior written consent of Lender, which
shall not be unreasonably withheld, delayed or denied; provided, further, that either
Owner, Senior Mezz Borrower or Intermediate Mezz Borrower may settle, adjust
and compromise any such claim, action or proceeding which is of an amount less
than $250,000 provided no Event of Default has occurred.  Any proceeds remaining after the application
of any award to reconstruct or repair the Premises or to the payment of the
Mortgage Loan, the Senior 


 


35





















 


Mezz Loan and the Intermediate Mezz Loan shall be
paid to Lender and applied to the payment of the Debt whether or not then
due.  In the event that Owner is
permitted pursuant to the terms of the Mortgage to reconstruct, restore or
repair the Premises following a condemnation of any portion of the Premises,
Borrower shall cause Owner to promptly and diligently repair and restore the
Premises in the manner and within the time periods required by the Mortgage,
the Leases and any other agreements affecting the Premises.  In the event that Owner is permitted pursuant
to the terms of the Mortgage to elect not to reconstruct, restore or repair the
Premises following a condemnation of any portion of the Premises, Borrower
shall not permit Owner to elect not to reconstruct, restore or repair the Premises
without the prior written consent of Lender.


 


Section 2.36. 
Ground Lease.


 


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


 


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


 


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


 


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


 


36





















 


exercise of any such option.


 


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


 


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


 


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


 


(h)           Borrower
shall immediately, after obtaining knowledge thereof, notify Lender of any
filing by or against the Ground Lessor of a petition under the Bankruptcy
Code.  Borrower shall thereafter
forthwith give written notice of such filing to Lender, setting forth any
information available to Borrower or Owner as to the date of such filing, the
court in which such petition was filed, and the relief sought therein.  Borrower shall promptly deliver to Lender 


 


37





















 


following receipt any and all notices, summonses,
pleadings, applications and other documents received by Borrower or Owner in
connection with any such petition and any proceedings relating thereto.


 


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


 


ARTICLE III. 
EVENTS OF DEFAULT/REMEDIES


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(g)           if
any representation or warranty of Borrower, Senior Mezz Borrower, Intermediate
Mezz Borrower, Owner or Guarantor made herein or in any other Loan Document 


 


38





















 


or in any certificate, report, financial statement
or other instrument or agreement furnished to Lender shall prove false or
misleading in any material respect as of the date made or furnished;


 


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


 


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


 


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


 


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


 


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


 


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


 


(n)           if
a default shall occur under any of the other terms, covenants or conditions of 


 


39





















 


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


 


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


 


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


 


40





















 


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


 


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


 


(d)           Without
limiting the generality of the other provisions of this Agreement, Lender is
hereby authorized by Borrower, but not obligated, in the event of any Event of
Default hereunder giving rise to Lender’s rights to sell or otherwise dispose
of the Collateral, and after the giving of any notices required herein, to sell
all or any part of the Collateral at private sale, subject to an investment
letter or in any other manner which will not require the Collateral, or any
part thereof, to be registered in accordance with the Securities Act of 1933,
as amended (the “Securities Act”), or other applicable rules and
regulations promulgated thereunder, or any other law or regulation, at the best
price reasonably obtainable by Lender at any such private sale or other
disposition in the manner mentioned above, and Borrower specifically
acknowledges that any such disposition shall be commercially reasonable under
the UCC even though any such private sales may be at prices and on terms less
favorable than those obtainable through a public sale without such
restrictions, and agrees that Lender shall have no obligation to engage in
public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale required by registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should 


 


41





















 


agree to, so register it.  Lender is also hereby authorized by Borrower,
but not obligated, to take such actions, give such notices, obtain such
consents, and do such other things as Lender may deem required or appropriate
in the event of a sale or disposition of any of the Collateral.  If Lender determines to exercise its right to
sell any or all of the Collateral, upon written request, Borrower shall and
shall cause each issuer of any Pledged Interests or other Equity Interests
owned by Borrower to be sold hereunder from time to time to furnish to Lender
all such information as Lender may request in order to determine the number of
shares and other instruments included in the Collateral which may be sold by
Lender in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.  Borrower
clearly understands that Lender may at its discretion approach a restricted
number of potential purchasers and that a sale under such circumstances may
yield a lower price for the Collateral, or any part or parts thereof, than
would otherwise be obtainable if same were registered and sold in the open
market.  Borrower agrees:  (i) in the event Lender shall, upon an
Event of Default hereunder, sell the Collateral, or any portion thereof, at
such private sale or sales, Lender shall have the right to rely upon the advice
and opinion of any member firm of the National Security Exchange as to the best
price reasonably obtainable upon such private sale thereof; and (ii) that
such reliance shall be conclusive evidence that Lender handled such matter in a
commercially reasonable manner under the UCC.


 


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


 


(f)            Any
time after an Event of Default Lender shall have the power to sell the
Collateral or any part thereof at public auction, in such manner, at such time
and place, upon 


 


42





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(h)           Upon
the completion of any sale or sales made by Lender under or by virtue of this
Section, Lender, or any officer of any court empowered to do so, shall execute
and deliver to the accepted purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, granting, conveying, assigning
and transferring all estate, right, title and interest in and to the
Collateral.  Lender is hereby irrevocably
appointed the true and lawful attorney-in-fact of Borrower (coupled with an
interest), in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries and for that purpose Lender may execute
all necessary instruments of conveyance, assignment, transfer and delivery, and
may substitute one or more 


 


43





















 


Persons with like power, Borrower hereby ratifying
and confirming all that its said attorney-in-fact or such substitute or
substitutes shall lawfully do by virtue hereof. 
Nevertheless, Borrower, if so requested by Lender, shall ratify and
confirm any such sale or sales by executing and delivering to Lender, or to
such purchaser or purchasers all such instruments as may be advisable, in the
sole judgment of Lender, for such purpose, and as may be designated in such
request.  Any such sale or sales made
under or by virtue of this Section shall operate to divest all the estate,
right, title, interest, claim and demand whatsoever, whether at law or in
equity, of Borrower in and to the Collateral, and shall, to the fullest extent
permitted under Legal Requirements, be a perpetual bar, both at law and in
equity against Borrower and against any and all Persons claiming or who may
claim the same, or any part thereof, from, through or under Borrower.


 


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


 


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


 


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


 


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


 


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


 


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



 


44





















 


sale of the Collateral.


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 3.08. 
Payment of Debt After Default. 
If following the occurrence of any Event of Default, Borrower shall
tender payment of an amount sufficient to satisfy the Debt in whole or in part
at any time prior to a UCC sale of the Collateral, and if at the time of such
tender prepayment of the principal balance of the Note is not permitted by the
Note and this Agreement, 


 


45





















 


Borrower shall, in addition to the entire Debt, also
pay to Lender a sum equal to interest which would have accrued on the principal
balance of the Note at an interest rate equal to the LIBOR Margin for the Note
plus the greater of (x) the then current LIBOR Rate and (y) the then current
average yield for “This Week” as published by the Federal Reserve Board during
the most recent full week preceding the date on which Borrower tenders such
payment in Federal Reserve Statistical Release H.15 (519) for instruments
having a ten (10) year maturity, from the date of such tender to the earlier of
(a) the Maturity Date or (b) the first day of the period during which
prepayment of the principal balance of the Note would have been permitted
together with a prepayment consideration equal to the prepayment consideration
which would have been payable as of the first day of the period during which
prepayment would have been permitted.  If
at the time of such tender, prepayment of the principal balance of the Note is
permitted, such tender by Borrower shall be deemed to be a voluntary prepayment
of the principal balance of the Note and Borrower shall, in addition to the
entire Debt, also pay to Lender the applicable Exit Additional Interest Payment
and prepayment consideration specified in the Note and this Agreement.


 


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


 


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


 


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


 


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


 


46





















 


earlier action was commenced.


 


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


 


ARTICLE IV. 
INDEMNIFICATION


 


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


 


47





















 


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


 


ARTICLE V.  SECURITY AGREEMENT


 


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


 


48





















 


with the provisions hereof at least ten (10) days
prior to such action shall constitute reasonable notice to Borrower.


 


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


 


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


 


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


 


ARTICLE VI.  PREPAYMENT


 


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


 


(b)           Borrower
may prepay the Loan, in whole or in part, as of the last day of an Interest
Accrual Period in accordance with the following provisions:


 


(i)            Lender
shall have received from Borrower, not less than thirty (30) days’, or in the
case of the IPO, fifteen (15) days, nor more than ninety (90) days’, prior
written notice specifying the date proposed for such prepayment and the amount
which is to be prepaid.


 


(ii)           Borrower shall also pay to Lender all interest due through
and including the last day of the Interest Accrual Period in which such
prepayment is being made, together with any and all other amounts due and owing
pursuant to the terms of the Note, this Agreement or the other Loan Documents.


 


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


 


(iv)          Intentionally omitted.


 


49





















 


(v)           Any partial prepayment of the Principal Amount, including,
without limitation, Unscheduled Payments, shall be applied to the installments
of principal last due hereunder and shall not release or relieve Borrower from
the obligation to pay the Minimum Amortization Payments (as defined in the
Note) becoming due under the Note.


 


(vi)          In the event that the Loan is prepaid in whole or in part
prior to the first (1st) anniversary of the date hereof, Borrower shall pay to
Lender, together with such prepayment and all other amounts due in connection
therewith, a non-refundable amount which shall be deemed earned by Lender upon
the funding of the Loan and shall not count to or be credited to payment of the
Principal Amount, any interest thereon or any other amounts payable under the
Note, the Agreement or any of the Loan Documents, equal to the Spread
Maintenance Premium.


 


(vii)         No prepayments shall be made on the Mortgage Loan until the
Loan shall have been paid in full other than in connection with a Release
pursuant to the Mortgage Loan, in which case Borrower shall be required to
prepay only a portion of the Loan in an amount equal to the outstanding
principal amount of the Loan for the Cross-collateralized Property which is the
subject of the Release multiplied by a fraction, the numerator of which is (A)
one hundred fifteen percent (115%) of the Allocated Loan Amount for the
Cross-collateralized Property which is the subject of the Release or (B) with
respect to the Delano Hotel only, one hundred ten percent (110%) of the
Allocated Loan Amount of the Delano Hotel, and the denominator of which is the
original principal amount of the Loan.


 


Section 6.02.  Additional
Interest.  Upon any repayment or
prepayment of the Loan, Borrower shall be required to pay to Lender a
non-refundable sum (the “Exit Additional Interest Payment”) on the date
of such repayment or prepayment equal to one-quarter of one percent (0.25%) of
the principal amount of the Debt being repaid or prepaid.  All Exit Additional Interest Payments shall
be deemed to be earned by Lender upon the funding of the Loan.  Notwithstanding the foregoing, no Exit
Additional Interest Fee shall be due with respect to repayments of the Loan
made (a) in connection with an IPO, (b) from sales proceeds from the conversion
of the Premises to a condominium form of ownership with respect to which
Borrower or Owner shall sell residential condominium units to the public, which
conversion the parties hereto acknowledge may only be done with the consent of
Lender and subject to such conditions as Lender shall, in its sole and absolute
discretion, impose, or (c) in connection with a prepayment resulting from (i)
regularly scheduled amortization payments made pursuant to the Note, (ii) proceeds
of asset sales to bona fide third parties which are not Affiliates of Borrower,
(iii) equity contributions from members of Borrower or (iv) Additional
Financing, so long as any such equity contributions or Additional Financings
are not refinanced through mortgage financing within 180 days following the
date of such equity contribution or the incurrence of Additional Financings, as
applicable.


 


ARTICLE VII.  MISCELLANEOUS


 


Section 7.01. 
Notices.  Any notice,
demand, statement, request or consent made hereunder shall be in writing and
delivered personally or sent to the party to whom the notice, demand or request
is being made by overnight delivery by Federal Express or other nationally 


 


50


















 


recognized overnight delivery service, as follows
and shall be deemed given when delivered personally or one (1) Business Day
after being deposited with Federal Express or such other nationally recognized
delivery service:


 


	
   

  	
  If to Lender:

  	
   

  	
  Wachovia
  Bank, National Association

  
	
   

  	
   

  	
   

  	
  Commercial
  Real Estate Services

  
	
   

  	
   

  	
   

  	
  8739
  Research Drive URP-4

  
	
   

  	
   

  	
   

  	
  NC
  1075

  
	
   

  	
   

  	
   

  	
  Charlotte,
  NC 28262

  
	
   

  	
   

  	
   

  	
  Loan
  Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attention:
  Portfolio Management

  
	
   

  	
   

  	
   

  	
  Fax
  No.: (704) 715-0036

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  copies to:

  	
   

  	
  Hypo Real Estate Capital Corporation

  
	
   

  	
   

  	
   

  	
  622 Third Avenue

  
	
   

  	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
   

  	
  Attn: Chief Risk Officer

  
	
   

  	
   

  	
   

  	
  Facsimile No.: (212)
  671-6445

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Hypo Real Estate Capital
  Corporation

  
	
   

  	
   

  	
   

  	
  622 Third Avenue

  
	
   

  	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
   

  	
  Attn: Chief Legal Officer

  
	
   

  	
   

  	
   

  	
  Facsimile No.: (212)
  671-6368

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Proskauer Rose LLP

  
	
   

  	
   

  	
   

  	
  1585 Broadway

  
	
   

  	
   

  	
   

  	
  New York, New York 10036

  
	
   

  	
   

  	
   

  	
  Attn: David J. Weinberger,
  Esq.

  
	
   

  	
   

  	
   

  	
  Facsimile No.: (212)
  969-2900

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to Borrower:

  	
   

  	
  To
  Borrower, at the address first written above, to the

  
	
   

  	
   

  	
   

  	
  attention
  of Chief Financial Officer, Facsimile No. (212)

  
	
   

  	
   

  	
   

  	
  277-4268,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  copies to:

  	
   

  	
  NorthStar Capital
  Investment Corp.

  
	
   

  	
   

  	
   

  	
  527 Madison Avenue, 17th
  Floor

  
	
   

  	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
   

  	
  Attn: Marc S. Gordon

  
	
   

  	
   

  	
   

  	
  Facsimile No.: (212)
  319-4557

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Skadden,
  Arps, Slate, Meagher & Flom LLP

  
	
   

  	
   

  	
   

  	
  Four
  Times Square

  



 


51










 













 


	
   

  	
   

  	
   

  	
  New
  York, New York 10036

  
	
   

  	
   

  	
   

  	
  Attn:
  Neil L. Rock, Esq.,

  
	
   

  	
   

  	
   

  	
  Facsimile
  No.: (917) 777-3787,

  



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


52





















 


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


 


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


 


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


 


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


 


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


 


Section 7.14. 
Usury Laws.  This Agreement
and the Note are subject to the express condition, and it is the expressed
intent of the parties, that at no time shall Borrower be obligated 


 


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or required to pay interest on the principal balance
due under the Note at a rate which could subject the holder of the Note to
either civil or criminal liability as a result of being in excess of the
maximum interest rate which Borrower is permitted by law to contract or agree
to pay.  If by the terms of this Agreement
or the Note, Borrower is at any time required or obligated to pay interest on
the principal balance due under the Note at a rate in excess of such maximum
rate, such rate of interest shall be deemed to be immediately reduced to such
maximum rate and the interest payable shall be computed at such maximum rate
and all prior interest payments in excess of such maximum rate shall be applied
and shall be deemed to have been payments in reduction of the principal balance
of the Note.  No application to the
principal balance of the Note pursuant to this Section shall give rise to any
requirement to pay any prepayment fee or charge of any kind due hereunder, if
any.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 7.24. 
Borrower’s Obligations Absolute. 
Borrower acknowledges that Lender and/or certain Affiliates of Lender
are engaged in the business of financing, owning, operating, leasing, managing,
and brokering real estate and in other business ventures which may be viewed as
adverse to or competitive with the business, prospect, profits, operations or
condition (financial or otherwise) of Borrower. 
Except as set forth to the contrary in the Loan Documents, all sums
payable by Borrower hereunder shall be paid without notice or demand,
counterclaim, set-off, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and the obligations and liabilities of
Borrower hereunder shall in no way be released, discharged, or otherwise
affected (except as expressly provided herein) by reason of:  (a) any bankruptcy proceeding relating to
Owner, Senior Mezz Borrower, Intermediate Mezz Borrower, Borrower, any General
Partner, or any indemnitor, or any action taken with respect to this Agreement
or any other Loan Document by any trustee or receiver of Owner, Senior Mezz
Borrower, Intermediate Mezz Borrower, Borrower or any such General Partner or
indemnitor, or by any court, in any such proceeding; (b) any claim which
Borrower has or might have against Lender; (c) any default or failure on the
part of Lender to perform or comply with any of the terms hereof or of any
other agreement with Borrower; or (d) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not Borrower shall have
notice or knowledge of any of the foregoing.


 


Section 7.25. 
Publicity.  All promotional
news releases, publicity or advertising by Borrower or its Affiliates through
any media intended to reach the general public shall not refer to the Loan
Documents or the financing evidenced by the Loan Documents, or to Lender or to
any of its Affiliates without the prior written approval of Lender or such
Affiliate, as applicable, in each instance, such approval not to be
unreasonably withheld or delayed.  Lender
shall be authorized to provide information relating to the Collateral, the Loan
and matters relating thereto to rating agencies, underwriters, potential
securities investors, auditors, regulatory authorities and to any Persons which
may be entitled to such information by operation of law and may use basic
transaction information (including, without limitation, the name of Borrower,
the name and 


 


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address of the Premises and the Loan Amount) in
press releases or other marketing materials.


 


Section 7.26. 
Securitization Opinions. 
In the event the Loan is included as an asset of a Securitization by
Lender or any of its Affiliates, Borrower shall, within fifteen (15) Business
Days after Lender’s written request therefor, at Lender’s sole cost and
expense, deliver opinions in form and substance and delivered by counsel
reasonably acceptable to Lender and the Rating Agency, as may be reasonably
required by Lender and/or the Rating Agency in connection with such
securitization.  Borrower’s failure to
deliver the opinions required hereby within such fifteen (15) Business Day
period shall constitute an “Event of Default” hereunder.  Notwithstanding the foregoing, in no event
shall Borrower be required to deliver a “10b-5 opinion” in connection with any
Securitization.  Notwithstanding the
foregoing, Borrower shall, upon demand, reimburse Lender for up to $10,000 of
the cost incurred by Lender pursuant to the terms of this Section 7.26 and
Lender shall only be obligated to pay reasonable costs and expenses upon
receipt of detailed billing information containing the description of services
rendered, attorneys’ billing rates, number of hours worked and other
information as Lender may reasonably require.


 


Section 7.27. 
Sale of Loan, Participations, Securitization.  (a) Nothing contained in this Agreement shall
be construed as preventing Lender, at any time after the date hereof, from
selling, pledging, assigning or transferring the Note and in connection with
any such sale, pledge, assignment or transfer from assigning this Agreement and
transferring possession of the Collateral, if any, in Lender’s possession, to
the purchaser of the Note.  Upon any
sale, pledge, assignment or transfer of the Note and upon assignment of this
Agreement and a transfer in connection therewith of possession of the
Collateral, if any, in Lender’s possession to the purchaser of the Note, Lender
shall be released and discharged from any liability or responsibility with
respect to the Loan Documents and references to “Lender” in this
Agreement shall, with respect to any matters thereafter occurring, be deemed to
be references to the purchaser of the Note. 
Borrower or any agent of Borrower acting on its behalf shall maintain at
its offices a copy of each notice of a sale, pledge, assignment or other
transfer of the Loan or a portion thereof as a whole loan delivered to it and a
register (the “Register”) for the recordation of the names and
addresses of each Lender and the principal amount of the Loan or portion
thereof owing to each Lender from time to time. 
The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrower may treat each Person whose name is recorded in
the Register as the owner of the Loan or portion thereof recorded therein,
hereunder for all purposes of this Agreement. 
A sale, pledge, assignment or other transfer of the Loan or a portion
thereof as a whole loan, whether or not evidenced by a Note, shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and, if applicable, each Note shall expressly so provide).  The Register shall be available for
inspection by each Lender at any reasonable time and from time to time upon
reasonable prior notice.  Borrower hereby
appoints Lender as its agent to maintain the Register and Lender hereby accepts
such appointment.  Lender shall indemnify
and hold harmless Borrower for any losses resulting from Lender’s failure to
maintain the Register and no failure by Lender, as Borrower’s agent (solely for
the purposes of maintaining the Register), shall result in a default hereunder
or under any other Loan Document or otherwise subject Borrower to any
liability.


 


(b)           Borrower
acknowledges that Lender may on or after the Closing Date sell and assign
participation interests in and to the Loan, or pledge, hypothecate or encumber,
or sell and 


 


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assign all or any portion of the Loan, to or with
such domestic or foreign banks, insurance companies, pension funds, trusts or
other institutional lenders or other Persons, parties or investors (including,
without limitation, grantor trusts, owner trusts, special purpose corporations,
real estate investment trusts or other similar or comparable investment
vehicles) as may be selected by Lender in its sole and absolute discretion and
on terms and conditions satisfactory to Lender in its sole and absolute
discretion.  Borrower and all Affiliates
of Borrower shall cooperate in all respects with Lender in connection with the
sale of participation interests in, or the pledge, hypothecation or encumbrance
or sale of all or any portion of, the Loan, and shall, in connection therewith,
at Borrower’s sole cost and expense with respect to the first request made by
Lender following the Closing Date and at Lender’s expense for any additional
requests thereafter, execute and deliver such estoppels, certificates,
instruments and documents as may be reasonably requested by Lender.  Borrower grants to Lender the right to
distribute financial and other information concerning Borrower, the Collateral,
and all other pertinent information with respect to the Loan to any Person who
has purchased a participation interest in the Loan, or who has purchased the
Loan, or who has made a loan to Lender secured by the Loan or who has expressed
an interest in purchasing a participation interest in the Loan, or expressed an
interest in purchasing the Loan or the making of a loan to Lender secured by
the Loan.  If requested by Lender,
Borrower shall execute and deliver, and shall cause each Affiliate of Borrower
to execute and deliver, at no cost or expense to Borrower, such documents and
instruments as may be necessary to split the Loan into two or more loans
evidenced by separate sets of notes and secured by separate sets of other
related Loan Documents to the full extent required by Lender to facilitate the
sale of participation interests in the Loan or the sale of the Loan or the
making of a loan to Lender secured by the Loan, it being agreed that (a) any
such splitting of the Loan will not adversely affect or diminish the rights of
Borrower as presently set forth herein and in the other Loan Documents and will
not increase the respective obligations and liabilities of Borrower or any
other Person associated or connected with the Loan or the Collateral, (b) the
Loan Documents securing the Loan as so split will have such priority of lien as
may be specified by Lender, and (c) the retained interest of Lender in the Loan
as so split shall be allocated to or among one or more of such separate loans
in a manner specified by Lender in its sole and absolute discretion.  From and after the effective date of any
assignment of all or any portion of the Loan to any Person (an “Assignee”)
(a) such Assignee shall be a party hereto and to each of the other Loan Documents
to the extent of the applicable percentage or percentages assigned to such
Assignee and, except as otherwise specified herein, shall succeed to the rights
and obligations of Lender hereunder in respect of such applicable percentage or
percentages and (b) Lender shall relinquish its rights and be released from its
obligations hereunder and under the Loan Documents to the extent of such
applicable percentage or percentages. 
The liabilities of Lender and each of the other Assignees shall be
separate and not joint and several. 
Neither Lender nor any Assignee shall be responsible for the obligations
of any other Assignee.  Borrower
acknowledges that the information provided by Borrower to Lender may be
incorporated into the offering documents for a Securitization and to the
fullest extent permitted, Borrower irrevocably waives all rights, if any, to
prohibit such disclosures including, without limitation, any right of privacy.  Lender and each Rating Agency shall be
entitled to rely on the information supplied by, or on behalf of, Borrower and
Borrower indemnifies Lender as to any liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses, (including, without
limitation, reasonable attorney’s fees and expenses, whether incurred within or
outside the judicial process) that arise out of or are based upon any untrue
statement or alleged 


 


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untrue statement of any material fact contained in
such information or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in such
information or necessary in order to make the statements in such information,
or in light of the circumstances under which they were made, not misleading.


 


(c)           Lender,
at its option, may elect to effect a Securitization by means of the issuance of
certificates of interest therein or notes secured thereby (the “Securities”)
rated by one or more Rating Agencies.  In
such event and upon request by Lender to seek to effect such a Securitization,
Borrower shall promptly thereafter cooperate in all reasonable respects with
Lender in the Securitization including, without limitation, providing such
information as may be requested in connection with the preparation of a private
placement memorandum or registration statement required to privately place or
publicly distribute the Securities in a manner which does not conflict with
federal or state securities laws.


 


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


 


Section 7.29. 
Mortgage Loan Defaults.


 


(a)           Without
limiting the generality of the other provisions of this Agreement, and without
waiving or releasing Borrower from any of its obligations hereunder, if there
shall occur any Event of Default under the Mortgage Loan Documents (without
regard to any other defenses or offset rights Owner may have against Mortgage
Lender), or under the Senior Mezz Documents (without regard to any defenses or
offset rights Senior Mezz Borrower may have against Senior Mezz Lender) or
under the Intermediate Mezz Documents (without regard to any defenses or offset
rights Intermediate Mezz Borrower may have against Intermediate Mezz 


 


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


 


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


 


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


 


(d)           If
Lender shall receive a copy of any notice of default under the Mortgage Loan
Documents sent by Mortgage Lender to Owner, under the Senior Mezz Loan
Documents sent by Senior Mezz Lender to Senior Mezz Borrower or under the
Intermediate Mezz Loan Documents 


 


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


 


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


 


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


 


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


 


ARTICLE VIII. 
EXCULPATION


 


Section 8.01. 
Exculpation. 
Notwithstanding anything herein or in any other Loan Document to the
contrary, except as otherwise set forth in this Section 8.01 to the contrary,
Lender shall not enforce the liability and obligation of Borrower and (a) if
Borrower is a partnership, its constituent partners or any of their respective
partners, (b) if Borrower is a trust, 


 


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its beneficiaries or any of their respective
Partners (as hereinafter defined), (c) if Borrower is a corporation, any of its
shareholders, directors, principals, officers or employees, or (d) if Borrower
is a limited liability company, any of its members and their respective legal,
equitable and beneficial owner (the Persons described in the foregoing clauses
(a) - (d), as the case may be, are hereinafter referred to as the “Partners”)
to perform and observe the obligations contained in this Agreement or any of
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower or the Partners, except that Lender may bring
a UCC sale, action for specific performance, or other appropriate action or
proceeding (including, without limitation, an action to obtain a deficiency
judgment) solely for the purpose of enabling Lender to realize upon (i)
Borrower’s interest in the Collateral and (ii) any other collateral given to
Lender under the Loan Documents (the “Default Collateral”); provided,
however, that any judgment in any such action or proceeding shall be
enforceable against Borrower and the Partners only to the extent of any such
Default Collateral.  The provisions of
this Section shall not, however, (a) impair the validity of the Debt evidenced
by the Note or in any way affect or impair the lien of this Agreement or any of
the other Loan Documents or the right of Lender to enforce this Agreement
following the occurrence of an Event of Default; (b) impair the right of Lender
to name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under this Agreement; (c) affect the validity or
enforceability of the Note, this Agreement, or any of the other Loan Documents,
or impair the right of Lender to seek a personal judgment against the
Guarantor; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the right of Lender to bring suit for a monetary judgment
with respect to damages incurred by Lender resulting from fraud or intentional misrepresentation
by Borrower, or any other Person in connection with this Agreement, the Note or
the other Loan Documents, and the foregoing provisions shall not modify,
diminish or discharge the liability of Borrower or the Partners with respect to
same; (f) impair the right of Lender to bring suit for a monetary judgment to
obtain the Recourse Distributions received by Borrower including, without
limitation, the right to bring suit for a monetary judgement to proceed against
any Partner, to the extent of any such Recourse Distributions theretofore
distributed to and received by such Partner, and the foregoing provisions shall
not modify, diminish or discharge the liability of Borrower or the Partners
with respect to same; (g) impair the right of Lender to bring suit for a
monetary judgment with respect to Borrower’s misappropriation of tenant
security deposits or Rent, and the foregoing provisions shall not modify,
diminish or discharge the liability of Borrower or the Partners with respect to
same; (h) impair the right of Lender to obtain insurance proceeds due to Lender
pursuant to this Agreement; (i) impair the right of Lender to enforce the
provisions of Sections 2.02(g) and 4.01, inclusive of this Agreement, even
after repayment in full by Borrower of the Debt; (j) prevent or in any way
hinder Lender from exercising, or constitute a defense, or counterclaim, or
other basis for relief in respect of the exercise of, any other remedy against
any or all of the collateral securing the Note as provided in the Loan
Documents; (k) impair the right of Lender to bring suit for a monetary judgment
with respect to damages incurred by Lender resulting from any misapplication or
conversion of Loss Proceeds (as defined in the Mortgage), and the foregoing
provisions shall not modify, diminish or discharge the liability of Borrower or
the Partners with respect to same; (l) impair the right of Lender to sue for,
seek or demand a deficiency judgment against Borrower solely for the purpose of
foreclosing the Premises or any part thereof, or realizing upon the Default
Collateral; provided, however, that any such deficiency judgment
referred to in this clause (l) shall be enforceable against Borrower and the
Partners only to the extent of any of the Default Collateral; (m) impair 


 


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the ability of Lender to bring suit for monetary
judgment with respect to damages incurred by Lender resulting from arson or
waste to or of the Premises and/or the Collateral or damage to the Premises
committed by Borrower or its Affiliates; (n) impair the right of Lender to
bring a suit for a monetary judgment in the event of the exercise of any right
or remedy under any federal, state or local forfeiture laws resulting in the
loss of the lien of this Agreement, or the priority thereof, against the Collateral;
(o) be deemed a waiver of any right which Lender may have under Sections
506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Code to file a
claim for the full amount of the Debt or to require that all collateral shall
continue to secure all of the Debt; (p) impair the right of Lender to bring
suit for monetary judgment with respect to damages incurred by Lender resulting
from any losses resulting from any claims, actions or proceedings initiated by
Borrower (or any Affiliate of Borrower) alleging that the relationship of
Borrower and Lender is that of joint venturers, partners, tenants in common,
joint tenants or any relationship other than that of debtor and creditor; (q) impair
the right of Lender to bring suit for a monetary judgment for damages incurred
by Lender in the event of a Transfer in violation of the provisions of Section
2.11 hereof, including, without limitation, the failure to obtain Lender’s
consent to a Transfer as, when and to the extent required thereunder; (r)
impair the right of Lender to bring suit for a monetary judgment in the event
that Borrower moves its principal place of business or its books and records
relating to the Collateral which are governed by the UCC, or changes its name,
its jurisdiction of organization, type of organization or other legal structure
or, if it has one, organizational identification number, without first giving
Lender thirty (30) days prior written notice or (s) impair the right of Lender
to bring suit for a monetary judgment in the event that Borrower changes its
name of otherwise does anything which would make the information set forth in
any UCC Financing Statements relating to the Collateral materially misleading
without giving Lender thirty (30) days prior written notice thereof.  The provisions of this Section shall be
inapplicable to Borrower if (a) any proceeding, action, petition or filing
under the Bankruptcy Code, or any similar state or federal law now or hereafter
in effect relating to bankruptcy, reorganization or insolvency, or the
arrangement or adjustment of debts, shall be filed by, consented to or
acquiesced in by or with respect to Borrower, or if Borrower shall institute
any proceeding for its dissolution or liquidation, or shall make an assignment
for the benefit of creditors or (b) Borrower or any Affiliate contests or in
any material way interferes with, directly or indirectly (collectively, a “Contest”)
any UCC sale or other material remedy exercised by Lender upon the occurrence
of any Event of Default under the Loan Documents whether by making any motion,
bringing any counterclaim, claiming any defense, seeking any injunction or
other restraint, commencing any action, or otherwise (provided that if any such
Person obtains a non-appealable order successfully asserting a Contest,
Borrower shall have no liability under this clause (b)) or (c) Borrower (i)
fails to cause Owner to deliver notice of default under the Ground Lease to
Lender or any other Person designated in writing by Lender or (ii) fails to
prevent Owner from amending or modifying the Ground Lease without the prior
written consent of Lender, in which event Lender shall have recourse against
all of the assets of Borrower including, without limitation, any right, title
and interest of Borrower in and to the Premises, and any partnership interests
in Borrower (but excluding the other assets of such Partners to the extent
Lender would not have had recourse thereto other than in accordance with the
provisions of this Section).


 


*  *  * 
*  *


 


62





















 


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


 


 


	
  Borrower’s Organizational
  Identification

  	
  MMRDH JUNIOR MEZZ HOLDING

  
	
  Number:  3829579

  	
  COMPANY LLC, Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc S. Gordon

  	
   

  
	
   

  	
   

  	
  Name: Marc S. Gordon

  
	
   

  	
   

  	
  Title: Authorized
  Signatory

  
					



 





















 


EXHIBIT A


 


Description of the Premises


 


 


 


2





















 


EXHIBIT B


 


Unpaid Principal Balance of Mortgage Loan:  $473,750,000.00


 


Unpaid Principal Balance of Senior Mezz Loan:  $51,250,000.00


 


Unpaid Principal balance of Intermediate Mezz Loan:
$30,000,000.00


 





















 


EXHIBIT C


 


CERTAIN DEFINED TERMS


 


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


 


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


 


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


 


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


 


“Allocated Loan Amount”
shall have the meaning set forth on Schedule 5 attached hereto.


 


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


 


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


 


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


 


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


 


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


 


“Collateral”
shall mean (a) all Equity Interests, (b) all additional Equity
Interests acquired by Borrower, including all rights, options, subscriptions
and/or warrants acquired by Borrower with respect to additional Equity
Interests in any Pledged Entity, (c) all rights to payment of all monetary
obligations owed to Borrower, if any, by a Pledged Entity, (d) the Lockbox
Account, including any and all funds from time to time credited to the Lockbox
Account; (e) the Accounts and all cash, checks, drafts, securities
entitlements, securities, securities accounts, funds or deposit accounts
maintained or deposited with Lender and other investment property,
certificates, instruments and other property, including, without limitation,
all deposits and/or wire transfers from time to time deposited or held in,
credited to or made to any of the foregoing; (f) all interest, dividends, cash,
instruments, securities, securities entitlements and other investment property,
and other property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing or purchased
with funds from the Accounts; (g) all of Borrower’s rights in the Rate Cap
Agreement; (h) all rights of Borrower in, to and under Intermediate Mezz
Borrower’s certificate of formation, limited liability company agreement and
all other organizational documents of Owner (collectively, the 


 


1





















 


“Intermediate Mezz Borrower Organizational
Documents”), or any other agreement or instrument relating to the Pledged
Interests, including, without limitation, (i) all rights of Borrower to receive
moneys due and to become due under or pursuant to the Intermediate Mezz
Borrower Organizational Documents, (ii) all rights of Borrower to receive proceeds
of any insurance, indemnity, warranty or guaranty with respect to the
Intermediate Mezz Borrower Organizational Documents, (iii) all claims of
Borrower for damages arising out of or for breach of or default under the
Intermediate Mezz Borrower Organizational Documents and (iv) any right of
Borrower to perform thereunder and to compel performance and otherwise exercise
all rights and remedies thereunder; and (i) all Proceeds.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Distributions” shall
mean all dividends, distributions, liquidation proceeds, cash, profits,
instruments and other property and economic benefits to which Borrower is
entitled with respect to any one or more Equity Interests, whether or not
received by or otherwise distributed to Borrower, in each case whether cash or
non-cash and whether such dividends, distributions, liquidation proceeds, cash,
profits, instruments and other property and economic benefits are 


 


2





















 


paid or distributed by the Pledged Entities
in respect of operating profits, sales, exchanges, refinancings, condemnations
or insured losses of the relevant Pledged Entity’s assets, the liquidation of
such Pledge Entity’s assets and affairs, management fees, guaranteed payments,
repayment of loans, or reimbursement of expenses or otherwise in respect of or
in exchange for any or all of the Equity Interests.


 


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


 


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


 


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


 


“ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as amended from time to
time, and any successor statute thereto, and the regulations promulgated
thereunder.


 


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


 


3





















 


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


 


“Exit Additional Interest
Payment” shall have the meaning set forth in Section 6.02.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Lease” means all
leases and other agreements or arrangements affecting the use, enjoyment or
occupancy of all or any portion of the Premises now in effect or hereafter
entered into (including, without limitation, all lettings, subleases, licenses,
concessions, tenancies and 


 


4





















 


other occupancy agreements covering or
encumbering all or any portion of the Premises), whether before or after the
filing by or against Owner of any petition for relief under the Bankruptcy
Code, together with any guarantees, supplements, amendments, modifications,
extensions and renewals of the same, and all additional remainders, reversions,
and other rights and estates appurtenant thereto.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Lockbox Account”
shall mean account number 5000000074400 established
with Wachovia Bank, National Association in the name “Wachovia Bank, National
Association, as secured party of MMRDH Junior Mezz Holding Company LLC”.


 


5





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


7





















 


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


 


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


 


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


 


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


 


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


 


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


 


“Proceeds” shall mean
(a) all “proceeds” (as such term is defined in the UCC) and “products” (as
such term is defined in the UCC) with respect to the Collateral and
(b) includes, without limitation: 
whatever is receivable or received when Collateral is sold, collected, 


 


8





















 


exchanged or otherwise disposed of, whether
such disposition is voluntary or involuntary; all rights to payment, including
return premiums, with respect to any insurance relating thereto; all interest,
dividends and other property receivable or received on account of the
Collateral or proceeds thereof, (including all Distributions or other income
from the Equity Interests, all collections thereon or all Distributions with
respect thereto); and proceeds of any indemnity or guaranty payable to Borrower
or Lender from time to time with respect to any Collateral.


 


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


 


“Rate Cap Agreement”
shall mean that certain interest rate protection agreement (together with the
confirmation and schedules relating thereto) with a notional amount which shall
not at any time be less than the Principal Amount and a LIBOR strike price
equal to four and one-quarter percent (4.25%) entered into by Borrower in
accordance with the terms hereof or of the other Loan Documents and any similar
interest rate cap or collar agreements subsequently entered into in replacement
or substitution therefor by Borrower with respect to the Loan.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Solvent” shall mean,
as to any Person, that (a) the sum of the assets of such Person, at a fair
valuation, exceeds its liabilities, including contingent liabilities, (b) such
Person has sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (c) such Person has not incurred
debts, and does not intend to incur debts, beyond 


 


9





















 


its ability to pay such debts as they
mature.  For purposes of this definition,
“debt” means any liability on a claim, and “claim” means (a) a
right to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (b) a right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, or
unsecured.  With respect to any such
contingent liabilities, such liabilities shall be computed in accordance with
GAAP at the amount which, in light of all the facts and circumstances existing
at the time, represents the amount which can reasonably be expected to become
an actual or matured liability.


 


“Spread Maintenance
Premium” shall mean (a) the amount of the prepayment, multiplied by (b) the
LIBOR Margin (as defined in the Note) multiplied by (c) a fraction, the
numerator of which is the number of full and partial months from such
prepayment date through the end of the first (1st) Loan Year and the
denominator of which is 12; provided, however, if the Loan is repaid in whole
or in part as a result of an IPO at any time prior to the Payment Date
occurring in July, 2006, the Spread Maintenance Premium shall be calculated
based on (a) the amount of the prepayment multiplied by (b) the LIBOR Margin
multiplied by (c) a fraction the numerator of which is the number of full and
partial months from said prepayment date through the Payment Date occurring in January,
2006, and the denominator of which is 12.


 


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


 


“Transfer” shall mean
any conveying, assigning, selling, mortgaging, encumbering, pledging,
hypothecating, granting of a security interest in, granting of options with
respect to or other disposition (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise and whether or not for
consideration or of record) of all or any portion of any legal or beneficial
interest in the Collateral, Borrower, Senior Mezz Borrower, Intermediate Mezz
Borrower, Owner, the Premises or any other portion of the Property (as defined
in the Mortgage); provided, however, notwithstanding the foregoing or anything
to the contrary contained in any other Loan Document, “Transfer” shall not
include (a) any sale, transfer, conveyance, encumbrance or assignment of any
direct or indirect legal or beneficial ownership interest in Borrower,
provided, in each case, that no Person or group of Affiliated Persons which did
not, as of the Closing Date, own 49% or more of Borrower, obtains a direct or
indirect ownership interest in Borrower of more than 49% or obtains, directly
or indirectly, Control of Borrower (other than a Person to whom Control is attributed
under the Securities Act solely by virtue of being a director of a public
company and other than, in connection with an IPO, to a Person with respect to
which Edward Scheetz or David Hamamoto have the title and responsibilities of a
chief executive officer, president and/or chief financial officer and a seat on
the board of directors of the public company formed in connection with the IPO
so long as Edward Scheetz or David Hamamoto remain actively involved in the
management of the operations of Borrower) unless such Person or group of
Affiliated Persons (the “Sub Owners”) are owned by a Person or group of
Affiliated Persons (the “Parent Owner”), which owned 49% or more of the
direct and/or indirect legal or beneficial ownership interest in Borrower prior
to such transfer and either (A) Borrower had previously delivered an opinion of
counsel which discussed the substantive non-consolidation of such Parent Owner
in form and substance and prepared by counsel reasonably acceptable to Lender
or (B) Sub-Owner owns such interest in 


 


10





















 


Borrower through ownership of a Person or
group of Affiliated Persons with respect to which such a substantive
non-consolidation opinion was previously delivered to Lender or (b) subsequent
to an IPO, transfers of publicly traded stock on a national stock exchange or
on the NASDAQ Stock Market in the normal course of business and not in
connection with a tender offer or a sale of the public Person resulting from
the IPO or substantially all of the assets of such Person.


 


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


 


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


 


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


 


11





















 


Schedule 1


 


Corporations, Limited Liability Corporations and Partnerships


 


 


MMRDH Intermediate Mezz Holding Company LLC, a Delaware limited
liability company


 





















 


Schedule 2


 


Ownership Chart


 


 


 





















 


Schedule 3


 


Intentionally Omitted.


 





















 


Schedule 4


 


Stock Power


 


 


A transfer power in form and
substance acceptable to Lender.


 





















 


Schedule 5


 


Allocated Loan Amount


 


 




	
  Property

  	
   

  	
  Allocated Loan Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Hudson Hotel

  	
   

  	
  $9,827,586.21

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Morgans Hotel

  	
   

  	
  $1,810,344.83

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Royalton Hotel

  	
   

  	
  $2,607,758.62

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Delano Hotel

  	
   

  	
  $5,668,103.45

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Mondrian Hotel

  	
   

  	
  $5,086,206.90

  	
   

  






 





















 


CONSENT AND WAIVER


 


As a material inducement for Lender to enter into the Loan and Security
Agreement (“Loan Agreement”) dated June 29, 2005 between MMRDH JUNIOR MEZZ
HOLDING COMPANY LLC (“Borrower”) and WACHOVIA BANK, NATIONAL ASSOCIATION (“Lender”),
and for valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned, as of the 29th day of June, 2005, hereby
consents to the pledge of the Collateral contained in the Loan Agreement and
ratifies all encumbrances and terms contained therein.


 


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


 


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


 


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


 


The undersigned agrees that
neither the execution and delivery of the Loan Agreement, the enforcement by
Lender of any of its rights thereunder, nor the transfer (or agreement to 


 





















 


transfer) by Lender of any
of its rights in the Pledged Entities or under the Loan Agreement shall
constitute a default under the Organizational Documents, and the undersigned
expressly waives any rights it may have under the Organizational Documents as a
result of the foregoing.  The undersigned
hereby waives any and all rights under the Organizational Documents which,
whether exercised by the undersigned or not, would prevent, inhibit or
interfere with the granting of a security interest in the Collateral to Lender,
the foreclosure of such security interest in the Collateral by Lender or the
full realization by Lender of any of its other rights under the Loan Agreement.


 


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


 


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


 


IN WITNESS WHEREOF, the
undersigned has duly executed this consent and waiver as of this 29th day of June,
2005.


 


	
   

  	
  MMRDH INTERMEDIATE MEZZ
  HOLDING

  
	
   

  	
  COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Marc S. Gordon

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Marc S. Gordon

  
	
   

  	
   

  	
   

  	
  Title: Authorized
  Signatory