Document:

exv10w1

Exhibit 10.1

 

Published CUSIP Number: 70509WAA6

CREDIT AGREEMENT

Dated as of July 8, 2010

among

PEBBLEBROOK HOTEL, L.P.,

as the Borrower,

PEBBLEBROOK HOTEL TRUST,

as the Parent REIT and a Guarantor,

CERTAIN SUBSIDIARIES OF THE BORROWER,

as Guarantors,

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and

L/C Issuer,

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,

and

WELLS FARGO SECURITIES, LLC,

as Joint Lead Arrangers and Joint Book Runners

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agent

U.S. BANK NATIONAL ASSOCIATION,

as Documentation Agent

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Section	 	Page	 
	ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	1.01 Defined Terms
	 	 	1	 
	1.02 Other Interpretive Provisions
	 	 	27	 
	1.03 Accounting Terms
	 	 	28	 
	1.04 Rounding
	 	 	29	 
	1.05 Times of Day
	 	 	29	 
	1.06 Letter of Credit Amounts
	 	 	29	 
	1.07 Addition/Removal of Borrowing Base Properties
	 	 	29	 
	ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS
	 	 	33	 
	2.01 Committed Loans
	 	 	33	 
	2.02 Borrowings, Conversions and Continuations of Committed Loans
	 	 	33	 
	2.03 Letters of Credit
	 	 	35	 
	2.04 Swing Line Loans
	 	 	41	 
	2.05 Prepayments
	 	 	43	 
	2.06 Termination or Reduction of Commitments
	 	 	43	 
	2.07 Repayment of Loans
	 	 	44	 
	2.08 Interest
	 	 	44	 
	2.09 Fees
	 	 	44	 
	2.10 Computation of Interest and Fees; Retroactive Adjustments of Applicable
Margin
	 	 	45	 
	2.11 Evidence of Debt
	 	 	45	 
	2.12 Payments Generally; Administrative Agent’s Clawback
	 	 	46	 
	2.13 Sharing of Payments by Lenders
	 	 	47	 
	2.14 Extension of Maturity Date
	 	 	47	 
	2.15 Increase in Commitments
	 	 	48	 
	2.16 [Reserved]
	 	 	49	 
	2.17 Cash Collateral
	 	 	49	 
	2.18 Defaulting Lenders
	 	 	50	 
	ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	52	 
	3.01 Taxes
	 	 	52	 
	3.02 Illegality
	 	 	54	 
	3.03 Inability to Determine Rates
	 	 	55	 
	3.04 Increased Costs; Reserves on Eurodollar Rate Loans
	 	 	55	 
	3.05 Compensation for Losses
	 	 	56	 
	3.06 Mitigation Obligations; Replacement of Lenders
	 	 	57	 
	3.07 Survival
	 	 	57	 
	ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	 	 	57	 
	4.01 Conditions of Initial Credit Extension
	 	 	57	 
	4.02 Conditions to all Credit Extensions
	 	 	60	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES
	 	 	60	 
	5.01 Existence, Qualification and Power
	 	 	60	 
	5.02 Authorization; No Contravention
	 	 	60	 
	5.03 Governmental Authorization; Other Consents
	 	 	61	 
	5.04 Binding Effect
	 	 	61	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	61	 

i

 

	 	 	 	 	 
	Section	 	Page	 
	5.06 Litigation
	 	 	61	 
	5.07 No Default
	 	 	62	 
	5.08 Ownership of Property; Liens; Investments
	 	 	62	 
	5.09 Environmental Compliance
	 	 	62	 
	5.10 Insurance
	 	 	63	 
	5.11 Taxes
	 	 	63	 
	5.12 ERISA Compliance
	 	 	64	 
	5.13 Subsidiaries; Equity Interests
	 	 	64	 
	5.14 Margin Regulations; Investment Company Act
	 	 	65	 
	5.15 Disclosure
	 	 	65	 
	5.16 Compliance with Laws
	 	 	65	 
	5.17 Taxpayer Identification Number
	 	 	65	 
	5.18 Intellectual Property; Licenses, Etc.
	 	 	65	 
	5.19 Solvency
	 	 	66	 
	5.20 Casualty, Etc
	 	 	66	 
	5.21 Labor Matters
	 	 	66	 
	5.22 REIT Status
	 	 	66	 
	5.23 Collateral Documents
	 	 	66	 
	5.24 Borrowing Base Properties
	 	 	66	 
	ARTICLE VI. AFFIRMATIVE COVENANTS
	 	 	66	 
	6.01 Financial Statements
	 	 	66	 
	6.02 Certificates; Other Information
	 	 	67	 
	6.03 Notices
	 	 	69	 
	6.04 Payment of Obligations
	 	 	69	 
	6.05 Preservation of Existence, Etc
	 	 	69	 
	6.06 Maintenance of Properties
	 	 	70	 
	6.07 Maintenance of Insurance
	 	 	70	 
	6.08 Compliance with Laws and Contractual Obligations
	 	 	70	 
	6.09 Books and Records
	 	 	70	 
	6.10 Inspection Rights
	 	 	70	 
	6.11 Use of Proceeds
	 	 	70	 
	6.12 Additional Guarantors
	 	 	70	 
	6.13 Pledged Equity Interests; Real Property and Other Collateral
	 	 	71	 
	6.14 Further Assurances
	 	 	72	 
	6.15 Compliance with Terms of Approved Ground Leases; Material Easement
Agreements
	 	 	72	 
	6.16 Environmental Assessment Report
	 	 	74	 
	6.17 Borrowing Base Entity SPE/Separateness Requirements; New York Borrowing
Base Properties
	 	 	75	 
	6.18 Additional Insurance Requirements for Borrowing Base Properties
	 	 	75	 
	6.19 Updated Appraisals
	 	 	77	 
	6.20 Title Insurance Policy
	 	 	78	 
	ARTICLE VII. NEGATIVE COVENANTS
	 	 	78	 
	7.01 Liens
	 	 	78	 
	7.02 Investments
	 	 	79	 
	7.03 Indebtedness
	 	 	81	 

ii

 

	 	 	 	 	 
	Section	 	Page	 
	7.04 Fundamental Changes
	 	 	81	 
	7.05 Dispositions
	 	 	82	 
	7.06 Restricted Payments
	 	 	82	 
	7.07 Change in Nature of Business
	 	 	83	 
	7.08 Transactions with Affiliates
	 	 	83	 
	7.09 Burdensome Agreements
	 	 	83	 
	7.10 Use of Proceeds
	 	 	83	 
	7.11 Financial Covenants
	 	 	83	 
	7.12 Capital Expenditures
	 	 	84	 
	7.13 Accounting Changes
	 	 	84	 
	7.14 Ownership of Subsidiaries; Certain Real Property Assets
	 	 	84	 
	7.15 Leases
	 	 	85	 
	7.16 Sale Leasebacks
	 	 	85	 
	7.17 [Reserved]
	 	 	85	 
	7.18 Additional Borrowing Base Property Matters
	 	 	85	 
	7.19 Insurance Proceeds and Condemnation Awards
	 	 	85	 
	ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
	 	 	86	 
	8.01 Events of Default
	 	 	86	 
	8.02 Remedies Upon Event of Default
	 	 	88	 
	8.03 Application of Funds
	 	 	89	 
	8.04 Special Provision Regarding Failure to Comply with Certain Financial
Covenants
	 	 	89	 
	ARTICLE IX. ADMINISTRATIVE AGENT
	 	 	90	 
	9.01 Appointment and Authority
	 	 	90	 
	9.02 Rights as a Lender
	 	 	90	 
	9.03 Exculpatory Provisions
	 	 	90	 
	9.04 Reliance by Administrative Agent
	 	 	91	 
	9.05 Delegation of Duties
	 	 	91	 
	9.06 Resignation or Removal of Administrative Agent
	 	 	91	 
	9.07 Non-Reliance on Administrative Agent and Other Lenders
	 	 	92	 
	9.08 No Other Duties, Etc.
	 	 	92	 
	9.09 Administrative Agent May File Proofs of Claim
	 	 	92	 
	9.10 Collateral and Guaranty Matters
	 	 	93	 
	9.11 Secured Hedge Agreements
	 	 	94	 
	ARTICLE X. MISCELLANEOUS
	 	 	94	 
	10.01 Amendments, Etc.
	 	 	94	 
	10.02 Notices; Effectiveness; Electronic Communication
	 	 	95	 
	10.03 No Waiver; Cumulative Remedies; Enforcement
	 	 	97	 
	10.04 Expenses; Indemnity; Damage Waiver
	 	 	97	 
	10.05 Payments Set Aside
	 	 	99	 
	10.06 Successors and Assigns
	 	 	99	 
	10.07 Treatment of Certain Information; Confidentiality
	 	 	102	 
	10.08 Right of Setoff
	 	 	103	 
	10.09 Interest Rate Limitation
	 	 	103	 
	10.10 Counterparts; Integration; Effectiveness
	 	 	103	 
	10.11 Survival of Representations and Warranties
	 	 	103	 
	10.12 Severability
	 	 	104	 

iii

 

	 	 	 	 	 
	Section	 	Page	 
	10.13 Replacement of Lenders
	 	 	104	 
	10.14 Governing Law; Jurisdiction; Etc.
	 	 	104	 
	10.15 Waiver of Jury Trial
	 	 	105	 
	10.16 California Judicial Reference
	 	 	105	 
	10.17 No Advisory or Fiduciary Responsibility
	 	 	105	 
	10.18 Electronic Execution of Assignments and Certain Other Documents
	 	 	106	 
	10.19 USA PATRIOT Act
	 	 	106	 
	ARTICLE XI. GUARANTY
	 	 	106	 
	11.01 The Guaranty
	 	 	106	 
	11.02 Obligations Unconditional
	 	 	107	 
	11.03 Reinstatement
	 	 	107	 
	11.04 Certain Waivers
	 	 	108	 
	11.05 Remedies
	 	 	108	 
	11.06 Rights of Contribution
	 	 	108	 
	11.07 Guaranty of Payment; Continuing Guaranty
	 	 	108	 
	 
	 	 	 	 
	SIGNATURES
	 	 	S-1	 

iv

 

SCHEDULES

	 	 	 	 
	 	2.01

	 	Commitments and Applicable Percentages
	 	5.05

	 	Supplement to Interim Financial Statements
	 	5.06

	 	Litigation
	 	5.08(b)

	 	Existing Liens
	 	5.08(c)

	 	Existing Investments
	 	5.09

	 	Environmental Matters
	 	5.10

	 	Insurance
	 	5.12(d)

	 	Pension Plans
	 	5.13(a)

	 	Capital and Ownership Structure of Borrower and Subsidiaries
	 	5.13(b)

	 	Subsidiaries of Parent REIT, Borrower and Loan Parties
	 	5.18

	 	Intellectual Property Matters
	 	5.22

	 	Schedule of Taxable REIT Subsidiaries
	 	5.24(a)

	 	Borrowing Base Properties
	 	5.24(b)

	 	Approved Managers
	 	7.03

	 	Existing Indebtedness
	 	10.02

	 	Administrative Agent’s Office; Certain Addresses for Notices

EXHIBITS

	 	 	 	 
		 	 	Form of
	 	A

	 	Committed Loan Notice
	 	B

	 	Swing Line Loan Notice
	 	C

	 	Note
	 	D

	 	Compliance Certificate
	 	E-1

	 	Assignment and Assumption
	 	E-2

	 	Administrative Questionnaire
	 	F

	 	Mortgage
	 	G-1

	 	Opinion Matters (Counsel to Loan Parties)
	 	G-2

	 	Opinion Matters (Local Counsel to Loan Parties)
	 	H

	 	Joinder Agreement
	 	I

	 	Third Party Report Reliance Language
	 	J

	 	Request to Reduce Availability Regarding Recording Cost Amount

v

 

CREDIT AGREEMENT

     This CREDIT AGREEMENT (“Agreement”) is entered into as of July 8, 2010, among
PEBBLEBROOK HOTEL, L.P., a Delaware limited partnership (the “Borrower”), PEBBLEBROOK HOTEL
TRUST, a Maryland real estate investment trust (the “Parent REIT”), the other Persons party
hereto from time to time as Guarantors (as such term is defined herein), each lender from time to
time party hereto (collectively, the “Lenders” and individually, a “Lender”), and
BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

     The Borrower has requested that the Lenders provide a revolving credit facility, and the
Lenders are willing to do so on the terms and conditions set forth herein.

     In consideration of the mutual covenants and agreements herein contained, the parties hereto
covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

     1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings
set forth below:

     “Acceleration” has the meaning specified in Section 8.02.

     “Adjusted Unrestricted Cash” means, on any date, an amount, not less than zero
($0.00), equal to (A) to the extent the Borrower’s Unrestricted Cash is in excess of $100 million,
an amount equal to 100% of the Unrestricted Cash in excess of $100 million held by the Borrower; or
(B) to the extent the Unrestricted Cash held by the Borrower is less than or equal to $100 million,
an amount equal to the lesser of (i) the difference between such Unrestricted Cash balance of the
Borrower and $10 million and (ii) $10 million.

     “Administrative Agent” means Bank of America in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent.

     “Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or account as
the Administrative Agent may from time to time notify to the Borrower and the Lenders.

     “Administrative Questionnaire” means an Administrative Questionnaire in substantially
the form of Exhibit E-2 or any other form approved by the Administrative Agent.

     “Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.

     “Aggregate Commitments” means the Commitments of all the Lenders.

     “Agreement” means this Credit Agreement.

     “Applicable Laws” means, collectively, all applicable international, foreign, Federal,
state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the enforcement, interpretation
or administration thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each
case whether or not having the force of law.

     “Applicable Margin” means (a) from the Closing Date to the date on which the
Administrative Agent receives a Compliance Certificate pursuant to Section 6.02(b) for the
fiscal quarter ending June 30, 2010, 2.00% per annum for Base Rate Loans and Swing Line Loans and
3.00% per annum for Eurodollar Rate Loans and Letters of

 

Credit, and (b) thereafter, the applicable percentage per annum set forth below determined by
reference to the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate
received by the Administrative Agent pursuant to Section 6.02(b):

	 	 	 	 	 	 	 
	 	 	 	 	Eurodollar	 	Base Rate
	 	 	 	 	Rate Loans	 	Loans and
	Pricing	 	Consolidated	 	and	 	Swing Line
	Level	 	Leverage Ratio	 	Letters of Credit	 	Loans
	I
	 	< 3.0x
	 	3.00%
	 	2.00%
	II
	 	33.0 and <3.5x
	 	3.25%
	 	2.25%
	III
	 	33.5x and <4.0x
	 	3.50%
	 	2.50%
	IV
	 	34.0x and <4.5x
	 	3.75%
	 	2.75%
	V
	 	34.5x
	 	4.00%
	 	3.00%

     Any increase or decrease in the Applicable Margin resulting from a change in the Consolidated
Leverage Ratio shall become effective as of the first Business Day immediately following the last
day of the fiscal quarter for which such Compliance Certificate has been timely delivered pursuant
to Section 6.02(b); provided, however, that if a Compliance Certificate is
not delivered when due in accordance with such Section, then, upon the request of the Required
Lenders, Pricing Level V shall apply as of the first Business Day after the last day of the fiscal
quarter for which such Compliance Certificate was required to have been delivered and shall remain
in effect until the date on which such Compliance Certificate is actually delivered.

     Notwithstanding anything to the contrary contained in this definition, the determination of
the Applicable Margin for any period shall be subject to the provisions of Section 2.10(b).

     “Applicable Percentage” means with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s
Commitment at such time, subject to adjustment as provided in Section 2.18. If the
commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Commitments
have expired, then the Applicable Percentage of each Lender shall be determined based on the
Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent
assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of
such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such
Lender becomes a party hereto, as applicable.

     “Appraisal” means, with respect to each Borrowing Base Property, a FIRREA-compliant
MAI appraisal of such Borrowing Base Property ordered by the Administrative Agent, from an
appraiser and in form and substance acceptable to the Administrative Agent in its reasonable
discretion and initially dated as of a date not more than sixty (60) days prior to the date on
which such Borrowing Base Property is first included in the calculation of the Borrowing Base, and
any such new or updated appraisals meeting the foregoing requirements (other than the initial date)
obtained by the Administrative Agent pursuant to Section 6.19.

     “Appraised Value” means, as of any date of determination, for each Borrowing Base
Property existing as of such date, the most-recently obtained “as-is” appraised value of such
Borrowing Base Property as set forth in an Appraisal.

     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.

     “Approved Ground Lease” means a ground lease that is in form and substance reasonably
acceptable to the Administrative Agent and Supermajority Lenders (as evidenced by their approval of
the BBP Deliverables related to a proposed Borrowing Base Property that is subject to a ground
lease).

     “Approved Manager” means any of the managers identified on Schedule 5.24(b)
that are pre-approved by the Administrative Agent and the Supermajority Lenders as of the Closing
Date or are otherwise approved following

2

 

the Closing Date by the Administrative Agent and the
Supermajority Lenders and who are engaged to manage one
or more Borrowing Base Properties pursuant to management agreements in form and substance
reasonably acceptable to the Administrative Agent and the Supermajority Lenders between the
applicable manager and the TRS that has leased such Borrowing Base Property from the owner thereof.

     “Arranger” means Banc of America Securities LLC, in its capacity as a joint lead
arranger and a joint book runner.

     “Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

     “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section
10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit
E-1 or any other form approved by the Administrative Agent.

     “Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of
any Person, the capitalized amount thereof that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of the remaining lease payments under the relevant lease that
would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

     “Audited Financial Statements” means the audited consolidated balance sheet of the
Consolidated Parties for the fiscal year ended December 31, 2009, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the
Consolidated Parties, including the notes thereto.

     “Auto-Extension Letter of Credit” has the meaning specified in Section
2.03(b)(iii).

     “Availability Period” means the period from and including the Closing Date to the
earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments
pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender
to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to
Section 8.02.

     “Bank of America” means Bank of America, N.A. and its successors.

     “Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a)
the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate,” and (c) the Eurodollar Rate
plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including
Bank of America’s costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at, above, or below such
announced rate. Any change in such prime rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such change.

     “Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.

     “Base Rate Loan” means a Loan that bears interest based on the Base Rate.

     “BBP Deliverables” means, with respect to each Real Property for which the Borrower
seeks approval as a “Borrowing Base Property” the following items (except to the extent the
delivery thereof is otherwise waived in writing by the Administrative Agent and the Supermajority
Lenders):

     (a) except to the extent provided in Section 1.07(e) regarding any Real
Property located in the State of New York, evidence that counterparts of the Mortgage
related to such Real Property have been duly executed, acknowledged and delivered and are in
form suitable for filing or recording in all filing or recording offices that the
Administrative Agent may deem necessary or desirable in its reasonable

3

 

discretion in order
to create a valid first and subsisting Lien on the property described therein in favor of
the Administrative Agent for the benefit of the Secured Parties and that provision for
all filing, documentary, stamp, intangible and recording taxes and fees on the aggregate
amount to be secured thereby (which amount may be less than the aggregate amount of the
Aggregate Commitments in the reasonable discretion of the Administrative Agent acting upon
the advice of its counsel) shall have been made;

     (b) unexpired commitments for ALTA/ASCM mortgagee title insurance policies (with copies
of all title exceptions and encumbrances and indicia of ownership described therein) issued
by the Title Insurance Company (the “Mortgage Commitments”) with respect to each
such Real Property, which commitments represent the unconditional commitment by the Title
Insurance Company to issue a mortgagee title insurance policy in favor of the Administrative
Agent insuring that each of the Mortgages creates a valid and enforceable first priority
mortgage lien on the applicable Real Property described therein, free and clear of all
defects and encumbrances except Permitted Liens of the type described in Section
7.01(a), (c), (d), (f), (g) and (j), which
Mortgage Commitments shall be issued in an amount at least equal to the amount to be secured
by such Mortgage and otherwise be in form and substance satisfactory to the Administrative
Agent in its reasonable discretion and shall include such endorsements as are reasonably
requested by the Administrative Agent, (including tie-in, first loss and last dollar
endorsements, in each case, where available), and which Mortgage Commitments shall be
updated, renewed or replaced at least ten (10) days prior to the expiration of the
then-existing Mortgage Commitment provided as a condition to any extension of a temporary
waiver by the Administrative Agent in accordance with the provisions of Section
1.07(e) of the requirement for the execution, delivery and recording of a Mortgage or
the delivery of a Mortgage Policy relating thereto with respect to any such Real Property
located in the State of New York, together with evidence of the Borrower’s or the applicable
Loan Party’s provision for the payment of all premiums required to be paid as a condition to
the issuance of policies with respect to such Mortgage Commitments;

     (c) maps or plats of an ALTA/ASCM (or other form acceptable to the Administrative Agent
in its discretion) survey of the sites of the Real Property covered by the Mortgage
Commitments certified to the Administrative Agent and the Title Insurance Company in a
manner reasonably satisfactory to each of the Administrative Agent and the Title Insurance
Company, dated a date reasonably satisfactory to each of the Administrative Agent and the
Title Insurance Company by an independent professional licensed land surveyor duly
registered and licensed in the States in which the property described in such survey is
located and acceptable to the Administrative Agent, showing all buildings and other
improvements, any off-site improvements, the location of any easements, parking spaces,
rights of way, building set-back lines and other dimensional regulations and the absence of
encroachments, either by such improvements or on to such property, and other defects, other
than encroachments and other defects acceptable to the Administrative Agent, and which maps
or plats and the surveys on which they are based shall be sufficient to delete any standard
printed survey exception contained in the applicable Mortgage Policy and be made in
accordance with the 2005 ALTA/ACSM Minimum Standard Detail Requirements for Land Title
Surveys including items 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(a), 13 and 14 on Table
A thereof, together with photographs (interior and exterior) thereof, but which photographs
need not be part of the survey;

     (d) property condition, engineering, soils and other similar reports as to such Real
Properties ordered by the Borrower in connection with the potential acquisition, from
professional firms reasonably acceptable to the Administrative Agent, in each case including
the reliance language set forth on Exhibit I hereto (or such other reliance language
as is acceptable to the Administrative Agent in its reasonable discretion) and otherwise in
form and substance reasonably acceptable to the Administrative Agent;

     (e) copies of each Material Lease in existence with respect to such Real Property,
together with estoppels and subordination, nondisturbance and attornment agreements from any
tenants with respect to such Material Leases, in each case in form and substance reasonably
acceptable to the Administrative Agent; provided, however, that such subordination,
nondisturbance and attornment agreements for leases to a TRS shall provide that if the
Administrative Agent forecloses under a Mortgage or takes title to a Borrowing Base Property
by deed in lieu thereof, so long as the TRS is not in default (beyond any applicable cure
periods) under its Lease: (i) neither the TRS’ possession of the applicable Borrowing Base
Property nor the TRS’ rights and privileges under its Lease will be disturbed or terminated,
by such

4

 

foreclosure or deed in lieu thereof, and (ii) if the Administrative Agent (or its
nominee or designee) shall
succeed to the rights of a Loan Party under such Lease through foreclosure, deed in
lieu thereof or otherwise, or another person purchases the Borrowing Base Property at or
following foreclosure of the Mortgage, then the TRS shall attorn to and recognize the
Administrative Agent (or its nominee or designee) or such purchaser as the TRS’ landlord
under the Lease;

     (f) to the extent the applicable Real Property is subject to a ground lease pursuant to
which a Loan Party is the ground lessee, a copy of such ground lease (which must be an
Approved Ground Lease) and estoppel and consent agreements executed by each of the ground
lessors with respect to any such Approved Ground Lease, along with (1) a memorandum of lease
in recordable form with respect to such leasehold interest, executed and acknowledged by the
owner of the affected Real Property, as lessor, or (2) evidence that the applicable Approved
Ground Lease with respect to such leasehold interest or a memorandum thereof has been
recorded in all places necessary or desirable, in the Administrative Agent’s reasonable
judgment, to give constructive notice to third-party purchasers of such leasehold interest,
or (3) if such leasehold interest was acquired or subleased from the holder of a recorded
leasehold interest, the applicable assignment or sublease document, executed and
acknowledged by such holder, in each case in form sufficient to give such constructive
notice upon recordation and otherwise in form reasonably satisfactory to the Administrative
Agent;

     (g) evidence of the insurance required by the terms hereof or of the applicable
Mortgage related to such Real Property, in each case naming the Administrative Agent (for
the benefit of the Secured Parties) as additional insured (in the case of liability
insurance) or loss payee (in the case of hazard insurance);

     (h) an Appraisal of each of such Real Properties described in the Mortgages;

     (i) evidence as to (i) whether such Real Property is in an area designated by the
Federal Emergency Management Agency as having special flood or mud slide hazards (a
“Flood Hazard Property”) and (ii) if such Real Property is a Flood Hazard Property,
(A) whether the community in which such Real Property is located is participating in the
National Flood Insurance Program, (B) the applicable Borrower’s written acknowledgment of
receipt of written notification from the Administrative Agent as to the fact that such Real
Property is a Flood Hazard Property and as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood Insurance Program and (C)
copies of insurance policies or certificates of insurance of the Consolidated Parties
evidencing flood insurance satisfactory to the Administrative Agent and naming the
Administrative Agent as sole loss payee on behalf of the Lenders;

     (j) if no zoning endorsement has been issued with respect to the Mortgage Policy, then
evidence satisfactory to the Administrative Agent that such Real Property, and the uses of
such Real Property, are in compliance in all material respects with all applicable zoning
laws (the evidence submitted as to which should include the zoning designation made for such
Real Property, the permitted uses of each such Real Property under such zoning designation
and, if available, zoning requirements as to parking, lot size, ingress, egress and building
setbacks);

     (k) an environmental site assessment (which includes the reliance language set forth on
Exhibit I hereto, or such other reliance language as is acceptable to the
Administrative Agent in its reasonable discretion, or the Administrative Agent is otherwise
provided a reliance letter acceptable to the Administrative Agent in its reasonable
discretion) with respect to such Real Property issued not more than one year prior to the
date that Borrower requests approval of such Real Property as a “Borrowing Base Property”
showing no “recognized environmental conditions” requiring remediation pursuant to an
Environmental Law that have not been properly addressed through remediation completed to the
satisfaction of all Governmental Authorities (or such other resolution which has been
accepted in writing by either the Administrative Agent or all Governmental Authority(ies)
with jurisdiction relating to both the applicable Real Property and such recognized
environmental conditions, and having authority to enforce any Environmental Laws with
respect thereto) and otherwise showing environmental conditions which are reasonably
acceptable to the Administrative Agent;

5

 

     (l) an investment summary prepared by the Borrower respecting such Real Property, which
investment summary shall include a brief narrative, historical and pro forma cash flow
summaries and a preliminary operating budget with respect to such Real Property;

     (m) with respect to Real Properties located in California (or, in the reasonable
judgment of the Administrative Agent, in any other area with a high degree of seismic risk),
a seismic report with respect thereto dated as of a date reasonably acceptable to the
Administrative Agent and earthquake insurance to the extent customarily obtained under the
circumstances described in such report or as otherwise deemed reasonably necessary by the
Administrative Agent;

     (n) a copy of the fully-executed purchase and sale agreement respecting such Real
Property between the proposed Borrowing Base Entity and the seller of such Real Property;

     (o) a copy of the management agreement between the applicable TRS and an Approved
Manager respecting such Real Property (including without limitation, an abstract of such
management agreement), together with a collateral assignment of such management agreement
among the applicable TRS, such Approved Manager and the applicable Borrowing Base Entity in
such form as the Administrative Agent may reasonably agree;

     (p) a copy of the franchise agreement respecting such Real Property (including without
limitation, an abstract of such franchise agreement), together with a collateral assignment
of such agreement with respect to such franchise agreement among the applicable TRS, the
franchisor under such franchise agreement and the applicable Borrowing Base Entity in such
form as the Administrative Agent may reasonably agree, or in the alternative, a “comfort
letter” from such franchisor or other evidence reasonably acceptable to the Administrative
Agent of the Administrative Agent’s ability to assume the franchise agreement or enter into
a replacement franchise agreement in connection with the exercise of remedies following an
Event of Default;

     (q) unless the Person owning or acquiring such Real Property is a Guarantor, a Joinder
Agreement executed by such Person as contemplated under and in accordance with Section
6.12; and

     (r) such other documentation as may be reasonably required by the Administrative Agent.

     “BBP Value” means, as of any date of determination, the sum of the “as-is” appraised
value of the assets from time to time qualifying as Borrowing Base Properties pursuant to the
most-recently obtained Appraisal related thereto; provided, however that, as of the
date which is 24 months following the Closing Date and continuing until the termination of this
Agreement, the following asset concentration restrictions shall apply to the calculation of BBP
Value (except to the extent waived by the Administrative Agent and Required Lenders): (a) no less
than four (4) Real Properties must, at all times, qualify as Borrowing Base Properties or the BBP
Value shall be deemed to be zero ($0.00); (b) the maximum BBP Value allocable to Borrowing Base
Property assets located in any one Major MSA shall not exceed 40% of the total BBP Value and the
maximum BBP Value allocable to Borrowing Base Property assets located in any one Other MSA shall
not exceed 33% of the total BBP Value (provided, that to the extent such limitations are
exceeded, the value of such assets shall be removed from the calculation of BBP Value to the extent
of such excess) and the Borrowing Base shall include Real Properties located in at least four (4)
metropolitan statistical areas; and (c) no more than 20% of the BBP Value shall be allocable to
assets which are subject to an Approved Ground Lease (provided, that (i) a hotel shall be
excluded from the calculation of this limitation to the extent that (A) such hotel is subject to an
Approved Ground Lease entered into in connection with a “bonds for title,” “payment in lieu of
taxes” or similar transaction through a local development authority or equivalent governmental
issuer, (B) the documentation for such transaction contains the right in favor of the Loan Party
that is a party thereto to repurchase the interest in such property owned by such authority or
issuer for a price not greater than One Hundred Dollars ($100.00), and (C) the fee simple interest
in such property held by such authority or issuer is subordinated to the Mortgage encumbering such
property in favor of the Administrative Agent, and (ii) to the extent such limitation is exceeded,
the value of such assets shall be removed from the calculation of BBP Value to the extent of such
excess); provided, further, that, at no time following the Closing Date shall the
BBP Value allocable to Borrowing Base Property assets located in the State of New York that are not
subject to a

6

 

recorded Mortgage as provided in Section 1.07(e) exceed 20% (or such higher
percentage as may be approved by
the Supermajority Lenders) of the total BBP Value (provided, that to the extent such
limitation is exceeded, the value of such assets shall be removed from the calculation of BBP Value
to the extent of such excess).

     “Borrower” has the meaning specified in the introductory paragraph hereto.

     “Borrower Materials” has the meaning specified in Section 6.02.

     “Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the context may
require.

     “Borrowing Base” means, as of any date of calculation, the least of the following:
(a) the Aggregate Commitments, (b) the Collateral Value Amount, and (c) the Mortgageability Amount.

     “Borrowing Base Entity” means, as of any date of determination, any Person that owns
(or leases as ground lessee pursuant to an Approved Ground Lease) a Borrowing Base Property, and
“Borrowing Base Entities” means a collective reference to all of them.

     “Borrowing Base Properties” means, as of any date, a collective reference to each Real
Property (i) that is set forth on Schedule 5.24(a) hereto (as such schedule may be updated
from time to time in accordance with the terms hereof (including, without limitation, Sections
1.07 and 6.02(b)), in each case to the extent that such Real Property has not otherwise
been removed as a “Borrowing Base Property” pursuant to the other criteria for qualification as
such set forth in this definition and the other provisions of this Agreement, and (ii) that meets
the following criteria:

	 	(a)	 	such Real Property is a “luxury”, “upper upscale”, or “upscale” full or select
service hotel;
	 
	 	(b)	 	such Real Property’s brand and/or concept/flag (as applicable) has been
approved by the Administrative Agent, in its reasonable discretion;
	 
	 	(c)	 	such Real Property is managed by an Approved Manager pursuant to a management
agreement in form and substance reasonably acceptable to the Administrative Agent and
Lenders;
	 
	 	(d)	 	such Real Property is owned in fee simple by Borrower or a Guarantor (other
than the Parent REIT) or is subject to an Approved Ground Lease (and such property,
whether owned in fee simple by the Borrower or such Guarantor or is subject to an
Approved Ground Lease, is leased to the applicable TRS);
	 
	 	(e)	 	such Real Property is free of any Liens (other than Permitted Liens of the type
described in Section 7.01(a), (c), (d), (f),
(g) and (j)) or negative pledges;
	 
	 	(f)	 	Borrower has proposed such Real Property to the Administrative Agent and
Lenders in writing and has provided to Administrative Agent and Lenders all of the BBP
Deliverables with respect to such Real Property and such BBP Deliverables are approved
as provided herein; and
	 
	 	(g)	 	the Supermajority Lenders have approved such Real Property’s inclusion as a
“Borrowing Base Property” in accordance with the terms hereof; provided, that a
Lender shall be deemed to have conditionally approved a property’s inclusion as a
“Borrowing Base Property” and confirmed the acceptability of each of the Conditional
Approval BBP Deliverables, with respect to such Real Property to the extent that such
Lender has not, on or prior to the date which is fifteen (15) Business Days following
such Lender’s receipt of all of the Conditional Approval BBP Deliverables with respect
to such Real Property, communicated to the Administrative Agent in writing its
rejection of any of the Conditional Approval BBP Deliverables or such Real Property’s
proposed inclusion as a “Borrowing Base Property” hereunder. All remaining BBP
Deliverables will be approved by the Administrative Agent and/or Supermajority Lenders,
as applicable, promptly after receipt.

7

 

The term “Borrowing Base Property” shall mean any one of such Borrowing Base Properties.

     “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Applicable Laws of, or are in fact closed in,
New York, New York, Charlotte, North Carolina or Dallas, Texas and, if such day relates to any
Eurodollar Rate Loan, means any such day that is also a London Banking Day.

     “Calculation Period” means, as of any date of determination commencing with the
delivery of the Required Financial Information for the fiscal quarter ending June 30, 2010, the
most recent four (4) fiscal quarter period for which the Borrower has provided the Required
Financial Information; provided, that (a) notwithstanding the foregoing, calculations made
with respect to Required Financial Information for fiscal quarters ending prior to June 30, 2011
shall be based on the period from April 1, 2010 through the end of the applicable fiscal quarter
(with the calculated amounts annualized to the extent the period from April 1, 2010 through the
most-recently ended fiscal quarter is not at least twelve (12) months); and (b) for calculations
made on a Pro Forma Basis, the amounts calculated for the applicable Calculation Period shall be
adjusted as set forth in Section 1.03(c), but shall otherwise relate to the applicable
Calculation Period (as defined above).

     “Cash Collateralize” means to pledge and deposit with or deliver to the Administrative
Agent, for the benefit of the Administrative Agent, L/C Issuer or Swing Line Lender (as applicable)
and the Lenders, as collateral for L/C Obligations, Obligations in respect of Swing Line Loans, or
obligations of Lenders to fund participations in respect of either thereof (as the context may
require), cash or deposit account balances or, if the L/C Issuer or Swing Line Lender benefitting
from such collateral shall agree in its sole discretion, other credit support, in each case
pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and
(b) the L/C Issuer or the Swing Line Lender (as applicable). “Cash Collateral” shall have a meaning
correlative to the foregoing and shall include the proceeds of such cash collateral and other
credit support.

     “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.

	 	 	“Change of Control” means an event or series of events by which:

     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or
group shall be deemed to have “beneficial ownership” of all securities that such person or
group has the right to acquire, whether such right is exercisable immediately or only after
the passage of time (such right, an “option right”)), directly or indirectly, of 25%
or more of the equity securities of the Borrower entitled to vote for members of the board
of directors or equivalent governing body of the Borrower on a fully-diluted basis (and
taking into account all such securities that such person or group has the right to acquire
pursuant to any option right);

     (b) during any period of twenty-four (24) consecutive months, a majority of the members
of the board of directors or other equivalent governing body of the Borrower cease to be
composed of individuals (i) who were members of that board or equivalent governing body on
the first day of such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above constituting at
the time of such election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii) above
constituting at the time of such election or nomination at least a majority of that board or
equivalent governing body; or

8

 

     (c) the passage of thirty days from the date upon which any Person or two or more
Persons acting in concert shall have acquired by contract or otherwise, or shall have
entered into a contract or
arrangement that, upon consummation thereof, will result in its or their acquisition of
the power to exercise, directly or indirectly, a controlling influence over the management
or policies of the Borrower, or control over the equity securities of the Borrower entitled
to vote for members of the board of directors or equivalent governing body of the Borrower
on a fully-diluted basis (and taking into account all such securities that such Person or
group has the right to acquire pursuant to any option right) representing 25% or more of the
combined voting power of such securities.

     “Closing Date” means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 10.01.

     “Code” means the Internal Revenue Code of 1986.

     “Collateral” means all of the “Collateral” and “Mortgaged Property”
referred to in the Collateral Documents and all of the other property that is or is intended under
the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent
for the benefit of the Secured Parties.

     “Collateral Documents” means, collectively, the Pledge Agreement, the Mortgages, and
each of the other mortgages, collateral assignments, security agreements, pledge agreements or
other similar agreements delivered to the Administrative Agent pursuant to Section 6.13,
and each of the other agreements, instruments or documents that creates or purports to create a
Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

     “Collateral Value Amount” means, as of any date of determination, an amount equal to
(a) the product of (i) 50% multiplied by (ii) the BBP Value as of such date minus
(b) the Recording Cost Amount for each Borrowing Base Property located in the State of New York and
for which a Mortgage has not been recorded to the extent such Recording Cost Amount for such
Borrowing Base Property has not been deposited by the Borrower or other applicable Loan Party in an
escrow account on terms and conditions reasonably satisfactory to the Administrative Agent;
provided, that for purposes of determining the Collateral Value Amount, the portion of BBP
Value as of any date attributable to any particular Borrowing Base Property shall be reduced by an
amount equal to the positive amount by which (A) the Appraised Value for such Borrowing Base
Property exceeds (B) the amount of Indebtedness hereunder secured by the Mortgage (whether recorded
or unrecorded) applicable to such Borrowing Base Property.

     “Commitment” means, as to each Lender, its obligation to (a) make Committed Loans to
the Borrower pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and
(c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as
applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

     “Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of
the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by
each of the Lenders pursuant to Section 2.01.

     “Committed Loan” has the meaning specified in Section 2.01.

     “Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a conversion
of Committed Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans,
pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of
Exhibit A.

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

     “Conditional Approval BBP Deliverables” means, with respect to each Real Property for
which the Borrower seeks approval as a “Borrowing Base Property,” each of the BBP Deliverables
described in clauses (d), (e) (with respect to copies of each Material Lease), (f) (with respect to
a copy of the ground lease), (i) (with respect to

9

 

evidence as to whether such Real Property is
designated as a Flood Hazard Property), (j), (k), (l), (m), (n), (o) (other than the collateral
assignment of such management agreement described therein) and (p) (other than the collateral
assignment of such franchise agreement or the “comfort letter” or other evidence regarding the
rights of the Administrative Agent in connection with the exercise of remedies hereunder described
therein) of the definition of “BBP Deliverables.”

     “Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the
ratio of (a) EBITDA for the Calculation Period ending on such date to (b) Consolidated Fixed
Charges for such period.

     “Consolidated Fixed Charges” means, for any period, the sum of (a) Consolidated
Interest Charges for such period, plus (b) current scheduled principal payments on
Consolidated Funded Indebtedness for such period (including, for purposes hereof, current scheduled
reductions in commitments, but excluding any payment of principal under the Credit Documents and
any “balloon” payment or final payment at maturity that is significantly larger than the scheduled
payments that preceded it), plus (c) dividends and distributions paid in cash on preferred
stock by the Consolidated Parties on a consolidated basis and all Unconsolidated Affiliates, if
any, for such period, in each case, determined in accordance with GAAP; provided, that, to
the extent the calculations under clauses (a), (b) and (c) above include amounts allocable to
Unconsolidated Affiliates, such calculations shall be without duplication and shall only include
such amounts to the extent attributable to any Unconsolidated Affiliate Interests.

     “Consolidated Funded Indebtedness” means, as of any date of determination, without
duplication, the sum of (a) the outstanding principal amount of all obligations of the Consolidated
Parties on a consolidated basis, whether current or long-term, for borrowed money (including all
obligations hereunder and under the other Loan Documents) and all obligations of the Consolidated
Parties on a consolidated basis evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (b) all purchase money Indebtedness of the Consolidated Parties on a
consolidated basis, (c) all obligations of the Consolidated Parties on a consolidated basis arising
under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments, (d) all obligations of the Consolidated Parties on a
consolidated basis in respect of forward purchase agreements or the deferred purchase price of any
property or services (other than trade accounts payable in the ordinary course of business), (e)
Attributable Indebtedness of the Consolidated Parties on a consolidated basis in respect of capital
leases and Synthetic Lease Obligations, (f) without duplication, all Guarantees of the Consolidated
Parties on a consolidated basis with respect to outstanding Indebtedness of the types specified in
clauses (a) through (e) above of Persons other than the Parent REIT or any Subsidiary, (g) without
duplication, all Indebtedness of the Consolidated Parties on a consolidated basis of the types
referred to in clauses (a) through (f) above of any partnership or joint venture in which the
Parent REIT or a Subsidiary is a general partner or joint venturer, and (h) without duplication,
the aggregate amount of Unconsolidated Affiliate Funded Indebtedness for all Unconsolidated
Affiliates; provided, however, that as of any date during the period commencing as
of the Closing Date and extending to (but not including) the Initial Maturity Date, Adjusted
Unrestricted Cash of the Borrower shall be deducted from the sum of amounts under clauses (a)
through (g) above in calculating “Consolidated Funded Indebtedness.”

     “Consolidated Funded Indebtedness to Total Asset Value Ratio” means, as of any date of
determination, the ratio of (a) the sum of (i) Consolidated Funded Indebtedness on such date,
plus (ii) to the extent not included in the determination of Consolidated Funded
Indebtedness pursuant to the foregoing clause (i), Adjusted Unrestricted Cash of the Borrower to
(b) Total Asset Value on such date.

     “Consolidated Interest Charges” means, for any period, the sum of (a) all interest,
premium payments, debt discount, fees, charges and related expenses of the Consolidated Parties on
a consolidated basis and all Unconsolidated Affiliates, in connection with borrowed money
(including capitalized interest) or in connection with the deferred purchase price of assets, in
each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent
expense of the Consolidated Parties on a consolidated basis and all Unconsolidated Affiliates with
respect to such period under capital leases that is treated as interest in accordance with GAAP;
provided, that, to the extent the calculations under clauses (a) and (b) above include
amounts allocable to Unconsolidated Affiliates, such calculations shall be without duplication and
shall only include such amounts to the extent attributable to any Unconsolidated Affiliate
Interests.

10

 

     “Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) EBITDA for the period of the four fiscal
quarters most recently ended.

     “Consolidated Net Income” means, for any period, the sum of (a) the net income of the
Consolidated Parties on a consolidated basis (excluding extraordinary gains and extraordinary
losses) for such period, calculated in accordance with GAAP, plus (b) without duplication,
an amount equal to the aggregate of net income (excluding extraordinary gains and extraordinary
losses) for such period, calculated in accordance with GAAP, of each Unconsolidated Affiliate
multiplied by the respective Unconsolidated Affiliate Interest in each such entity.

     “Consolidated Parties” means a collective reference to the Parent REIT and its
consolidated Subsidiaries; and “Consolidated Party” means any one of them.

     “Consolidated Recourse Secured Indebtedness” means, as of any date of determination,
for the Consolidated Parties on a consolidated basis, all Secured Debt that is recourse to the
Parent REIT or any of its Subsidiaries (except to the extent such recourse is limited to customary
non-recourse carve-outs).

     “Consolidated Tangible Assets” means the amount by which total assets of the
Consolidated Parties determined in accordance with GAAP exceed that portion of such total assets
allocated to or included as Intangible Assets of the Consolidated Parties.

     “Consolidated Tangible Net Worth” means, as of any date of determination,
Shareholders’ Equity on that date, minus the Intangible Assets of the Consolidated Parties
on that date, minus, without duplication, the Intangible Assets of each Unconsolidated
Affiliate multiplied by the respective Unconsolidated Affiliate Interest in each such entity;
provided, however, that there shall be excluded from the calculation of
“Consolidated Tangible Net Worth” any effects resulting from the application of FASB ASC No. 715:
Compensation – Retirement Benefits.

     “Contractual Obligation” means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound.

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

     “Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit
Extension.

     “DC Hotel Trust” means DC Hotel Trust, a Maryland real estate investment trust.

     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally.

     “Default” means any event or condition that constitutes an Event of Default or that,
with the giving of any notice, the passage of time, or both, would be an Event of Default.

     “Default Rate” means (a) when used with respect to Obligations other than Letter of
Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin,
if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided,
however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest
rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan
plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the
Applicable Margin plus 2% per annum.

     “Defaulting Lender” means, subject to Section 2.18(b), any Lender that, as
determined by the Administrative Agent, (a) has failed to perform any of its funding obligations
hereunder, including in respect of its Loans or participations in respect of Letters of Credit or
Swing Line Loans, within three Business Days of the date

11

 

required to be funded by it hereunder, (b)
has notified the Borrower, or the Administrative Agent or any Lender that it does not intend to
comply with its funding obligations or has made a public statement to that effect with respect to
its funding obligations hereunder or under other agreements in which it commits to extend credit,
(c) has failed,
within three Business Days after request by the Administrative Agent, to confirm in a manner
satisfactory to the Administrative Agent that it will comply with its funding obligations, or (d)
has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding
under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for
the benefit of creditors or similar Person charged with reorganization or liquidation of its
business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated
its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a
Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any
equity interest in that Lender or any direct or indirect parent company thereof by a Governmental
Authority.

     “Disposition” or “Dispose” means the sale, transfer, license, lease (excluding
the lease of any Borrowing Base Property and personal property assets related thereto to any TRS
pursuant to a form of Lease approved by the Administrative Agent, in its reasonable discretion) or
other disposition (including any sale and leaseback transaction) of any property by any Person,
including any sale, assignment, transfer or other disposal, with or without recourse, of any notes
or accounts receivable or any rights and claims associated therewith.

     “Dollar” and “$” mean lawful money of the United States.

     “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any
political subdivision of the United States.

     “EBITDA” means, for any period, the sum of (a) an amount equal to Consolidated Net
Income for such period plus (b) the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Interest Charges for such period, (ii) the provision for
Federal, state, local and foreign income taxes payable by the Consolidated Parties and
Unconsolidated Affiliates for such period, (iii) depreciation and amortization expense of the
Consolidated Parties and Unconsolidated Affiliates, (iv) other non-recurring expenses of the
Consolidated Parties and Unconsolidated Affiliates reducing such Consolidated Net Income which do
not represent a cash item in such period or any future period, and (v), without duplication of any
of the foregoing, amounts deducted from net income as a result of pre-funded fees or expenses
incurred in connection with acquisitions permitted under the Loan Documents that can no longer be
capitalized due to FAS 141R Changes and charges relating to the under-accrual of earn outs due to
the FAS 141R Changes, minus (c) the following to the extent included in calculating such
Consolidated Net Income: (i) Federal, state, local and foreign income tax credits of the
Consolidated Parties and Unconsolidated Affiliates for such period and (ii) all non-cash items
increasing Consolidated Net Income for such period; provided, that, to the extent the
calculations under clauses (a), (b) and (c) above include amounts allocable to Unconsolidated
Affiliates, such calculations shall be without duplication and shall only include such amounts to
the extent attributable to any Unconsolidated Affiliate Interests.

     “Eligible Assignee” means any Person that meets the requirements to be an assignee
under Section 10.06(b)(iii) and (v) (subject to such consents, if any, as may be
required under Section 10.06(b)(iii)).

     “Environmental Laws” means any and all applicable Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or Governmental Authority restrictions relating to
pollution and the protection of the environment or the release of any materials into the
environment, including those related to hazardous substances or wastes, air emissions and
discharges to waste or public systems.

     “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly
resulting from or based upon (a) violation of any Environmental Laws, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure
to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.

12

 

     “Equity Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all
of the securities convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all of the other
ownership or profit interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or
other interests are outstanding on any date of determination.

     “ERISA” means the Employee Retirement Income Security Act of 1974.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code).

     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the
withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which such entity was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization;
(d) the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of
proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan
in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or
Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.

     “Eurodollar Rate” means

     (a) for any Interest Period with respect to a Eurodollar Rate Loan, the greater of (i) 1.50%
(the “LIBOR Floor”), and (ii) the rate per annum equal to (A) the British Bankers
Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or such other commercially
available source providing quotations of BBA LIBOR as may be designated by the Administrative Agent
from time to time) at approximately 11:00 a.m., London time, two London Banking Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period, or (B) if such rate is not
available at such time for any reason, the rate per annum determined by the Administrative Agent to
be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or
converted and with a term equivalent to such Interest Period would be offered by Bank of America’s
London Branch to major banks in the London interbank eurodollar market at their request at
approximately 11:00 a.m. (London time) two London Banking Days prior to the commencement of such
Interest Period; and

     (b) for any interest calculation with respect to a Base Rate Loan on any date, the greater of
(i) the LIBOR Floor, and (ii) the rate per annum equal to (A) BBA LIBOR, at approximately 11:00
a.m., London time determined two London Banking Days prior to such date for Dollar deposits being
delivered in the London interbank market for a term of one month commencing that day, or (B) if
such published rate is not available at such time for any reason, the rate per annum determined by
the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of
determination in same day funds in the approximate amount of the Base Rate Loan being made or
maintained and with a term equal to one month would be offered by Bank of America’s London Branch
to major banks in the London interbank Eurodollar market at their request at the date and time of
determination.

     “Eurodollar Rate Loan” means a Committed Loan that bears interest at a rate based on
clause (a) of the definition of Eurodollar Rate.

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     “Event of Default” has the meaning specified in Section 8.01.

     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the L/C
Issuer or any other recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the Applicable Laws of which such recipient is
organized or in which its principal office is located or with which it has a connection (other than
any such connection resulting, in whole or in part, from its having executed, delivered or
performed its obligations or received a payment under, or enforced, this Agreement or any other
Loan Document) or, in the case of any Lender, in which its applicable Lending Office is located,
(b) any branch profits taxes imposed by the United States or any similar tax imposed by any other
jurisdiction in which the Borrower is located, (c) any backup withholding tax that is required by
the Code to be withheld from amounts payable to a Lender, and (d) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under Section 10.13), any
United States withholding tax that (i) is required to be imposed on amounts payable to such Foreign
Lender pursuant to the Applicable Laws in force at the time such Foreign Lender becomes a party
hereto (or designates a new Lending Office) or (ii) is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with Section
3.01(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new Lending Office (or assignment), to receive additional amounts
from the Borrower with respect to such withholding tax pursuant to Section 3.01(a)(ii) or
(iii).

     “Extended Maturity Date” has the meaning specified in Section 2.14(b).

     “FAS 141R Changes” means those changes made to a buyer’s accounting practices by the
Financial Accounting Standards Board’s Statement of Financial Accounting Standard No. 141R,
Business Combinations, which is effective for annual reporting periods that begin in calendar year
2009.

     “FASB ASC” means the Accounting Standards Codification of the Financial Accounting
Standards Board.

     “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such
rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined by the Administrative
Agent.

     “Fee Letter” means the letter agreement, dated March 18, 2010, among the Parent REIT,
the Administrative Agent and the Arranger.

     “FFO Distribution Allowance” means, for any four (4) calendar quarter period of the
Consolidated Parties, an amount equal to 95% of Funds From Operations for such period.

     “Financial Covenant Failure Event” shall have the meaning set forth in Section
8.04.

     “First-Tier Foreign Subsidiary” means any Foreign Subsidiary that is owned directly by
the Parent REIT, the Borrower or a Domestic Subsidiary of the Parent REIT or the Borrower.

     “Foreign Lender” means any Lender that is organized under the Applicable Laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes (including such a
Lender when acting in the capacity of the L/C Issuer). For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.

     “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

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

     “Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect
to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C
Obligations other than L/C Obligations as to which such Defaulting Lender’s participation
obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the
terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable
Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s
participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance
with the terms hereof.

     “Fully Satisfied” means, with respect to the Obligations as of any date, that, as of
such date, (a) all principal of and interest accrued to such date which constitute Obligations
shall have been irrevocably paid in full in cash, (b) all fees, expenses and other amounts then due
and payable which constitute Obligations shall have been irrevocably paid in cash, (c) all
outstanding Letters of Credit shall have been (i) terminated, (ii) fully irrevocably Cash
Collateralized or (iii) secured by one or more letters of credit on terms and conditions, and with
one or more financial institutions, satisfactory to the L/C Issuer and (d) the Commitments shall
have expired or been terminated in full (in each case, other than inchoate indemnification
liabilities arising under the Loan Documents).

     “Fund” means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its activities.

     “Funds From Operations” means, with respect to the immediately prior fiscal quarter
period, Consolidated Net Income, plus depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures as hereafter provided; provided, that, to
the extent such calculations include amounts allocable to Unconsolidated Affiliates, such
calculations shall be without duplication and shall only include such amounts to the extent
attributable to any Unconsolidated Affiliate Interests. Without limiting the foregoing,
notwithstanding contrary treatment under GAAP, for purposes hereof, (a) “Funds From Operations”
shall include, and be adjusted to take into account, (i) the Parent REITs’ interests in
unconsolidated partnerships and joint ventures, on the same basis as consolidated partnerships and
subsidiaries, as provided in the “white paper” issued in April 2002 by the National Association of
Real Estate Investment Trusts, as may be amended from time to time, and (ii) amounts deducted from
net income as a result of pre-funded fees or expenses incurred in connection with acquisitions
permitted under the Loan Documents that can no longer be capitalized due to FAS 141R Changes and
charges relating to the under-accrual of earn outs due to the FAS 141R Changes, and (b) net income
(or loss) of the Consolidated Parties on a consolidated basis shall not include gains (or, if
applicable, losses) resulting from or in connection with (i) restructuring of indebtedness, (ii)
sales of property, (iii) sales or redemptions of preferred stock or (iv) non cash asset impairment
charges.

     “GAAP” means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the circumstances as of the date
of determination, consistently applied.

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

     “Guarantee” means, as to any Person, any (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other
obligation payable or performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or services for the purpose of
assuring the obligee in respect of such Indebtedness or other obligation of the payment or
performance of

15

 

such Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, (iv) to guaranty to any Person rental
income levels (or shortfalls) or re-tenanting costs (including tenant improvements, moving
expenses, lease commissions and any other costs associated with procuring new tenants); provided,
that such obligations shall be determined to be equal to the maximum potential amount of the
payments due from the Person guaranteeing the applicable rental income levels over the term of the
applicable lease or (v) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or (b) any lien on any
assets of such Person securing any Indebtedness or other obligation of any other Person, whether or
not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or
otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith; provided, that, to the extent any Guarantee is
limited by its terms, then the amount of such Guarantee shall be deemed to be the stated or
determinable amount of such Guarantee. The term “Guarantee” as a verb has a corresponding meaning.

     “Guarantors” means, collectively, the Parent REIT, each Person that is required to be
a Guarantor pursuant to Section 6.12, as identified on the signature pages hereto as a
“Guarantor” as of the Closing Date, and each other Person that becomes a Guarantor after the
Closing Date pursuant to the terms hereof as required by Section 6.12, in each case
together with their successors and permitted assigns.

     “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Laws.

     “Hedge Bank” means any Lender or Affiliate of a Lender, in its capacity as a party to
a Swap Contract that is not otherwise prohibited under Article VI or VII.

     “Impacted Lender” means any Lender as to which (a) L/C Issuer has a good faith belief
that the Lender has defaulted in fulfilling its obligations under one or more other syndicated
credit facilities or (b) an entity that controls the Lender has been deemed insolvent or become
subject to a bankruptcy or other similar proceeding.

     “Increase Effective Date” has the meaning given to such term in Section
2.15(d).

     “Indebtedness” means, as to any Person at a particular time, without duplication, all
of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

     (a) all obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

     (b) all direct or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments;

     (c) net obligations of such Person under any Swap Contract;

     (d) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable incurred in the ordinary course of business and,
in each case, not overdue by more than ninety (90) days after such trade account payable was
created, except to the extent that any such trade payables are being disputed in good
faith);

     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness arising under conditional
sales or other title

16

 

retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;

     (f) capital leases and Synthetic Lease Obligations;

     (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interest in such Person or any other Person,
valued, in the case of a redeemable preferred interest, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends; and

     (h) all Guarantees of such Person in respect of any of the
foregoing.

     For all purposes hereof, the Indebtedness of any Person shall include, without duplication,
the Indebtedness of any partnership or joint venture in which such Person is a general partner or a
joint venturer. The amount of any net obligation under any Swap Contract on any date shall be
deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease
or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.

     “Indemnified Taxes” means Taxes other than Excluded Taxes.

     “Indemnitees” has the meaning specified in Section 10.04(b).

     “Information” has the meaning specified in Section 10.07.

     “Initial Maturity Date” has the meaning specified in Section 2.14(a).

     “Intangible Assets” means assets that are considered to be intangible assets under
GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks,
patents, franchises, licenses, unamortized deferred charges, unamortized debt discount and
capitalized research and development costs.

     “Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the
last day of each Interest Period applicable to such Loan and the Maturity Date; provided,
however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such Interest Period shall
also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the
last Business Day of each March, June, September and December and the Maturity Date.

     “Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the
date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan
and ending on the date fourteen (14) days (to the extent each of the Lenders are able to provide a
Eurodollar Rate Loan for such period) or one, two, three or six months thereafter, as selected by
the Borrower in its Committed Loan Notice; provided that:

     (i) any Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next preceding
Business Day;

     (ii) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and

     (iii) no Interest Period shall extend beyond the Maturity Date.

     “Investment” means, as to any Person, any direct or indirect acquisition or investment
by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other
securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or
assumption of debt of, or purchase or other acquisition of any other debt or equity participation
or interest in, another Person, including any partnership or joint venture interest in

17

 

such other
Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other
Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions)
of assets of another
Person that constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for subsequent increases
or decreases in the value of such Investment.

     “IP Rights” has the meaning specified in Section 5.18.

     “IRS” means the United States Internal Revenue Service.

     “ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such
later version thereof as may be in effect at the time of issuance).

     “Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit
Application, and any other document, agreement and instrument entered into by the L/C Issuer and
the Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of
Credit.

     “Jayhawk Owner LLC” means Jayhawk Owner LLC, a Delaware limited liability company.

     “Joinder Agreement” means a Joinder Agreement substantially in the form of Exhibit
H hereto, executed and delivered by a new Guarantor in accordance with the provisions of
Section 6.12 hereof.

     “L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.

     “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter
of Credit which has not been reimbursed on the date when made or refinanced as a Committed
Borrowing.

     “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount thereof.

     “L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit
hereunder, or any successor issuer of Letters of Credit hereunder in the event that Bank of America
ceases (for whatever reason) to act in such capacity, or any other Lender (with the consent of the
Administrative Agent, in its sole discretion) as an issuer of Letters of Credit hereunder.

     “L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available
to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.06. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be “outstanding” in the amount so remaining available to be drawn.

     “Lease” means a lease, sublease, license, concession agreement or other agreement
providing for the use or occupancy of any portion of any Real Property (and any personal property
related thereto that is covered by such lease, sublease, license, concession agreement or other
agreement) owned or ground leased by any Loan Party, including all amendments, supplements,
restatements, assignments and other modifications thereto.

     “Lender” has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes the Swing Line Lender.

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     “Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other office or offices as
a Lender may from time to time notify the Borrower and the Administrative Agent.

     “Letter of Credit” means any letter of credit issued hereunder. A Letter of Credit
may be a standby letter of credit only.

     “Letter of Credit Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

     “Letter of Credit Expiration Date” means the day that is thirty (30) days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business
Day).

     “Letter of Credit Fee” has the meaning specified in Section 2.03(i).

     “Letter of Credit Sublimit” means an amount equal to $30,000,000.00. The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other security interest
or preferential arrangement in the nature of a security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any easement, right of way or
other encumbrance on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).

     “Loan” means an extension of credit by a Lender to the Borrower under Article
II in the form of a Committed Loan or a Swing Line Loan.

     “Loan Documents” means this Agreement, each Note, each Issuer Document, any agreement
creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.17
of this Agreement, each Collateral Document, and the Fee Letter.

     “Loan Parties” means, collectively, the Borrower and each Guarantor.

     “London Banking Day” means any day on which dealings in Dollar deposits are conducted
by and between banks in the London interbank Eurodollar market.

     “Major MSA” means the metropolitan statistical area of any of the following: (i) New
York City, New York; (ii) Chicago, Illinois; (iii) Washington, DC; (iv) Los Angeles, California;
(v) Boston, Massachusetts; and (vi) San Francisco, California.

     “Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or
condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of the Borrower and the other Loan Parties taken as a whole to
perform their respective obligations under any Loan Document; or (c) a material adverse effect upon
the legality, validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party.

     “Material Lease” shall mean as to any Borrowing Base Property (i) any Lease of such
Borrowing Base Property (and any personal property assets related thereto) between the applicable
Loan Party that owns such Borrowing Base Property and any TRS, (ii) any Lease which, individually
or when aggregated with all other Leases at such Borrowing Base Property with the same tenant or
any of its Affiliates, accounts for ten percent (10%) or more of such Borrowing Base Property’s
revenue, or (iii) any Lease which contains any option, offer, right of first refusal or other
similar entitlement to acquire all or any portion of the Property.

19

 

     “Maturity Date” means (a) the Initial Maturity Date and (b) if maturity is extended
pursuant to Section 2.14, the Extended Maturity Date; provided, however,
that, in each case, if such date is not a Business Day, the Maturity Date shall be the next
preceding Business Day.

     “Mortgage” means any deed of trust, trust deed, deed to secure debt, indemnity deed of
trust, mortgage, leasehold mortgage and leasehold deed of trust, in substantially the form of
Exhibit F (with such changes as may be satisfactory to the Administrative Agent and its
counsel in their reasonable discretion to account for local law matters) or such other form as may
be reasonably satisfactory to the Administrative Agent and its counsel (including, without
limitation, an amendment to or amendment and restatement of an existing deed of trust, trust deed,
deed to secure debt, indemnity deed of trust, mortgage, leasehold mortgage or leasehold deed of
trust) and covering the Real Property described therein (together with an assignment of leases and
rents referred to therein, if any).

     “Mortgage Commitments” has the meaning given to such term in clause (b) of the
definition of “BBP Deliverables.”

     “Mortgage Policy” means, with respect to any Real Property, a fully paid American Land
Title Association Lender’s Extended Coverage title insurance policy with respect to any Mortgage
related thereto, together with endorsements and in amounts reasonably acceptable to the
Administrative Agent, issued, coinsured and reinsured by title insurers reasonably acceptable to
the Administrative Agent (including the Title Insurance Company), insuring the Mortgages to be
valid first and subsisting Liens on the property described therein, free and clear of all defects
(including, but not limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting
only Permitted Liens of the type described in Section 7.01(a), (c), (d),
(f), (g) and (j) and Liens approved by the Administrative Agent and
providing for such other affirmative insurance (including endorsements for future advances under
the Loan Documents, for mechanics’ and materialmen’s Liens and for zoning of the applicable
property, and affirmative “gap” insurance coverage) and such coinsurance and direct access
reinsurance as the Administrative Agent may deem reasonably necessary or desirable and as may be
available in the state where such Real Property is located.

     “Mortgageability Amount” means, as of any date of calculation, (i) for the period
commencing as of the Closing Date and extending through the date which is 18 months following the
Closing Date, the maximum principal amount which can be supported by the Mortgageability Cash Flow
and maintain a minimum implied debt service coverage ratio of 1.50x and (ii) for all dates
following the date which is 18 months following the Closing Date, the maximum principal amount
which can be supported by the Mortgageability Cash Flow and maintain a minimum implied debt service
coverage ratio of 1.75x, in each case assuming a 30 year amortization schedule (based on level
payments) and an interest rate equal to the greater of (A) the ten year Treasury Rate plus 3.5% and
(B) 8.0%; provided, in each case, the Mortgageability Amount shall be reduced by the Recording Cost
Amount for each Borrowing Base Property located in the State of New York and for which a Mortgage
has not been recorded to the extent such Recording Cost Amount for such Borrowing Base Properties
has not been deposited by the Borrower or other applicable Loan Party in an escrow account on terms
and conditions reasonably satisfactory to the Administrative Agent.

     “Mortgageability Cash Flow” means, as of any date of calculation, the sum of the Net
Operating Incomes from each of the Borrowing Base Properties for the most recently-ended
Calculation Period (and, if specifically required, including adjustments for subsequent events or
conditions on a Pro Forma Basis).

     “Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA that is subject to Title IV of ERISA, to which the Borrower or any
ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

     “Multiple Employer Plan” means any employee benefit plan which has two or more
contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not
under common control, as such a plan is described in Section 4064 of ERISA.

     “Negative Pledge Agreement” means a negative pledge agreement in recordable form given
by a Loan Party to the Administrative Agent pursuant to which such Loan Party shall acknowledge
that such Loan Party has agreed not

20

 

to encumber certain Real Property owned by it, located in the
State of New York and offered as security for the Obligations.

     “Net Operating Income” means, with respect to any Borrowing Base Property and for the
most recently ended Calculation Period, an amount equal to (a) the aggregate gross revenues from
the operations of such
Borrowing Base Property during the applicable Calculation Period, minus (b) the sum of
(i) all expenses and other proper charges incurred in connection with the operation of such
Borrowing Base Property during such period pro-rated as appropriate (including real estate taxes,
but excluding any management fees, debt service charges, income taxes, depreciation, amortization
and other non-cash expenses), and (ii) a base management fee that is the greater of 3.0% of the
aggregate revenues from the operations of such Borrowing Base Property during such period or actual
management fees paid and (iii) an annual replacement reserve equal to 4.0% of the aggregate
revenues from the operations of such Borrowing Base Property.

     “Non-Extension Notice” has the meaning specified in Section 2.03(b)(iii).

     “Non-Guarantor Subsidiary” shall mean any Subsidiary (whether direct or indirect) of
the Borrower, other than any Subsidiary which owns a Borrowing Base Property or any Subsidiary
which owns any of the Equity Interests of any such Subsidiary, which (a) is a TRS; (b) is DC Hotel
Trust; (c) is (i) formed for or converted to the specific purpose of holding title to Real Property
assets which are collateral for Indebtedness owing or to be owed by such Subsidiary (provided that
such Indebtedness must be incurred or assumed within ninety (90) days (or such longer period as the
Administrative Agent may agree in writing) of such formation or conversion or such Subsidiary shall
cease to qualify as a Non-Guarantor Subsidiary, and (ii) expressly prohibited in writing from
guaranteeing Indebtedness of any other person or entity pursuant to (A) a provision in any
document, instrument or agreement evidencing such Indebtedness of such Subsidiary or (B) a
provision of such Subsidiary’s Organization Documents, in each case, which provision was included
in such Organization Document or such other document, instrument or agreement at the request of the
applicable third party creditor and as an express condition to the extension or assumption of such
Indebtedness; provided, that a Subsidiary meeting the requirements set forth in this clause
(c) shall only remain a “Non-Guarantor Subsidiary” for so long as (1) each of the foregoing
requirements set forth in this clause (c) are satisfied, (2) such Subsidiary does not guarantee any
other Indebtedness and (3) the Indebtedness with respect to which the restrictions noted in clause
(c) (ii) are imposed remains outstanding; or (d) (i) becomes a Subsidiary following the Closing
Date, (ii) is not a Wholly Owned Subsidiary of the Borrower, and (iii) with respect to which the
Borrower and its Affiliates, as applicable, do not have sufficient voting power to cause such
Subsidiary to become a Guarantor hereunder.

     “Note” means a promissory note made by the Borrower in favor of a Lender evidencing
Loans made by such Lender, substantially in the form of Exhibit C.

     “Obligations” means all advances to, and debts, liabilities, obligations, covenants
and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any
Loan, Letter of Credit or Secured Hedge Agreement, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter
arising and including interest and fees that accrue after the commencement by or against any Loan
Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as
the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.

     “Organization Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.

     “Other MSA” means any metropolitan statistical area other than a Major MSA.

21

 

     “Other Taxes” means all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies (other than Excluded Taxes) arising from any
payment made hereunder or under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

     “Outstanding Amount” means (i) with respect to Committed Loans and Swing Line Loans on
any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings
and prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be,
occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of
such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such
date and any other changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.

     “Parent REIT” has the meaning specified in the introductory paragraph hereto.

     “Participant” has the meaning specified in Section 10.06(d).

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “Pebblebrook Hotel Lessee” means Pebblebrook Hotel Lessee, Inc., a Delaware
corporation, and its permitted successors.

     “Pension Plan” means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and
is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case of a Multiple
Employer Plan, has made contributions at any time during the immediately preceding five plan years.

     “Permitted Liens” has the meaning specified in Section 7.01.

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

     “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) other than a Multiemployer Plan established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

     “Platform” has the meaning specified in Section 6.02.

     “Pledge Agreement” means the pledge and security agreement dated as of the Closing
Date given by certain of the Loan Parties, as pledgors, to the Administrative Agent to secure the
Obligations, and any other pledge agreements or joinder agreements that may be given by any Person
pursuant to the terms hereof, in each case as the same may be amended and modified from time to
time.

     “Pro Forma Basis” means, for purposes of calculating (utilizing the principles set
forth in Section 1.03(c)) compliance with the Borrowing Base restrictions set forth herein
and each of the financial covenants set forth in Section 7.11(a)-(d) in respect of a
proposed transaction, that such transaction shall be deemed to have occurred as of the first day of
the four fiscal-quarter period ending as of the most recent fiscal quarter end preceding the date
of such transaction with respect to which the Administrative Agent has received the Required
Financial Information. As used herein, “transaction” shall mean (a) any incurrence or assumption
of Indebtedness as referred to in Section 7.02(i),or (j), or (b) any removal of a
Borrowing Base Property from qualification as such pursuant to Section 7.05(a) or
(b) or any other Disposition as referred to in Section 7.05, or (c) any acquisition
of any Person (whether by merger or otherwise) or other property. In connection with any
calculation relating to the Borrowing Base or of the financial covenants set forth in
Section 7.11(a)-(d) upon giving effect to a transaction on a Pro Forma Basis:

22

 

     (i) for purposes of any such calculation in respect of any incurrence or assumption of
Indebtedness as referred to in Section 7.02(i) or (j), any Indebtedness
which is retired in connection with such incurrence or assumption shall be excluded and
deemed to have been retired as of the first day of the applicable period;

     (ii) for purposes of any such calculation in respect of any removal of a Borrowing Base
Property from qualification as such pursuant to Section 7.05 or any other
Disposition as referred to in Section 7.05, (A) income statement items (whether
positive or negative) attributable to the Person or property disposed of shall be excluded,
(B) any Indebtedness which is retired in connection with such transaction shall be excluded
and deemed to have been retired as of the first day of the applicable period, and (C) pro
forma adjustments shall be included to the extent that such adjustments would give effect to
events that are (1) directly attributable to such transaction, (2) expected to have a
continuing impact on the Consolidated Parties and (3) factually supportable (in the
reasonable judgment of the Administrative Agent); and

     (iii) for purposes of any such calculation in respect of any acquisition of any Person
(whether by merger or otherwise) or other property, (A) income statement items (whether
positive or negative) and capital expenditures attributable to the Person or property
acquired shall be deemed to be included as of the first day of the applicable period, and
(B) pro forma adjustments (with the calculated amounts annualized to the extent the period
from the date of such acquisition through the most-recently ended fiscal quarter is not at
least twelve (12) months or four (4) fiscal quarters, in the case of any applicable period
that is based on twelve months or four (4) fiscal quarters) shall be included to the extent
that such adjustments would give effect to events that are (1) directly attributable to such
transaction, (2) expected to have a continuing impact on the Consolidated Parties and
(3) factually supportable (in the reasonable judgment of the Administrative Agent).

     “Public Lender” has the meaning specified in Section 6.02.

     “QRS” means a Person qualifying for treatment either as a “qualified REIT subsidiary”
under Section 856(i) of the Code, or as an entity disregarded as an entity separate from its owner
under Treasury Regulations under Section 7701 of the Code.

     “Register” has the meaning specified in Section 10.06(c).

     “Real Properties” means, at any time, a collective reference to each of the facilities
and real properties owned or leased by the Borrower or any other Subsidiary or in which any such
Person has an interest at such time; and “Real Property” means any one of such Real
Properties.

     “Recording Cost Amount” shall have the meaning set forth in Section 1.07(e).

     “REIT” means a Person qualifying for treatment as a “real estate investment trust”
under the Code.

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

     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30 day notice period has been waived.

     “Request for Credit Extension” means (a) with respect to a Borrowing, conversion or
continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit
Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line
Loan Notice.

     “Required Financial Information” means, with respect to each fiscal period or quarter
of the Borrower, (a) the financial statements required to be delivered pursuant to
Section 6.01(a) or (b) for such fiscal period or

23

 

quarter of the Parent REIT, and
(b) the Compliance Certificate required by Section 6.02(b) to be delivered with the
financial statements described in clause (a) above.

     “Required Lenders” means, as of any date of determination, Lenders having at least 51%
of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the obligation
of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section
8.02, Lenders holding in the aggregate at least 51% of
the Total Outstandings (with the aggregate amount of each Lender’s risk participation and
funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition); provided that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making
a determination of Required Lenders.

     “Responsible Officer” means the chief executive officer, president, chief financial
officer, treasurer, or controller of a Loan Party, and solely for purposes of the delivery of
incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary
of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a
Loan Party shall be conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such Responsible Officer shall
be conclusively presumed to have acted on behalf of such Loan Party.

     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity Interest of the
Parent REIT or any Subsidiary or any Unconsolidated Affiliate, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of any such capital
stock or other Equity Interest, or on account of any return of capital to the Parent REIT’s
shareholders, partners or members (or the equivalent Person thereof); provided, that, to
the extent the calculation of the amount of any dividend or other distribution for purposes of this
definition of “Restricted Payment” includes amounts allocable to Unconsolidated Affiliates, such
calculation shall be without duplication and shall only include such amounts to the extent
attributable to any Unconsolidated Affiliate Interests.

     “Sale and Leaseback Transaction” means any arrangement pursuant to which any
Consolidated Party, directly or indirectly, becomes liable as lessee, guarantor or other surety
with respect to any lease, whether an operating lease or a capital lease, of any property (a) which
such Consolidated Party has sold or transferred (or is to sell or transfer) to a Person which is
not a Consolidated Party or (b) which such Consolidated Party intends to use for substantially the
same purpose as any other property which has been sold or transferred (or is to be sold or
transferred) by such Consolidated Party to another Person which is not a Consolidated Party in
connection with such lease.

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

     “Secured Debt” means, for any given calculation date, without duplication, the total
aggregate principal amount of any Indebtedness (other than Indebtedness incurred under the Loan
Documents) of the Consolidated Parties on a consolidated basis that is (a) secured in any manner by
any lien or (b) entitled to the benefit of a negative pledge (other than under this Agreement);
provided, that Indebtedness in respect of obligations under any capitalized lease shall not
be deemed to be “Secured Debt.”

     “Secured Hedge Agreement” means any interest rate Swap Contract permitted under
Article VI or VII that is entered into by and between the Borrower and any Hedge
Bank.

     “Secured Parties” means, collectively, the Administrative Agent, the Lenders, the L/C
Issuer, the Swing Line Lender, the Hedge Banks, each co-agent or sub-agent appointed by the
Administrative Agent from time to time pursuant to Section 9.05, and the other Persons the
Obligations owing to which are or are purported to be secured by the Collateral under the terms of
the Collateral Documents.

     “Shareholders’ Equity” means, as of any date of determination, the sum of (a)
consolidated shareholders’ equity of the Consolidated Parties as of that date determined in
accordance with GAAP plus (b) without duplication,

24

 

an amount equal to the aggregate
shareholders’ equity of each Unconsolidated Affiliate multiplied by the respective Unconsolidated
Affiliate Interest in each such entity.

     “Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become absolute and matured,
(c) such Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such
Person is not engaged in business or a transaction, and is not about to engage in business or a
transaction, for which such Person’s property would constitute an unreasonably small capital, and
(e) such Person is able to pay its debts and liabilities, contingent obligations and other
commitments as they mature in the ordinary course of business. The amount of contingent
liabilities at any time shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other governing body (other
than securities or interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise controlled, directly,
or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary
or Subsidiaries of the Parent REIT.

     “Subsidiary TRS” means any TRS other than Pebblebrook Hotel Lessee.

     “Supermajority Lenders” means, (a) as of any date of determination prior to the date
that at least four (4) Real Properties have been approved as Borrowing Base Properties in
accordance with the provisions hereof and of the other Loan Documents (such date, the “Minimum
BBP Date”), Lenders having 100% of the Aggregate Commitments or, if the commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been
terminated pursuant to Section 8.02, Lenders holding in the aggregate 100% of the Total
Outstandings (with the aggregate amount of each Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition), and (b) as of any date of determination on or following the Minimum
BBP Date, Lenders having at least 66 2/3% of the Aggregate Commitments or, if the commitment of
each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02, Lenders holding in the aggregate at least 66 2/3%
of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition); provided that, in each case, the Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded
for purposes of making a determination of Required Lenders.

     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

     “Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting agreement relating to such
Swap Contracts, (a) for any date on or after

25

 

the date such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to the date referenced
in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as
determined based upon one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

     “Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section
2.04.

     “Swing Line Lender” means Bank of America in its capacity as provider of Swing Line
Loans, or any successor swing line lender hereunder.

     “Swing Line Loan” has the meaning specified in Section 2.04(a).

     “Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit
B.

     “Swing Line Sublimit” means an amount equal to the lesser of (a) $30,000,000.00 and
(b) the Aggregate Commitments. The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Commitments.

     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or
possession of property creating obligations that do not appear on the balance sheet of such Person
but which, upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

     “Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

     “Threshold Amount” means $15,000,000.00.

     “Title Insurance Company” means any title insurance company reasonably acceptable to
the Administrative Agent issuing a Mortgage Policy hereunder.

     “Total Asset Value” means the sum of (a) unrestricted cash or cash equivalents of any
Consolidated Party; plus (b) hotel property acquisitions by any Consolidated Party, valued
at acquisition cost; plus (c) the cost of value enhancing capital expenditures by any
Consolidated Party; plus (d) the value of land owned by any Consolidated Party, as
determined in accordance with GAAP; plus (e) the value of mortgage assets owned by any
Consolidated Party, as determined in accordance with GAAP.

     “Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C
Obligations.

     “TRS” means each of (i) Pebblebrook Hotel Lessee and (ii) each other taxable REIT
subsidiary that is a Wholly Owned Subsidiary of Pebblebrook Hotel Lessee.

     “Type” means, with respect to a Committed Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

     “Unconsolidated Affiliate” means any corporation, partnership, association, joint
venture or other entity in each case which is not a Consolidated Party and in which a Consolidated
Party owns, directly or indirectly, any Equity Interest.

     “Unconsolidated Affiliate Funded Indebtedness” means, as of any date of determination
for any Unconsolidated Affiliate, the product of (i) the sum of (a) the outstanding principal
amount of all obligations of such Unconsolidated Affiliate, whether current or long-term, for
borrowed money and all obligations of such Unconsolidated Affiliate evidenced by bonds, debentures,
notes, loan agreements or other similar instruments, (b)

26

 

all purchase money Indebtedness of such Unconsolidated Affiliate, (c) all obligations of such
Unconsolidated Affiliate arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (d) all obligations of
such Unconsolidated Affiliate in respect of forward purchase agreements or the deferred purchase
price of any property or services (other than trade accounts payable in the ordinary course of
business), (e) Attributable Indebtedness of such Unconsolidated Affiliate in respect of capital
leases and Synthetic Lease Obligations, (f) without duplication, all Guarantees of such
Unconsolidated Affiliate with respect to outstanding Indebtedness of the types specified in clauses
(a) through (e) above of Persons other than such Unconsolidated Affiliate, and (g) all Indebtedness
of such Unconsolidated Affiliate of the types referred to in clauses (a) through (f) above of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Unconsolidated Affiliate is a general partner or joint venturer,
multiplied by (ii) the respective Unconsolidated Affiliate Interest of each Consolidated Party in
such Unconsolidated Affiliate.

     “Unconsolidated Affiliate Interest” means the percentage of the Equity Interests owned
by a Consolidated Party in an Unconsolidated Affiliate accounted for pursuant to the equity method
of accounting under GAAP.

     “United States” and “U.S.” mean the United States of America.

     “Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

     “Unrestricted Cash” means as of any date of determination, all cash of the Borrower on
such date that (a) does not appear (or would not be required to appear) as “restricted” on a
balance sheet of the Borrower, (b) is not subject to a Lien in favor of any Person other than Liens
granted to the Administrative Agent and statutory Liens in favor of any depositary bank where such
cash is maintained, (c) does not consist of or constitute “deposits” or sums legally held by the
Borrower in trust for another Person, (d) is not subject to any contractual restriction or
obligation regarding the payment thereof for a particular purpose (including insurance proceeds
that are required to be used in connection with the repair, restoration or replacement of any
property of the Borrower), and (e) is otherwise generally available for use by the Borrower.

     “Unused Fee” has the meaning specified in Section 2.09(a).

     “Unused Rate” means a percentage per annum equal to 0.50%.

     “Wholly Owned Subsidiary” means, with respect to any direct or indirect Subsidiary of
any Person, that 100% of the Equity Interests with ordinary voting power issued by such Subsidiary
(other than directors’ qualifying shares and investments by foreign nationals mandated by
Applicable Laws) is beneficially owned, directly or indirectly, by such Person.

     1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:

     (a) The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation.” The word “will” shall be construed to have the same meaning
and effect as the word “shall.” Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document (including any
Organization Document) shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified (subject to
any restrictions on such amendments, supplements or modifications set forth herein or in any
other Loan Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall be
construed to refer to such Loan Document in its entirety and not to any particular provision
thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any reference to any
law shall include all statutory and regulatory provisions consolidating, amending, replacing
or interpreting such law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation

27

 

as amended, modified or supplemented from time to time, and (vi) the words
“asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights.

     (b) In the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means
“to and including.”

     (c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this Agreement or
any other Loan Document.

     1.03 Accounting Terms.

     (a) Generally. All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including financial ratios and other
financial calculations) required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements, except as
otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of
determining compliance with any covenant (including the computation of any financial covenant)
contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried
at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC
470-20 on financial liabilities shall be disregarded.

     (b) Changes in GAAP. If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or
the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of the Required Lenders); provided
that, until so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the
Administrative Agent and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations
of such ratio or requirement made before and after giving effect to such change in GAAP.

     (c) Financial Covenant Calculation Conventions. Notwithstanding the above, the
parties hereto acknowledge and agree that, for purposes of all calculations made under the
financial covenants set forth in Section 7.11 (including without limitation for purposes
of the definitions of “Pro Forma Basis” set forth in Section 1.01), (i) after consummation
of any Disposition or removal of a Borrowing Base Property pursuant to Section 1.07 (A)
income statement items (whether income or expense) and capital expenditures attributable to the
property disposed of or removed shall, to the extent not otherwise excluded in such income
statement items for the Consolidated Parties in accordance with GAAP or in accordance with any
defined terms set forth in Section 1.01, be excluded as of the first day of the applicable
period and (B) Indebtedness which is retired shall be excluded and deemed to have been retired as
of the first day of the applicable period and (ii) after consummation of any acquisition (A)
income statement items (whether positive or negative) and capital expenditures attributable to the
Person or property acquired shall, to the extent not otherwise included in such income statement
items for the Consolidated Parties in accordance with GAAP or in accordance with any defined terms
set forth in Section 1.01, be included to the extent relating to any period applicable in
such calculations, (B) to the extent not retired in connection with such acquisition, Indebtedness
of the Person or property acquired shall be deemed to have been incurred as of the first day of
the applicable period, (iii) in connection with any incurrence of Indebtedness, any Indebtedness
which is retired in connection with such incurrence shall be excluded and deemed to have been
retired as of the first day of the applicable period and (iv) pro forma adjustments may be
included to the extent that such adjustments would give effect to items that are (1) directly
attributable to the relevant transaction, (2) expected to have a continuing impact on the
Consolidated Parties and (3) factually supportable (in the opinion of the Administrative Agent).

     (d) Consolidation of Variable Interest Entities. All references herein to
consolidated financial statements of the Borrower and its Subsidiaries or to the determination of
any amount for the Borrower and its

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Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed
to include each variable interest entity that the Borrower is required to consolidate pursuant to
FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.

     1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a rounding-up if there is no
nearest number).

     1.05 Times of Day. Unless otherwise specified, all references herein to times of day shall be
references to Eastern time (daylight or standard, as applicable).

     1.06 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of
Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at
such time; provided, however, that with respect to any Letter of Credit that, by
its terms or the terms of any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all such increases,
whether or not such maximum stated amount is in effect at such time.

     1.07 Addition/Removal of Borrowing Base Properties.

     (a) The Borrower may from time to time amend Schedule 5.24(a) to add an additional
Real Property that qualifies as a Borrowing Base Property; provided no Real Property shall
be included as a Borrowing Base Property in any compliance certificate delivered to the
Administrative Agent, on Schedule 5.24(a) or otherwise in any calculation of the Borrowing
Base, the Collateral Value Amount, the Mortgageability Amount, or any of the components of the
financial covenants set forth in Section 7.11 that refer to “Borrowing Base Properties”
unless and until (i) the Borrower has delivered to the Administrative Agent all of the BBP
Deliverables with respect to such Real Property (except to the extent the delivery thereof is
otherwise waived in writing by the Administrative Agent and the Supermajority Lenders) and either
(A) the Mortgage meeting the requirements hereof and encumbering such Real Property has been filed
or recorded in each filing or recording office that the Administrative Agent may deem necessary or
desirable in its reasonable discretion in order to create a valid first and subsisting Lien on the
property described therein in favor of Administrative Agent for the benefit of the Secured Parties
(except to the extent the filing or recording thereof is otherwise temporarily waived in writing by
the Administrative Agent as expressly contemplated in Section 1.07(e) below) or (B) the
Administrative Agent has received a Mortgage Policy respecting such Real Property (which Mortgage
Policy shall include affirmative “gap” insurance coverage), and (ii) the Supermajority Lenders have
approved in writing (or otherwise been deemed to have been approved in accordance with the
provisions of clause (g) of the definition of “Borrowing Base Properties”) such items and the
qualification of such Real Property as a Borrowing Base Property; provided,
further, to the extent the Borrower has delivered to the Administrative Agent all of the
Conditional Approval BBP Deliverables with respect to a particular Real Property, the Supermajority
Lenders may conditionally approve (or be deemed to have conditionally approved, in accordance with
the provisions of clause (g) of the definition of “Borrowing Base Properties”) the addition of such
Real Property as a Borrowing Base Property, such conditional approval to be subject only to the
receipt and approval by the Administrative Agent and the Supermajority Lenders (to the extent
subject to Supermajority Lender approval) of each of the remaining BBP Deliverables. In the case
of any conditional approval pursuant to the immediately preceding sentence, such Real Property will
be included as a Borrowing Base Property only upon receipt and approval by the Administrative Agent
and the Supermajority Lenders (to the extent subject to Supermajority Lender approval) of such
remaining BBP Deliverables (except to the extent the delivery thereof is otherwise waived in
writing by the Administrative Agent and the Supermajority Lenders). In connection with the
addition of any Borrowing Base Property following (or in connection with) such approval by the
Supermajority Lenders, the Administrative Agent will, in good faith, review and consider executing
customary documentation not otherwise included in the BBP Deliverables that may be requested by any
applicable franchisor and/or Approved Manager with respect to such Borrowing Base Property.

     (b) Notwithstanding anything contained herein to the contrary, to the extent any property
previously-qualifying as a Borrowing Base Property ceases to meet the criteria for qualification as
such, such property shall be immediately removed from all financial covenant and Borrowing
Base-related calculations contained herein. Any

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such property shall immediately cease to be a “Borrowing Base Property” hereunder and
Schedule 5.24(a) attached hereto shall be deemed to have been immediately amended to remove
such Real Property from the list of Borrowing Base Properties.

     (c) The Loan Parties may voluntarily remove any Borrowing Base Property from qualification as
such (but only in connection with a proposed refinancing, sale or other Disposition), if, and to
the extent: the Loan Parties shall, immediately following such removal, be in compliance (on a Pro
Forma Basis) with all of the covenants contained in Article VII of this Agreement and with
all Borrowing Base-related limitations on Outstanding Amounts set forth in this Agreement;
provided, in no event shall the Loan Parties voluntarily remove a Borrowing Base Property
from qualification as such after the date that is twenty-four (24) months following the Closing
Date unless, following such removal, either (i) the Borrowing Base will continue to include at
least four (4) Real Properties located in at least four (4) separate metropolitan statistical
areas, or (ii) prior to the voluntary removal of such Borrowing Base Property from qualification as
such, Borrower shall have (a) caused the Total Outstandings (other than that portion of L/C
Obligations comprised of the aggregate undrawn amount of Letters of Credit) to be prepaid and
reduced to zero ($0), and (b) fully Cash Collateralized that portion of L/C Obligations comprised
of the aggregate undrawn amount of Letters of Credit. Following the voluntary removal of a
Borrowing Base Property from qualification as such pursuant to clause (ii) of the proviso in the
immediately preceding sentence, Borrower shall not submit any Request for Credit Extension (and
none of the Lenders, the Swing Line Lender or the L/C Issuer shall be obligated to fund any
Committed Loan or Swing Line Loan, or to issue any Letter of Credit) unless and until the Borrowing
Base includes at least four (4) Real Properties located in at least four (4) separate metropolitan
statistical areas, and all other conditions for such Credit Extension (including those conditions
set forth in Article IV) have been satisfied.

     (d) Upon removal of a Borrowing Base Property pursuant to clauses (b) or (c) above, (i)
Schedule 5.24(a) shall be immediately amended to remove such Real Property from the list of
Borrowing Base Properties; (ii) the Borrower shall timely deliver a Compliance Certificate with
respect to such removal in accordance with the terms of Section 6.03(e) hereof after giving
effect to such release; (iii) if and to the extent no Default or Event of Default then exists and
the Administrative Agent determines that all information and calculations set forth on such
Compliance Certificate are accurate in all material respects, all Liens in favor of the
Administrative Agent or the Lender on such Real Property shall be released promptly by the
Administrative Agent.

     (e) Notwithstanding the requirements for the execution, delivery and recording of the Mortgage
or the delivery of the Mortgage Policy before a Real Property may be included as a Borrowing Base
Property as described in Section 1.07(a), provided no Default or Event of Default then
exists, Administrative Agent may, at the request of the Borrower, temporarily waive the requirement
for the execution, delivery and recording of such Mortgage and the delivery of such Mortgage Policy
relating thereto with respect to any such Real Property located in the State of New York (which
temporary waiver shall not extend beyond the expiration date of any Mortgage Commitments delivered
in connection with such Real Property, unless the Borrower shall have delivered to the
Administrative Agent updated, supplemental or replacement Mortgage Commitments with respect to such
Real Property at least ten (10) days prior to the expiration of such then-existing Mortgage
Commitments), so long as:

     (i) all of the other requirements relative to the qualification of such Real Property
qualifying as a Borrowing Base Property have been fully satisfied (including, in the case of
an extension of an existing temporary waiver with respect to the requirement for the
execution, delivery and recording of such Mortgage or the delivery of such Mortgage Policy
relating thereto beyond the expiration date of the Mortgage Commitments provided in
connection with such existing temporary waiver, the delivery to the Administrative Agent of
such updated, supplemental or replacement Mortgage Commitments with respect to such Real
Property at least ten (10) days prior to the expiration of such then-existing Mortgage
Commitments as described above) or waived in writing;

     (ii) (A) 125% of the cost of recording such Mortgage (including all mortgage,
recording, documentary and similar Taxes) and paying title insurance premiums in connection
with the Mortgage Policy with respect thereto (the “Recording Cost Amount”) has been
deposited by the Borrower or other applicable Loan Party in an escrow account on terms and
conditions reasonably satisfactory to the Administrative Agent or (B) the Borrower has
delivered a letter to Administrative Agent in the form of Exhibit J stating that it
will not escrow such Recording Cost Amount and requesting instead that the

30

 

Collateral Value Amount and the Mortgageability Amount, for purposes of calculating the
Borrowing Base, be reduced by the Recording Cost Amount;

     (iii) Administrative Agent has received a Pledge Agreement encumbering the Equity
Interests of the Loan Party which owns such New York Real Property and such filings,
certificates and other items as Administrative Agent deems necessary to perfect its security
interest in such Equity Interests; and

     (iv) Administrative Agent has received a Negative Pledge Agreement in form and
substance satisfactory to it in its reasonable discretion in the appropriate form for filing
or recording in the filing or recording offices where a Mortgage encumbering such property
would be recorded in order to perfect the Lien granted thereby.

     Notwithstanding any such temporary waiver by Administrative Agent, Administrative Agent
may, or shall at the request of the Required Lenders, request that the applicable Borrowing
Base Entity that owns such New York Real Property execute and deliver to the Administrative
Agent a Mortgage with respect to such New York Real Property (and the Borrower shall cause
such Borrowing Base Entity to so execute and deliver such Mortgage to the Administrative
Agent), and the Administrative Agent may, or shall at the request of the Required Lenders,
record such Mortgage on such New York Real Property or such Negative Pledge Agreement if any
of the following occur:

     (x) an Event of Default occurs under Sections 8.01(a), (b),
(e), (f), (g), (h) or (i), or

     (y) the Appraised Value for such New York Real Property is less than the
Mortgageability Amount for such Real Property;

provided, that the Borrower shall not be required to cause the applicable Borrowing
Base Entity to execute and deliver a Mortgage to the Administrative Agent, and the
Administrative Agent shall not record the Mortgage or the Negative Pledge Agreement
respecting such New York Real Property, if Borrower shall have immediately following either
of the events described in clause (x) or (y) above (a) caused the Total Outstandings (other
than that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of
Credit) to be prepaid and reduced to zero ($0), and (b) fully Cash Collateralized that
portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit.

Notwithstanding the foregoing provisions of this Section 1.07(e), except for the
requirement concerning the execution, delivery and recording of the Mortgage and the
delivery of the Mortgage Policy, each New York Borrowing Base Property and each Loan Party
that owns such New York Borrowing Base Property shall be subject to all of the terms,
conditions, and requirements hereunder applicable to Borrowing Base Properties and Borrowing
Base Entities generally.

     (f) Unless and until the Mortgage or the Negative Pledge Agreement respecting any applicable
Borrowing Base Property located in the State of New York has been executed, delivered and recorded
and the Mortgage Policy respecting such New York Borrowing Base Property has been delivered to the
Administrative Agent, in each case in accordance with the provisions of Section
1.07(e)(iv), the Borrowing Base Entity that owns such New York Borrowing Base Property shall
not:

     (i) engage in any business or activity other than the ownership, operation and
maintenance of the Borrowing Base Property owned by it, and activities incidental thereto;

     (ii) acquire or own any assets other than (A) the Borrowing Base Property owned by it,
and (B) such incidental personal property as may be necessary for the operation of such
Borrowing Base Property;

     (iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in
whole or in part, transfer or otherwise dispose of all or substantially all of its assets or
change its legal structure;

31

 

     (iv) fail to observe all organizational formalities, or fail to preserve its existence
as an entity duly organized, validly existing and in good standing under the Applicable Laws
of the jurisdiction of its organization or formation, or amend, modify or terminate any of
the provisions of its Organization Documents in a manner contrary to, or inconsistent with,
the covenants set forth in this Section 1.07(f);

     (v) own any subsidiary, or make any investment in, any Person;

     (vi) commingle its assets with the assets of any other Person, or permit any Affiliate
or constituent party independent access to its bank accounts;

     (vii) incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than (A) the Obligations, (B) trade and operational
Indebtedness incurred in the ordinary course of business with trade creditors, provided such
Indebtedness is (I) unsecured, (II) not evidenced by a note, (III) on commercially
reasonable terms and conditions, and (IV) due not more than ninety (90) days past the date
incurred and paid on or prior to such date, except to the extent that such trade and
operational Indebtedness is being disputed in good faith, and/or (C) financing leases and
purchase money Indebtedness incurred in the ordinary course of business relating to personal
property on commercially reasonable terms and conditions; provided, however, the aggregate
amount of the Indebtedness described in (B) and (C) shall not exceed at any time three
percent (3%) of the outstanding principal amount of the Loans;

     (viii) fail to maintain its records, books of account, bank accounts, financial
statements, accounting records and other entity documents separate and apart from those of
any other Person; except that such Borrowing Base Entity’s financial position, assets,
liabilities, net worth and operating results may be included in the consolidated financial
statements of the Consolidated Parties, provided that such consolidated financial statements
contain a footnote indicating that such Borrowing Base Entity is a separate legal entity and
that it maintains separate books and records;

     (ix) enter into any contract or agreement with any general partner, member,
shareholder, principal, guarantor of the Obligations of Borrower or such Borrowing Base
Entity, or any Affiliate of the foregoing, except upon terms and conditions that are
substantially similar to those that would be available on an arm’s-length basis with
unaffiliated third parties;

     (x) maintain its assets in such a manner that it will be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other Person;

     (xi) except as expressly contemplated by the Loan Documents, assume or guaranty the
debts of any other Person, hold itself out to be responsible for the debts of any other
Person, or otherwise pledge its assets for the benefit of any other Person or hold out its
credit as being available to satisfy the obligations of any other Person;

     (xii) make any loans or advances to any Person;

     (xiii) fail to file its own tax returns to the extent it is (I) not part of a
consolidated group filing a consolidated tax return, (II) not treated as a division for tax
purposes of another taxpayer, or (III) otherwise required to file pursuant to Applicable
Laws;

     (xiv) fail either to hold itself out to the public as a legal entity separate and
distinct from any other Person or to conduct its business solely in its own name or fail to
correct any known misunderstanding regarding its separate identity;

     (xv) if it is a partnership or limited liability company, without the unanimous written
consent of all of its partners or members, as applicable, and the written consent of 100% of
the directors or managers, as applicable, of such Borrowing Base Entity, (A) file or consent
to the filing of any petition, either voluntary or involuntary, to take advantage of any
Creditors Rights Laws, (B) seek or consent to the appointment of a receiver, liquidator or
any similar official, (C) take any action that might cause such entity to become insolvent,
or (D) make an assignment for the benefit of creditors;

32

 

     (xvi) fail to allocate shared expenses (including, without limitation, shared office
space and services performed by an employee of an Affiliate) among the Persons sharing such
expenses and to use separate stationery, invoices and checks;

     (xvii) fail to remain Solvent (if the contribution rights that each Loan Party will
have against the other Loan Parties and the subrogation rights such Borrowing Base Entity
may have, if any, against the Borrower are taken into account);

     (xviii) acquire debt or equity securities or any other debt or payment obligations of
its partners, members, shareholders or other Affiliates, as applicable; or

     (xix) fail to maintain a sufficient number of employees in light of its contemplated
business operations.

     In addition, unless and until the Mortgage or the Negative Pledge Agreement respecting any
such Borrowing Base Property located in the State of New York has been recorded and the Mortgage
Policy respecting such New York Borrowing Base Property has been delivered to the Administrative
Agent, in each case in accordance with the provisions of Section 1.07(e)(iv), the
Organization Documents of the Borrowing Base Entity that owns such New York Borrowing Base Property
shall (x) prohibit such entity from incurring any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (A) the Obligations, (B) trade and operational
Indebtedness incurred in the ordinary course of business with trade creditors, provided such
Indebtedness is (I) unsecured, (II) not evidenced by a note, (III) on commercially reasonable terms
and conditions, and (IV) due not more than ninety (90) days past the date incurred and paid on or
prior to such date, except to the extent that such trade and operational Indebtedness is being
disputed in good faith, and/or (C) financing leases and purchase money Indebtedness incurred in the
ordinary course of business relating to personal property on commercially reasonable terms and
conditions; provided, however, the aggregate amount of the Indebtedness described
in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount
of the Loans, and (y) prohibit such entity the granting of any Liens with respect to such Real
Property other than pursuant to the Loan Documents.

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

     2.01 Committed Loans. Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a “Committed Loan”) to the Borrower from
time to time, on any Business Day during the Availability Period, in an aggregate amount not to
exceed at any time outstanding the amount of such Lender’s Commitment; provided,
however, that after giving effect to any Committed Borrowing, (i) the Total Outstandings
shall not exceed the Aggregate Commitments, (ii) the aggregate Outstanding Amount of the Committed
Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all Swing Line Loans shall not exceed such Lender’s Commitment, and (iii) the Total Outstandings
shall not exceed the Borrowing Base. Within the limits of each Lender’s Commitment, and subject to
the other terms and conditions hereof, the Borrower may borrow under this Section 2.01,
prepay under Section 2.05, and reborrow under this Section 2.01. Committed Loans
may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

	2.02	 	Borrowings, Conversions and Continuations of Committed Loans.

     (a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other,
and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice
to the Administrative Agent, which may be given by telephone. Each such notice must be received by
the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested
date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any
conversion of Eurodollar Rate Loans to Base Rate Committed Loans, and (ii) on the requested date of
any Borrowing of Base Rate Committed Loans; provided, however, that if the Borrower
wishes to request Eurodollar Rate Loans having an Interest Period other than one, two, three or six
months in duration as provided in the definition of “Interest Period,” the applicable notice must
be received by the

33

 

Administrative Agent not later than 11:00 a.m. four Business Days prior to the requested date
of such Borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt
notice to the Lenders of such request and determine whether the requested Interest Period is
acceptable to all of them. Not later than 11:00 a.m., three Business Days before the requested
date of such Borrowing, conversion or continuation, the Administrative Agent shall notify the
Borrower (which notice may be by telephone) whether or not the requested Interest Period has been
consented to by all the Lenders. Each telephonic notice by the Borrower pursuant to this
Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a
written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the
Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a
principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as
provided in Sections 2.03(c) and 2.04(c), each Borrowing of or conversion to Base
Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i)
whether the Borrower is requesting a Committed Borrowing, a conversion of Committed Loans from one
Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the
Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii)
the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of
Committed Loans to be borrowed or to which existing Committed Loans are to be converted, and (v) if
applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to
specify a Type of Committed Loan in a Committed Loan Notice or if the Borrower fails to give a
timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be
made as, or converted to, Eurodollar Rate Loans having an Interest Period of one (1) month. Any
such automatic conversion to Eurodollar Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any
such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month. Notwithstanding anything to the contrary herein, a
Swing Line Loan may not be converted to a Eurodollar Rate Loan.

     (b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans,
and if no timely notice of a conversion or continuation is provided by the Borrower, the
Administrative Agent shall notify each Lender of the details of any automatic conversion to
Eurodollar Rate Loans described in the preceding subsection. In the case of a Committed Borrowing,
each Lender shall make the amount of its Committed Loan available to the Administrative Agent in
immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the
Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the
applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial
Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received
available to the Borrower in like funds as received by the Administrative Agent either by (i)
crediting the account of the Borrower on the books of Bank of America with the amount of such funds
or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower; provided,
however, that if, on the date the Committed Loan Notice with respect to such Borrowing is
given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing,
first, shall be applied to the payment in full of any such L/C Borrowings, and
second, shall be made available to the Borrower as provided above.

     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted
only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of
a Default or an Event of Default, no Loans may be requested as, converted to or continued as
Eurodollar Rate Loans without the consent of the Required Lenders.

     (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of
such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent
shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such change.

     (e) After giving effect to all Committed Borrowings, all conversions of Committed Loans from
one Type to the other, and all continuations of Committed Loans as the same Type, there shall not
be more than five Interest Periods in effect with respect to Committed Loans.

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     2.03 Letters of Credit.

     (a) The Letter of Credit Commitment.

     (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in
reliance upon the agreements of the Lenders set forth in this Section 2.03, (1) from
time to time on any Business Day during the period from the Closing Date until the Letter of
Credit Expiration Date, to issue Letters of Credit for the account of any Loan Party, and to
amend Letters of Credit previously issued by it, in accordance with subsection (b) below,
and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree
to participate in Letters of Credit issued for the account of the Borrower or any other Loan
Party and any drawings thereunder; provided that after giving effect to any L/C
Credit Extension with respect to any Letter of Credit, (w) the Total Outstandings shall not
exceed the Borrowing Base, (x) the Total Outstandings shall not exceed the Aggregate
Commitments, (y) the aggregate Outstanding Amount of the Committed Loans of any Lender,
plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all Swing Line Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding
Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request
by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested complies with the
conditions set forth in the proviso to the preceding sentence. Within the foregoing limits,
and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired or that have
been drawn upon and reimbursed.

(ii) The L/C Issuer shall not issue any Letter of Credit, if:

     (A) subject to Section 2.03(b)(iii), the expiry date of the requested
Letter of Credit would occur more than twelve months after the date of issuance,
unless all the Lenders have approved such expiry date;

     (B) the expiry date of the requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such expiry
date; or

     (C) a default of any Lender’s obligations to fund under Section 2.03(c)
exists or any Lender is at such time a Defaulting Lender or an Impacted Lender
hereunder, unless the L/C Issuer has entered into arrangements satisfactory to the
L/C Issuer with the Borrower or such Lender to eliminate the L/C Issuer’s risk with
respect to such Lender; or

     (D) the requested Letter of Credit is to be denominated in a currency other
than Dollars.

(iii) The L/C Issuer shall not be under any obligation to issue any Letter of Credit
if:

     (A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing the
Letter of Credit, or any Applicable Law applicable to the L/C Issuer or any request
or directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the
L/C Issuer refrain from, the issuance of letters of credit generally or the Letter
of Credit in particular or shall impose upon the L/C Issuer with respect to the
Letter of Credit any restriction, reserve or capital requirement (for which the L/C
Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or
shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was
not applicable on the Closing Date and which the L/C Issuer in good faith deems
material to it;

     (B) the issuance of the Letter of Credit would violate one or more policies of
the L/C Issuer applicable to letters of credit generally;

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     (C) except as otherwise agreed by the Administrative Agent and the L/C Issuer,
the Letter of Credit is in an initial stated amount less than $500,000;

     (D) any Lender is at that time an Impacted Lender or a Defaulting Lender,
unless the L/C Issuer has entered into arrangements, including the delivery of Cash
Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the
Borrower or such Lender to eliminate the L/C Issuer’s actual or potential Fronting
Exposure (after giving effect to Section 2.18(a)(iv)) with respect to the
Defaulting Lender arising from either the Letter of Credit then proposed to be
issued or that Letter of Credit and all other L/C Obligations as to which the L/C
Issuer has actual or potential Fronting Exposure, as it may elect in its sole
discretion; or

     (E) the Letter of Credit contains any provisions for automatic reinstatement of
the stated amount after any drawing thereunder.

     (iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be
permitted at such time to issue the Letter of Credit in its amended form under the terms
hereof.

     (v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A)
the L/C Issuer would have no obligation at such time to issue the Letter of Credit in its
amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not
accept the proposed amendment to such Letter of Credit.

     (vi) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and the L/C Issuer shall have
all of the benefits and immunities (A) provided to the Administrative Agent in Article
IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection
with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents
pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used
in Article IX included the L/C Issuer with respect to such acts or omissions, and
(B) as additionally provided herein with respect to the L/C Issuer.

     (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of
Credit.

     (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative
Agent) in the form of a Letter of Credit Application, appropriately completed and signed by
a Responsible Officer of the Borrower. Such Letter of Credit Application must be received
by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two
Business Days (or such later date and time as the Administrative Agent and the L/C Issuer
may agree in a particular instance in their sole discretion) prior to the proposed issuance
date or date of amendment, as the case may be. In the case of a request for an initial
issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and
detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested
Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry
date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the full text of any
certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the
purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C
Issuer may reasonably require. In the case of a request for an amendment of any outstanding
Letter of Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date
of amendment thereof (which shall be a Business Day); (C) the nature of the proposed
amendment; and (D) such other matters as the L/C Issuer may reasonably require.
Additionally, the Borrower shall furnish to the L/C Issuer and the Administrative Agent such
other documents and information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may
reasonably require.

     (ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will
confirm with the Administrative Agent (by telephone or in writing) that the Administrative
Agent has received a copy of such Letter of Credit Application from the Borrower and, if
not, the L/C Issuer will provide the

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Administrative Agent with a copy thereof. Unless the L/C Issuer has received written
notice from any Lender, the Administrative Agent or any Loan Party, at least one Business
Day prior to the requested date of issuance or amendment of the applicable Letter of Credit,
that one or more applicable conditions contained in Article IV shall not then be
satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the Borrower (or the applicable
Loan Party) or enter into the applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer’s usual and customary business practices. Immediately upon
the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation
in such Letter of Credit in an amount equal to the product of such Lender’s Applicable
Percentage times the amount of such Letter of Credit.

     (iii) If the Borrower so requests in any applicable Letter of Credit Application, the
L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic
extension provisions (each, an “Auto-Extension Letter of Credit”); provided
that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such
extension at least once in each twelve-month period (commencing with the date of issuance of
such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a
day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C
Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for
any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders
shall be deemed to have authorized (but may not require) the L/C Issuer to permit the
extension of such Letter of Credit at any time to an expiry date not later than the Letter
of Credit Expiration Date; provided, however, that the L/C Issuer shall not
permit any such extension if (A) the L/C Issuer has determined that it would not be
permitted, or would have no obligation, at such time to issue such Letter of Credit in its
revised form (as extended) under the terms hereof (by reason of the provisions of clause
(ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which
may be by telephone or in writing) on or before the day that is seven Business Days before
the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders
have elected not to permit such extension or (2) from the Administrative Agent, any Lender
or the Borrower that one or more of the applicable conditions specified in Section
4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit
such extension.

     (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter
of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C
Issuer will also deliver to the Borrower and the Administrative Agent a true and complete
copy of such Letter of Credit or amendment.

     (c) Drawings and Reimbursements; Funding of Participations.

     (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and the
Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by the
L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), the Borrower
shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the
amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time,
the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of
the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such
Lender’s Applicable Percentage thereof. In such event, the Borrower shall be deemed to have
requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an
amount equal to the Unreimbursed Amount, without regard to the minimum and multiples
specified in Section 2.02 for the principal amount of Base Rate Loans, but subject
to the amount of the unutilized portion of the Aggregate Commitments and the conditions set
forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any
notice given by the L/C Issuer or the Administrative Agent pursuant to this Section
2.03(c)(i) may be given by telephone if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.

     (ii) Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make
funds available (and the Administrative Agent may apply Cash Collateral provided for such
purpose) for the account of the L/C Issuer at the Administrative Agent’s Office in an amount
equal to its Applicable Percentage of the

37

 

Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such
notice by the Administrative Agent, whereupon, subject to the provisions of Section
2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a
Base Rate Committed Loan to the Borrower in such amount. The Administrative Agent shall
remit the funds so received to the L/C Issuer.

     (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Committed Borrowing of Base Rate Loans because the conditions set forth in Section
4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that
is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment
to the Administrative Agent for the account of the L/C Issuer pursuant to Section
2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.

     (iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this
Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be
solely for the account of the L/C Issuer.

     (v) Each Lender’s obligation to make Committed Loans or L/C Advances to reimburse the
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section
2.03(c), shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the L/C Issuer, the Borrower or any other Person for any
reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lender’s obligation to make Committed Loans
pursuant to this Section 2.03(c) is subject to the conditions set forth in
Section 4.02 (other than delivery by the Borrower of a Committed Loan Notice). No
such making of an L/C Advance shall relieve or otherwise impair the obligation of the
Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit, together with interest as provided herein.

     (vi) If any Lender fails to make available to the Administrative Agent for the account
of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section
2.03(c)(ii), then, without limiting the other provisions of this Agreement, the L/C
Issuer shall be entitled to recover from such Lender (acting through the Administrative
Agent), on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available to the L/C
Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by the L/C Issuer in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily charged by the
L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest
and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan
included in the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C
Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this clause (vi)
shall be conclusive absent manifest error.

     (d) Repayment of Participations.

     (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and
has received from any Lender such Lender’s L/C Advance in respect of such payment in
accordance with Section 2.03(c), if the Administrative Agent receives for the
account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or
interest thereon (whether directly from the Borrower or otherwise, including proceeds of
Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will
distribute to such Lender its Applicable Percentage thereof in the same funds as those
received by the Administrative Agent.

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     (ii) If any payment received by the Administrative Agent for the account of the L/C
Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the
circumstances described in Section 10.05 (including pursuant to any settlement
entered into by the L/C Issuer in its discretion), each Lender shall pay to the
Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on
demand of the Administrative Agent, plus interest thereon from the date of such demand to
the date such amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect. The obligations of the Lenders under this clause
shall survive the payment in full of the Obligations and the termination of this Agreement.

     (e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer
for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:

     (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other Loan Document;

     (ii) the existence of any claim, counterclaim, setoff, defense or other right that the
Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such transferee
may be acting), the L/C Issuer or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement
or instrument relating thereto, or any unrelated transaction;

     (iii) any draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under such
Letter of Credit;

     (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of
a draft or certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of such Letter of Credit, including any arising in connection with any
proceeding under any Debtor Relief Law; or

     (v) any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or any Subsidiary.

     The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto
that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s
instructions or other irregularity, the Borrower will promptly notify the L/C Issuer. The Borrower
shall be conclusively deemed to have waived, to the extent permitted by Applicable Laws, any such
claim against the L/C Issuer and its correspondents with respect to any particular Letter of Credit
unless such notice is given within five (5) Business Days after the issuance of such Letter of
Credit or amendment thereto.

     (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of the L/C Issuer, the
Administrative Agent, any of their respective Related Parties nor any correspondent, participant or
assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document
or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all
risks of the acts or omissions of any beneficiary or transferee with respect to its use of any
Letter

39

 

of Credit; provided, however, that this assumption is not intended to, and
shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the
Administrative Agent, any of their respective Related Parties nor any correspondent, participant or
assignee of the L/C Issuer shall be liable or responsible for any of the matters described in
clauses (i) through (v) of Section 2.03(e); provided, however, that
anything in clauses (i) through (v) of Section 2.03(e) and this Section 2.03(f) to
the contrary notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C
Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves
were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents
that appear on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

     (g) Applicability of ISP. Unless otherwise expressly agreed by the L/C Issuer and the
Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each standby Letter
of Credit.

     (h) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the
“Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Margin
times the daily amount available to be drawn under such Letter of Credit; provided,
however, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with
respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral
satisfactory to the L/C Issuer pursuant to this Section 2.03 shall be payable, to the
maximum extent permitted by Applicable Law, to the other Lenders in accordance with the upward
adjustments in their respective Applicable Percentages allocable to such Letter of Credit pursuant
to Section 2.18(a)(iv), with the balance of such fee, if any, payable to the L/C Issuer for
its own account. For purposes of computing the daily amount available to be drawn under any Letter
of Credit, the amount of such Letter of Credit shall be determined in accordance with Section
1.06. Letter of Credit Fees shall be (i) due and payable on the first Business Day after the
end of each March, June, September and December, commencing with the first such date to occur after
the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on
demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable
Margin during any quarter, the daily amount available to be drawn under each Letter of Credit shall
be computed and multiplied by the Applicable Margin separately for each period during such quarter
that such Applicable Margin was in effect. Notwithstanding anything to the contrary contained
herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of
Credit Fees shall accrue at the Default Rate.

     (i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The
Borrower shall, in connection with the issuance or extension (whether or not pursuant to an
automatic extension) of each Letter of Credit, pay directly to the L/C Issuer for its own account a
fronting fee for each Letter of Credit equal to the greater of (i) $1,500.00 and (ii) 0.125% times
the maximum amount available to be drawn under such Letter of Credit (whether or not such maximum
amount is then in effect with respect to such Letter of Credit). Such fronting fee shall be
payable upon issuance or extension of the applicable Letter of Credit. For the purposes of
computing the daily amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 1.06. In addition to the
foregoing, the Borrower shall pay directly to the L/C Issuer for its own account the customary
issuance, presentation, amendment and other processing fees, and other standard costs and charges,
of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand and are nonrefundable.

     (j) Conflict with Issuer Documents. In the event of any conflict between the terms
hereof and the terms of any Issuer Document, the terms hereof shall control.

     (k) Letters of Credit Issued for Loan Parties Other than the Borrower.
Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Loan Party

40

 

other than the Borrower, the Borrower shall be obligated to reimburse the L/C Issuer hereunder
for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the
issuance of Letters of Credit for the account of the Loan Parties inures to the benefit of the
Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such
Loan Parties.

     2.04 Swing Line Loans.

     (a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing
Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section
2.04, may in its sole discretion make loans (each such loan, a “Swing Line Loan”) to
the Borrower from time to time on any Business Day during the Availability Period in Dollars in an
aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage
of the Outstanding Amount of Committed Loans and L/C Obligations of the Lender acting as Swing Line
Lender, may exceed the amount of such Lender’s Commitment; provided, however, that
after giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the
Aggregate Commitments, (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender,
plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations,
plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans
shall not exceed such Lender’s Commitment, and (iii) the Total Outstandings shall not exceed the
Borrowing Base, and provided, further, that the Borrower shall not use the proceeds
of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits,
and subject to the other terms and conditions hereof, the Borrower may borrow under this
Section 2.04, prepay under Section 2.05, and reborrow under this Section
2.04. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing
Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal
to the product of such Lender’s Applicable Percentage times the amount of such Swing Line
Loan.

     (b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Borrower’s
irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent
not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be
borrowed, which shall be a minimum of $250,000, and (ii) the requested borrowing date, which shall
be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing
Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swing
Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the
Administrative Agent (by telephone or in writing) that the Administrative Agent has also received
such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent
(by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received
notice (by telephone or in writing) from the Administrative Agent (including at the request of any
Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing
Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first
proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable
conditions specified in Article IV is not then satisfied, then, subject to the terms and
conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date
specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the
Borrower. The Swing Line Lender shall not be required to fund any Swing Line Loan to the extent
any Lender is at such time an Impacted Lender or a Defaulting Lender hereunder.

     (c) Refinancing of Swing Line Loans.

     (i) The Swing Line Lender at any time in its sole discretion may request, on behalf of
the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its
behalf), that each Lender make a Base Rate Committed Loan in an amount equal to such
Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such
request shall be made in writing (which written request shall be deemed to be a Committed
Loan Notice for purposes hereof) and in accordance with the requirements of Section
2.02, without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate
Commitments and the conditions set forth in Section 4.02. The Swing Line Lender
shall furnish the

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Borrower with a copy of the applicable Committed Loan Notice promptly after delivering
such notice to the Administrative Agent. Each Lender shall make an amount equal to its
Applicable Percentage of the amount specified in such Committed Loan Notice available to the
Administrative Agent in immediately available funds (and the Administrative Agent may apply
Cash Collateral available with respect to the applicable Swing Line Loan) for the account of
the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the
day specified in such Committed Loan Notice, whereupon, subject to Section
2.04(c)(ii), each Lender that so makes funds available shall be deemed to have made a
Base Rate Committed Loan to the Borrower in such amount. The Administrative Agent shall
remit the funds so received to the Swing Line Lender.

     (ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed
Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Committed
Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request
by the Swing Line Lender that each of the Lenders fund its risk participation in the
relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the
account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed
payment in respect of such participation.

     (iii) If any Lender fails to make available to the Administrative Agent for the account
of the Swing Line Lender any amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.04(c) by the time specified in Section
2.04(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting
through the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment is
immediately available to the Swing Line Lender at a rate per annum equal to the greater of
the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with
banking industry rules on interbank compensation, plus any administrative, processing or
similar fees customarily charged by the Swing Line Lender in connection with the foregoing.
If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid
shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing
or funded participation in the relevant Swing Line Loan, as the case may be. A certificate
of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with
respect to any amounts owing under this clause (iii) shall be conclusive absent manifest
error.

     (iv) Each Lender’s obligation to make Committed Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section 2.04(c) shall be
absolute and unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may have against
the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however, that each
Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is
subject to the conditions set forth in Section 4.02. No such funding of risk
participations shall relieve or otherwise impair the obligation of the Borrower to repay
Swing Line Loans, together with interest as provided herein.

     (d) Repayment of Participations.

     (i) At any time after any Lender has purchased and funded a risk participation in a
Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line
Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage thereof
in the same funds as those received by the Swing Line Lender.

     (ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line Lender under
any of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay
to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand to the date such amount is
returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent
will make such demand upon the request of the Swing Line Lender. The obligations of the
Lenders under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.

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     (e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be
responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Lender
funds its Base Rate Committed Loan or risk participation pursuant to this Section 2.04 to
refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such
Applicable Percentage shall be solely for the account of the Swing Line Lender.

     (f) Payments Directly to Swing Line Lender. The Borrower shall make all payments of
principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

     2.05 Prepayments.

     (a) The Borrower may, upon notice to the Administrative Agent, at any time or from time to
time voluntarily prepay Committed Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by the Administrative Agent not later than
11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B)
on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar Rate
Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof; and (iii) any prepayment of Base Rate Committed Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire
principal amount thereof then outstanding. Each such notice shall specify the date and amount of
such prepayment and the Type(s) of Committed Loans to be prepaid and, if Eurodollar Rate Loans are
to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable
Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make
such prepayment and the payment amount specified in such notice shall be due and payable on the
date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest on the amount prepaid, together with any additional amounts required pursuant to
Section 3.05. Subject to Section 2.18, each such prepayment shall be applied to
the Committed Loans of the Lenders in accordance with their respective Applicable Percentages.

     (b) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative
Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part
without premium or penalty; provided that (i) such notice must be received by the Swing
Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment,
and (ii) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice
shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such notice shall be due
and payable on the date specified therein.

     (c) If for any reason the Total Outstandings at any time exceed the Borrowing Base, the
Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an
aggregate amount equal to such excess; provided, however, that the Borrower shall
not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c)
unless after the prepayment in full of the Loans the Total Outstandings exceed the Borrowing Base.

     2.06 Termination or Reduction of Commitments. The Borrower may, upon notice to the
Administrative Agent, terminate the Aggregate Commitments, the Letter of Credit Sublimit or the
Swing Line Sublimit, or from time to time permanently reduce the Aggregate Commitments, the Letter
of Credit Sublimit or the Swing Line Sublimit; provided that (i) any such notice shall be
received by the Administrative Agent not later than 11:00 a.m. five (5) Business Days prior to the
date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount
of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrower shall not
terminate or reduce (A) the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments,
(B) the Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of L/C
Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit, or
(C) the Swing Line Sublimit if, after giving effect thereto and to any concurrent prepayments
hereunder, the Outstanding Amount of Swing Line Loans would exceed the Swing Line Sublimit, and
(iv) if, after giving effect to any reduction of the Aggregate Commitments, the Letter of Credit
Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit
shall be automatically reduced by the amount of such excess. The Administrative Agent will
promptly notify the Lenders

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of any such notice of termination or reduction of the Aggregate Commitments, the Letter of
Credit Sublimit or the Swing Line Sublimit. Any reduction of the Aggregate Commitments shall be
applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued
until the effective date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.

     2.07 Repayment of Loans.

     (a) The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal
amount of Committed Loans outstanding on such date and all other outstanding Obligations as of such
date.

     (b) The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date five
(5) Business Days after such Loan is made and (ii) the Maturity Date.

	2.08	 	Interest.

     (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall
bear interest on the outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Margin;
(ii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Margin; and (iii) each Swing Line Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Margin.

     (b) (i) If any amount of principal of any Loan is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount
shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by Applicable Laws.

     (ii) If any amount (other than principal of any Loan) payable by the Borrower under any
Loan Document is not paid when due (without regard to any applicable grace periods), whether
at stated maturity, by acceleration or otherwise, then upon the request of the Required
Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by Applicable Laws.

     (iii) Upon the request of the Required Lenders, while any Event of Default exists, the
Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder
at a fluctuating interest rate per annum at all times equal to the Default Rate to the
fullest extent permitted by Applicable Laws.

     (iv) Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.

     (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein. Interest hereunder shall be
due and payable in accordance with the terms hereof before and after judgment, and before and after
the commencement of any proceeding under any Debtor Relief Law.

     2.09 Fees. In addition to certain fees described in subsections (h) and (i) of Section
2.03:

     (a) Unused Fees. The Borrower shall, for each day during the term of this Agreement
on which there exist any Commitments, pay to the Administrative Agent for the account of each
Lender holding a Commitment (in accordance with such Lender’s Applicable Percentage thereof), an
unused fee (the “Unused Fee”) equal to the Unused Rate times the actual daily
amount by which the Aggregate Commitments exceed the Total Outstandings (less the amount of any
outstanding Swing Line Loans) as of such date, subject to adjustment as provided in Section
2.18. The Unused Fee shall accrue at all times during the term of this Agreement on which
there exist any Commitments, including at any time during which one or more of the conditions in
Article V is not met, and shall be

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due and payable quarterly in arrears on the fifth day of each January, April, July and October
(or the next succeeding Business Day if such day is not a Business Day), commencing on July 5, 2010
(with such initial payment to include such fees commencing from the Closing Date), and on the
Maturity Date. The Unused Fee shall be calculated quarterly in arrears, based on the applicable
daily Unused Rates during each day of such quarter.

     (b) Other Fees.

     (i) The Borrower shall pay to the Arranger and the Administrative Agent for their own
respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees
shall be fully earned when paid and shall not be refundable for any reason whatsoever.

     (ii) The Borrower shall pay to the Administrative Agent, for the account of the Lenders, such
fees (if any) in the amounts and at the times specified in the Fee Letter. Such fees shall be
fully earned when paid and shall not be refundable for any reason whatsoever.

     2.10 Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin. (a) All
computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to
the Eurodollar Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed. All other computations of fees and interest shall be made on the basis of
a 360-day year and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan
for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for
the day on which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.12(a), bear interest for one
day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be
conclusive and binding for all purposes, absent manifest error.

     (b) If, as a result of any restatement of or other adjustment to the financial statements of
the Borrower or for any other reason, the Borrower or the Lenders determine that (i) the
Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate
and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher
pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to
the Administrative Agent for the account of the applicable Lenders or the L/C Issuer, as the case
may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or
deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, automatically and without further action by the Administrative Agent, any Lender or
the L/C Issuer), an amount equal to the excess of the amount of interest and fees that should have
been paid for such period over the amount of interest and fees actually paid for such period. This
paragraph shall not limit the rights of the Administrative Agent, any Lender or the L/C Issuer, as
the case may be, under Section 2.03(c)(iii), 2.03(i) or 2.08(b) or under
Article VIII. The Borrower’s obligations under this paragraph shall survive until the date
that is one (1) year after the date of the termination of the Aggregate Commitments and the
repayment of all other Obligations hereunder.

     2.11 Evidence of Debt.

     (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender and by the Administrative Agent in the ordinary course of
business. The accounts or records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the
Borrower and the interest and payments thereon. Any failure to so record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the Administrative Agent in
respect of such matters, the accounts and records of the Administrative Agent shall control in the
absence of manifest error. Upon the request of any Lender made through the Administrative Agent,
the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note,
which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may
attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and
maturity of its Loans and payments with respect thereto.

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     (b) In addition to the accounts and records referred to in subsection (a), each Lender and the
Administrative Agent shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing
Line Loans. In the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of manifest error.

     2.12 Payments Generally; Administrative Agent’s Clawback.

     (a) General. All payments to be made by the Borrower shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly
provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent,
for the account of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable
Percentage (or other applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender’s Lending Office. All payments received by the Administrative
Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower
shall come due on a day other than a Business Day, payment shall be made on the next following
Business Day, and such extension of time shall be reflected in computing interest or fees, as the
case may be.

     (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the proposed date of any
Committed Borrowing of Eurodollar Rate Loans (or, in the case of any Committed Borrowing of Base
Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not
make available to the Administrative Agent such Lender’s share of such Committed Borrowing, the
Administrative Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans,
that such Lender has made such share available in accordance with and at the time required by
Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share of the applicable
Committed Borrowing available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding
amount in immediately available funds with interest thereon, for each day from and including the
date such amount is made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation, plus any administrative, processing or similar fees
customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the
case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If
the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of
such interest paid by the Borrower for such period. If such Lender pays its share of the
applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Committed Loan included in such Committed Borrowing. Any payment by the
Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall
have failed to make such payment to the Administrative Agent.

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

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     A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest error.

     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing
provisions of this Article II, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the applicable Credit Extension set forth in
Article IV are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from such Lender) to such
Lender, with interest earned thereon at the Federal Funds Rate until returned.

     (d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make
Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make
payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender
to make any Committed Loan, to fund any such participation or to make any payment under Section
10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the failure of any other
Lender to so make its Committed Loan, to purchase its participation or to make its payment under
Section 10.04(c).

     (e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain
the funds for any Loan in any particular place or manner or to constitute a representation by any
Lender that it has obtained or will obtain the funds for any Loan in any particular place or
manner.

     2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff
or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of
the Committed Loans made by it, or the participations in L/C Obligations or in Swing Line Loans
held by it (excluding any amounts applied by the Swing Line Lender to outstanding Swing Line Loans
and excluding any amounts received by the L/C Issuer and/or Swing Line Lender to secure the
obligations of a Defaulting Lender or an Impacted Lender to fund risk participations hereunder)
resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such
Committed Loans or participations and accrued interest thereon greater than its pro
rata share thereof as provided herein, then the Lender receiving such greater proportion
shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Committed Loans and subparticipations in L/C Obligations and Swing Line Loans
of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Committed Loans and other amounts owing them,
provided that:

     (i) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the extent of such
recovery, without interest; and

     (ii) the provisions of this Section shall not be construed to apply to (x) any payment
made by or on behalf of the Borrower pursuant to and in accordance with the express terms of
this Agreement (including the application of funds arising from the existence of a
Defaulting Lender), (y) the application of Cash Collateral provided for in Section
2.17, or (z) any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Committed Loans or subparticipations in L/C
Obligations or Swing Line Loans to any assignee or participant, other than an assignment to
the Borrower or any Affiliate thereof (as to which the provisions of this Section shall
apply).

     2.14 Extension of Maturity Date.

     (a) Initial Maturity Date. Subject to extension pursuant to the terms and conditions
set forth in clause (b) of this Section 2.14 and subject to the provisions of clause (c) of
this Section 2.14, the Borrower shall, on the third anniversary of the date hereof (the
“Initial Maturity Date”), cause the Obligations (including, without limitation, all
outstanding principal and interest on the Loans and Swing Line Loans and all fees, costs and
expenses due and owing under the Loan Documents) to be Fully Satisfied.

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     (b) Extended Maturity Date Option. Not more than 180 days and not less than 90 days
prior to the Initial Maturity Date, the Borrower may request in writing that the Lenders extend the
term of this Agreement by one (1) additional year to the fourth anniversary of the date hereof (the
end of such period being the “Extended Maturity Date”). Each Lender agrees that the
Maturity Date shall be extended following such a request from the Borrower subject to satisfaction
of the following terms and conditions:

     (i) no Default or Event of Default shall exist on the date of such extension and after
giving effect thereto;

     (ii) each of the Borrowing Base Properties shall have been reappraised pursuant to an
Appraisal reasonably acceptable to the Administrative Agent and having an effective date not
more than sixty (60) days prior to the Initial Maturity Date (such Appraisals to be
commissioned by the Administrative Agent and paid for by the Borrower);

     (iii) the Total Outstandings shall be less than the Borrowing Base, as adjusted in
connection with the Appraisals obtained pursuant to subclause (ii) above;

     (iv) the Borrower shall, at the Initial Maturity Date, pay to the Administrative Agent
(for the pro rata benefit of the Lenders based on their respective Applicable Percentage as
of such date) an extension fee equal to (A) 50.0 basis points (0.50%), multiplied by (B) the
Aggregate Commitments as of such date and shall have paid all other outstanding fees,
expenses or other amounts for which the Loan Parties are responsible hereunder; and

     (v) each Loan Party shall deliver to the Administrative Agent a certificate dated as of
the Initial Maturity Date signed by a Responsible Officer of such Loan Party (A) certifying
and attaching the resolutions adopted by such Loan Party approving or consenting to such
extension and (B) certifying that, before and after giving effect to such extension, (1) the
representations and warranties of such Loan Party contained in Article V and the
other Loan Documents are true and correct in all material respects on and as of the Initial
Maturity Date, except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such earlier date,
and except that for purposes of this Section 2.14, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to
refer to the most recent statements furnished pursuant to subsections (a) and (b),
respectively, of Section 6.01, and (2) no Default exists.

     (c) Notification by Administrative Agent. The Administrative Agent shall notify the
Borrower and each of the Lenders of the effectiveness of any extension pursuant to this Section
2.14.

     (d) Satisfaction of Obligations Upon Acceleration. Notwithstanding anything contained
herein or in any other Loan Document to the contrary, to the extent any of the Obligations are
accelerated pursuant to the terms hereof (including, without limitation, Section 8.02
hereof) or of any other Loan Document, the Borrower shall, immediately upon the occurrence of such
acceleration, cause such accelerated Obligations to be Fully Satisfied.

     (e) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.13 or 10.01 to the contrary.

     2.15 Increase in Commitments.

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     (a) Request for Increase. Provided there exists no Default, upon notice to the
Administrative Agent (which shall promptly notify the Lenders), the Borrower may, from time to
time, request an increase in the Aggregate Commitments by an amount (for all such requests) not
exceeding $50,000,000; provided that (i) any such request for an increase shall be in a
minimum amount of $15,000,000 and, if greater than $15,000,000, in whole increments of $1,000,000
in excess thereof, and (ii) the Borrower may make a maximum of three (3) such requests. At the
time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall
specify the time period within which each Lender is requested to respond (which shall in no event
be less than ten Business Days from the date of delivery of such notice to the Lenders).

     (b) Lender Elections to Increase. Each Lender may decline or elect to participate in
such requested increase in the Aggregate Commitments in its sole discretion, and each Lender shall
notify the Administrative Agent within such time period whether or not it agrees to increase its
Commitment and, if so, whether by an amount equal to, greater than, or less than its Applicable
Percentage of such requested increase. Any Lender not responding within such time period shall be
deemed to have declined to increase its Commitment.

     (c) Notification by Administrative Agent; Additional Lenders. The Administrative
Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made
hereunder. To achieve the full amount of a requested increase and subject to the approval of the
Administrative Agent, the L/C Issuer and the Swing Line Lender (which approvals shall not be
unreasonably withheld), the Borrower may also invite additional Eligible Assignees to become
Lenders pursuant to a joinder agreement in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.

     (d) Effective Date and Allocations. If the Aggregate Commitments are increased in
accordance with this Section, the Administrative Agent and the Borrower shall determine the
effective date (the “Increase Effective Date”) and the final allocation of such increase.
The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation
of such increase and the Increase Effective Date.

     (e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party
dated as of the Increase Effective Date signed by a Responsible Officer of such Loan Party (i)
certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such
increase, and (ii) in the case of the Borrower, certifying that, before and after giving effect to
such increase, (A) the representations and warranties contained in Article V and the other
Loan Documents are true and correct in all material respects on and as of the Increase Effective
Date, except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in all material respects as of such earlier
date, and except that for purposes of this Section 2.15, the representations and warranties
contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01,
and (B) no Default exists. The Borrower shall prepay any Committed Loans outstanding on the
Increase Effective Date (and pay any additional amounts required pursuant to Section 3.05)
to the extent necessary to keep the outstanding Committed Loans ratable with any revised Applicable
Percentages arising from any nonratable increase in the Commitments under this Section, and each
Loan Party shall execute and deliver such documents or instruments as the Administrative Agent may
require to evidence such increase in Commitments and to ratify each such Loan Party’s continuing
obligations hereunder and under the other Loan Documents.

     (f) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.13 or 10.01 to the contrary.

     2.16 [Reserved].

     2.17 Cash Collateral.

     (a) Certain Credit Support Events. Upon the request of the Administrative Agent or
the L/C Issuer (i) if the L/C Issuer has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of
Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower shall,
in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations.
At any time that there shall exist a Defaulting Lender, immediately upon the request of the

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Administrative Agent, the L/C Issuer or the Swing Line Lender, the Borrower shall deliver to
the Administrative Agent Cash Collateral in an amount sufficient to cover all Fronting Exposure
(after giving effect to Section 2.18(a)(iv) and any Cash Collateral provided by the
Defaulting Lender).

     Grant of Security Interest. All Cash Collateral (other than credit support not
constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit
accounts at Bank of America. The Borrower, and to the extent provided by any Lender, such Lender,
hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the
Administrative Agent, the L/C Issuer and the Lenders (including the Swing Line Lender), and agrees
to maintain, a first priority security interest in all such cash, deposit accounts and all balances
therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of
the foregoing, all as security for the obligations to which such Cash Collateral may be applied
pursuant to Section 2.17(c). If at any time the Administrative Agent determines that Cash
Collateral is subject to any right or claim of any Person other than the Administrative Agent as
herein provided, or that the total amount of such Cash Collateral is less than the applicable
Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting
Lender will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative
Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

     (b) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under any of this Section 2.17 or Sections
2.04, 2.05, 2.06, 2.18 or 8.02 in respect of Letters of Credit
or Swing Line Loans shall be held and applied to the satisfaction of the specific L/C Obligations,
Swing Line Loans, obligations to fund participations therein (including, as to Cash Collateral
provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for
which the Cash Collateral was so provided, prior to any other application of such property as may
be provided for herein.

     (c) Release. Cash Collateral (or the appropriate portion thereof) provided to reduce
Fronting Exposure or other obligations shall be released promptly following (i) the elimination of
the applicable Fronting Exposure or other obligations giving rise thereto (including by the
termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee
following compliance with Section 10.06(b)(vi))) or (ii) the Administrative Agent’s good
faith determination that there exists excess Cash Collateral; provided, however, (x) that
Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the
continuance of a Default or Event of Default (and following application as provided in this
Section 2.17 may be otherwise applied in accordance with Section 8.03), and (y) the
Person providing Cash Collateral and the L/C Issuer or Swing Line Lender, as applicable, may agree
that Cash Collateral shall not be released but instead held to support future anticipated Fronting
Exposure or other obligations.

     2.18 Defaulting Lenders.

     (a) Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no
longer a Defaulting Lender, to the extent permitted by Applicable Law:

     (i) Waivers and Amendments. That Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall be
restricted as set forth in Section 10.01.

     (ii) Reallocation of Payments. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of that Defaulting Lender
(whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise,
and including any amounts made available to the Administrative Agent by that Defaulting
Lender pursuant to Section 10.08), shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment of any amounts
owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the
payment on a pro rata basis of any amounts owing by that Defaulting Lender to the L/C Issuer
or Swing Line Lender hereunder; third, if so determined by the Administrative Agent or
requested by the L/C Issuer or Swing Line Lender, to be held as Cash Collateral for future
funding obligations of that Defaulting Lender of any participation in any Swing Line Loan or
Letter of Credit; fourth, as the Borrower may request (so long as no Default or Event of
Default exists), to the funding of any Loan in respect of which that Defaulting

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Lender has failed to fund its portion thereof as required by this Agreement, as
determined by the Administrative Agent; fifth, if so determined by the Administrative Agent
and the Borrower, to be held in a non-interest bearing deposit account and released in order
to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; sixth,
to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a
result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C
Issuer or Swing Line Lender against that Defaulting Lender as a result of that Defaulting
Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or
Event of Default exists, to the payment of any amounts owing to the Borrower as a result of
any judgment of a court of competent jurisdiction obtained by the Borrower against that
Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under
this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that if (x) such payment is a payment of the
principal amount of any Loans or L/C Borrowings in respect of which that Defaulting Lender
has not fully funded its appropriate share and (y) such Loans or L/C Borrowings were made at
a time when the conditions set forth in Section 4.02 were satisfied or waived, such
payment shall be applied solely to pay the Loans of, and L/C Borrowings owed to, all
non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any
Loans of, or L/C Borrowings owed to, that Defaulting Lender. Any payments, prepayments or
other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay
amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section
2.18(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each
Lender irrevocably consents hereto.

     (iii) Certain Fees. That Defaulting Lender (x) shall not be entitled to
receive any Unused Fee pursuant to Section 2.10(a) for any period during which that
Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such Unused
Fee that otherwise would have been required to have been paid to that Defaulting Lender) and
(y) shall be limited in its right to receive Letter of Credit Fees as provided in
Section 2.04(h).

     (iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure.
During any period in which there is a Defaulting Lender, for purposes of computing the
amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund
participations in Letters of Credit or Swing Line Loans pursuant to Sections 2.03
and 2.04, the “Applicable Percentage” of each non-Defaulting Lender shall be
computed without giving effect to the Commitment of that Defaulting Lender;
provided, that, (i) each such reallocation shall be given effect only if, at the
date the applicable Lender becomes a Defaulting Lender, no Default or Event of Default
exists; and (ii) the aggregate obligation of each non-Defaulting Lender to acquire,
refinance or fund participations in Letters of Credit and Swing Line Loans shall not exceed
the positive difference, if any, of (1) the Commitment of that non-Defaulting Lender
minus (2) the aggregate Outstanding Amount of the Committed Loans of that Lender.

     (b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, Swing Line
Lender and the L/C Issuer agree in writing in their sole discretion that a Defaulting Lender should
no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties
hereto, whereupon as of the effective date specified in such notice and subject to any conditions
set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender
will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or
take such other actions as the Administrative Agent may determine to be necessary to cause the
Committed Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to
be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without
giving effect to Section 2.18(a)(iv)), whereupon that Lender will cease to be a Defaulting
Lender; provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender;
and provided, further, that except to the extent otherwise expressly agreed by the
affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having been a Defaulting
Lender.

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ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

     3.01 Taxes.

     (a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes. (i)
Any and all payments by or on account of any obligation of the Borrower hereunder or under any
other Loan Document shall to the extent permitted by Applicable Laws be made free and clear of and
without reduction or withholding for any Taxes. If, however, Applicable Laws require the Borrower
or the Administrative Agent to withhold or deduct any Tax, such Tax shall be withheld or deducted
in accordance with such Applicable Laws as determined by the Borrower or the Administrative Agent,
as the case may be, upon the basis of the information and documentation to be delivered pursuant to
subsection (e) below.

     (ii) If the Borrower or the Administrative Agent shall be required by the Code to withhold or
deduct any Taxes, including both United States Federal backup withholding and withholding taxes,
from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are
determined by the Administrative Agent to be required based upon the information and documentation
it has received pursuant to subsection (e) below, (B) the Administrative Agent shall timely pay the
full amount withheld or deducted to the relevant Governmental Authority in accordance with the
Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified
Taxes or Other Taxes, the sum payable by the Borrower shall be increased as necessary so that after
any required withholding or the making of all required deductions (including deductions applicable
to additional sums payable under this Section) the Administrative Agent, Lender or L/C Issuer, as
the case may be, receives an amount equal to the sum it would have received had no such withholding
or deduction been made; provided, however, that the Borrower shall not be required
to increase the amount payable under this Section or indemnify Administrative Agent, a Lender or
L/C Issuer under Section 3.01(c) to the extent that the obligation to withhold or indemnify
the relevant Tax existed on the date that such Administrative Agent, Lender or L/C Issuer became a
party to this Agreement in the capacity under which such party makes a claim under this Section.

     (b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with Applicable Laws.

     (c) Tax Indemnifications. (i) Without limiting the provisions of subsection (a) or
(b) above, the Borrower shall, and does hereby, indemnify the Administrative Agent, each Lender and
the L/C Issuer, and shall make payment in respect thereof within 10 days after demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section) withheld or deducted
by the Borrower or the Administrative Agent or paid by the Administrative Agent, such Lender or the
L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority. The Borrower
shall also, and does hereby, indemnify the Administrative Agent, and shall make payment in respect
thereof within 10 days after demand therefor, for any amount which a Lender or the L/C Issuer for
any reason fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of this
subsection. A certificate as to the amount of any such payment or liability delivered to the
Borrower by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be
conclusive absent manifest error. Notwithstanding the foregoing, where demand for such Indemnified
Taxes or Other Taxes is not made within one (1) year after such Administrative Agent, Lender or L/C
Issuer receives written notice of the assertion of taxes and the Borrower does not otherwise have
notice of such assertion, no indemnification shall be required for penalties, additions to tax,
expenses, and interest accruing on such Indemnified Taxes or Other Taxes from the date that is one
(1) year after the receipt by such Administrative Agent, Lender or L/C Issuer of written notice of
the assertion of such taxes until thirty (30) days after the date such demand was actually received
by the Borrower.

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     (ii) Without limiting the provisions of subsection (a) or (b) above, each Lender and
the L/C Issuer shall, and does hereby, indemnify the Borrower and the Administrative Agent,
and shall make payment in respect thereof within 10 days after demand therefor, against any
and all Taxes and any and all related losses, claims, liabilities, penalties, interest and
expenses (including the fees, charges and disbursements of any counsel for the Borrower or
the Administrative Agent) incurred by or asserted against the Borrower or the Administrative
Agent by any Governmental Authority as a result of the failure by such Lender or the L/C
Issuer, as the case may be, to deliver, or as a result of the inaccuracy, inadequacy or
deficiency of, any documentation required to be delivered by such Lender or the L/C Issuer,
as the case may be, to the Borrower or the Administrative Agent pursuant to subsection (e).
Each Lender and the L/C Issuer hereby authorizes the Administrative Agent to set off and
apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case
may be, under this Agreement or any other Loan Document against any amount due to the
Administrative Agent under this clause (ii). The agreements in this clause (ii) shall
survive the resignation and/or replacement of the Administrative Agent, any assignment of
rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all other Obligations.

     (d) Evidence of Payments. Upon request by the Borrower or the Administrative Agent,
as the case may be, after any payment of Taxes by the Borrower or the Administrative Agent to a
Governmental Authority as provided in this Section 3.01, the Borrower shall deliver to the
Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be,
the original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of any return required by Applicable Law to report such payment or other evidence
of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case
may be.

     (e) Status of Lenders; Tax Documentation. (i) Each Lender shall deliver to the
Borrower and to the Administrative Agent, at the time or times prescribed by Applicable Laws or
when reasonably requested by the Borrower or the Administrative Agent, such properly completed and
executed documentation prescribed by Applicable Laws or by the taxing authorities of any
jurisdiction and such other reasonably requested information as will permit the Borrower or the
Administrative Agent, as the case may be, to determine (A) whether or not payments made hereunder
or under any other Loan Document are subject to Taxes, (B) if applicable, the required rate of
withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or
reduction of, applicable Taxes in respect of all payments to be made to such Lender by the Borrower
pursuant to this Agreement or otherwise to establish such Lender’s status for withholding tax
purposes in the applicable jurisdiction.

     (ii) Without limiting the generality of the foregoing, if the Borrower is resident for
tax purposes in the United States,

     (A) any Lender that is a “United States person” within the meaning of Section
7701(a)(30) of the Code shall deliver to the Borrower and the Administrative Agent executed
originals of Internal Revenue Service Form W-9 or such other documentation or information
prescribed by Applicable Laws or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent, as the case may be, to
determine whether or not such Lender is subject to backup withholding or information
reporting requirements; and

     (B) each Foreign Lender that is entitled under the Code or any applicable treaty to an
exemption from or reduction of withholding tax with respect to payments hereunder or under
any other Loan Document shall deliver to the Borrower and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Borrower or the Administrative Agent, but only if such Foreign
Lender is legally entitled to do so), whichever of the following is applicable:

     (I) executed originals of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,

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     (II) executed originals of Internal Revenue Service Form W-8ECI,

     (III) executed originals of Internal Revenue Service Form W-8IMY and all
required supporting documentation,

     (IV) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the effect
that such Foreign Lender is not (A) a “bank” within the meaning of section
881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the
meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code and (y) executed
originals of Internal Revenue Service Form W-8BEN, or

     (V) executed originals of any other form prescribed by Applicable Laws as a
basis for claiming exemption from or a reduction in United States Federal
withholding tax together with such supplementary documentation as may be prescribed
by Applicable Laws to permit the Borrower or the Administrative Agent to determine
the withholding or deduction required to be made.

     (iii) Each Lender shall promptly (A) notify the Borrower and the Administrative Agent
of any change in circumstances which would modify or render invalid any claimed exemption or
reduction, and (B) take such steps as shall not be materially disadvantageous to it, in the
reasonable judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of Applicable Laws of any
jurisdiction that the Borrower or the Administrative Agent make any withholding or deduction
for taxes from amounts payable to such Lender.

     (f) Treatment of Certain Refunds. Unless required by Applicable Laws, at no time
shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a
Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund
of Taxes withheld or deducted from funds paid for the account of such Lender or the L/C Issuer, as
the case may be. If the Administrative Agent, any Lender or the L/C Issuer determines, in its sole
discretion, that it has received (or otherwise been credited with) a refund of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has
paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to
such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses incurred by the Administrative Agent, such Lender or the L/C
Issuer, as the case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower, upon the
request of the Administrative Agent, such Lender or the L/C Issuer, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent, such Lender or the L/C Issuer in the event the
Administrative Agent, such Lender or the L/C Issuer is required to repay such refund to such
Governmental Authority. This subsection shall not be construed to require the Administrative
Agent, any Lender or the L/C Issuer to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other Person.

     3.02 Illegality. If any Lender determines that any Applicable Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable
Lending Office to make, maintain or fund Loans whose interest is determined by reference to the
Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice
thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such
Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to
Eurodollar Rate Committed Loans shall be suspended, and (ii) if such notice asserts the illegality
of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by
reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate
Loans of such Lender shall, if necessary to avoid such illegality, be determined by the
Administrative Agent without reference to the Eurodollar Rate component of the Base Rate, in each
case until such Lender notifies the Administrative Agent and the Borrower that the circumstances

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giving rise to such determination no longer exist. Upon receipt of such notice, (x) the
Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or,
if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans (the interest
rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be
determined by the Administrative Agent without reference to the Eurodollar Rate component of the
Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Rate Loans and (y) if such notice asserts the
illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate,
the Administrative Agent shall during the period of such suspension compute the Base Rate
applicable to such Lender without reference to the Eurodollar Rate component thereof until the
Administrative is advised in writing by such Lender that it is no longer illegal for such Lender
to determine or charge interest rates based upon the Eurodollar Rate. Upon any such prepayment or
conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

     3.03 Inability to Determine Rates. If the Required Lenders determine that for any reason in
connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof
that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market
for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Committed Loan or in connection with an existing or
proposed Base Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Committed Loan does not adequately and fairly reflect the cost to
such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower
and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended, and (y) in the event of a determination described in the preceding
sentence with respect to the Eurodollar Rate component of the Base Rate, the utilization of the
Eurodollar Rate component in determining the Base Rate shall be suspended, in each case until the
Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon
receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion
to or continuation of Eurodollar Rate Committed Loans or, failing that, will be deemed to have
converted such request into a request for a Committed Borrowing of Base Rate Loans in the amount
specified therein.

     3.04 Increased Costs; Reserves on Eurodollar Rate Loans.

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

     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for the account
of, or credit extended or participated in by, any Lender (except any reserve requirement
contemplated by Section 3.04(e)) or the L/C Issuer;

     (ii) subject any Lender or the L/C Issuer to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or
any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such
Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 3.01 and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or the L/C Issuer); or

     (iii) impose on any Lender or the L/C Issuer or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such
Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan the interest on which is determined by reference to the Eurodollar Rate (or of
maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the
L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its
obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum
received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest
or any other amount) then, upon request of such Lender or the L/C Issuer, the Borrower will pay to
such Lender or

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the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such
Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction
suffered.

     (b) Capital Requirements. If any Lender or the L/C Issuer determines that any Change
in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such
Lender’s or the L/C Issuer’s holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on
the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below
that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could
have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C
Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with
respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the
L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or
the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction
suffered.

     (c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its
holding company, as the case may be, as specified in subsection (a) or (b) of this Section and
delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such
Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.

     (d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer
to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a
waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the
foregoing provisions of this Section for any increased costs incurred or reductions suffered more
than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies
the Borrower of the Change in Law giving rise to such increased costs or reductions and of such
Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect thereof).

     (e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to each Lender, as long
as such Lender shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive), which shall be due and payable
on each date on which interest is payable on such Loan, provided the Borrower shall have
received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such
additional interest from such Lender. If a Lender fails to give notice 10 days prior to the
relevant Interest Payment Date, such additional interest shall be due and payable 10 days from
receipt of such notice.

     3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative
Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:

     (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate
Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise);

     (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a
Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in
the amount notified by the Borrower; or

     (c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest
Period therefor as a result of a request by the Borrower pursuant to Section 10.13;

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including any loss or expense arising from the liquidation or reemployment of funds obtained by it
to maintain such Loan or from fees payable to terminate the deposits from which such funds were
obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in
connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section
3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.

     3.06 Mitigation Obligations; Replacement of Lenders.

     (a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 3.04, or the Borrower is required to pay any additional amount to any Lender,
the L/C Issuer or any Governmental Authority for the account of any Lender or the L/C Issuer
pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02,
then such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of
such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or
eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each
case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost
or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case
may be. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender
or the L/C Issuer in connection with any such designation or assignment.

     (b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower
may replace such Lender in accordance with Section 10.13.

     3.07 Survival. All of the Borrower’s obligations under this Article III shall survive
termination of the Aggregate Commitments, repayment of all other Obligations hereunder and
resignation of the Administrative Agent.

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

     4.01 Conditions of Initial Credit Extension. The obligation of the L/C Issuer and each Lender
to make its initial Credit Extension hereunder is subject to satisfaction of the following
conditions precedent:

     (a) The Administrative Agent’s receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a
Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date) and each in form and
substance satisfactory to the Administrative Agent and each of the Lenders:

     (i) executed counterparts of this Agreement, sufficient in number for distribution to
the Administrative Agent, each Lender and the Borrower;

     (ii) a Note executed by the Borrower in favor of each Lender requesting a Note;

     (iii) the Pledge Agreement (together with each other pledge and security agreement and
pledge and security agreement supplement delivered pursuant to Section 6.13, in each
case as amended or modified), duly executed by each Person required to execute same pursuant
to the terms hereof, together with:

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     (A) all certificates evidencing any certificated Equity Interests pledged to
the Administrative Agent pursuant to the Pledge Agreement, together with duly
executed in blank, undated stock powers attached thereto;

     (B) proper Financing Statements in form appropriate for filing under the
Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem
necessary or desirable in order to perfect the Liens created under the Pledge
Agreement, covering the Collateral described in the Pledge Agreement,

     (C) updated searches of Uniform Commercial Code filings in the jurisdiction of
organization of each Loan Party and each jurisdiction where any Collateral is
located or where a filing would need to be made in order to perfect the
Administrative Agent’s security interest in the Collateral, copies of the financing
statements on file in such jurisdictions and evidence that no Liens exist other than
Permitted Liens,

     (D) duly executed notices of grant of security interest in the form required by
the Pledge Agreement as are necessary, as determined by Administrative Agent, to
perfect the Administrative Agent’s security interest in the Collateral, duly
executed consents as are necessary, as determined by Administrative Agent, to
perfect the Administrative Agent’s security interest in the Collateral and evidence
of the completion of all other actions, recordings and filings of or with respect to
the Pledge Agreement that the Administrative Agent may deem necessary or desirable
in order to perfect the Liens created thereby,

     (E) evidence that all other action that the Administrative Agent may deem
necessary or desirable in order to perfect the Liens created under the Pledge
Agreement has been taken (including receipt of duly executed payoff letters, UCC-3
termination statements and landlords’ and bailees’ waiver and consent agreements);

     (iv) a Mortgage with respect to each Borrowing Base Property, if any, duly executed by
the appropriate Loan Party, together, in each case, with the BBP Deliverables related
thereto;

     (v) such certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as the Administrative Agent
may require evidencing the identity, authority and capacity of each Responsible Officer
thereof authorized to act as a Responsible Officer in connection with this Agreement and the
other Loan Documents to which such Loan Party is a party;

     (vi) copies of the Organization Documents of each Loan Party certified to be true and
complete as of a recent date by the appropriate Governmental Authority of the state or other
jurisdiction of its incorporation or organization, where applicable, and certified by a
secretary or assistant secretary of such Borrower to be true and correct as of the Closing
Date and such other documents and certifications as the Administrative Agent may reasonably
require to evidence that each Loan Party is duly organized or formed, and that each of the
Loan Parties is validly existing, in good standing and qualified to engage in business in
each jurisdiction where its ownership, lease or operation of properties or the conduct of
its business requires such qualification;

     (vii) a favorable opinion of (A) Hunton & Williams, counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, in the form attached as Exhibit
G-1, and (B) Administrative Agent-approved local counsel to the Loan Parties in each
state in which any Borrowing Base Property (if any) is located, addressed to the
Administrative Agent and each Lender, as to the matters set forth in the form of opinion
attached as in Exhibit G-2 (with such modifications, assumptions, exceptions and
qualifications as are reasonably acceptable to the Administrative Agent) and such other
matters concerning the Loan Parties and the Loan Documents as the Required Lenders may
request;

     (viii) a certificate of a Responsible Officer of each Loan Party either (A) attaching
copies of all consents, licenses and approvals required in connection with the execution,
delivery and performance by

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such Loan Party and the validity against such Loan Party of the Loan Documents to which it
is a party, and such consents, licenses and approvals shall be in full force and effect, or
(B) stating that no such consents, licenses or approvals are so required;

     (ix) a certificate signed by a Responsible Officer of the Borrower certifying (A) that
the conditions specified in Sections 4.02(a), (b) and (c) have been
satisfied, (B) that there has been no event or circumstance since the date of the Audited
Financial Statements that has had or could be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect; and (C) a calculation of the
Consolidated Leverage Ratio as of the last day of the fiscal quarter of the Borrower most
recently ended prior to the Closing Date;

     (x) a duly completed Compliance Certificate as of the last day of the fiscal quarter of
the Borrower ended on March 31, 2010, signed by a Responsible Officer of the Borrower;

     (xi) evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect;

     (xii) a certificate executed by a Responsible Officer of the Borrower as of the Closing
Date, in form and substance satisfactory to the Administrative Agent, regarding the Solvency
of (a) the Borrower, (b) each of the other Loan Parties, and (c) the Consolidated Parties on
a consolidated basis;

     (xiii) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required Lenders
reasonably may require.

     (b) The Administrative Agent shall have received executed counterparts of the Fee Letter, and
any fees required to be paid hereunder or under the Fee Letter on or before the Closing Date shall
have been paid (provided such fees may be paid from the proceeds of such initial Credit Extension).

     (c) Unless waived by the Administrative Agent, the Borrower shall have paid all reasonable
fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if
requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus
such additional amounts of such fees, charges and disbursements as shall constitute its reasonable
estimate of such fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not thereafter preclude a final settling of
accounts between the Borrower and the Administrative Agent).

     (d) The representations and warranties of the Borrower and each other Loan Party contained in
Article V or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and correct on and as of the
Closing Date.

     (e) No Default shall exist, or would result from, such proposed Credit Extension or from the
application of the proceeds thereof.

     (f) There shall not have occurred any event or circumstance since the date of the Audited
Financial Statements that has had or could be reasonably expected to have, either individually or
in the aggregate, a Material Adverse Effect.

     (g) The absence of any condition, circumstance, action, suit, investigation or proceeding
pending or, to the knowledge of the Borrower and/or Guarantors, threatened in any court or before
any arbitrator or governmental authority that could reasonably be expected to have a Material
Adverse Effect.

     Without limiting the generality of the provisions of the last paragraph of Section
9.03, for purposes of determining compliance with the conditions specified in this Section
4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative
Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

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     4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any Request
for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed
Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject to the following
conditions precedent:

     (a) The representations and warranties of the Borrower and each other Loan Party contained in
Article V or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and correct in all material
respects on and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which case they shall be
true and correct in all material respects as of such earlier date, and except that for purposes of
this Section 4.02, the representations and warranties contained in subsections (a) and (b)
of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant
to clauses (a) and (b), respectively, of Section 6.01.

     (b) No Default or Event of Default shall exist, or would result from such proposed Credit
Extension or from the application of the proceeds thereof.

     (c) Assuming the effectiveness of the requested Credit Extension, (i) the Total Outstandings
as of such date shall not exceed the Borrowing Base; and (ii) the Total Outstandings shall not
exceed the Aggregate Commitments.

     (d) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall
have received a Request for Credit Extension in accordance with the requirements hereof.

     (e) All of the conditions precedent set forth in Section 4.01 shall have been
satisfied on or prior to date of such requested Credit Extension.

     Each Request for Credit Extension (other than a Committed Loan Notice requesting only a
conversion of Committed Loans to the other Type or a continuation of Eurodollar Rate Loans)
submitted by the Borrower shall be deemed to be a representation and warranty that the conditions
specified in Sections 4.02(a), (b) and (c) have been satisfied on and as of
the date of the applicable Credit Extension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Administrative Agent and the Lenders that:

     5.01 Existence, Qualification and Power. Each Loan Party (a) is duly organized or formed,
validly existing and, as applicable, in good standing under the Applicable Laws of the jurisdiction
of its incorporation or organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and
carry on its business and (ii) execute, deliver and perform its obligations under the Loan
Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in
good standing under the Applicable Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such qualification or license;
except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect.

     5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan
Party of each Loan Document to which such Person is party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a) contravene the
terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to be made under (i)
any Contractual Obligation to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries, except in each case, to the extent such
violation, breach, Lien or payment could not reasonably be expected to have a Material Adverse
Effect, or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any Applicable Law.

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     5.03 Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery or performance by,
or enforcement against, any Loan Party of this Agreement or any other Loan Document (other than the
filing and/or recording of financing statements and/or Mortgages in connection with the perfection
of the Liens of the Secured Parties under the Collateral Documents).

     5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).

     5.05 Financial Statements; No Material Adverse Effect.

     (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii)
fairly present the financial condition of the Consolidated Parties, on a consolidated basis, as of
the date thereof and their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all indebtedness and other liabilities, direct or contingent, of the
Consolidated Parties as of the date thereof, including liabilities for taxes, commitments and
Indebtedness, that in each case is material in relation to the business, operations, properties,
assets or condition (financial or otherwise) of the Consolidated Parties.

     (b) The unaudited consolidated balance sheets of the Consolidated Parties dated March 31,
2010, and the related consolidated statements of income or operations, shareholders’ equity and
cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present the financial condition of the Consolidated Parties as of the date
thereof and their results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments. Except
as otherwise set forth on Schedule 5.05, such financial statements set forth all
indebtedness and other liabilities, direct or contingent, of the Consolidated Parties as of March
31, 2010, including liabilities for taxes, commitments and Indebtedness, that in each case is
material in relation to the business, operations, properties, assets or condition (financial or
otherwise) of the Consolidated Parties.

     (c) Since the date of the Audited Financial Statements, there has been no event or
circumstance, either individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

     (d) The consolidated pro forma balance sheets of the Consolidated Parties as at March 31,
2010, and the related consolidated pro forma statements of income and cash flows of the
Consolidated Parties for the three (3) months then ended, certified by the chief financial officer
or treasurer of the Borrower, copies of which have been furnished to each Lender, fairly present
the consolidated pro forma financial condition of the Consolidated Parties as at such date and the
consolidated pro forma results of operations of the Consolidated Parties for the period ended on
such date, all in accordance with GAAP.

     5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to
the knowledge of any Responsible Officer of any Loan Party after due and diligent investigation,
threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by
or against any Loan Party or any of their Subsidiaries or against any of their properties or
revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any
of the transactions contemplated hereby, or (b) except as specifically disclosed in Schedule
5.06, if determined adversely, could (either individually or in the aggregate) reasonably be
expected to have a Material Adverse Effect, and there has been no material adverse change in the
status of, or the financial effect on, any Loan Party or any Subsidiary thereof with respect to,
the matters described on Schedule 5.06.

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     5.07 No Default. Neither any Loan Party nor any Subsidiary thereof is in default under or
with respect to any Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No Default exists or would result from
the consummation of the transactions contemplated by this Agreement or any other Loan Document.

     5.08 Ownership of Property; Liens; Investments.

     (a) Each Loan Party has good record and marketable title in fee simple to, or valid leasehold
interests in, each of the Borrowing Base Properties and/or all other real property necessary or
used in the ordinary conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each
of the Borrowing Base Properties is either wholly owned in fee by a Loan Party or ground leased by
a Loan Party pursuant to a long term ground lease which has been designated as an Approved Ground
Lease, in each case subject to no Liens other than Permitted Liens of the type described in
Section 7.01(a), (c), (d), (f), (g) and (j). To
the extent a Borrowing Base Property is leased by a Loan Party pursuant to an Approved Ground
Lease, (i) such Approved Ground Lease is in full force and effect and remains unmodified except to
the extent expressly permitted by Section 6.15(b)(vii); (ii) except as expressly permitted
by Section 6.15(b)(vii), no rights in favor of the applicable Loan Party lessee have been
waived, canceled or surrendered; (iii) except as expressly permitted by Section 6.15, no
election or option under such Approved Ground Lease has been exercised by the Loan Party lessee
(other than options to renew or extend the term thereof); (iv) all rental and other charges due and
payable thereunder have been paid in full (except to the extent such payment is not yet overdue
subject to applicable cure or grace periods); (v) no Loan Party is in default under such Approved
Ground Lease (beyond any applicable cure or grace periods) which would permit the applicable lessor
or other obligor to terminate or exercise any other remedy with respect to the applicable Approved
Ground Lease, nor has any Loan Party received any notice of default with respect to such Approved
Ground Lease that has not been delivered to the Administrative Agent pursuant to Section
6.15(b)(viii); (vi) to the knowledge of the Responsible Officers of the Loan Parties, no lessor
under such Approved Ground Lease is in default with respect to its material obligations thereunder;
(vii) a true and correct copy of such Approved Ground Lease (together with any amendments,
modifications, restatements or supplements thereof) has been delivered to the Administrative Agent;
and (viii) there exist no adverse claims as to the applicable Loan Party’s title or right to
possession of the leasehold premises referenced therein.

     (b) The property of each Loan Party is subject to no Liens, other than Liens set forth on
Schedule 5.08(b), matters shown on each Mortgage Policy and as otherwise permitted by
Section 7.01.

     (c) Schedule 5.08(c) sets forth a complete and accurate list of all Investments held
by any Loan Party on the Closing Date, showing as of the Closing Date the amount, obligor or issuer
and maturity, if any, thereof.

     5.09 Environmental Compliance.

     (a) The Loan Parties conduct in the ordinary course of business a review of the effect of
existing Environmental Laws and claims alleging potential liability or responsibility for violation
of any Environmental Laws on their respective businesses, operations and real properties, and as a
result thereof the Loan Parties have reasonably concluded that, except as specifically disclosed in
Schedule 5.09, such Environmental Laws and claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     (b) Except as otherwise set forth in Schedule 5.09, (i) none of the real properties
currently or to the knowledge of any Responsible Officer of any Loan Party, formerly owned or
operated by any Loan Party, is listed or, to the knowledge of any Responsible Officer of any Loan
Party, proposed for listing on the United States Environmental Protection Agency’s (EPA) National
Priorities List or on the EPA Comprehensive Environmental Response, Compensation, and Liability
Information Sharing database or any analogous state or local list, nor to the knowledge of any
Responsible Officer of any Loan Party is any adjacent property on such list, (ii) no Loan Party has
operated and, to the knowledge of any Responsible Officer of any Loan Party, there are no and never
have been any underground or above-ground storage tanks or any surface impoundments, septic tanks,
pits, sumps or lagoons in which Hazardous Materials are being or have been transported, treated,
stored or disposed on any Real Property currently owned or operated by any Loan Party or, to the
knowledge of any Responsible Officer of any Loan Party, on any real property formerly owned or
operated by any Loan Party, (iii) or to the knowledge of any Responsible Officer of any Loan Party,
there is no friable asbestos or asbestos-containing material on any Real Property currently

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owned or operated by any Loan Party, and (iv) Hazardous Materials have not been transported,
released, discharged or disposed of on any real property currently or formerly owned or operated by
any Loan Party except as would not reasonably be expected to have a Material Adverse Effect.

     (c) Except as otherwise set forth on Schedule 5.09, no Loan Party is undertaking, and
has not completed, either individually or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to any actual or threatened
release, discharge or disposal of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any Governmental Authority or the requirements of any
Environmental Laws; and to the knowledge of the Responsible Officers of the Loan Parties all
Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any
real property currently or formerly owned or operated by any Loan Party have been disposed of in a
manner not reasonably expected to result in a Material Adverse Effect.

     (d) Except as otherwise set forth on Schedule 5.09, each of the Borrowing Base
Properties and, to the knowledge of the Responsible Officers of the Loan Parties, all operations at
such Borrowing Base Properties are in compliance with all Environmental Laws in all material
respects, there is no material violation of any Environmental Laws with respect to such Borrowing
Base Properties or, to the knowledge of any Responsible Officer of any Loan Party, the businesses
operated thereon, and there are no conditions relating to such Borrowing Base Properties or the
businesses that could reasonably be expected to result in a Material Adverse Effect.

     (e) Except as otherwise set forth on Schedule 5.09, none of the Borrowing Base
Properties contains, or to the knowledge of any Responsible Officer of any Loan Party has
previously contained, any Hazardous Materials at, on or under such Borrowing Base Properties in
amounts or concentrations that constitute or constituted a violation of Environmental Laws that
could have a Material Adverse Effect.

     (f) Except as otherwise set forth on Schedule 5.09, no Loan Party has received any
written or verbal notice of, or inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability regarding Hazardous Materials
or compliance with Environmental Laws with regard to any of its Borrowing Base Properties or the
businesses located thereon, nor does any Responsible Officer of any Loan Party have knowledge or
reason to believe that any such notice will be received or is being threatened.

     (g) No Loan Party is subject to any judicial proceeding or governmental or administrative
action and, to the knowledge of the Responsible Officers of the Loan Parties, no such proceeding or
action is threatened in writing, under any Environmental Laws that could reasonably be expected to
give rise to a Material Adverse Effect, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Laws with respect to the Loan Parties, the Borrowing Base
Properties or, to the knowledge of any Responsible Officer of any Loan Party, the businesses
located thereon that could be reasonably expected to give rise to a Material Adverse Effect.

     5.10 Insurance. The properties of the Loan Parties are insured with financially sound and
reputable insurance companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the applicable Loan Party operates.
The insurance coverage of the Loan Parties with respect to the Borrowing Base Properties as of the
Closing Date is outlined as to carrier, policy number, expiration date, type and amount on
Schedule 5.10. All insurance related to the Borrowing Base Properties names the
Administrative Agent (for the benefit of the Secured Parties) as additional insured (in the case of
liability insurance) or loss payee (in the case of hazard insurance).

     5.11 Taxes. The Loan Parties have filed all Federal and state income and other material tax
returns and reports required to be filed, and have paid all Federal and state income and other
material taxes, assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax assessment against
any Loan Party that would, if made, have a Material Adverse Effect. No Loan Party nor any
Subsidiary thereof is party to any tax sharing agreement; provided, however, that
any tax protection agreement entered into with a contributor of property to a Loan Party (but only
to the extent the indemnity or other obligation to such contributor

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under such tax protection agreement is limited to any capital gains tax that would be due upon
a sale or other Disposition of such contributed property and either (i) is limited to an amount
that does not exceed 1.0% of the total assets of such Loan Party or (ii) exceeds 1% but less than
5% of the total assets of such Loan Party but which indemnity is only triggered by a sale or other
Disposition of such contributed property) shall not be considered a tax sharing agreement.

     5.12 ERISA Compliance.

     (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Federal or state laws, except to the extent that the failure to so comply
would result in, or could reasonably be expected to result in, a Material Adverse Effect. Each
Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service to the effect that the form of
such Pension Plan is qualified under Section 401(a) of the Code and the trust related thereto has
been determined by the Internal Revenue Service to be exempt from federal income tax under Section
501(a) of the Code, or an application for such a letter is currently being processed by the
Internal Revenue Service. To the best knowledge of the Borrower, nothing has occurred that would
prevent or cause the loss of the tax-qualified status of any such Pension Plan.

     (b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions
or lawsuits, or action by any Governmental Authority, with respect to any Plan that could
reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

     (c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware
of any fact, event or circumstance that could reasonably be expected to constitute or result in an
ERISA Event with respect to any Pension Plan; (ii) there has been no failure to satisfy the minimum
funding standard applicable to a Pension Plan under Section 412 of the Code and Section 302 of
ERISA for any plan year, and no waiver of the minimum funding standards applicable to a Pension
Plan under Section 412 of the Code and Section 302 of ERISA for any plan year has been applied for
or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target
attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither
the Borrower nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be
expected to cause the funding target attainment percentage for any such Pension Plan to drop below
60% as of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has
incurred any liability to the PBGC other than for the payment of premiums, and there are no premium
payments which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and
(vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no
event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to
institute proceedings under Title IV of ERISA to terminate any Pension Plan.

     (d) Neither the Borrower nor any ERISA Affiliate maintains or contributes to, or has any
unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan
other than those listed on Schedule 5.12(d) hereto.

     5.13 Subsidiaries; Equity Interests. The corporate capital and ownership structure of the
Borrower and its Subsidiaries is as described in Schedule 5.13(a) (as of the most recent
update of such schedule in accordance with Section 6.02(i) hereof). Set forth on
Schedule 5.13(b) is a complete and accurate list (as of the most recent update of such
schedule in accordance with Section 6.02(i) hereof) with respect to each of the direct and
indirect Subsidiaries of the Parent REIT and the Borrower of (i) jurisdiction of organization, (ii)
number of ownership interests (if expressed in units or shares) of each class of Equity Interests
outstanding, (iii) number and percentage of outstanding ownership interests (if expressed in units
or shares) of each class owned (directly or indirectly) by the Parent REIT, the Borrower and their
Subsidiaries, (iv) all outstanding options, warrants, rights of conversion or purchase and all
other similar rights with respect thereto and (v) an identification of which such Subsidiaries are
Guarantors hereunder and which Borrowing Base Properties are owned by each such Loan Party. The
outstanding Equity Interests of the Loan Parties and each Subsidiary are, to the extent applicable
depending on the organizational nature of such Person, validly issued, fully paid and
non-assessable and is owned by the Parent REIT, the Borrower or a Subsidiary thereof (as
applicable), directly or

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indirectly, in the manner set forth on Schedule 5.13(b), free and clear of all Liens
(other than Permitted Liens or, in the case of the Equity Interests of the Loan Parties, statutory
Liens or Liens arising under or contemplated in connection with the Loan Documents). Other than as
set forth in Schedule 5.13(b) (as of the most recent update of such schedule in accordance
with Section 6.02(i) hereof), no Loan Party (other than the Parent REIT) or any Subsidiary
thereof has outstanding any securities convertible into or exchangeable for its Equity Interests
nor does any such Person have outstanding any rights to subscribe for or to purchase or any options
for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to its Equity Interests. The copy of
the charter of each Loan Party and each amendment thereto provided pursuant to Section
4.01(a)(v) is a true and correct copy of each such document as of the Closing Date, each of
which is valid and in full force and effect.

     5.14 Margin Regulations; Investment Company Act.

     (a) The Borrower is not engaged and will not engage, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock.

     (b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is
required to be registered as an “investment company” under the Investment Company Act of 1940.

     5.15 Disclosure. The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any other Loan Party is
subject, and all other matters known to any Responsible Officer of any Loan Party (other than
matters of a general economic nature), that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. No report, financial statement, certificate or
other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each
case, as modified or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, the Loan Parties represent only that such
information was prepared in good faith based upon assumptions believed by the Loan Parties to be
reasonable at the time (it being recognized by the Lenders that projections as to future events are
not to be viewed as facts and that actual results may differ).

     5.16 Compliance with Laws. Each Loan Party thereof is in compliance in all material respects
with the requirements of all Applicable Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which (a) such requirement of
Applicable Law or order, writ, injunction or decree is being contested in good faith by appropriate
proceedings diligently conducted or (b) the failure to comply therewith, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse Effect.

     5.17 Taxpayer Identification Number. The Borrower’s true and correct U.S. taxpayer
identification number is set forth on Schedule 10.02.

     5.18 Intellectual Property; Licenses, Etc. The Borrower and the other Loan Parties own, or
possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents,
patent rights, franchises, licenses and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person. To the knowledge of any Responsible Officer
of any Loan Party, no slogan or other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed, by the Borrower or any other
Loan Party infringes upon any rights held by any other Person, except for such infringements that
would not have a Material Adverse Effect. Except as specifically disclosed in Schedule
5.18, no claim or litigation regarding any of the foregoing is pending or, to the knowledge of
any Responsible Officer of any Loan Party, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

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     5.19 Solvency. (a) As of the Closing Date and immediately prior to the initial Credit
Extension, the Borrower is Solvent, each other Loan Party is Solvent, and the Consolidated Parties,
on a consolidated basis, are Solvent, (b) as of the date and immediately prior to each Subsidiary
becoming a Guarantor pursuant to Section 6.12, such Subsidiary is Solvent, and (c)
following the initial Credit Extension, the Borrower is Solvent, each other Loan Party is Solvent,
and the Consolidated Parties, on a consolidated basis, are Solvent if the contribution rights that
each such party will have against such other parties and the subrogation rights that each such
party may have, if any, against the Borrower are taken into account.

     5.20 Casualty, Etc. None of the Borrowing Base Properties have been affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of public enemy or other casualty (whether or not covered by insurance)
that, either individually or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.

     5.21 Labor Matters. As of the Closing Date, there are no collective bargaining agreements or
Multiemployer Plans covering the employees of any Loan Party or any of their Subsidiaries. No Loan
Party or any of their Subsidiaries has suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last year, which could (either individually or in the
aggregate) reasonably be expected to have a Material Adverse Effect.

     5.22 REIT Status. The Parent REIT is qualified as a REIT and the Borrower is qualified as a
REIT, a partnership or a disregarded entity (in each case, for federal income tax purposes), a TRS
or a QRS, and each of their Subsidiaries that is a corporation is either a TRS or a QRS. As of the
Closing Date, the Subsidiaries of the Parent REIT and the Borrower that are taxable REIT
subsidiaries, as such term is used in the Code, are identified on Schedule 5.22.

     5.23 Collateral Documents. The provisions of the Collateral Documents are effective to create
in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and
enforceable first priority and perfected Lien (subject to Liens permitted by Section 7.01)
on all right, title and interest of the respective Loan Parties in the Collateral described
therein. Except for filings completed prior to the Closing Date and as contemplated hereby and by
the Collateral Documents (including the recording of the Mortgages and UCC financing statements
relative to any personal property Collateral), no filing or other action will be necessary to
perfect or protect such Liens.

     5.24 Borrowing Base Properties. Schedule 5.24(a) (as adjusted from time to time in
accordance with the terms hereof) sets forth each of the Borrowing Base Properties as of the date
of the last adjustment thereof pursuant to the terms of Section 1.07. Each Real Property
listed on Schedule 5.24(a) fully qualifies as a Borrowing Base Property.

ARTICLE VI.

AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall not be Fully Satisfied, or any Letter of Credit shall remain outstanding, the
Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01,
6.02, and 6.03) cause each other Loan Party and, except where expressly limited to
Loan Parties, each Subsidiary (and where noted the Consolidated Parties) to:

     6.01 Financial Statements. Deliver to the Administrative Agent, for distribution to the
Lenders:

     (a) as soon as available, but in any event within 90 days after the end of each fiscal year of
the Parent REIT (commencing with the fiscal year ended December 31, 2010), a consolidated balance
sheet of the Consolidated Parties as at the end of such fiscal year, and the related consolidated
statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be (i)
certified by the chief executive officer, chief financial officer, treasurer or controller of the
Borrower as fairly presenting in all material respects the financial condition, results of
operations, shareholders’ equity and cash flows of the Consolidated Parties in accordance with
GAAP, and (ii) audited and accompanied by a report and opinion of an independent certified public accountant
of nationally

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recognized standing reasonably acceptable to the Required Lenders, which report and
opinion shall be prepared in accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or like qualification or exception or any qualification or exception
as to the scope of such audit; and

     (b) as soon as available, but in any event within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Parent REIT (commencing with the fiscal quarter
ended June 30, 2010), a consolidated balance sheet of the Consolidated Parties as at the end of
such fiscal quarter, the related consolidated statements of income or operations for such fiscal
quarter and for the portion of the Borrower’s fiscal year then ended, and the related consolidated
of changes in shareholders’ equity, and cash flows for the portion of the Borrower’s fiscal year
then ended, in each case setting forth in comparative form, as applicable, the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the
chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly
presenting in all material respects the financial condition, results of operations, shareholders’
equity and cash flows of the Consolidated Parties in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes.

As to any information contained in materials furnished pursuant to Section 6.02(d), the
Borrower shall not be separately required to furnish such information under clause (a) or (b)
above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish
the information and materials described in clauses (a) and (b) above at the times specified
therein.

     6.02 Certificates; Other Information. Deliver to the Administrative Agent (for distribution
of the same to each Lender):

     (a) [Reserved];

     (b) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b), (i) a duly completed Compliance Certificate signed by the chief
executive officer, chief financial officer, treasurer or controller of the Borrower (which delivery
may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic
communication including fax or email and shall be deemed to be an original authentic counterpart
thereof for all purposes), and (ii) a profit and loss summary showing the operating condition for
each of the Borrowing Base Properties (in form and with such detail as is reasonably satisfactory
to the Administrative Agent);

     (c) if a Default or Event of Default exists, promptly after any request by the Administrative
Agent, copies of any detailed audit reports, management letters or recommendations submitted to the
board of directors (or the audit committee of the board of directors) of any Consolidated Party by
independent accountants in connection with the accounts or books of any Consolidated Party, or any
audit of any of them, subject to applicable professional guidelines;

     (d) promptly after the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the shareholders of the Parent REIT, and copies
of all annual, regular, periodic and special reports and registration statements which the Borrower
or the Parent REIT may file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative
Agent pursuant hereto;

     (e) promptly after the furnishing thereof, copies of any report furnished to any holder of
debt securities of any Loan Party (or any Subsidiary thereof if such debt securities are recourse
(other than customary non-recourse carve outs) to such Loan Party) pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be furnished to the
Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;

     (f) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan
Party or any Subsidiary thereof, copies of each notice or other correspondence received from the
SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible
investigation or other inquiry by such agency regarding financial or other operational results of
any Loan Party or any Subsidiary thereof;

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     (g) not later than five (5) Business Days after receipt thereof by any Loan Party, copies of
all notices, requests and other documents (including amendments, waivers and other modifications)
so received under or pursuant to any instrument, indenture, loan or credit or similar agreement
regarding or related to any breach or default by any party thereto or any other event that could
materially impair the value of the interests or the rights of any Loan Party or otherwise have a
Material Adverse Effect and, from time to time upon request by the Administrative Agent, such
information and reports regarding such instruments, indentures and loan and credit and similar
agreements as the Administrative Agent may request;

     (h) promptly after the assertion or occurrence thereof, notice of any action or proceeding
against or of any noncompliance by any Loan Party with respect to a Borrowing Base Property with
any Environmental Laws that could (i) reasonably be expected to have a Material Adverse Effect or
(ii) cause any Real Property described in any Mortgage to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Laws;

     (i) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b), an update to Schedules 5.06, 5.09, 5.12(d) or
5.13(a) or (b) to the extent the information provided by any such schedules has
changed since the most recent update thereto; provided, that the Borrower shall, promptly
upon the Administrative Agent’s written request therefor, provide any information or materials
requested by the Administrative Agent to confirm or evidence the matters reflected in such updated
schedules;

     (j) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b), copies of Smith Travel Research (STR Global) summary STAR Reports for
each Borrowing Base Property for the fiscal quarter to which such financial statements relate; and

     (k) promptly, such additional information regarding the business, financial or corporate
affairs of the Loan Parties or any Subsidiary thereof, or compliance with the terms of the Loan
Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

     Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(d) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on
the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent); provided
that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent
upon its request (either in its discretion or at the direction of the Required Lenders) to the
Borrower to deliver such paper copies until a written request to cease delivering paper copies is
given by the Administrative Agent and (ii) the Borrower shall notify the Administrative Agent (by
telecopier or electronic mail) of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such
documents. The Administrative Agent shall have no obligation to request the delivery of or to
maintain paper copies of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by the Borrower with any such request by a Lender for
delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

     The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will
make available to the Lenders and the L/C Issuer materials and/or information provided by or on
behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the
Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and
(b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to
receive material non-public information with respect to the Borrower or its Affiliates, or the
respective securities of any of the foregoing, and who may be engaged in investment and other
market-related activities with respect to such Persons’ securities. The Borrower hereby agrees
that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly
and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the
Administrative Agent, the Arranger, the L/C Issuer and the Lenders to treat such Borrower Materials
as not containing any material non-public

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information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided,
however, that to the extent such Borrower Materials constitute Information, they shall be
treated as set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are
permitted to be made available through a portion of the Platform designated “Public Side
Information;” and (z) the Administrative Agent and the Arranger shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of
the Platform that is not designated “Public Side Information.” Notwithstanding the foregoing, the
Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”

     6.03 Notices. Promptly notify the Administrative Agent (who shall promptly notify each
Lender):

     (a) of the occurrence of any Default;

     (b) of (i) (A) any breach or non-performance of, or any default under, a material Contractual
Obligation of any Loan Party; (B) the commencement of, or any material development in, any
litigation or proceeding affecting any Loan Party, including pursuant to any Environmental Laws; or
(C) any other matter, which, in the case of any of clause (A), (B) or (C), individually or in the
aggregate, has resulted in or could reasonably be expected to result in a Material Adverse Effect;
and (ii) any material written dispute or any material litigation, investigation, proceeding or
suspension between the Borrower or any Loan Party and any Governmental Authority;

     (c) of the occurrence of any ERISA Event;

     (d) of any material change in accounting policies or financial reporting practices by any Loan
Party, including any determination by the Borrower referred to in Section 2.10(b);

     (e) of any voluntary removal or other event or circumstance that results in a Real Property
previously qualifying as a Borrowing Base Property ceasing to qualify as such (provided,
that such notification shall be accompanied by an updated Compliance Certificate with calculations
showing the effect of such removal on the financial covenants contained herein and on any Borrowing
Base-related restrictions on the Outstanding Amounts hereunder); and

     (f) of any adverse changes to any insurance policy obtained by any Loan Party with respect to
or in connection with any Borrowing Base Property in accordance with Section 6.18,
including, without limitation, any reduction in the amount or scope of coverage or any increase in
any deductible or other self-retention amount thereunder.

     Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence referred to therein
(including, in the case of any notice pursuant to Section 6.03(a), a description of any and
all provisions of this Agreement and any other Loan Document that the Responsible Officers of the
Borrower believe have been breached) and stating what action the Borrower has taken and proposes to
take with respect thereto.

     6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all
of its material obligations and liabilities, including (a) all material tax liabilities,
assessments and governmental charges or levies upon it or its properties or assets, unless the same
are being contested in good faith by appropriate proceedings diligently conducted and adequate
reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary; and (b)
all lawful claims which, if unpaid, would by law become a Lien upon its property, unless the same
are being contested in good faith by appropriate proceedings diligently conducted (the commencement
and continuation of which proceedings shall suspend the collection of any such contested amount
from the Borrower or such Subsidiary, and suspend the enforcement thereof against, the applicable
property), and adequate reserves in accordance with GAAP are being maintained by the Borrower or
such Subsidiary and, as to any Loan Party, such claims are bonded (to the extent requested by the
Administrative Agent).

     6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and
effect its legal existence and good standing under the Applicable Laws of the jurisdiction of its
organization except in a transaction permitted by Section 7.04 or 7.05; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses

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and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to
do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew
all of its registered patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

     6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its material
properties and equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear and casualty (as to which insurance satisfying the criteria
hereunder was maintained at the time of such casualty) excepted; (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical
in the industry in the operation and maintenance of its facilities.

     6.07 Maintenance of Insurance. Maintain (and cause each Consolidated Party to maintain) with
financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with
respect to the properties and business of the Consolidated Parties against loss or damage of the
kinds customarily insured against by Persons engaged in the same or similar business, of such types
and in such amounts as are customarily carried under similar circumstances by such other Persons
and, in the case of insurance maintained by the Loan Parties, providing for not less than 30 days’
prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance.

     6.08 Compliance with Laws and Contractual Obligations. Comply in all material respects with
the requirements of all Applicable Laws, all Contractual Obligations and all orders, writs,
injunctions and decrees applicable to it or to its business or property, except in such instances
in which (a) such requirement of Applicable Law, Contractual Obligation or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b)
the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

     6.09 Books and Records. Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Parent REIT and such Loan Party,
as the case may be.

     6.10 Inspection Rights. Permit representatives of the Administrative Agent to visit and
inspect any of its properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants (provided that the Borrower may, if it so
chooses, be present at or may participate in any such discussions), at such reasonable times during
normal business hours and as often as may be reasonably desired, upon reasonable advance notice to
the Borrower with the costs and expenses of the Administrative Agent being for its own account if
no Event of Default then exists; provided, however, that when an Event of Default
exists the Administrative Agent or any Lender (or any of their respective representatives or
independent contractors) may do any of the foregoing at the expense of the Borrower at any time
during normal business hours and without advance notice.

     6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for working capital, capital
expenditures and other general corporate purposes (including, without limitation, property
acquisitions and Restricted Payments not prohibited under Section 7.06) not in
contravention of any Applicable Law or of any Loan Document.

     6.12 Additional Guarantors.

     Notify the Administrative Agent at the time that any Person becomes a Subsidiary of the
Borrower, another Loan Party or DC Hotel Trust (other than, in each case, a Non-Guarantor
Subsidiary), and promptly thereafter (and in any event within 30 days or such longer period as the
Administrative Agent may agree in writing), (i) cause such Person to (a) become a Guarantor by
executing and delivering to the Administrative Agent a counterpart of this
Agreement, a Joinder Agreement or such other document as the Administrative Agent shall deem
appropriate for such purpose, and (b) deliver to the Administrative Agent documents of the types
referred to in clauses (iii), (v) and (vi) of Section 4.01(a), together with favorable
opinions of counsel to such Person (which shall cover, among other

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things, the legality, validity, binding effect and enforceability of the documentation referred to in this clause (i)), and (ii) if
required by Section 6.13(a), cause the Borrower, such other Loan Party or DC Hotel Trust,
as applicable, to execute and deliver such Joinder Agreement or other document (including any new
pledge and security agreement or supplement to the Pledge Agreement executed and delivered on or in
connection with the Closing Date or, in the case of DC Hotel Trust, a hypothecation or similar
document, instrument or agreement reasonably acceptable to the Administrative Agent) for the
purpose of causing the Equity Interests in such Person to be subject to a perfected Lien in favor
of the Administrative Agent in accordance with Section 6.13(a), together with favorable
opinions of counsel to the Borrower or such other Loan Party, as applicable, which opinions shall
cover, among other things, the legality, validity, binding effect and enforceability of the
documentation referred to in this clause (ii), all such documentation referred to herein to be in
form, content and scope reasonably satisfactory to the Administrative Agent.

     6.13 Pledged Equity Interests; Real Property and Other Collateral.

     (a) Equity Interests. (i) Cause (A) 100% of the issued and outstanding Equity
Interests owned of record by the Borrower with respect to Pebblebrook Hotel Lessee and (B) 100% of
the issued and outstanding Equity Interests owned of record by the Borrower, any other Loan Party
or DC Hotel Trust with respect to each Domestic Subsidiary (whether direct or indirect) of the
Borrower, any Loan Party or DC Hotel Trust that owns or holds any interest in a Borrowing Base
Property (other than any Subsidiary TRS) to be subject at all times to a first-priority, perfected
Lien in favor of the Administrative Agent pursuant to the terms and conditions of the Collateral
Documents or such other security documents as the Administrative Agent shall reasonably request,
and (ii) cause 65% of the issued and outstanding Equity Interests owned of record by the Borrower,
any other Loan Party or DC Hotel Trust with respect to each First-Tier Foreign Subsidiary that owns
or holds any interest in a Borrowing Base Property (other than any Subsidiary TRS) to be subject at
all times to a first-priority, perfected Lien in favor of the Administrative agent pursuant to the
terms and conditions of the Collateral Documents or such other security documents as the
Administrative agent shall reasonably request, which such Lien shall, upon satisfaction of any
filing or delivery requirements set forth in the Collateral Documents, be perfected;
provided, that the requirement pursuant to clause (ii) for the pledge of not more than 65%
of the Equity Interests in each such First-Tier Foreign Subsidiary that owns or holds any interest
in a Borrowing Base Property (other than any Subsidiary TRS) is intended to avoid treatment of the
undistributed earnings of a Foreign Subsidiary as a deemed dividend to its United States parent for
United States federal income tax purposes and each of the Parent REIT, Borrower or any Subsidiary
shall pledge or cause to be pledged any greater percentage of its interest in a Foreign Subsidiary
that (whether pursuant to existing Applicable Law or as the result of changes to, or clarifications
of, existing Applicable Law after the date hereof) (x) would not reasonably be expected to cause
the undistributed earnings of such Foreign Subsidiary to be treated as a deemed dividend to the
United States parent of such Foreign Subsidiary, as determined for United States federal income tax
purposes, and (y) would not otherwise reasonably be expected to result in material adverse tax
consequences to such Foreign Subsidiary or its United States parent.

     (b) Borrowing Base Properties; Mortgages. Cause (i) all Real Property interests
related to the Borrowing Base Properties, and (ii) all personal property related to Borrowing Base
Properties that is owned by any Loan Party (including, without limitation, any and all construction
drawings, construction plans and architectural renderings relating thereto and any leases, rents,
leasing agreements, and, unless such agreements expressly prohibit the grant of a security interest
in such Loan Party’s rights thereunder, management contracts and franchise agreements (whether or
not any such property is included in the Real Property interests covered under clause (i))), other
than vehicles subject to certificates of title, to, in each case, be subject at all times to first
priority (subject to Permitted Liens of the type described in Section 7.01(a), (c),
(d), (f), (g) and (j)), perfected and, in the case of the Real
Property interest in each Borrowing Base Property (whether leased or owned), title insured Liens in
favor of the Administrative Agent to secure the Obligations pursuant to the terms and conditions of
the Mortgages and other Collateral Documents, including, with respect to any such Borrowing Base
Property acquired subsequent to the Closing Date, such other additional security documents as the
Administrative Agent shall request (including additional Mortgages or other Collateral Documents);

     (c) Other Assets. Without limiting the foregoing, (i) cause all of the Collateral
(including, without limitation, each Borrowing Base Property) to be subject at all times to first
priority, perfected Liens in favor of the Administrative Agent (subject only to Permitted Liens) to
secure the Obligations pursuant to the terms and conditions hereof and of the Collateral Documents,
and (ii) deliver such other documentation as the Administrative

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Agent may reasonably request in connection with the foregoing, including, without limitation, appropriate UCC-1 financing
statements, certified resolutions and other organizational and authorizing documents of such
Person, favorable opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation referred to above and
the perfection of the Administrative Agent’s Liens thereunder) and other items of the types
required to be delivered hereunder and pursuant to the Collateral Documents, all in form, content
and scope reasonably satisfactory to the Administrative Agent.

     (d) Indemnity; Costs and Expenses. Indemnify and/or reimburse (as applicable) the
Administrative Agent for any and all reasonable, documented out-of-pocket costs, expenses, claims,
fees or other amounts paid or incurred by the Administrative Agent to the extent paid or incurred
in connection with the filing or recording of any documents, agreement or instruments related to
the Collateral, the protection of any of the Collateral, its rights and interests therein or any
Loan Party’s underlying rights and interests therein or the enforcement of any of its other rights
with respect to the Collateral; provided, that the reimbursement and indemnity obligations
set forth in this clause (d) shall be in addition to and in furtherance of all other reimbursement
or indemnity obligations of the Loan Parties (including the Borrower) referenced herein or in any
other Loan Document.

     6.14 Further Assurances.

     Promptly upon request by the Administrative Agent, or any Lender through the Administrative
Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in
the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all such further acts,
deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender
through the Administrative Agent, may reasonably require from time to time in order to (i) carry
out more effectively the purposes of the Loan Documents, (ii) to the fullest extent permitted by
Applicable Law, subject any Loan Party’s properties, assets, rights or interests to the Liens now
or hereafter intended to be covered by any of the Collateral Documents, (iii) perfect and maintain
the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens
intended to be created thereunder and (iv) assure, convey, grant, assign, transfer, preserve,
protect and confirm more effectively unto the Secured Parties the rights granted or now or
hereafter intended to be granted to the Secured Parties under any Loan Document or under any other
instrument executed in connection with any Loan Document to which any Loan Party is or is to be a
party.

     6.15 Compliance with Terms of Approved Ground Leases; Material Easement Agreements.

     (a) Make all payments and otherwise perform in all material respects all obligations in
respect of all Approved Ground Leases related to the Borrowing Base Properties and keep such
Approved Ground Leases in full force and effect and not allow such Approved Ground Leases to lapse
or be terminated or any rights to renew such Approved Ground Leases to be forfeited or cancelled,
notify the Administrative Agent of any default by any party with respect to such Approved Ground
Leases and cooperate with the Administrative Agent in all respects to cure any such default,
except, in any case, where the failure to do so, either individually or in the aggregate, would not
be reasonably likely to have a Material Adverse Effect.

     (b) Without limiting the foregoing, with respect to each Approved Ground Lease or material
appurtenant easement agreements in favor of such Loan Party and related to any Borrowing Base
Property (as applicable):

     (i) pay when due the rent and other amounts due and payable thereunder (subject to
applicable cure or grace periods);

     (ii) timely perform and observe all of the material terms, covenants and conditions
required to be performed and observed by it as tenant thereunder (subject to applicable cure
or grace periods);

     (iii) do all things necessary to preserve and keep unimpaired such Approved Ground
Lease or easement agreement and its material rights thereunder;

     (iv) not waive, excuse or discharge any of the material obligations of the lessor or
other obligor thereunder;

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     (v) diligently and continuously enforce the material obligations of the lessor or other
obligor thereunder;

     (vi) not do, permit or suffer any act, event or omission which would result in a
default thereunder (or which, with the giving of notice or the passage of time, or both,
would constitute a default thereunder), in each case which would permit the applicable
lessor or other obligor to terminate or exercise any other remedy with respect to the
applicable Approved Ground Lease or easement;

     (vii) cancel, terminate, surrender, modify or amend any of the provisions of any such
Approved Ground Lease or easement or agree to any termination, amendment, modification or
surrender thereof if the effect of such cancellation, termination, surrender, modification,
amendment, easement or agreement is to (A) shorten the term of such Approved Ground Lease,
(B) increase the rent payable under such Approved Ground Lease, (C) increase the purchase
price under any purchase option concerning the property included in and subject to such
Approved Ground Lease, (D) modify the gross or net leasable area subject to such Approved
Ground Lease, (E) transfer to the ground lessee any costs and/or expenses previously paid by
the ground lessor under such Approved Ground Lease, (F) terminate (or grant the ground
lessor additional rights to unilaterally terminate) such Approved Ground Lease, or (G)
subordinate the rights of any Loan Party or any TRS under such Approved Ground Lease to an
Approved Manager or any other Person, in each case without the prior written consent of the
Administrative Agent;

     (viii) deliver to the Administrative Agent all default and other material notices
received by it or sent by it under the applicable Approved Ground Lease or easement
agreement;

     (ix) upon Administrative Agent’s written request, provide to Administrative Agent any
information or materials relating to such Approved Ground Lease or easement agreement and
evidencing such Loan Party’s due observance and performance of its material obligations
thereunder;

     (x) not permit or consent to the subordination of such Approved Ground Lease or
easement agreement to any mortgage or other leasehold interest of the premises related
thereto;

     (xi) execute and deliver (to the extent permitted to do so under such Approved Ground
Lease or easement agreement), upon the reasonable request of the Administrative Agent, any
documents, instruments or agreements as may be required to permit the Administrative Agent
to cure any default under such Approved Ground Lease or easement agreement;

     (xii) provide to Administrative Agent written notice of its intention to exercise any
option or renewal or extension rights with respect to such Approved Ground Lease or easement
at least thirty (30) days prior to the expiration of the time to exercise such right or
option and duly exercise any renewal or extension option with respect to any such Approved
Ground Lease or easement (either consistent with such notice or upon the direction of the
Administrative Agent); provided, that each Loan Party further hereby appoints the
Administrative Agent its attorney-in-fact, coupled with an interest, to execute and deliver,
for and in the name of such Person, all instruments, documents or agreements necessary to
extend or renew any such Approved Ground Lease or easement;

     (xiii) not treat, in connection with the bankruptcy or other insolvency proceedings of
any ground lessor or other obligor, any Approved Ground Lease or easement agreement as
terminated, cancelled or surrendered pursuant to the Bankruptcy Code without the
Administrative Agent’s prior written consent;

     (xiv) in connection with the bankruptcy or other insolvency proceedings of any ground
lessor or other obligor, ratify the legality, binding effect and enforceability of the
applicable Approved Ground Lease or easement agreement as against the applicable Loan Party
within the applicable time period therefore in such proceedings, notwithstanding any
rejection by such ground lessor or obligor or trustee, custodian or receiver related
thereto;

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     (xv) provide to the Administrative Agent not less than thirty (30) days prior written
notice of the date on which the applicable Loan Party shall apply to any court or other
governmental authority for authority or permission to reject the applicable Approved Ground
Lease or easement agreement in the event that there shall be filed by or against any
Borrower any petition, action or proceeding under the Bankruptcy Code or any similar federal
or state law; provided, that the Administrative Agent shall have the right, but not
the obligation, to serve upon the applicable Loan Party within such thirty (30) day period a
notice stating that (A) the Administrative Agent demands that such Loan Party assume and the
assign the relevant Approved Ground Lease or easement agreement to the Administrative Agent
subject to an in accordance with the Bankruptcy Code and (B) the Administrative Agent
covenants to cure or provide reasonably adequate assurance thereof with respect to all
defaults susceptible of being cured by the Administrative Agent and of future performance
under the applicable Approved Ground Lease or easement agreement; provided,
further, that if the Administrative Agent serves such notice upon the applicable
Loan Party, such Loan Party shall not seek to reject the applicable agreement and shall
promptly comply with such demand;

     (xvi) permit the Administrative Agent (at its option), during the continuance of any
Event of Default, to (i) perform and comply with all obligations under the applicable
Approved Ground Lease or easement agreement; (ii) do and take such action as the
Administrative Agent deems necessary or desirable to prevent or cure any default by such
Loan Party under such Approved Ground Lease or easement agreement and (iii) enter in and
upon the applicable premises related to such Approved Ground Lease or easement agreement to
the extent and as often as the Administrative Agent deems necessary or desirable in order to
prevent or cure any default under the applicable Approved Ground Lease or easement
agreement;

     (xvii) in the event of any arbitration, court or other adjudicative proceedings under
or with respect to any such Approved Ground Lease or easement agreement, permit the
Administrative Agent (at its option) to exercise all right, title and interest of the
applicable Loan Party in connection with such proceedings; provided, that (i) each
Loan Party hereby irrevocably appoint the Administrative Agent as their attorney-in-fact
(which appointment shall be deemed coupled with an interest) to exercise such right,
interest and title and (ii) the Borrower shall bear all costs, fees and expenses related to
such proceedings; provided, further, that each Loan Party hereby further
agrees that the Administrative Agent shall have the right, but not the obligation, to
proceed in respect of any claim, suit, action or proceeding relating to the rejection of any
of the Approved Ground Leases or easement agreements referenced above by the relevant ground
lessor or obligor as a result of bankruptcy or similar proceedings (including, without
limitation, the right to file and prosecute all proofs of claims, complaints, notices and
other documents in any such bankruptcy case or similar proceeding); and

     (xviii) deliver to the Administrative Agent (and, if it has the ability pursuant to the
subject Approved Ground Lease or easement agreement, cause the applicable ground lessor
under such Approved Ground Lease or grantor under such easement agreement to deliver to the
Administrative Agent) an estoppel certificate from the ground lessor or grantor in relation
to such Approved Ground Lease or easement agreement in form and substance acceptable to the
Administrative Agent, in its reasonable discretion, and, in any case, setting forth (A) the
name of lessee and lessor under the Approved Ground Lease (if applicable); (B) that such
Approved Ground Lease or easement agreement is in full force and effect and has not been
modified except to the extent Administrative Agent has received notice of such modification;
(C) that no rental and other payments due thereunder are delinquent as of the date of such
estoppel; and (D) whether such Person knows of any actual or alleged defaults or events of
default under the applicable Approved Ground Lease or easement agreement;

provided, that each Borrower hereby agrees to execute and deliver to Administrative Agent,
within ten (10) Business Days of any request therefor, such documents, instruments, agreements,
assignments or other conveyances reasonably requested by the Administrative Agent in connection with or in furtherance of any of the
provisions set forth above or the rights granted to the Administrative Agent in connection
therewith.

     6.16 Environmental Assessment Report.

     Upon the written request of the Administrative Agent following the occurrence of any event or
the discovery of any condition which the Administrative Agent or the Required Lenders believe has
caused (or could be

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reasonably expected to cause) the representations and warranties set forth in
Section 5.09, insofar as they relate to the Borrowing Base Properties, to be untrue in any
material respect, furnish or cause to be furnished to the Administrative Agent, at the Borrower’s
expense, (a) with respect to a material release of Hazardous Materials at any Borrowing Base
Property, a report of an environmental assessment of reasonable scope, form and depth (including,
where appropriate, invasive soil or groundwater sampling) as to the nature and extent of the
presence of any Hazardous Materials released or threatened to be released and/or (b) with respect
to a material violation of Environmental Laws by any Loan Party at any Borrowing Base Property, a
report of such violation by a consultant acceptable to the Administrative Agent. If the Borrower
fails to deliver such environmental reports within sixty (60) days after receipt of such written
request then the Administrative Agent may arrange for same, and the Loan Parties hereby grant to
the Administrative Agent and its representatives access to the Borrowing Base Properties to
reasonably undertake such an assessment (including, where appropriate, invasive soil or groundwater
sampling). The reasonable cost of any assessment arranged for by the Administrative Agent pursuant
to this provision will be payable by the Borrower on demand and added to the obligations secured by
the Collateral Documents

     6.17 Borrowing Base Entity SPE/Separateness Requirements; New York Borrowing Base
Properties.

     Cause each Borrowing Base Entity that owns a Borrowing Base Property located in the State of
New York for which no Mortgage or Negative Pledge Agreement has been executed, delivered and/or
recorded and for which no Mortgage Policy has been delivered to the Administrative Agent, in each
case as provided in Section 1.07(e), to comply with (x) the requirements set forth in
Section 1.07(f) and (y) the provisions in the Organization Documents of each such Borrowing
Base Entity included pursuant to the last paragraph of Section 1.07(f).

     6.18 Additional Insurance Requirements for Borrowing Base Properties.

     (a) Obtain and maintain, with respect to each Borrowing Base Property (or cause the applicable
TRS that is party to any Lease regarding each such Borrowing Base Property to obtain and maintain),
at its (or their) sole expense the following:

     (i) property insurance with respect to all insurable property located at or on or
constituting a part of such Borrowing Base Property, against loss or damage by fire,
lightning, windstorm, explosion, hail, tornado and such additional hazards as are presently
included in “Special Form (also known as “all-risk”) coverage and against any and all acts
of terrorism and such other insurable hazards as the Administrative Agent may require, in an
amount not less than 100% of the full replacement cost, including the cost of debris
removal, without deduction for depreciation and sufficient to prevent the applicable Loan
Parties and the Administrative Agent from becoming a coinsurer, such insurance to be in
“builder’s risk” completed value (non reporting) form during and with respect to any
construction on or with respect to such Borrowing Base Property;

     (ii) if and to the extent any portion of any of the improvements are, under the Flood
Disaster Protection Act of 1973 (“FDPA”), as it may be amended from time to time, in a
Special Flood hazard Area, within a Flood Zone designated A or V in a participating
community, a flood insurance policy in an amount required by the Administrative Agent, but
in no event less than the amount sufficient to meet the requirements of Applicable Law and
the FDPA, as such requirements may from time to time be in effect;

     (iii) general liability insurance, on an “occurrence” basis, against claims for
“personal injury” liability, including bodily injury, death or property damage liability,
for the benefit of the applicable Loan Party as named insured and the Administrative Agent
as additional insured;

     (iv) statutory workers’ compensation insurance with respect to any work on or about
such Borrowing Base Property (including employer’s liability insurance, if required by the
Administrative Agent), covering all employees of the applicable Loan Party and/or its
applicable Subsidiaries and any contractor;

     (v) if there is a general contractor, commercial general liability insurance, including
products and completed operations coverage, and in other respects similar to that described
in clause (iv) above, for

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the benefit of the general contractor as named insured and the
applicable Loan Party and the Administrative Agent as additional insureds, in addition to
statutory workers’ compensation insurance with respect to any work on or about the premises
(including employer’s liability insurance, if required by the Administrative Agent),
covering all employees of the general contractor and any contractor; and

     (vi) such other insurance (and related endorsements) as may from time to time be
required by the Administrative Agent (including but not limited to soft cost coverage,
automobile liability insurance, business interruption insurance or delayed rental insurance,
boiler and machinery insurance, earthquake insurance (if then customarily carried by owners
of premises similarly situated), wind insurance, sinkhole coverage, and/or permit to occupy
endorsement) and against other insurable hazards or casualties which at the time are
commonly insured against in the case of premises similarly situated, due regard being given
to the height, type, construction, location, use and occupancy of buildings and
improvements.

     (b) All insurance policies obtained by any Loan Party with respect to or in connection with
any Borrowing Base Property shall be issued and maintained by insurers, in amounts, with
deductibles, limits and retentions, and in forms satisfactory to the Administrative Agent, and
shall require not less than thirty (30) days’ prior written notice to the Administrative Agent of
any cancellation of coverage.

     (c) All insurance companies providing coverage pursuant to clause (a) of this Section
6.18 or any other general coverage required pursuant to any Loan Documents must be licensed to
do business in the state in which the applicable Borrowing Base Property is located and must have
an A.M. Best Company financial and performance ratings of A-:IX or better.

     (d) All insurance policies maintained, or caused to be maintained, by any Loan Party or its
applicable Subsidiaries with respect to any Borrowing Base Property, except for general liability
insurance, shall provide that each such policy shall be primary without right of contribution from
any other insurance that may be carried by such Loan Party or its applicable Subsidiaries or the
Administrative Agent and that all of the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each insured.

     (e) If any insurer which has issued a policy of title, hazard, liability or other insurance
required pursuant to this Section 6.18 or any other provision of any Loan Document becomes
insolvent or the subject of any petition, case, proceeding or other action pursuant to any debtor
relief law, or if in Administrative Agent’s opinion the financial responsibility of such insurer is
or becomes inadequate, such Loan Party shall, in each instance promptly upon its discovery thereof
or upon the request of the Administrative Agent therefor, and at the Loan Party’s expense, promptly
obtain and deliver (or cause to be obtained and delivered) to the Administrative Agent a like
policy (or, if and to the extent permitted by the Administrative Agent, acceptable evidence of
insurance) issued by another insurer, which insurer and policy meet the requirements of this
Section 6.18 or any other provision of any Loan Document, as the case may be.

     (f) Without limiting the discretion of the Administrative Agent with respect to required
endorsements to insurance policies, all such policies for loss of or damage to any Borrowing Base
Property shall contain a standard mortgagee clause (without contribution) naming the Administrative
Agent as mortgagee with loss proceeds payable to the Administrative Agent notwithstanding (i) any
act, failure to act or negligence of or violation of any warranty, declaration or condition
contained in any such policy by any named or additional insured; (ii) the occupation or use of such
Borrowing Base Property for purposes more hazardous than permitted by the terms of any such policy;
(iii) any foreclosure or other action by the Administrative Agent under the Loan Documents; or (iv)
any change in title to or ownership of such Borrowing Base Property or any portion thereof, such
proceeds to be held for application as provided in the Loan Documents.

     (g) The originals of each initial insurance policy (or to the extent permitted by the
Administrative Agent, a copy of the original policy and such evidence of insurance as may be
acceptable to the Administrative Agent) shall be delivered to the Administrative Agent at the time
of execution of the applicable Mortgage, with all premiums fully paid current, and each renewal or
substitute policy (or evidence of insurance) shall be delivered to the Administrative Agent, with
all premiums fully paid current, at least ten (10) business days before the termination of the
policy it renews or replaces. The applicable Loan Party shall pay (or cause to be paid) all
premiums on

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policies required hereunder as they become due and payable and promptly deliver to the
Administrative Agent evidence satisfactory to the Administrative Agent of the timely payment
thereof.

     (h) If any loss occurs at any time when the applicable Loan Party has failed to perform the
covenants and agreements set forth in this Section 6.18 with respect to any insurance
payable because of loss sustained to any part of the premises whether or not such insurance is
required by the Administrative Agent, then the Administrative Agent shall nevertheless be entitled
to the benefit of all insurance covering the loss and held by or for the applicable Loan Party, to
the same extent as if it had been made payable to the Administrative Agent.

     (i) Upon any foreclosure of any Mortgage or transfer of title to all or any portion of any
Borrower Base Property in extinguishment of the whole or any part of the Obligations, all of the
applicable Loan Party’s right, title and interest in and to the insurance policies referred to in
this Section 6.18 with respect to such Borrowing Base Property (including unearned
premiums) and all proceeds payable thereunder shall thereupon vest in the purchaser at foreclosure
or other such transferee, to the extent permissible under such policies.

     (j) During the continuance of any Event of Default, the Administrative Agent shall have the
right (but not the obligation) to make proof of loss for, settle and adjust any claim under, and
receive the proceeds of, all insurance for loss of or damage to any Borrowing Base Property,
regardless of whether or not such insurance policies are required by the Administrative Agent, and
the reasonable expenses incurred by the Administrative Agent in the adjustment and collection of
insurance proceeds shall be a part of the Obligations and shall be due and payable to the
Administrative Agent on demand. The Administrative Agent shall not be, under any circumstances,
liable or responsible for failure to collect or exercise diligence in the collection of any of such
proceeds or for the obtaining, maintaining or adequacy of any insurance or for failure to see to
the proper application of any amount paid over to any Loan Party. Any such proceeds received by
the Administrative Agent shall, after deduction therefrom of all reasonable expenses actually
incurred by the Administrative Agent, including attorneys’ fees, at the Administrative Agent’s
option be (i) released to the applicable Loan Party, or (ii) applied (upon compliance with such
terms and conditions as may be required by the Administrative Agent ) to repair or restoration,
either partly or entirely, of the Borrowing Base Property so damaged, or (iii) applied to the
payment of the Obligations in such order and manner as the Administrative Agent, in its sole
discretion, may elect, whether or not due (provided, that to the extent any such proceeds are
applied to any portion of the outstanding principal or interest on any of the Loans, such proceeds
shall be applied to all Outstanding Amounts on any Loans pro rata based on the Total Outstandings).
In any event, the unpaid portion of the Obligations shall remain in full force and effect and the
payment thereof shall not be excused.

     (k) Each Loan Party shall at all times comply (and shall cause each applicable TRS to comply)
in all material respects with the requirements of the insurance policies required hereunder and of
the issuers of such policies and of any board of fire underwriters or similar body as applicable to
or affecting any Borrowing Base Property.

     6.19 Updated Appraisals.

     Acknowledge and agree that the Administrative Agent shall have the right, in its discretion,
to obtain, at the sole expense of the Borrower, a new or updated Appraisal with respect to any of
the Borrowing Base Properties (in addition to the re-appraisals that may be required in connection
with the exercise of the Borrower’s option to extend the Maturity Date pursuant to Section
2.14) to the extent that the most recently delivered Appraisal with respect to such Borrowing
Base Property is more than twelve (12) calendar months old; provided, without limiting the
foregoing right of the Administrative Agent, so long as no Event of Default shall then exist, the
Administrative Agent shall, within fifteen (15) business days following the written request of the
Borrower and at the sole cost and expense of the Borrower, order new or updated Appraisals for any
of the Borrowing Base Properties to the extent that the most recently delivered Appraisal related
to any such Borrowing Base Property is more than six (6) calendar
months old. In addition, to the extent the Administrative Agent initially incurs any costs or
expenses related to any new or updated Appraisal provided for in this Section 6.19, the
Borrower shall reimburse the Administrative Agent upon demand in the amount of such out-of-pocket
costs or expenses. As such new or updated Appraisals are obtained and approved by the
Administrative Agent, such Appraisals shall, immediately upon such approval, be used in the
determination of the BBP Value of the applicable Borrowing Base Property.

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     6.20 Title Insurance Policy.

     Deliver (or cause to be delivered) within thirty (30) days following the addition of a
Borrowing Base Property to the Borrowing Base pursuant to Section 1.07 to the
Administrative Agent a Mortgage Policy with respect to the applicable Borrowing Base Property, in
an amount at least equal to the amount to be secured by the applicable Mortgage and together with
endorsements acceptable to the Administrative Agent (including tie-in, first loss and last dollar
endorsements, in each case, where available), issued, coinsured and reinsured by title insurers
reasonably acceptable to the Administrative Agent, insuring the Mortgages to be valid first and
subsisting Liens on the property described therein, free and clear of all defects (including, but
not limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting only Permitted
Liens of the type described in Section 7.01(a), (c), (d), (f),
(g) and (j) and other Liens approved by the Administrative Agent and providing for
such other affirmative insurance (including endorsements for future advances under the Loan
Documents, for mechanics’ and materialmen’s Liens and for zoning of the applicable property) and
such coinsurance and direct access reinsurance as the Administrative Agent reasonably may deem
necessary or desirable and as may be available in the state where such Real Property is located.
Without limiting the foregoing, Borrower shall, promptly following the recording of the Mortgage
with respect to any Borrowing Base Property added upon the receipt of a Mortgage Policy pursuant to
clause (B) of Section 1.07(a)(i), cause the Title Insurance Company that issued such
Mortgage Policy to issue an endorsement to such Mortgage Policy modifying the description of the
insured Mortgage in Schedule A of such Mortgage Policy to add the recording information.

ARTICLE VII.

NEGATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall not be Fully Satisfied, or any Letter of Credit shall remain outstanding, the
Borrower shall not, nor shall it permit any other Loan Party or, except where expressly limited to
Loan Parties, any other Subsidiary (and where applicable, specifically including Section
7.11, the Consolidated Parties) to, directly or indirectly:

     7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than the following
(collectively, the “Permitted Liens”):

     (a) Liens pursuant to any Loan Document;

     (b) Liens existing on the date hereof and listed on Schedule 5.08(b) and any renewals
or extensions thereof, provided that (i) the property covered thereby is not changed, (ii)
the amount secured or benefited thereby is not increased except as contemplated by Section
7.03(b), (iii) the direct or any contingent obligor with respect thereto is not changed, and
(iv) any renewal or extension of the obligations secured or benefited thereby is permitted by
Section 7.03(b);

     (c) Liens for taxes not yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;

     (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period of more than thirty
(30) days or which are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books of the applicable
Person;

     (e) pledges or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation, other than any Lien
imposed by ERISA;

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

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     (g) (i) Liens on any Borrowing Base Property shown as exceptions from coverage under any
Mortgage Policy approved by the Administrative Agent respecting such Borrowing Base Property, and
(ii) without duplication of the foregoing, easements, rights-of-way, restrictions and other similar
encumbrances affecting any Real Property owned by any Loan Party which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of the business of the
applicable Person and which, with respect to Borrowing Base Properties, have been reviewed and
approved by the Administrative Agent (such approval to be in the reasonable judgment of the
Administrative Agent);

     (h) Liens securing judgments for the payment of money not constituting an Event of Default
under Section 8.01(h);

     (i) Liens, if any, in favor of the L/C Issuer and/or Swing Line Lender to Cash Collateralize
or otherwise secure the obligations of a Defaulting Lender or an Impacted Lender to fund risk
participations hereunder;

     (j) the interests of any ground lessor under an Approved Ground Lease and the interests of any
TRS under a lease of any Borrowing Base Property;

     (k) Liens on any assets (other than any Borrowing Base Property and related assets) securing
Indebtedness permitted by Section 7.03(f), including Liens on such Real Property existing
at the time such Real Property is acquired by the applicable Loan Party or any Non-Guarantor
Subsidiary;

     (l) Liens on the Equity Interests of any Non-Guarantor Subsidiary; provided, no such
Liens shall be permitted with respect to the Equity Interests of Pebblebrook Hotel Lessee, any
entity which is the lessee with respect to a Borrowing Base Property or the direct or indirect
parent thereof (other than Liens in favor of the Administrative Agent respecting the Equity
Interests of Pebblebrook Hotel Lessee, as contemplated by the Loan Documents);

     (m) other Liens on assets (other than Borrowing Base Properties) securing claims or other
obligations of the Loan Parties and their Subsidiaries (other than Indebtedness) in amounts not
exceeding $5,000,000 in the aggregate; and

     (n) any interest of title of a lessor under, and Liens arising from or evidenced by protective
UCC financing statements (or equivalent filings, registrations or agreements in foreign
jurisdictions) relating to, operating leases permitted hereunder.

     7.02 Investments. Make any Investments, except:

     (a) Investments by the Consolidated Parties (other than by the Parent REIT) in (i) Borrowing
Base Properties, and (ii) other real properties that are fully-developed, open and operating
income-producing “luxury,” “upper upscale” or “upscale” full or select service hotels, with all
material approvals from each Governmental Authority required in connection with the lawful
operation of such hotels, and which real properties shall, upon the making of such Investments, be
wholly owned by such Consolidated Party;

     (b) Investments held by the Borrower or such Loan Party or other Subsidiary in the form of
cash or cash equivalents;

     (c) Investments existing as of the Closing Date and set forth in Schedule 5.08(c);

     (d) Advances to officers, directors and employees of the Borrower, the Loan Parties and other
Subsidiaries in aggregate amounts not to exceed (i) $500,000 at any time outstanding for employee
relocation purposes, and (ii) $100,000 at any time outstanding for travel, entertainment, and analogous
ordinary business purposes;

     (e) Investments of (i) the Borrower in any Guarantor (including (A) Investments by the
Borrower in any private REIT, so long as Borrower owns 100.0% of the “common” Equity Interests in
such private REIT and

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(B) Investments by the Borrower in a Guarantor in the form of an intercompany
loan), (ii) any Guarantor in the Borrower or in another Guarantor (including Investments by a
Guarantor in the Borrower or in another Guarantor in the form of an intercompany loan), and (iii)
the Borrower, any Guarantor or any Non-Guarantor Subsidiary in Non-Guarantor Subsidiaries
(including Investments by the Borrower, any Guarantor or any Non-Guarantor Subsidiary in a
Non-Guarantor Subsidiary in the form of an intercompany loan) that own, directly or indirectly, and
operate Real Properties that are fully-developed, open and operating income-producing “luxury,”
“upper upscale” or “upscale” full or select service hotels, with all material approvals from each
Governmental Authority required in connection with the lawful operation of such hotels;
provided, notwithstanding the foregoing or any other provision herein or in any other Loan
Document to the contrary, the Parent REIT shall not own any Equity Interests in any Person other
than the Borrower;

     (f) Investments consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course of business, and
Investments received in satisfaction or partial satisfaction thereof from financially troubled
account debtors to the extent reasonably necessary in order to prevent or limit loss;

     (g) Guarantees permitted by Section 7.03;

     (h) Other Investments of the Borrower and its Subsidiaries in:

     (i) Real properties consisting of undeveloped or speculative land (valued at cost for
purposes of this clause (h)) with an aggregate value not greater than five percent (5.0%) of
Consolidated Tangible Assets and which real properties shall, upon the making of such
Investments, be wholly owned by the Borrower or such Subsidiary;

     (ii) Incoming-producing real properties (other than hotels or similar hospitality
properties) (valued at cost for purposes of this clause (h)) with an aggregate value not
greater than ten percent (10.0%) of Consolidated Tangible Assets and which real properties
shall, upon the making of such Investments, be wholly owned by the Borrower or such
Subsidiary;

     (iii) Real properties with respect to which development activities are being undertaken
by the applicable owner thereof (valued at cost for purposes of this clause (h);
provided, that all costs and expenses associated with all existing development
activities (budget to completion) shall be included in determining the aggregate Investment
of the Borrower or such Subsidiary with respect to such activities) with an aggregate value
not greater than fifteen percent (15.0%) of Consolidated Tangible Assets and which real
properties shall, upon the making of such Investments, be wholly owned by the Borrower or
such Subsidiary and;

     (iv) Unconsolidated Affiliates (valued at cost for purposes of this clause (h)) with an
aggregate value not greater than fifteen percent (15.0%) of Consolidated Tangible Assets;

     (v) Mortgage or real estate-related loan assets (valued at cost for purposes of this
clause (h)) with an aggregate value not greater than fifteen percent (15.0%) of Consolidated
Tangible Assets; and

     (vi) Equity Interests in any Person (other than any Affiliate of the Borrower) (valued
at cost for purposes of this clause (h)) with an aggregate value not greater than five
percent (5.0%) of Consolidated Tangible Assets;

provided, however, that the collective aggregate value of the Investments owned
pursuant to items (i) through (vi) of this clause (h) above shall not at any time exceed thirty
percent (30.0%) of Consolidated Tangible Assets;

     (i) Investments in fixed or capital assets to the extent not prohibited under Section
7.12; and

     (j) Investments in any Person as a result of any merger or consolidation completed in
compliance with Section 7.04.

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     7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:

     (a) Indebtedness under the Loan Documents;

     (b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and any
refinancings, refundings, renewals or extensions thereof; provided that the amount of such
Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and
expenses reasonably incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder;

     (c) Guarantees of (i) the Borrower or any Guarantor in respect of Indebtedness otherwise
permitted hereunder of the Borrower or any other Guarantor, (ii) the Parent REIT or the Borrower,
in respect of Indebtedness otherwise permitted hereunder of any Non-Guarantor Subsidiary if, in the
case of any Guarantee pursuant to this clause (ii), (x) no Default or Event of Default shall exist
immediately before or immediately after the making of such Guarantee, and (y) there exists no
violation of the financial covenants hereunder on a Pro Forma Basis after the making of such
Guarantee, and (iii) Non-Guarantor Subsidiaries made in the ordinary course of business;

     (d) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or
arising under any Swap Contract, provided that (i) such obligations are (or were) entered
into by such Person in the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person, or changes in the value of securities issued by such Person, and not
for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain
any provision exonerating the non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party;

     (e) unsecured Indebtedness in the form of trade payables incurred in the ordinary course of
business;

     (f) Indebtedness of any Loan Party or Non-Guarantor Subsidiary incurred or assumed after the
date hereof that is either unsecured or is secured by Liens on any assets of such Loan Party (other
than any Borrowing Base Property) or of such Non-Guarantor Subsidiary; provided, such
Indebtedness shall be permitted under this Section 7.03(f) only if: (i) no Default or Event
of Default shall exist immediately before or immediately after the incurrence or assumption of such
Indebtedness, and (ii) there exists no violation of the financial covenants hereunder on a Pro
Forma Basis after the incurrence or assumption of such Indebtedness; and

     (g) Indebtedness consisting of intercompany loans permitted under Section 7.02(e).

     7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another
Person, or Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
Person, except for Dispositions permitted under Section 7.05 (other than under Section
7.05(e)) or except that, so long as no Default or Event of Default exists or would result
therefrom:

     (a) any Guarantor may merge with the Borrower or any other Guarantor, provided that
when any Guarantor is merging with the Borrower, the Borrower shall be the continuing or surviving
Person;

     (b) any Loan Party may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or to another Loan Party; and

     (c) (i) any Non-Guarantor Subsidiary may merge with any other Person or Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to any other Person;
provided such merger or Disposition shall be permitted under this Section
7.04(c)(i) only if there exists no violation of the financial
covenants hereunder on a Pro Forma Basis after such merger or Disposition, and (ii) any
Non-Guarantor Subsidiary may merge with a Loan Party; provided that the Loan Party shall be
the continuing or surviving Person.

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     7.05 Dispositions.

Make any Disposition of any assets or property, except:

     (a) Dispositions in the ordinary course of business (other than those Dispositions permitted
under clause (b) of this Section 7.05), so long as (i) no Default or Event of Default shall
exist immediately before or immediately after such Disposition, and (ii) the Consolidated Parties
will be in compliance, on a Pro Forma Basis following such Disposition, with (x) the covenants set
forth in Sections 7.01, 7.02, 7.03, and 7.11 of this Agreement, (y)
all restrictions on Outstanding Amounts contained herein, and (z) the requirements of Section
1.07 (in the case of any Disposition with respect to a Borrowing Base Property), in each case
as demonstrated by a Compliance Certificate with supporting calculations delivered to the
Administrative Agent on or prior to the date of such Disposition showing the effect of such
Disposition;

     (b) Any of the following:

     (i) Dispositions of obsolete, surplus or worn out property or other property not
necessary for operations, whether now owned or hereafter acquired, in the ordinary course of
business and for no less than fair market value;

     (ii) Dispositions of equipment or real property to the extent that (A) such property is
exchanged for credit against the purchase price of similar replacement property or (B) the
proceeds of such Disposition are reasonably promptly applied to the purchase price of such
replacement property, in each case in the ordinary course of business and for no less than
fair market value;

     (iii) Dispositions of inventory and Investments of the type described in Section
7.02(b) and (c) in the ordinary course of business;

     (iv) leases of Real Property (other than any Borrowing Base Property) and personal
property assets related thereto to any TRS; and

     (v) in order to resolve disputes that occur in the ordinary course of business, the
Borrower and any Subsidiary of Borrower may discount or otherwise compromise, for less than
the face value thereof, notes or accounts receivable;

     (c) Dispositions of property by any Loan Party to the Borrower or to another Loan Party;

     (d) Dispositions permitted by Section 7.04; and

     (e) Any other Disposition approved in writing by the Administrative Agent and the Required
Lenders.

Notwithstanding the foregoing provisions of this Section 7.05, no Loan Party shall sell or
make any other Disposition of assets or property that will have the effect of causing such Loan
Party (or any other Loan Party) to become liable under any tax protection or tax sharing agreement
if the amount of such liability would exceed an amount equal to 1.0% of the total assets of such
Loan Party without the prior written consent of the Administrative Agent.

     7.06 Restricted Payments.

     (a) Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except:

     (i) so long as no Event of Default shall exist at the time of such Restricted Payment
or would result therefrom, each Subsidiary may make Restricted Payments to the Borrower, the
Guarantors and any other Person that owns an Equity Interest in such Subsidiary, ratably according to
their respective holdings of the type of Equity Interest in respect of which such Restricted
Payment is being made;

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     (ii) so long as no Event of Default shall exist at the time of such Restricted Payment
or would result therefrom, the Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or other common Equity
Interests of such Person;

     (iii) so long as no Event of Default shall exist at the time of such Restricted Payment
or would result therefrom, the Borrower and each Subsidiary may purchase, redeem or
otherwise acquire Equity Interests issued by it with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other common Equity
Interests; and

     (iv) so long as no Acceleration shall have occurred, each TRS may make Restricted
Payments to its TRS parent entity to the extent necessary to pay any tax liabilities then
due (after taking into account any losses, offsets and credits, as applicable; provided that
any such Restricted Payments by a TRS shall only be made after it has paid all of its
operating expenses currently due or anticipated within the current month and next following
month;

     (b) Notwithstanding the foregoing, the Loan Parties shall be permitted to make Restricted
Payments of the type and to the extent permitted pursuant to Section 7.11(e) of this
Agreement.

     7.07 Change in Nature of Business. Engage in any material line of business substantially
different from those lines of business conducted by the Borrower and its Subsidiaries on the date
hereof or any business substantially related or incidental thereto.

     7.08 Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate
of the Borrower, whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction
with a Person other than an Affiliate, provided, that the foregoing restriction shall not
apply to transactions between or among the Borrower and any Guarantor or between and among any
Guarantors, or between and among any Loan Party and the TRS or an Approved Manager (if applicable).

     7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than this Agreement
or any other Loan Document) that (a) limits the ability (i) of any Subsidiary to make Restricted
Payments to the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any
Guarantor, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the
Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such
Person; provided, however, that clauses (ii) and (iii) shall not prohibit any
negative pledge incurred or provided in favor of any holder of Indebtedness in respect of (A)
capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital
assets permitted hereunder , or (B) a property-specific financing involving only a Non-Guarantor
Subsidiary as the borrower, in each case solely to the extent any such negative pledge relates to
the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien
to secure an obligation of such Person if a Lien is granted to secure another obligation of such
Person.

     7.10 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock
(within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

     7.11 Financial Covenants.

     (a) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth at any
time to be less than the sum of (i) $300,000,000, and (ii) an amount equal to 75% of the net
proceeds from the issuance and sale of Equity Interests of the Borrower or any of its Subsidiaries
(other than issuances to any Loan Party) after the date hereof, including upon any conversion of
debt securities of the Borrower into such Equity Interests.

     (b) Consolidated Recourse Secured Indebtedness Limitation. Permit the amount of
Consolidated Recourse Secured Indebtedness (excluding Indebtedness hereunder) to, at any time,
exceed twenty-five percent (25.0%) of Consolidated Tangible Assets.

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     (c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge
Coverage Ratio (i) at any time during the period commencing as of the Closing Date and continuing
until the date which is 18 months following the Closing Date to be less than 1.50x, and (ii) and at
any time thereafter to be less than 1.75x.

     (d) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio at any time
during at any time during the following periods to be greater than the ratio set forth opposite
such period:

	 	 	 	 	 
	 	 	Maximum Consolidated
	Period	 	Leverage Ratio
	Closing Date through June 30, 2011
	 	 	7.00:1.00	 
	July 1, 2011 through December 31, 2012
	 	 	6.00:1.00	 
	January 1, 2013 and all dates thereafter
	 	 	5.00:1.00	 

     (e) Distribution Limitation. Permit, for any given four (4) calendar quarter period
of the Consolidated Parties, the amount of Restricted Payments made by the Consolidated Parties to
the holders of their Equity Interests (excluding any such holders of Equity Interests which are
Loan Parties) during such period to exceed the FFO Distribution Allowance for such period;
provided, that to the extent no Event of Default then exists or will result from same (or
if an Event of Default then exists or will result from same, then so long as no Acceleration shall
have occurred), each Loan Party and each other Subsidiary (including Pebblebrook Hotel Lessee)
shall be permitted to make Restricted Payments to the Borrower and the Borrower shall be permitted
to make Restricted Payments to Parent REIT, in each case to permit the Parent REIT to make
Restricted Payments to the holders of the Equity Interests in the Parent REIT to the extent
necessary to maintain Parent REIT’s status as a REIT and as necessary to pay any special or
extraordinary tax liabilities then due (after taking into account any losses, offsets and credits,
as applicable) on capital gains attributable to Parent REIT.

     (f) Consolidated Funded Indebtedness to Total Asset Value Ratio. Permit the
Consolidated Funded Indebtedness to Total Asset Value Ratio, at any time during the period
commencing as of the Closing Date and expiring as of the 31st calendar month following the Closing
Date, to exceed 45%.

     7.12 Capital Expenditures.

     Make or become legally obligated to make any expenditure in respect of the purchase or other
acquisition of any fixed or capital asset other than normal replacements and maintenance which are
properly charged to current operations and other reasonable and customary capital expenditures made
in the ordinary course of the business of the Parent REIT and its Subsidiaries.

     7.13
Accounting Changes.

     Make any change in (a) accounting policies or reporting practices, except as required by GAAP,
or (b) fiscal year, except with the written consent of the Administrative Agent.

     7.14
Ownership of Subsidiaries; Certain Real Property Assets.

     Notwithstanding any other provisions of this Agreement to the contrary, (a) permit any Person
(other than the Parent REIT, the Borrower, any other Loan Party or a private REIT) to own any
Equity Interests of any Borrowing Base Entity, except to qualify directors where required by
Applicable Law, (b) permit any Loan Party that owns a Borrowing Base Property to issue or have
outstanding any shares of preferred Equity Interests, (c) permit, create, incur, assume or suffer
to exist any Lien on any Equity Interests owned by the Borrower or any Loan Party of (i) any Loan
Party or (ii) any TRS that leases a Borrowing Base Property or is the direct or indirect parent of
any such TRS (other than, in each case, pursuant to the Collateral Documents), (d) permit DC Hotel
Trust to directly own or acquire any Real Property assets; provided, that this clause (d)
of Section 7.14 shall not prohibit DC Hotel Trust from owning or acquiring any Equity Interests in any Subsidiary that owns any Real
Property assets, or (e) permit the Borrower to own less than 99% of the outstanding common Equity
Interests in Pebblebrook Hotel Lessee.

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     7.15 Leases.

     Permit any Loan Party to enter into, terminate, cancel, amend, restate, supplement or
otherwise modify any Material Lease relating to any Borrowing Base Property; provided, that
(i) such Borrowing Base Property may be subject to an Approved Ground Lease entered into in
accordance with and subject to the requirements of this Agreement, (ii) the applicable Borrowing
Base Entity may lease such Borrowing Base Property owned (or ground leased) by it to a TRS pursuant
to a form of Lease acceptable to the Administrative Agent, in its reasonable discretion, and (iii)
the applicable Borrowing Base Entity or the applicable TRS (if any) may enter into, terminate,
cancel, amend, restate, supplement or otherwise modify any Material Lease relating to such
Borrowing Base Property (including any Lease between such Borrowing Base Entity and such TRS
respecting any Borrowing Base Property) to the extent that the entry into, termination,
cancellation, amendment, restatement, supplement or modification is not reasonably likely to, in
the aggregate with any other then-existing conditions or circumstances, have a Material Adverse
Effect.

     7.16 Sale Leasebacks.

     Permit any Loan Party to enter into any Sale and Leaseback Transaction with respect to any
Borrowing Base Property.

     7.17 [Reserved].

     7.18 Additional Borrowing Base Property Matters.

     (a) Permit (i) any Borrowing Base Property to cease to be wholly owned by a Loan Party or
ground leased by a Loan Party pursuant to an Approved Ground Lease, except in connection with a
Disposition completed in accordance with Sections 1.07 and 7.05; (ii) the existence
of any material default or any event of default of a Loan Party under any Approved Ground Lease
with respect to any Borrowing Base Property; (iii) any Borrowing Base Property to cease to be
encumbered by a first priority perfected Lien (subject only to Permitted Liens of the type
described in Section 7.01(c), (d), (f), (g), (i) and
(j)) in favor of the Administrative Agent (for the benefit of the Lenders, Administrative
Agent and the other Secured Parties), except in connection with a Disposition completed in
accordance with Sections 1.07 and 7.05; (iv) any Borrowing Base Property to be
subject to any Lien other than a Permitted Lien of the type described in Section 7.01(c),
(d), (f), (g), (i) and (j); or (v) at any time after the
date that is twenty-four (24) months after the Closing Date, Borrowing Base Properties to be
located in less than four (4) separate metropolitan statistical areas except in accordance with the
provisions of Section 1.07(c).

     (b) Without limiting the foregoing, neither the Borrower nor any other Loan Party shall add
any Borrowing Base Property to, or remove any Borrowing Base Property from, the Borrowing Base,
except in accordance with the provisions of Section 1.07.

     7.19 Insurance Proceeds and Condemnation Awards.

     (a) In the event of any loss or damage to any portion of any Borrowing Base Property due to
fire or other casualty, or any taking of any portion of any Borrowing Base Property by condemnation
or under power of eminent domain, the Administration Agent shall have the right, but not the
obligation, so long as any Default or Event of Default exists to settle insurance claims and
condemnation claims or awards, unless the loss or damage is less than the greater of (i)
$10,000,000.00 and (ii) ten percent (10%) of the “as is” appraised value of such Borrowing Base
Property. If no Default or Event of Default exists and (i) the loss or damage is less than the
greater of (i) $10,000,000.00 and (ii) ten percent (10%) of the “as is” appraised value of such
Borrowing Base Property, or (iii) the Administrative Agent elects not to settle such claim or
award, then the applicable Borrowing Base Entity shall have the right to settle such claim or award
without the consent of the Administrative Agent or the Required Lenders; provided that (A) such
Borrowing Base Entity shall use the proceeds of any claim or award to rebuild or restore the
applicable Borrowing Base Property substantially to its condition prior to the casualty or
condemnation to the extent permitted by Laws and (B) such Borrowing Base Entity shall provide the
Administrative Agent with notice of the casualty or condemnations. Failure to use the insurance
proceeds received directly from the insurance company to rebuild and restore shall constitute an
Event of Default. Notwithstanding the foregoing, provided that

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the conditions set forth in (A) and (B) above are satisfied and so long as each of the following (1) through (4) is satisfied, the Loan
Parties shall have the right to settle claims or awards for more than $10,000,000.00, provided that
the Administrative Agent shall have the right to settle any claim or award that the Loan Parties
have not settled on or before one year after the date of such loss or prior to the date of such
taking. If (1) no Event of Default exists hereunder or under the other Loan Documents; (2) no
monetary Event of Default has occurred during the preceding twelve (12) months; (3) the proceeds or
awards received by the Administrative Agent, together with any additional funds deposited with the
Administrative Agent by the Loan Parties, are sufficient, in the Administrative Agent’s reasonable
discretion, either to restore the affected Borrowing Base Property substantially to its condition
before the casualty or to remedy the condemnation; and (4) the Borrowing Base Property will
continue to qualify as a Borrowing Base Property following the completion of any such repairs or
restoration, then the applicable Borrowing Base Entity shall be entitled to use the insurance or
condemnation proceeds to rebuild the affected Borrowing Base Property or to remedy the effect of
the condemnation, as the case may be. In all other cases, the Administrative Agent shall have the
right (but not the obligation) to collect, retain and apply to the Indebtedness all insurance and
condemnation proceeds (after deduction of all expense of collection and settlement, including
reasonable attorney and adjusters’ fees and expenses). Any proceeds remaining after application to
the Indebtedness shall be paid by the Administrative Agent to the Borrower or the party then
entitled thereto.

     (b) If the Administrative Agent does not elect to or is not entitled to apply casualty
proceeds or condemnation awards to the Indebtedness and if the Loan Parties are not entitled to
settle such claims, all as provided under Section 7.19(a), the Administrative Agent shall
have the right (but not the obligation) to settle, collect and retain such proceeds, and after
deduction of all reasonable expenses of collection and settlement, including reasonable attorney
and adjusters’ fees and expenses, to release the same to the Borrower (or the applicable Borrowing
Base Entity, at the instruction of the Borrower) periodically, provided that the Borrower (or the
applicable Borrowing Base Entity) shall:

     (i) expeditiously repair and restore all damage to the portion of the Borrowing Base
Property in question resulting from such casualty or condemnation, including completion of
the construction if such fire or other casualty shall have occurred prior to completion, so
that the Borrowing Base Property continue to qualify as a Borrowing Base Property following
such construction; and

     (ii) if the casualty proceeds or condemnation awards are, in the Administrative Agent’s
reasonable judgment, insufficient to complete the repair and restoration of the buildings,
structures and other improvements constituting the Borrowing Base Property as aforesaid,
then the Loan Parties shall promptly deposit with the Administrative Agent the amount of
such deficiency.

Any request by a Loan Party for a disbursement by the Administrative Agent of casualty proceeds or
condemnation awards by the Borrower pursuant to this Section 7.19 and the disbursement
thereof shall be conditioned upon the Loan Parties’ compliance with and satisfaction of the same
conditions precedent as would be applicable in connection with construction loans made by
institutional lenders for projects similar to the affected Borrowing Base Property, including
approval of plans and specifications, submittal of evidence of completion, updated title insurance,
lien waivers, and other customary safeguards.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

     8.01 Events of Default. Any of the following shall constitute an Event of Default:

     (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as
required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii)
within three (3) days after the same becomes due, any interest on any Loan or on any L/C
Obligation, or any fee due hereunder, or (iii) within five (5) days after the same becomes due, any
other amount payable hereunder or under any other Loan Document; or

     (b) Specific Covenants. Except as expressly provided in Section 8.04, the
Borrower fails to perform or observe any term, covenant or agreement contained in any of
Section 6.01, 6.02, 6.03, 6.05(a), 6.10, 6.11,
6.12, 6.13, 6.15 (to the extent such failure would permit the ground lessor
under the applicable Approved Ground Lease to

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terminate such Approved Ground Lease), 6.18 or Article VII, or any Guarantor fails to perform or observe any term, covenant or
agreement contained in Article XI hereof; or

     (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part
to be performed or observed and such failure continues for thirty (30) days after the earlier of
(i) Borrower’s actual knowledge of such failure or (ii) Borrower’s receipt of notice as to such
failure from the Administrative Agent or any Lender; or

     (d) Representations and Warranties. Any representation, warranty, certification or
statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party
herein, in any other Loan Document, or in any document delivered in connection herewith or
therewith shall be incorrect or misleading in any material respect when made or deemed made; or

     (e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any payment
when due after giving effect to any applicable grace period (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or
Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an
aggregate principal amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of more than the
Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event occurs, the effect of which default or other event is to
cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries
of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or
to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or
an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded;
or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap
Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower
or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination
Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the
Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or

     (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes
or consents to the institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or
for all or any material part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the application or consent of
such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

     (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary becomes
unable or admits in writing its inability or fails generally to pay its debts as they become due,
or (ii) any writ or warrant of attachment or execution or similar process is issued or levied
against all or any material part of the property of any such Person and is not released, vacated or
fully bonded within 30 days after its issue or levy; or

     (h) Judgments. There is entered against the Borrower or any Subsidiary (i) one or
more final judgments or orders for the payment of money in an aggregate amount (as to all such
judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect and, in either case, (A)
enforcement proceedings are commenced by any creditor upon such judgment or order, or (B)
there is a period of thirty (30) consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, is not in effect; or

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     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan which has resulted or could reasonably be expected to result in liability of the Borrower
under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount
in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when
due, after the expiration of any applicable grace period, any installment payment with respect to
its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of the Threshold Amount; or

     (j) Invalidity of Loan Documents. Any provision of any Loan Document, at any time
after its execution and delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect;
or any Loan Party or any other Person contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Loan Party denies in writing that it has any or further
liability or obligation under any Loan Document, or purports to revoke, terminate or rescind in
writing any provision of any Loan Document; or

     (k) Change of Control. There occurs any Change of Control; or

     (l) Collateral Documents. Any Collateral Document after delivery thereof pursuant to
Sections 4.01 or 6.13 shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first priority Lien (subject to Permitted Liens of
the type described in Section 7.01(c), (d), (f), (g), (i)
and (j)) on the Collateral purported to be covered thereby; or

     (m) REIT or QRS Status. The Parent REIT shall, for any reason, lose or fail to
maintain its status as a REIT or the Borrower shall, for any reason, lose or fail to maintain its
status as any of the following: a REIT, a partnership or a disregarded entity (in each case, for
federal income tax purposes), a TRS or a QRS; or

     (n) Management and Franchise Agreements. There occurs a monetary or material default
under a management or franchise agreement with respect to a Borrowing Base Property (which material
default shall include any default which would permit the manager or franchisor under any such
management or franchise agreement to terminate such management or franchise agreement or would
otherwise result in a material increase of the obligations of the Borrower or such Subsidiary of
the Borrower that is a party to such management or franchise agreement) and such default is not
remedied prior to the date which is the later of (i) the earlier of (A) if no other Default exists,
sixty (60) days from the occurrence of the event or condition which caused, led to, or resulted in
such default, or (B) the date that a Default (other than the subject Default relative to such
management or franchise agreement) occurs and (ii) the last day of the cure period provided in such
management or franchise agreement (as applicable).

     8.02 Remedies Upon Event of Default. If any Event of Default exists, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the
following actions (any such action, an “Acceleration”):

     (a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer
to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be
terminated;

     (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document
to be immediately due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrower;

     (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to
the then Outstanding Amount thereof); and

     (d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies
available to it, the Lenders and the L/C Issuer under the Loan Documents;

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provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the
obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and
all interest and other amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Administrative Agent or any
Lender.

     8.03 Application of Funds. After the exercise of remedies provided for in Section
8.02 (or after the Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set forth in the proviso
to Section 8.02), any amounts received on account of the Obligations shall, subject to the
provisions of Sections 2.17 and 2.18, be applied by the Administrative Agent in the
following order:

     First, to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (including fees, charges and disbursements of counsel to the
Administrative Agent and amounts payable under Article III) payable to the Administrative
Agent in its capacity as such;

     Second, to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders
and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders
and the L/C Issuer (including fees and time charges for attorneys who may be employees of any
Lender or the L/C Issuer) and amounts payable under Article III), ratably among them in
proportion to the respective amounts described in this clause Second payable to them;

     Third, to payment of that portion of the Obligations constituting accrued and unpaid
Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably
among the Lenders and the L/C Issuer in proportion to the respective amounts described in this
clause Third payable to them;

     Fourth, to payment of that portion of the Obligations constituting unpaid principal of
the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Fourth held by them;

     Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters
of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections
2.03 and 2.17;

     Sixth, to payment of that portion of the Obligations constituting Obligations then
owing under Secured Hedge Agreements, ratably among the Hedge Banks in proportion to the respective
amounts described in this clause Sixth held by them; and

     Last, the balance, if any, after all of the Obligations have been indefeasibly paid in
full, to the Borrower or as otherwise required by Applicable Law.

Subject to Sections 2.03(c) and 2.17, amounts used to Cash Collateralize the
aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on
deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the order set forth
above.

     8.04 Special Provision Regarding Failure to Comply with Certain Financial Covenants.
Notwithstanding any provision herein or in any other Loan Document to the contrary (including
Section 8.01(b)), each of the Administrative Agent and the Lenders agrees that the failure
of the Borrower and the other Loan Parties to comply with any covenant set forth in Section
7.11 during the period commencing as of the Closing Date and continuing until the date that is
eighteen (18) months after the Closing Date (any such failure, a “Financial Covenant Failure
Event”) shall not constitute an Event of Default if the Borrower, immediately upon determining
that such Financial Covenant Failure Event shall have occurred, (a) causes the Total Outstandings (other
than that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of
Credit) to be prepaid and reduced to zero ($0), and (b) fully Cash Collateralizes that portion of
L/C Obligations comprised of the aggregate undrawn amount

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of Letters of Credit. Following the occurrence of a Financial Covenant Failure Event,
Borrower shall not submit any Request for Credit Extension (and none of the Lenders, the Swing Line
Lender or the L/C Issuer shall be obligated to fund any Committed Loan or Swing Line Loan, or to
issue any Letter of Credit) unless and until the condition giving rise to such Financial Covenant
Failure Event shall no longer exist, the Borrower and the other Loan Parties are in full compliance
with the covenants set forth in Section 7.11, and all other conditions for such Credit
Extension (including those conditions set forth in Article IV) have been satisfied.

ARTICLE IX.

ADMINISTRATIVE AGENT

     9.01 Appointment and Authority.

     Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on
its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes
the Administrative Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto. The provisions of this Article are solely for the
benefit of the Administrative Agent, the Lenders and the L/C Issuer, and neither the Borrower nor
any other Loan Party shall have rights as a third party beneficiary of any of such provisions.

     9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such Person and its
Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder
and without any duty to account therefor to the Lenders.

     9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, the Administrative Agent:

     (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a
Default then exists;

     (b) shall not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan
Documents that the Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided
for herein or in the other Loan Documents), provided that the Administrative Agent shall
not be required to take any action that, in its opinion or the opinion of its counsel, may expose
the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law;
and

     (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and shall not be liable for the failure to disclose, any information relating to
the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as
the Administrative Agent or any of its Affiliates in any capacity.

     The Administrative Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii)
in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice describing such Default is
given to the Administrative Agent by the Borrower, a Lender or the L/C Issuer.

     The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with this Agreement or
any other Loan Document,

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(ii) the contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Administrative Agent.

     9.04 Reliance by Administrative Agent.

     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated
by the proper Person. The Administrative Agent also may rely upon any statement made to it orally
or by telephone and believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition hereunder to the
making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such
condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall
have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such
Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

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

     9.06 Resignation or Removal of Administrative Agent. The Administrative Agent may at any time
give notice of its resignation to the Lenders, the L/C Issuer and the Borrower. Upon receipt of
any such notice of resignation, the Required Lenders shall appoint a successor, which successor
shall be approved by the Borrower with such approval not to be unreasonably withheld
(provided, however, if a Default or Event of Default shall exist at the time, no
approval of the Borrower shall be required hereunder), and which successor shall be a bank with an
office in the United States, or an Affiliate of any such bank with an office in the United States.
If no such successor shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the Lenders and the L/C
Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above;
provided that if the Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan Documents (except
that in the case of any collateral security held by the Administrative Agent on behalf of the
Lenders or the L/C Issuer under any of the Loan Documents, the retiring Administrative Agent shall
continue to hold such collateral security until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer
directly, until such time as the Required Lenders appoint a successor Administrative Agent as
provided for above in this Section. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder
or under the other Loan Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the retiring Administrative Agent’s resignation hereunder and under the other
Loan Documents, the provisions of this Article and Section 10.04 shall continue in

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

     The Administrative Agent may be removed by the Supermajority Lenders (excluding the vote of
the Administrative Agent, in its capacity as a Lender, as more particularly set forth in the
proviso to the next sentence) in the case of fraud, misappropriation of funds or the commission of
illegal acts by the Administrative Agent or where the Administrative Agent has been grossly
negligent in performing (or failing to perform) its obligations hereunder or under any other Loan
Document in any material respect. Any such removal shall be effective upon the acceptance of
appointment of a successor Agent in accordance with the provisions of the first paragraph of this
Section 9.06; provided, however, to the extent the Administrative Agent
being replaced pursuant to this Section 9.06 is also a Lender, such Person shall not be
permitted to vote in connection with the removal of the Administrative Agent and appointment of a
successor Administrative Agent pursuant to this paragraph of Section 9.06. Such successor
Administrative Agent shall be approved by the Borrower with such approval not to be unreasonably
withheld (provided, however, if a Default or Event of Default shall exist at the
time, no approval of the Borrower shall be required hereunder).

     Any resignation by (or removal of) Bank of America as Administrative Agent pursuant to this
Section shall also constitute its resignation (or removal) as L/C Issuer and Swing Line Lender.
Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties
of the retiring (or removed) L/C Issuer and Swing Line Lender, (b) the retiring (or removed) L/C
Issuer and Swing Line Lender shall be discharged from all of their respective duties and
obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall
issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time
of such succession or make other arrangements satisfactory to the retiring (or removed) L/C Issuer
to effectively assume the obligations of the retiring (or removed) L/C Issuer with respect to such
Letters of Credit.

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

     9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the
Syndication Agents, Documentation Agents, Joint Bookrunners or Joint Lead Arrangers (if any) listed
on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or
any of the other Loan Documents, except in its capacity, as applicable, as the Administrative
Agent, a Lender or the L/C Issuer hereunder.

     9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding
under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the
Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall
then be due and payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise

     (a) to file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing
and unpaid and to file such other documents as may be necessary or advisable in order to
have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of the Lenders,
the L/C Issuer and the Administrative Agent and their respective agents and counsel and all
other amounts due the Lenders, the L/C Issuer and the Administrative Agent under
Sections 2.03(i) and (j), 2.09 and 10.04) allowed in such
judicial proceeding; and

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     (b) to collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such
payments to the Administrative Agent and, in the event that the Administrative Agent shall consent
to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and
advances of the Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.

     Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the
L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or
the L/C Issuer in any such proceeding.

     9.10 Collateral and Guaranty Matters. Each of the Lenders (including each Lender in its
capacity as a potential Hedge Bank) and the L/C Issuer irrevocably authorize the Administrative
Agent, at its option and in its discretion,

     (a) to release any Lien on any property granted to or held by the Administrative Agent
under any Loan Document (i) upon termination of the Aggregate Commitments and payment in
full of all Obligations (other than contingent indemnification obligations) and the
expiration or termination of all Letters of Credit (other than Letters of Credit as to which
other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have
been made), (ii) that is sold or to be sold as part of or in connection with any sale
permitted hereunder or under any other Loan Document, including without limitation in
connection with the voluntary removal of a Borrowing Base Property from qualification as
such pursuant to Section 1.07(c) in connection with such sale, or (iii) subject to
Section 10.01, if approved, authorized or ratified in writing by the Required
Lenders;

     (b) to subordinate any Lien on any property granted to or held by the Administrative
Agent under any Loan Document to the holder of any Lien on such property that is permitted
by Section 7.01(i); and

     (c) to release any Guarantor from its obligations under Article XI hereof if (i) such
Person ceases to be a Subsidiary as a result of a transaction permitted hereunder, or (ii)
so long as no Default or Event of Default then exists (and will not exist as a result of
such release), such Person (A) acquires or owns any Real Property which is collateral for
Indebtedness incurred or assumed by such Person (and such Real Property is the sole Real
Property asset owned by such Person), and (B) is expressly prohibited in writing from
guaranteeing Indebtedness of any other person or entity pursuant to (I) a provision in any
document, instrument or agreement evidencing such Indebtedness of such Person or (II) a
provision of such Person’s Organization Documents, in each case, which provision was
included in such Organization Document or such other document, instrument or agreement at
the request of the applicable third party creditor and as an express condition to the
extension or assumption of such Indebtedness secured by such Real Property.

     Upon request by the Administrative Agent at any time, the Required Lenders will confirm in
writing the Administrative Agent’s authority to release or subordinate its interest in particular
types or items of property, or to release any Guarantor from its obligations under Article XI
hereof pursuant to this Section 9.10. In each case as specified in this Section
9.10, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the
applicable Loan Party such documents as Borrower may reasonably request to evidence the release of
such item of Collateral from the assignment and security interest granted under the Collateral
Documents or to subordinate its interest in such item, or to release such Guarantor from its
obligations hereunder, in each case in accordance with the terms of the Loan Documents and this
Section 9.10. Without limiting the foregoing, to the extent the Required Lenders waive any
of the provisions of Section 7.05 with respect to the Disposition of any assets or other
property covered thereby, or any assets or other property is Disposed of as permitted by
Section 7.05 or the Borrower voluntarily removes any Borrowing Base Property from
qualification as such pursuant to Section 1.07(c) in

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connection with any Disposition of such Borrowing Base Property, such assets or other property
(unless Disposed of to a Loan Party) or Borrowing Base Property shall be Disposed of free and clear
of the Liens created by the Collateral Documents, and the Administrative Agent shall, at the
Borrower’s expense, take all actions reasonably requested by Borrower to effect or cause such
assets, other property or Borrowing Base Property to be Disposed of free and clear of the Liens
created by the Collateral Documents.

     9.11 Secured Hedge Agreements. Except as otherwise expressly set forth herein or in any
Collateral Document, no Hedge Bank that obtains the benefits of Section 8.03, any
Collateral by virtue of the provisions hereof or of any Collateral by virtue of the provisions
hereof or of any Collateral Document shall have any right to notice of any action or to consent to,
direct or object to any action hereunder or under any other Loan Document or otherwise in respect
of the Collateral (including the release or impairment of any Collateral) other than in its
capacity as a Lender and, in such case, only to the extent expressly provided in the Loan
Documents. Notwithstanding any other provision of this Article IX to the contrary, the
Administrative Agent shall not be required to verify the payment of, or that other satisfactory
arrangements have been made with respect to, Obligations arising under Secured Hedge Agreements
unless the Administrative Agent has received written notice of such Obligations, together with such
supporting documentation as the Administrative Agent may request, from the applicable Hedge Bank.

ARTICLE X.

MISCELLANEOUS

     10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom,
shall be effective unless in writing signed by the Required Lenders and the Borrower or the
applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each
such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:

     (a) waive any condition set forth in Section 4.01(a) without the written consent of
each Lender;

     (b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 8.02) without the written consent of such Lender;

     (c) postpone any date fixed by this Agreement or any other Loan Document for any payment of
principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under
any other Loan Document without the written consent of each Lender directly affected thereby;

     (d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees
or other amounts payable hereunder or under any other Loan Document, or change the manner of
computation of any financial ratio (including any change in any applicable defined term) used in
determining the Applicable Margin that would result in a reduction of any interest rate on any Loan
or any fee payable hereunder without the written consent of each Lender directly affected thereby;
provided, however, that only the consent of the Required Lenders shall be necessary
to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay
interest or Letter of Credit Fees at the Default Rate;

     (e) change Section 8.03 in a manner that would alter the pro rata sharing of payments
required thereby without the written consent of each Lender;

     (f) change any provision of this Section or the definition of “Required Lenders” or
“Supermajority Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination
or grant any consent hereunder without the written consent of each Lender;

     (g) release, without the written consent of each Lender, (i) all or substantially all of the
value of the guaranty under Article XI hereof, except to the extent the release of any Guarantor is
permitted pursuant to Section

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9.10 (in which case such release may be made by the Administrative Agent acting
alone), or (ii) all or substantially all of the Collateral in any transaction or series of related
transactions; or

     (h) amend, modify or waive any of the provisions of any Loan Document related to advance rates
related to the Borrowing Base Properties or the definitions of (or provisions relating to) the
terms “Borrowing Base,” “Borrowing Base Properties,” “BBP Value” or the components thereof (to the
extent related to the calculation of the Borrowing Base or the approval and/or qualifications
respecting Borrowing Base Properties) without the written consent of the Supermajority Lenders;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights
or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of
Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the Lenders required above,
affect the rights or duties of the Administrative Agent under this Agreement or any other Loan
Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a
writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent
hereunder (and any amendment, waiver or consent which by its terms requires the consent of all
Lenders or each affected Lender may be effected with the consent of the applicable Lenders other
than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be
increased or extended without the consent of such Lender and (y) any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender that by its terms affects
any Defaulting Lender more adversely than other affected Lenders shall require the consent of such
Defaulting Lender.

If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to
any Loan Document that requires the consent of each Lender and that has been approved by all
Lenders other than such one (1) non-consenting Lender, the Borrower may replace such non-consenting
Lender in accordance with Section 10.13.

     10.02
Notices; Effectiveness; Electronic Communication.

     (a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subsection (b) below), all
notices and other communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or sent by telecopier (in
a manner that provides for electronic confirmation of delivery) as follows, and all notices and
other communications expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

     (i) if to any Loan Party, the Administrative Agent, the L/C Issuer or the Swing Line
Lender, to the address, telecopier number, electronic mail address or telephone number
specified for such Person on Schedule 10.02; and

     (ii) if to any other Lender, to the address(es), telecopier number(s), electronic mail
address(es) or telephone number(s) specified in its Administrative Questionnaire (including,
as appropriate, notices delivered solely to the Person designated by a Lender on its
Administrative Questionnaire then in effect for the delivery of notices that may contain
material non-public information relating to the Borrower).

Notices and other communications sent by hand or overnight courier service, or mailed by certified
or registered mail, shall be deemed to have been given when received; notices and other
communications sent by telecopier shall be deemed to have been given upon obtaining electronic
confirmation of delivery to the recipient telecopier (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the opening of business on
the next business day for the recipient). Notices and other communications delivered through
electronic communications to the extent provided in subsection (b) below, shall be effective as
provided in such subsection (b).

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     (b) Electronic Communications. Notices and other communications to the Lenders and
the L/C Issuer hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative
Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C
Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified
the Administrative Agent that it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be limited to
particular notices or communications.

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

     (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR
THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its
Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any
Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of
any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the
Administrative Agent’s transmission of Borrower Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses are determined by a court of
competent jurisdiction by a final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to the Borrower, any Lender, the L/C Issuer or any
other Person for indirect, special, incidental, consequential or punitive damages (as opposed to
direct or actual damages).

     (d) Change of Address, Etc. Each of the Borrower, the Administrative Agent, the L/C
Issuer and the Swing Line Lender may change its address, telecopier or telephone number for notices
and other communications hereunder by notice to the other parties hereto. Each other Lender may
change its address, telecopier or telephone number for notices and other communications hereunder
by notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In
addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that
the Administrative Agent has on record (i) an effective address, contact name, telephone number,
telecopier number and electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to
cause at least one individual at or on behalf of such Public Lender to at all times have selected
the “Private Side Information” or similar designation on the content declaration screen of the
Platform in order to enable such Public Lender or its delegate, in accordance with such Public
Lender’s compliance procedures and Applicable Law, including United States Federal and state
securities laws, to make reference to Borrower Materials that are not made available through the
“Public Side Information” portion of the Platform and that may contain material non-public
information with respect to the Borrower or its securities for purposes of United States Federal or
state securities laws.

     (e) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative
Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including
telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of
the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation

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thereof. The Borrower shall indemnify the Administrative Agent, the L/C Issuer, each Lender
and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting
from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower.
All telephonic notices to and other telephonic communications with the Administrative Agent may be
recorded by the Administrative Agent, and each of the parties hereto hereby consents to such
recording.

     10.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender, the L/C Issuer
or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by Applicable Law.

     Notwithstanding anything to the contrary contained herein or in any other Loan Document, the
authority to enforce rights and remedies hereunder and under the other Loan Documents against the
Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law
in connection with such enforcement shall be instituted and maintained exclusively by, the
Administrative Agent in accordance with Section 8.02 for the benefit of all the Secured
Parties; provided, however, that the foregoing shall not prohibit (a) the
Administrative Agent from exercising on its own behalf the rights and remedies that inure to its
benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan
Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that
inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may
be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in
accordance with Section 10.08 (subject to the terms of Section 2.13), or (d) any
Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the
pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and
provided, further, that if at any time there is no Person acting as Administrative
Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the
rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in
addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject
to Section 2.13, any Lender may, with the consent of the Required Lenders, enforce any
rights and remedies available to it and as authorized by the Required Lenders.

     10.04 Expenses; Indemnity; Damage Waiver.

     (a) Costs and Expenses. The Borrower shall pay, on the Closing Date and thereafter
within five (5) Business Days after written demand, (i) all reasonable and documented out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent), in connection with the
syndication of the credit facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented
out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, any Lender or the L/C Issuer
(including the fees, charges and disbursements of any counsel for the Administrative Agent, any
Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys who may be
employees of the Administrative Agent, any Lender or the L/C Issuer, in connection with the
enforcement or protection of its rights (A) in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or (B) in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of Credit. For the
avoidance of doubt, this Section shall not provide any right to payment with respect to increases
in taxes or costs and expenses related solely to such increases in taxes.

     (b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of
the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and
shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements
for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted

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against any Indemnitee by any third party or by the Borrower or any other Loan Party arising
out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance
by the parties hereto of their respective obligations hereunder or thereunder, the consummation of
the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and
any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the
other Loan Documents (including in respect of any matters addressed in Section 3.01),
(ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including
any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought by a third party or
by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party
thereto, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE
COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or willful misconduct
of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party
against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under
any other Loan Document, if the Borrower or such other Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of competent
jurisdiction. For the avoidance of doubt, this Section shall not provide any right to payment with
respect to increases in taxes or costs and expenses related solely to such increases in taxes.

     (c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it
to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any
of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender’s Applicable
Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment
is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity as such,
or against any Related Party of any of the foregoing acting for the Administrative Agent (or any
such sub-agent) or L/C Issuer in connection with such capacity; provided, further,
that the Administrative Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the
case may be, shall reimburse each Lender for any indemnity amount actually paid by such Lender to
the Administrative Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case
may be, pursuant to this Section 10.04(c) to the extent such underlying indemnity
obligation arose in connection with any claim by such Lender against the Administrative Agent (or
any such sub-agent) or the L/C Issuer in its capacity as such, or against such Related Party, as
the case may be, if such Lender has obtained a final, non-appealable judgment in favor of such
Lender on such claim as determined by a court of competent jurisdiction. The obligations of the
Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).

     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
Applicable Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to
direct or actual damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the transactions
contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof.
No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed to such unintended
recipients by such Indemnitee through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual damages resulting from
the gross negligence or willful misconduct of such Indemnitee as determined by a final and
nonappealable judgment of a court of competent jurisdiction.

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

     (f) Survival. The agreements in this Section shall survive the resignation of the
Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.

     10.05 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is
made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the
L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the Administrative
Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a)
to the extent of such recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had not been made or
such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the
Administrative Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such
demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from
time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of the
preceding sentence shall survive the payment in full of the Obligations and the termination of this
Agreement.

     10.06 Successors and Assigns.

     (a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the provisions of
subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of subsection (f) of this Section (and any other attempted assignment
or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent provided in
subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

     (b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this subsection (b),
participations in L/C Obligations and in Swing Line Loans) at the time owing to it);
provided that any such assignment shall be subject to the following conditions:

     (i) Minimum Amounts.

     (A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the case
of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and

     (B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment, determined as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date, shall not be less
than $5,000,000, unless each of the Administrative Agent and, so long as no Event of
Default then exists, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or

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delayed); provided, however, that concurrent assignments to
members of an Assignee Group and concurrent assignments from members of an Assignee
Group to a single Eligible Assignee (or to an Eligible Assignee and members of its
Assignee Group) will be treated as a single assignment for purposes of determining
whether such minimum amount has been met.

     (ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned, except that this
clause (ii) shall not apply to the Swing Line Lender’s rights and obligations in respect of
Swing Line Loans;

     (iii) Required Consents. No consent shall be required for any assignment
except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

     (A) the consent of the Borrower (such consent not to be unreasonably withheld)
shall be required unless (1) an Event of Default exists at the time of such
assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an
Approved Fund; provided that the Borrower shall be deemed to have consented
to any such assignment unless it shall object thereto by written notice to the
Administrative Agent within ten (10) Business Days after having received notice
thereof;

     (B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required if such assignment is to a
Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with
respect to such Lender;

     (C) the consent of the L/C Issuer (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment that increases the obligation of
the assignee to participate in exposure under one or more Letters of Credit (whether
or not then outstanding); and

     (D) the consent of the Swing Line Lender (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment.

     (iv) Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee in the amount of $2,500; provided, however,
that the Administrative Agent may, in its sole discretion, elect to waive such processing
and recordation fee in the case of any assignment. The assignee, if it is not a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.

     (v) No Assignment to Certain Persons. No such assignment shall be made (A) to
the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any Defaulting
Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder,
would constitute any of the foregoing Persons described in this clause (B), or (C) to a
natural person.

     (vi) Certain Additional Payments. In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be effective
unless and until, in addition to the other conditions thereto set forth herein, the parties
to the assignment shall make such additional payments to the Administrative Agent in an
aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright
payment, purchases by the assignee of participations or subparticipations, or other
compensating actions, including funding, with the consent of the Borrower and the
Administrative Agent, the applicable pro rata share of Loans previously requested but not
funded by the Defaulting Lender, to each of which the applicable assignee and assignor
hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then
owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and
interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share
of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with
its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment
of rights and obligations of any Defaulting Lender hereunder shall become effective under
Applicable Law without

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compliance with the provisions of this paragraph, then the assignee of such interest shall
be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance
occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04
with respect to facts and circumstances occurring prior to the effective date of such assignment.
Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that
does not comply with this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with subsection (d) of
this Section.

     (c) Register. The Administrative Agent, acting solely for this purpose as an agent of
the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders (existing and future), and the Commitments
of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. In addition, the
Administrative Agent shall maintain on the Register information regarding the designation, and
revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available
for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

     (d) Participations. Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person (other than a natural
person, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the Loans (including such
Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuer shall continue to
deal solely and directly with such Lender in connection with such Lender’s rights and obligations
under this Agreement.

     Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of Sections
3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by
Applicable Law, each Participant also shall be entitled to the benefits of Section 10.08 as
though it were a Lender, provided such Participant agrees to be subject to Section
2.13 as though it were a Lender.

     (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to
the benefits of Section 3.01 unless the Borrower is notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the Borrower, to comply with
Section 3.01(e) as though it were a Lender.

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     (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement (including under its Note, if any) to
secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as
a party hereto.

     (g) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding
anything to the contrary contained herein, if at any time Bank of America assigns all of its
Commitment and Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days’
notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to
the Borrower, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or
Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C
Issuer or Swing Line Lender hereunder; provided, however, that no failure by the
Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C
Issuer or Swing Line Lender, as the case may be; provided, further, that no Lender
shall have any obligation to accept such an appointment as successor L/C Issuer or Swing Line
Lender unless such Lender accepts such appointment in writing. If Bank of America resigns as L/C
Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder
with respect to all Letters of Credit outstanding as of the effective date of its resignation as
L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders
to make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to
Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the
rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it
and outstanding as of the effective date of such resignation, including the right to require the
Lenders to make Base Rate Committed Loans or fund risk participations in outstanding Swing Line
Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or
Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be,
and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of
Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory
to Bank of America to effectively assume the obligations of Bank of America with respect to such
Letters of Credit.

     10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent,
the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and
representatives (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by Applicable Laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the same as those of
this Section, to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee
invited to be a Lender pursuant to Section 2.15(c) or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and
its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x)
becomes publicly available other than as a result of a breach by the Person disclosing such
Information of this Section (or, to the knowledge of such Person, as a result of a breach by
another Person bound by this Section 10.07) or (y) becomes available to the Administrative
Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis
from a source other than the Borrower. For purposes of this Section, “Information” means all
information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is available to the
Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure
by the Borrower or any Subsidiary, provided that, in the case of written information received from
the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied with its obligation to
do so if such Person has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

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     Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the
Information may include material non-public information concerning the Borrower or a Subsidiary, as
the case may be, (b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public information in accordance
with Applicable Law, including United States Federal and state securities laws.

     10.08 Right of Setoff. If an Event of Default exists, each Lender, the L/C Issuer and each of
their respective Affiliates is hereby authorized at any time and from time to time, after obtaining
the prior written consent of the Administrative Agent, to the fullest extent permitted by
Applicable Law, to set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the
credit or the account of the Borrower or any other Loan Party against any and all of the
obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or
any other Loan Document to such Lender or the L/C Issuer, irrespective of whether or not such
Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document
and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or
are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office
holding such deposit or obligated on such indebtedness; provided, that in the event that any
Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid
over immediately to the Administrative Agent for further application in accordance with the
provisions of Section 2.18 and, pending such payment, shall be segregated by such
Defaulting Lender from its other funds and deemed held in trust for the benefit of the
Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the
Administrative Agent a statement describing in reasonable detail the Obligations owing to such
Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the
L/C Issuer and their respective Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective
Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Borrower and the
Administrative Agent promptly after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and application.

     10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by Applicable Law (the “Maximum Rate”). If
the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. In determining whether the interest contracted for,
charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations hereunder.

     10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging
means shall be effective as delivery of a manually executed counterpart of this Agreement.

     10.11 Survival of Representations and Warranties. All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive the execution and delivery hereof and thereof.
Such representations and warranties have been or will be relied upon by the Administrative Agent
and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or
on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit

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Extension, and shall continue in full force and effect as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain
outstanding.

     10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable provisions. The
invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction. Without limiting the foregoing provisions of this
Section 10.12, if and to the extent that the enforceability of any provisions in this
Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in
good faith by the Administrative Agent, the L/C Issuer or the Swing Line Lender, as applicable,
then such provisions shall be deemed to be in effect only to the extent not so limited.

     10.13 Replacement of Lenders. If any Lender requests compensation under Section 3.04,
if the Borrower is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01, if any Lender is a
Defaulting Lender or if any other circumstance exists hereunder that, pursuant to the express terms
hereof, gives the Borrower the right to replace a Lender as a party hereto (including such
circumstances described in Section 10.01), then the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 10.06), all of its interests, rights and obligations under
this Agreement and the related Loan Documents to an Eligible Assignee arranged by the Borrower and
the Administrative Agent that shall assume such obligations (which assignee may be another Lender,
if a Lender accepts such assignment), provided that:

     (a) the Borrower shall have paid to the Administrative Agent the assignment fee specified in
Section 10.06(b);

     (b) such Lender shall have received payment of an amount equal to the outstanding principal of
its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder and under the other Loan Documents (including any amounts under Section 3.05)
from the assignee (to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts);

     (c) in the case of any such assignment resulting from a claim for compensation under
Section 3.04 or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments thereafter; and

     (d) such assignment does not conflict with Applicable Laws.

     A Lender shall not be required to make any such assignment or delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.

     10.14 Governing Law; Jurisdiction; Etc.

     (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).

     (b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY

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AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH COURTS. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY APPLICABLE LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

     (c) WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF
THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT.

     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

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

     10.16 California Judicial Reference. If any action or proceeding is filed in a court of the
State of California by or against any party hereto in connection with any of the transactions
contemplated by this Agreement or any other Loan Document, (a) the court shall, and is hereby
directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to
a referee (who shall be a single active or retired judge) to hear and determine all of the issues
in such action or proceeding (whether of fact or of law) and to report a statement of decision,
provided that at the option of any party to such proceeding, any such issues pertaining to a
“provisional remedy” as defined in California Code of Civil Procedure Section 1281.8 shall be heard
and determined by the court, and (b) without limiting the generality of Section 10.04, the
Borrower shall be solely responsible to pay all fees and expenses of any referee appointed in such
action or proceeding.

     10.17 No Advisory or Fiduciary Responsibility. In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document), the Borrower and each other Loan Party
acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the
arranging and other services regarding this Agreement provided by the Administrative Agent and the
Arranger, are arm’s-length commercial transactions between the Borrower , each other Loan Party and
their respective Affiliates, on the one hand, and the Administrative Agent and the Arranger, on the
other hand, (B) each of the Borrower and the other Loan Parties has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the
Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions

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contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent and the
Arranger each is and has been acting solely as a principal and, except as expressly agreed in
writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent
or fiduciary for the Borrower, any other Loan Party or any of their respective Affiliates, or any
other Person and (B) neither the Administrative Agent nor the Arranger has any obligation to the
Borrower, any other Loan Party or any of their respective Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth herein and in the
other Loan Documents; and (iii) the Administrative Agent and the Arranger and their respective
Affiliates may be engaged in a broad range of transactions that involve interests that differ from
those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the
Administrative Agent nor the Arranger has any obligation to disclose any of such interests to the
Borrower, any other Loan Party or any of their respective Affiliates. To the fullest extent
permitted by Applicable Law, each of the Borrower and the other Loan Parties hereby waives and
releases any claims that it may have against the Administrative Agent and the Arranger with respect
to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby.

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

     10.19 USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and
the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower
that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender or the Administrative Agent, as applicable, to
identify the Borrower in accordance with the Act. The Borrower shall, promptly following a request
by the Administrative Agent or any Lender, provide all documentation and other information that the
Administrative Agent or such Lender requests in order to comply with its ongoing obligations under
applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

     10.20 Entire Agreement. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.

ARTICLE XI.

GUARANTY

     11.01 The Guaranty.

     (a) Each of the Guarantors hereby jointly and severally guarantees to the Administrative Agent
and each of the holders of the Obligations, as hereinafter provided, as primary obligor and not as
surety, the prompt payment of the Obligations (the “Guaranteed Obligations”) in full when
due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof. The Guarantors
hereby further agree that if any of the Guaranteed Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally, promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension of time of payment
or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of such extension or renewal.

106

 

     (b) Notwithstanding any provision to the contrary contained herein, in any other of the Loan
Documents, Secured Hedge Agreements or other documents relating to the Obligations, the obligations
of each Guarantor under this Credit Agreement and the other Loan Documents shall be limited to an
aggregate amount equal to the largest amount that would not render such obligations subject to
avoidance under the Debtor Relief Laws or any comparable provisions of any applicable state law.

     11.02 Obligations Unconditional.

     The obligations of the Guarantors under Section 11.01 are joint and several, absolute
and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability
of any of the Loan Documents or other documents relating to the Obligations, or any substitution,
compromise, release, impairment or exchange of any other guarantee of or security for any of the
Guaranteed Obligations, and, to the fullest extent permitted by Applicable Law, irrespective of any
other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, it being the intent of this Section 11.02 that the
obligations of the Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation,
indemnity, reimbursement or contribution against the Borrower or any other Guarantor for amounts
paid under this Article XI until such time as the Obligations have been irrevocably paid in
full and the commitments relating thereto have expired or been terminated. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent permitted by Applicable Law,
the occurrence of any one or more of the following shall not alter or impair the liability of any
Guarantor hereunder, which shall remain absolute and unconditional as described above:

     (a) at any time or from time to time, without notice to any Guarantor, the time for any
performance of or compliance with any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;

     (b) any of the acts mentioned in any of the provisions of any of the Loan Documents, or other
documents relating to the Guaranteed Obligations or any other agreement or instrument referred to
therein shall be done or omitted;

     (c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the
Obligations shall be modified, supplemented or amended in any respect, or any right under any of
the Loan Documents or other documents relating to the Guaranteed Obligations, or any other
agreement or instrument referred to therein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released, impaired or exchanged in whole
or in part or otherwise dealt with;

     (d) any Lien granted to, or in favor of, the Administrative Agent or any of the holders of the
Guaranteed Obligations as security for any of the Guaranteed Obligations shall fail to attach or be
perfected; or

     (e) any of the Guaranteed Obligations shall be determined to be void or voidable (including,
without limitation, for the benefit of any creditor of any Guarantor) or shall be subordinated to
the claims of any Person (including, without limitation, any creditor of any Guarantor).

     With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence,
presentment, demand of payment, protest notice of acceptance of the guaranty given hereby and of
Credit Extensions that may constitute obligations guaranteed hereby, notices of amendments, waivers
and supplements to the Loan Documents and other documents relating to the Guaranteed Obligations,
or the compromise, release or exchange of collateral or security, and all notices whatsoever, and
any requirement that the Administrative Agent or any holder of the Guaranteed Obligations exhaust
any right, power or remedy or proceed against any Person under any of the Loan Documents or any
other documents relating to the Guaranteed Obligations or any other agreement or instrument
referred to therein, or against any other Person under any other guarantee of, or security for, any
of the Obligations.

     11.03 Reinstatement.

     Neither the Guarantors’ obligations hereunder nor any remedy for the enforcement thereof shall
be impaired, modified, changed or released in any manner whatsoever by an impairment, modification,
change, release or limitation of the liability of the Borrower, by reason of the Borrower’s
bankruptcy or insolvency or by reason of

107

 

the invalidity or unenforceability of all or any portion of the Guaranteed Obligations. The
obligations of the Guarantors under this Article XI shall be automatically reinstated if
and to the extent that for any reason any payment by or on behalf of any Person in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the
Obligations, whether as a result of any proceedings pursuant to any Debtor Relief Law or otherwise,
and each Guarantor agrees that it will indemnify the Administrative Agent and each holder of
Guaranteed Obligations on demand for all reasonable out-of-pocket costs and expenses (including all
reasonable fees, expenses and disbursements of any law firm or other outside counsel incurred by
the Administrative Agent) incurred by the Administrative Agent or such holder of Guaranteed
Obligations in connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any Debtor Relief Law.

     11.04 Certain Waivers.

     Each Guarantor acknowledges and agrees that (a) the guaranty given hereby may be enforced
without the necessity of resorting to or otherwise exhausting remedies in respect of any other
security or collateral interests, and without the necessity at any time of having to take recourse
against the Borrower hereunder or against any collateral securing the Guaranteed Obligations or
otherwise, (b) it will not assert any right to require the action first be taken against the
Borrower or any other Person (including any co-guarantor) or pursuit of any other remedy or
enforcement any other right and (c) nothing contained herein shall prevent or limit action being
taken against the Borrower hereunder, under the other Loan Documents or the other documents and
agreements relating to the Guaranteed Obligations or from foreclosing on any security or collateral
interests relating hereto or thereto, or from exercising any other rights or remedies available in
respect thereof, if neither the Borrower nor the Guarantors shall timely perform their obligations,
and the exercise of any such rights and completion of any such foreclosure proceedings shall not
constitute a discharge of the Guarantors’ obligations hereunder unless as a result thereof, the
Guaranteed Obligations shall have been paid in full and the commitments relating thereto shall have
expired or been terminated, it being the purpose and intent that the Guarantors’ obligations
hereunder be absolute, irrevocable, independent and unconditional under all circumstances.

     11.05 Remedies.

     The Guarantors agree that, to the fullest extent permitted by Applicable Law, as between the
Guarantors, on the one hand, and the Administrative Agent and the holders of the Guaranteed
Obligations, on the other hand, the Guaranteed Obligations may be declared to be forthwith due and
payable as provided in Section 8.02 (and shall be deemed to have become automatically due
and payable in the circumstances provided in Section 8.02) for purposes of
Section 11.01, notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Guaranteed Obligations from becoming automatically due and payable)
as against any other Person and that, in the event of such declaration (or the Guaranteed
Obligations being deemed to have become automatically due and payable), the Guaranteed Obligations
(whether or not due and payable by any other Person) shall forthwith become due and payable by the
Guarantors for purposes of Section 11.01. The Guarantors acknowledge and agree that the
Guaranteed Obligations are secured in accordance with the terms of the Collateral Documents and
that the holders of the Guaranteed Obligations may exercise their remedies thereunder in accordance
with the terms thereof.

     11.06 Rights of Contribution.

     The Guarantors hereby agree as among themselves that, in connection with payments made
hereunder, each Guarantor shall have a right of contribution from each other Guarantor in
accordance with Applicable Law. Such contribution rights shall be subordinate and subject in right
of payment to the Guaranteed Obligations until such time as the Guaranteed Obligations have been
irrevocably paid in full and the commitments relating thereto shall have expired or been
terminated, and none of the Guarantors shall exercise any such contribution rights until the
Guaranteed Obligations have been irrevocably paid in full and the commitments relating thereto
shall have expired or been terminated.

     11.07 Guaranty of Payment; Continuing Guaranty.

     The guarantee in this Article XI is a guaranty of payment and performance, and not
merely of collection, and is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.

108

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	BORROWER:	PEBBLEBROOK HOTEL, L.P., a Delaware limited partnership

	 
	 	By:  	PEBBLEBROOK HOTEL TRUST, a Maryland Real Estate Investment Trust, its general partner
 	 
	 	 	 
	 	By:  	                                           /s/ Raymond D. Martz
 	 
	 	 	Name:  	Raymond D. Martz 	 
	 	 	Title:  	Chief Financial Officer 	 

	 	 	 	 	 
	GUARANTORS:       	PEBBLEBROOK HOTEL TRUST, a
Maryland Real Estate Investment Trust

 	 
	 	By:  	/s/ Raymond D. Martz
 	 
	 	 	Name:  	Raymond D. Martz           	 
	 	 	Title:  	Chief Financial Officer 	 

	 	 	 	 	 
	 	TARHEEL OWNER LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ Raymond D. Martz
 	 
	 	 	Name:  	Raymond D. Martz           	 
	 	 	Title:  	Vice President and Secretary 	 
	 
	 	HUSKIES OWNER LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ Raymond D. Martz
 	 
	 	 	Name:  	Raymond D. Martz           	 
	 	 	Title:  	Vice President and Secretary 	 
	 
	 	ORANGEMEN OWNER LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ Raymond D. Martz
 	 
	 	 	Name:  	Raymond D. Martz           	 
	 	 	Title:  	Vice President and Secretary 	 
	 
	 	GATOR OWNER LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ Raymond D. Martz
 	 
	 	 	Name:  	Raymond D. Martz           	 
	 	 	Title:  	Vice President and Secretary 	 
	 

 

 

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as Administrative Agent

 	 
	 	By:  	/s/ Roger C. Davis
 	 
	 	 	Name:  	Roger C. Davis 	 
	 	 	Title:  	Senior Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a
Lender, L/C Issuer and Swing Line Lender

 	 
	 	By:  	/s/ Roger C. Davis
 	 
	 	 	Name:  	Roger C. Davis 	 
	 	 	Title:  	Senior Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/ Mark F. Monahan
 	 
	 	 	Name:  	Mark F. Monahan 	 
	 	 	Title:  	Senior Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	US BANK NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/  Lori Y. Jensen
 	 
	 	 	Name:  	Lori Y. Jensen 	 
	 	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK,
as a Lender

 	 
	 	By:  	/s/  Jason Chrein
 	 
	 	 	Name:  	Jason Chrein 	 
	 	 	Title:  	Director 	 
	 	 	 
	 	By:  	                                              /s/  Joseph A. Asciolla
 	 
	 	 	Name:  	Joseph A. Asciolla 	 
	 	 	Title:  	Managing Director 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	ROYAL BANK OF CANADA, as a Lender

 	 
	 	By:  	/s/  Dan LePage
 	 
	 	 	Name:  	Dan LePage 	 
	 	 	Title:  	Authorized Signatory 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	RAYMOND JAMES BANK, FSB, as a Lender

 	 
	 	By:  	/s/  James M. Armstrong
 	 
	 	 	Name:  	James M. Armstrong 	 
	 	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CHEVY CHASE BANK, a division of Capital One N.A., as a Lender

 	 
	 	By:  	/s/  Paula W. Simon
 	 
	 	 	Name:  	Paula W. Simon 	 
	 	 	Title:  	Vice PresidentUnassociated Document

Exhibit 4.1

 

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 29, 2010, by and between SOLAR ENERGY INITIATIVES, INC., a Delaware corporation, with headquarters located at 818 AIA North - Suite 201, Ponte Vedra, Florida 32082 (the “Company”), and ASHER ENTERPRISES, INC., a Delaware corporation, with its address at 1 Linden Place, Suite 207, Great Neck, NY 11021 (the “Buyer”).

WHEREAS:

A. The Company and the Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”);

B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $100,000.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.

C. The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth immediately below its name on the signature pages hereto; and

NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:

1. Purchase and Sale of Note.

a. Purchase of Note.  On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

b. Form of Payment.  On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver such duly executed on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

 

 

 

  

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c. Closing Date.  Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on June 30, 2010, or such other mutually agreed upon time.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

2. Buyer’s Representations and Warranties.  The Buyer represents and warrants to the Company that:

a. Investment Purpose.  As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable (i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

 

b. Accredited Investor Status.  The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

c. Reliance on Exemptions.  The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

d. Information.  The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors.  The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company.  Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer.  Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below.  The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties made herein.

e. Governmental Review.  The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

 

 

 

  

2

  

 

f. Transfer or Re-sale.  The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case).  Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.  In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, within three (3) business days of delivery of the opinion to the Company, the Company shall pay to the Buyer liquidated damages of five percent (5%) of the outstanding amount of the Note per day plus accrued and unpaid interest on the Note, prorated for partial months, in cash or shares at the option of the Buyer (“Standard Liquidated Damages Amount”).  If the Buyer elects to be pay the Standard Liquidated Damages Amount in shares of Common Stock, such shares shall be issued at the Conversion Price (as defined in the Note) at the time of payment.

g. Legends.  The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

 

 

  

3

  

 

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (c) such holder provides the Company with reasonable assurances that such Security can be sold pursuant to Rule 144 or Regulation S.  The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.

h. Authorization; Enforcement. This Agreement has been duly and validly authorized.  This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

i. Residency.  The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.

3. Representations and Warranties of the Company.  The Company represents and warrants to the Buyer that:

a. Organization and Qualification.  The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted.  Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated.  The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.  “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith.  “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

 

 

  

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b. Authorization; Enforcement.  (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

 

c. Capitalization.  As of the date hereof, the authorized capital stock of the Company consists of: (i) 100,000,000 shares of Common Stock, $0.001 par value per share, of which 26,226,414 shares are issued and outstanding; and (ii) there are no authorized shares of Preferred Stock; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 4,918,033 shares are reserved for issuance upon conversion of the Note (subject to adjustment pursuant to the Company’s covenant set forth in Section 4(g) below).  All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.  No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company.  Except as disclosed in Schedule 3(c), as of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares.  The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.  The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

d. Issuance of Shares.  The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.

e. Acknowledgment of Dilution.  The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon conversion of the Note.  The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

 

 

 

  

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f. No Conflicts.  The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii)  result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect).  Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as a Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity.  Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note.  All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof.  The Company is not in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB in the foreseeable future.  The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

g. SEC Documents; Financial Statements.  The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”).  The Company has delivered to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents.  As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof).  As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved  and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).  Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to January 31, 2010, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

 

 

 

  

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h. Absence of Certain Changes.  Since January 31, 2010, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

i. Absence of Litigation.  There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect.  Schedule 3(i) contains a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect.  The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

j. Patents, Copyrights, etc.  The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing.  The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.

k. No Materially Adverse Contracts, Etc.  Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.

l. Tax Status.  The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.  The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax.  None of the Company’s tax returns is presently being audited by any taxing authority.

m. Certain Transactions.  Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

n. Disclosure.  All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading.  No event or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

 

 

 

  

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o. Acknowledgment Regarding Buyer’ Purchase of Securities.  The Company acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby.  The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by any Buyer or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Buyer’ purchase of the Securities.  The Company further represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.

p. No Integrated Offering.  Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer.  The issuance of the Securities to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.

q. No Brokers.  The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

r. Permits; Compliance.  The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits.  Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.  Since January 31, 2010, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

s. Environmental Matters.

(i) There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing.  The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

(ii) Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s or any of its Subsidiaries’ business.

(iii) There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law.

 

 

t. Title to Property.  The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would not have a Material Adverse Effect.  Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

u. Insurance.  The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged.  Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.  The Company has provided to Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage, errors and omissions coverage, and commercial general liability coverage.

 

 

  

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v. Internal Accounting Controls.  The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

w. Foreign Corrupt Practices.  Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

x. Solvency.  The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature.  The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year.

y. No Investment Company.  The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”).  The Company is not controlled by an Investment Company.

z. Breach of Representations and Warranties by the Company.  If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, the Company shall pay to the Buyer the Standard Liquidated Damages Amount in cash or in shares of Common Stock at the option of the Company, until such breach is cured.  If the Company elects to pay the Standard Liquidated Damages Amounts in shares of Common Stock, such shares shall be issued at the Conversion Price at the time of payment.

4. COVENANTS.

a. Best Efforts.  The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.

b. Form D; Blue Sky Laws.  The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing.  The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date.

c. Use of Proceeds.  The Company shall use the proceeds from the sale of the Note in the manner set forth in Schedule 4(d) attached hereto and made a part hereof and shall not, directly or indirectly, use such proceeds for any loan to or investment in any other corporation, partnership, enterprise or other person (except in connection with its currently existing direct or indirect Subsidiaries).

 

 

  

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d. Right of First Refusal.  Unless it shall have first delivered to the Buyer, at least seventy two (72) hours prior to the closing of such Future Offering (as defined herein), written notice describing the proposed Future Offering, including the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith, and providing the Buyer an option during the seventy two (72) hour period following delivery of such notice to purchase the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence are collectively referred to as the “Right of First Refusal”) (and subject to the exceptions described below), the Company will not conduct any equity financing (including debt with an equity component) (“Future Offerings”) during the period beginning on the Closing Date and ending twelve (12) months following the Closing Date.  In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of the proposed Future Offering and the Buyer thereafter shall have an option during the seventy two (72) hour period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended.  The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering.  The Right of First Refusal shall not apply to any transaction involving (i) issuances of securities in a firm commitment underwritten public offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as consideration for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Company.  The Right of First Refusal also shall not apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date hereof or to the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan approved by the shareholders of the Company.  The Right of First Refusal also shall not apply to Future Offerings in excess of $500,000.00.

e. Expenses.  At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”), including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Documents.  When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice by the Buyer Notwithstanding anything herein to the contrary, the Company’s obligation to reimburse Buyer’ expenses shall be $3,000.

f. Financial Information.  The Company agrees to send or make available the following reports to the Buyer until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives to such shareholders.

g. Authorization and Reservation of Shares.  The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of Common Stock to provide for the full conversion or exercise of the outstanding Note and issuance of the Conversion Shares in connection therewith (based on the Conversion Price of the Note in effect from time to time) and as otherwise required by the Note.  The Company shall not reduce the number of shares of Common Stock reserved for issuance upon conversion of Note without the consent of the Buyer.  The Company shall at all times maintain the number of shares of Common Stock so reserved for issuance at an amount (“Reserved Amount”) equal to five times the number that is then actually issuable upon full conversion of the Note and Additional Note (based on the Conversion Price of the Note in effect from time to time).  If at any time the number of shares of Common Stock authorized and reserved for issuance (“Authorized and Reserved Shares”) is below the Reserved Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize additional shares to meet the Company’s obligations under this Section 4(g), in the case of an insufficient number of authorized shares, obtain shareholder approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Reserved Amount.  If the Company fails to obtain such shareholder approval within thirty (30) days following the date on which the number of Reserved Amount exceeds the Authorized and Reserved Shares, the Company shall pay to the Buyer the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the option of the Buyer.  If the Buyer elects to be paid the Standard Liquidated Damages Amount in shares of Common Stock, such shares shall be issued at the Conversion Price at the time of payment.  In order to ensure that the Company has authorized a sufficient amount of shares to meet the Reserved Amount at all times, the Company must deliver to the Buyer at the end of every month a list detailing (1) the current amount of shares authorized by the Company and reserved for the Buyer; and (2) amount of shares issuable upon conversion of the Note and as payment of interest accrued on the Note for one year.  If the Company fails to provide such list within five (5) business days of the end of each month, the Company shall pay the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the option of the Buyer, until the list is delivered.  If the Buyer elects to be paid the Standard Liquidated Damages Amount in shares of Common Stock, such shares shall be issued at the Conversion Price at the time of payment.

 

 

  

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h. Listing.  The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as any Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note.  The Company will obtain and, so long as any Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB or any equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable.  The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCBB and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.

i. Corporate Existence.  So long as a Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

j. No Integration.  The Company shall not make any offers or sales of any security (other than the Securities) under circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its securities.

k. Breach of Covenants.  If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, the Company shall pay to the Buyer the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the option of Buyer, until such breach is cured.  If the Buyer elects to pay the Standard Liquidated Damages Amount in shares, such shares shall be issued at the Conversion Price at the time of payment.

l. Failure to Comply with the 1934 Act.  So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act.

m. Trading Activities.  Neither the Buyer nor their affiliates has an open short position in the common stock of the Company and the Buyer agree that they shall not, and that they will cause their affiliates not to, engage in any short sales of or hedging transactions with respect to the common stock of the Company.

5. Transfer Agent Instructions.  The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”).  Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement.  The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement.  Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities.  If a Buyer provides the Company, at the cost of the Company, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby.  Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

 

 

  

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6. Conditions to the Company’s Obligation to Sell.  The obligation of the Company hereunder to issue and sell the Note to a Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

a. The Buyer shall have executed this Agreement and delivered the same to the Company.

b. The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

c. The representations and warranties of the applicable Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the applicable Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the applicable Buyer at or prior to the Closing Date.

d. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7. Conditions to The Buyer’s Obligation to Purchase.  The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

a. The Company shall have executed this Agreement and delivered the same to the Buyer.

b. The Company shall have delivered to the Buyer duly executed Note (in such denominations as the Buyer shall request) in accordance with Section 1(b) above.

c. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest of the Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.

d. The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.  The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to the transactions contemplated hereby.

e. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

f. No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

g. The Conversion Shares shall have been authorized for quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB.

h. The Buyer shall have received an officer’s certificate described in Section 3(c) above, dated as of the Closing Date.

  

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8. Governing Law; Miscellaneous.

a. Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau.  The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  The Company and Buyer waive trial by jury.  The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.   Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

b. Counterparts; Signatures by Facsimile.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.  This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

c. Headings.  The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

d. Severability.  In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

e. Entire Agreement; Amendments.  This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

f. Notices.  All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be:

 

 

 

  

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If to the Company, to:

SOLAR ENERGY INITIATIVES, INC.

818 AIA North - Suite 201

Ponte Vedra, Florida 32082

Attn: DAVID FANN, Chief Executive Officer

facsimile: [enter fax number]

With a copy by fax only to (which copy shall not constitute notice):

[enter name of law firm]

Attn: [attorney name]

[enter address line 1]

[enter city, state, zip]

facsimile: [enter fax number]

If to the Buyer:

ASHER ENTERPRISES, INC.

1 Linden Pl., Suite 207

Great Neck, NY. 11021

Attn: Curt Kramer, President

facsimile: 516-498-9894

With a copy by fax only to (which copy shall not constitute notice):

Naidich Wurman Birnbaum & Maday, LLP

80 Cuttermill Road, Suite 410

Great Neck, NY 11021

Attn: Bernard S. Feldman, Esq.

facsimile: 516-466-3555

Each party shall provide notice to the other party of any change in address.

g. Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.  Neither the Company nor any Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other.  Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from a Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.

h. Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

 

 

  

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i. Survival.  The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer.  The Company agrees to indemnify and hold harmless each of the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

j. Publicity.  The Company, and each of the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of each of the Buyer, to make any press release or SEC, OTCBB (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although each of the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).

 

k. Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

l. No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

m. Remedies.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby.  Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.

 

 

 

  

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IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

	SOLAR ENERGY INITIATIVES, INC.	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
/s/

	 	 	
 

	 
	
DAVID FANN

	 	 	
 

	 
	
Chief Executive Officer

	 	 	
 

	 
	 	 	 	 	 
	 	 	 	 	 
	ASHER ENTERPRISES, INC.	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	 	 	 	 
	Name: Curt Kramer	 	 	 	 
	Title:   President	 	 	 	 
	1 Linden Pl., Suite 207	 	 	 	 
	Great Neck, NY. 11021	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	AGGREGATE SUBSCRIPTION AMOUNT:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Aggregate Principal Amount of Note:  	$100,000.00	 	 	 
	 	 	 	 	 
	Aggregate Purchase Price:  	$100,000.00	 	 	 

 

                                                               

 

 

 

 

 

 

 

 

 

 

 

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