Document:

Exhibit 10.4

Exhibit 10.4

Execution Version

CREDIT AGREEMENT

Dated as of July 28, 2011

by and among

MORGANS GROUP LLC,

as Borrower,

BEACH HOTEL ASSOCIATES LLC,

as Borrower,

MORGANS HOTEL GROUP CO.,

as a Guarantor,

DEUTSCHE BANK SECURITIES INC.,

as Sole Lead Arranger,

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Agent,

and

THE FINANCIAL INSTITUTIONS INITIALLY SIGNATORY HERETO

AND THEIR ASSIGNEES PURSUANT TO SECTION 13.5,

as Lenders

 

 

 

	 	 	 	 	 
	ARTICLE I Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 General; References to Times
	 	 	27	 
	Section 1.3 GAAP
	 	 	27	 
	Section 1.4 Pro Forma Calculations
	 	 	27	 
	Section 1.5 Florida Borrower Representative
	 	 	28	 
	Section 1.6 Joint and Several Obligations
	 	 	28	 
	 
	 	 	 	 
	ARTICLE II Credit Facility
	 	 	28	 
	 
	 	 	 	 
	Section 2.1 Loans 
	 	 	28	 
	Section 2.2 Letters of Credit
	 	 	29	 
	Section 2.3 Rates and Payment of Interest on Loans
	 	 	33	 
	Section 2.4 Number of Interest Periods
	 	 	34	 
	Section 2.5 Repayment of Loans
	 	 	34	 
	Section 2.6 Prepayments
	 	 	34	 
	Section 2.7 Continuation
	 	 	35	 
	Section 2.8 Conversion
	 	 	35	 
	Section 2.9 Notes 
	 	 	35	 
	Section 2.10 Voluntary Reductions of the Commitment
	 	 	36	 
	Section 2.11 Amount Limitations
	 	 	36	 
	Section 2.12 Incremental Commitments
	 	 	37	 
	 
	 	 	 	 
	ARTICLE III Payments, Fees and Other General Provisions
	 	 	38	 
	 
	 	 	 	 
	Section 3.1 Payments
	 	 	38	 
	Section 3.2 Pro Rata Treatment
	 	 	39	 
	Section 3.3 Sharing of Payments, Etc.
	 	 	39	 
	Section 3.4 Lockbox Account
	 	 	40	 
	Section 3.5 Several Obligations
	 	 	41	 
	Section 3.6 Minimum Amounts
	 	 	41	 
	Section 3.7 Fees
	 	 	42	 
	Section 3.8 Computations
	 	 	43	 
	Section 3.9 Usury 
	 	 	43	 
	Section 3.10 Agreement Regarding Interest and Charges
	 	 	43	 
	Section 3.11 Statements of Account
	 	 	43	 
	Section 3.12 Defaulting Lenders
	 	 	44	 
	Section 3.13 Taxes
	 	 	46	 
	Section 3.14 Mitigation Obligations; Replacement of Lenders
	 	 	49	 
	 
	 	 	 	 
	ARTICLE IV Florida Property
	 	 	50	 
	 
	 	 	 	 
	Section 4.1 Frequency of Calculations of Borrowing Base
	 	 	50	 
	Section 4.2 Frequency of Appraisals
	 	 	50	 
	Section 4.3 Additional Appraisals Required under Applicable Law
	 	 	51	 

 

i

 

	 	 	 	 	 
	ARTICLE V Yield Protection, Etc.
	 	 	51	 
	 
	 	 	 	 
	Section 5.1 Additional Costs; Capital Adequacy
	 	 	51	 
	Section 5.2 Suspension of LIBOR Loans
	 	 	53	 
	Section 5.3 Illegality
	 	 	53	 
	Section 5.4 Compensation
	 	 	53	 
	Section 5.5 Treatment of Affected Loans
	 	 	54	 
	Section 5.6 Change of Lending Office
	 	 	54	 
	Section 5.7 Assumptions Concerning Funding of LIBOR Loans
	 	 	55	 
	 
	 	 	 	 
	ARTICLE VI Conditions Precedent
	 	 	55	 
	 
	 	 	 	 
	Section 6.1 Initial Conditions Precedent
	 	 	55	 
	Section 6.2 Conditions Precedent to All Loans and Letters of Credit
	 	 	59	 
	 
	 	 	 	 
	ARTICLE VII Representations and Warranties
	 	 	60	 
	 
	 	 	 	 
	Section 7.1 Representations and Warranties
	 	 	60	 
	Section 7.2 Survival of Representations and Warranties, Etc.
	 	 	66	 
	 
	 	 	 	 
	ARTICLE VIII Affirmative Covenants
	 	 	67	 
	 
	 	 	 	 
	Section 8.1 Preservation of Existence and Similar Matters
	 	 	67	 
	Section 8.2 Compliance with Applicable Law and Material Contracts
	 	 	67	 
	Section 8.3 Maintenance of Property
	 	 	67	 
	Section 8.4 Insurance
	 	 	67	 
	Section 8.5 Payment of Taxes and Claims
	 	 	68	 
	Section 8.6 Visits and Inspections
	 	 	68	 
	Section 8.7 Use of Proceeds; Letters of Credit
	 	 	68	 
	Section 8.8 Environmental Matters
	 	 	69	 
	Section 8.9 Books and Records
	 	 	69	 
	Section 8.10 Further Assurances
	 	 	69	 
	Section 8.11 Exchange Listing
	 	 	69	 
	Section 8.12 Minimum Hedging Requirement
	 	 	69	 
	Section 8.13 Post-Closing Deliverables
	 	 	69	 
	 
	 	 	 	 
	ARTICLE IX Information
	 	 	70	 
	 
	 	 	 	 
	Section 9.1 Quarterly Financial Statements
	 	 	70	 
	Section 9.2 Year-End Statements
	 	 	70	 
	Section 9.3 Compliance Certificate; Borrowing Base Certificate; Etc.
	 	 	70	 
	Section 9.4 Other Information
	 	 	71	 
	Section 9.5 Electronic Delivery of Certain Information
	 	 	73	 
	 
	 	 	 	 
	ARTICLE X Negative Covenants
	 	 	74	 
	 
	 	 	 	 
	Section 10.1 Indebtedness; Certain Equity Securities
	 	 	74	 
	Section 10.2 Liens
	 	 	78	 

 

ii

 

	 	 	 	 	 
	Section 10.3 Fundamental Changes
	 	 	80	 
	Section 10.4 Investments, Loans, Advances, Guarantees and Acquisitions
	 	 	80	 
	Section 10.5 Asset Sales
	 	 	83	 
	Section 10.6 Swap Agreements
	 	 	84	 
	Section 10.7 Restricted Payments
	 	 	84	 
	Section 10.8 Transactions with Affiliates
	 	 	85	 
	Section 10.9 Restrictive Agreements
	 	 	86	 
	Section 10.10 Amendment of Material Documents
	 	 	86	 
	Section 10.11 Financial Covenants
	 	 	87	 
	Section 10.12 Changes in Fiscal Periods
	 	 	87	 
	Section 10.13 ERISA Exemptions
	 	 	87	 
	Section 10.14 Availability of Exceptions
	 	 	87	 
	 
	 	 	 	 
	ARTICLE XI Default
	 	 	88	 
	 
	 	 	 	 
	Section 11.1 Events of Default
	 	 	88	 
	Section 11.2 Remedies Upon Event of Default
	 	 	91	 
	Section 11.3 Remedies Upon Default
	 	 	92	 
	Section 11.4 Allocation of Proceeds
	 	 	92	 
	Section 11.5 Collateral Account
	 	 	92	 
	Section 11.6 Performance by Agent
	 	 	94	 
	Section 11.7 Rights Cumulative
	 	 	94	 
	 
	 	 	 	 
	ARTICLE XII The Agent
	 	 	95	 
	 
	 	 	 	 
	Section 12.1 Appointment; Nature of Duties
	 	 	95	 
	Section 12.2 Lack of Reliance on the Agent
	 	 	95	 
	Section 12.3 Certain Rights of Agent
	 	 	96	 
	Section 12.4 The Agent in its Individual Capacity
	 	 	96	 
	Section 12.5 Reliance; Delivery of Information
	 	 	96	 
	Section 12.6 Collateral Matters
	 	 	96	 
	Section 12.7 Holders
	 	 	97	 
	Section 12.8 Indemnification of Agent
	 	 	97	 
	Section 12.9 Successor Agent
	 	 	98	 
	Section 12.10 Titled Agents
	 	 	98	 
	 
	 	 	 	 
	ARTICLE XIII Miscellaneous
	 	 	99	 
	 
	 	 	 	 
	Section 13.1 Notices
	 	 	99	 
	Section 13.2 Expenses
	 	 	100	 
	Section 13.3 Setoff
	 	 	101	 
	Section 13.4 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL
	 	 	102	 
	Section 13.5 Successors and Assigns
	 	 	103	 
	Section 13.6 Amendments
	 	 	106	 
	Section 13.7 Nonliability of Agent, Issuing Bank and Lenders
	 	 	108	 
	Section 13.8 Confidentiality
	 	 	109	 

 

iii

 

	 	 	 	 	 
	Section 13.9 Termination; Survival
	 	 	109	 
	Section 13.10 Severability of Provisions
	 	 	110	 
	Section 13.11 Patriot Act
	 	 	110	 
	Section 13.12 Counterparts
	 	 	110	 
	Section 13.13 Obligations with Respect to Loan Parties
	 	 	110	 
	Section 13.14 Limitation of Liability
	 	 	110	 
	Section 13.15 Entire Agreement
	 	 	110	 
	Section 13.16 Construction
	 	 	111	 
	Section 13.17 Nature of Borrower Obligations
	 	 	111	 

SCHEDULES

	 	 	 	 	 
	Schedule 1.1(A)

	 	—
	 	List of Material Subsidiaries
	Schedule 2.1

	 	—
	 	Loan Commitments and Applicable Percentages
	Schedule 7.1(b)

	 	—
	 	Ownership Structure
	Schedule 7.1(d)

	 	—
	 	Governmental Approvals
	Schedule 7.1(f)

	 	—
	 	Title to Properties; Liens
	Schedule 7.1(g)

	 	—
	 	Indebtedness as of Effective Date
	Schedule 7.1(h)

	 	—
	 	Material Contracts
	Schedule 7.1(i)

	 	—
	 	Litigation
	Schedule 7.1(y)

	 	—
	 	Existing Swap Agreements
	Schedule 10.4

	 	—
	 	Existing Investments
	Schedule 10.9

	 	—
	 	Restrictive Agreements

EXHIBITS

	 	 	 	 	 
	Exhibit A

	 	—
	 	Form of Assignment and Assumption
	Exhibit B

	 	—
	 	Form of Notice of Borrowing
	Exhibit C

	 	—
	 	Form of Notice of Continuation
	Exhibit D

	 	—
	 	Form of Notice of Conversion
	Exhibit E

	 	—
	 	Intentionally Omitted
	Exhibit F

	 	—
	 	Form of Note
	Exhibit G

	 	—
	 	Form of Intercompany Note
	Exhibit H

	 	—
	 	Form of Letter of Credit Request
	Exhibit I

	 	—
	 	Form of Compliance Certificate
	Exhibit J

	 	—
	 	Form of Guaranty
	Exhibit K

	 	—
	 	Form of Security Deed
	Exhibit L

	 	—
	 	Form of Assignment of Leases and Rents
	Exhibit M

	 	—
	 	Form of Environmental Indemnity Agreement
	Exhibit N

	 	—
	 	Intentionally Omitted
	Exhibit O

	 	—
	 	Form of Property Management Contract Assignment
	Exhibit P

	 	—
	 	Form of Pledge Agreement
	Exhibit Q

	 	—
	 	Form of Security Agreement
	Exhibit R

	 	—
	 	Form of Borrowing Base Certificate
	Exhibit S

	 	—
	 	Form of Incremental Commitment Agreement
	Exhibit T

	 	—
	 	Form of Closing Certifications

 

iv

 

THIS CREDIT AGREEMENT (as modified, supplemented, amended, restated (including any amendment
and restatement hereof), extended or renewed from time to time, this “Agreement”) dated as
of July 28, 2011 by and among MORGANS GROUP LLC, a limited liability company formed under the laws
of the State of Delaware (the “MG Borrower”), BEACH HOTEL ASSOCIATES LLC, a limited
liability company formed under the laws of the State of Delaware (the “Florida Borrower”),
MORGANS HOTEL GROUP CO., a corporation formed under the laws of the State of Delaware
(“Holdings”), DEUTSCHE BANK SECURITIES INC., as Sole Lead Arranger (the
“Arranger”), DEUTSCHE BANK TRUST COMPANY AMERICAS, as Agent, and each of the financial
institutions initially a signatory hereto together with their assignees pursuant to Section
13.5.(b).

WHEREAS, the Agent and the Lenders desire to make available to the Borrowers a revolving
credit facility in the initial amount of $100,000,000, which will include a $15,000,000 letter of
credit subfacility, on the terms and conditions contained herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, the parties hereto agree as follows:

ARTICLE I

Definitions

Section 1.1 Definitions. In addition to terms defined elsewhere herein, the following terms shall have the following
meanings for the purposes of this Agreement:

“Act” has the meaning given that term in Section 9.4.(f).

“Additional Costs” has the meaning given that term in Section 5.1.

“Adjusted LIBOR” means, with respect to each Interest Period for any LIBOR Loan, the
rate obtained by dividing (a) LIBOR for such Interest Period by (b) a percentage equal to 1 minus
the stated maximum rate (stated as a decimal) of all reserves, if any, required to be maintained
with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as
specified in Regulation D of the Board of Governors of the Federal Reserve System (or against any
other category of liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any applicable category of extensions of credit or other assets which
includes loans by an office of any Lender outside of the United States of America to residents of
the United States of America). Any change in such maximum rate shall result in a change in
Adjusted LIBOR on the date on which such change in such maximum rate becomes effective.

“Adjusted Net Operating Income” means, for the most recently completed four fiscal
quarters, Net Operating Income for the Florida Property, less (a) the Deemed FF&E Reserve for such
period and (b) the Deemed Management Fee for such period.

“Affiliate” means, with respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified; provided, however, that for purposes of
Section 10.8., the term “Affiliate” shall also include any Person that directly, or
indirectly through one or more intermediaries, owns 5% or more of any class of Equity Interests of
the Person specified or that is an executive officer or director of the Person specified.

“Agent” means DBTCA, as contractual representative for the Lenders under the terms of
this Agreement, and any of its successors.

“Agreement Date” means July 28, 2011.

“Applicable Law” means all applicable provisions of constitutions, statutes, laws,
rules, regulations and orders of all Governmental Authorities, the common law, and all orders and
decrees of all courts, tribunals and arbitrators.

 

1

 

“Applicable Margin” means 4.00% per annum for LIBOR Loans and 3.00% per annum for Base
Rate Loans.

“Appraisal” means, in respect of the Florida Property, an appraisal prepared by an
M.A.I. designated member of the Appraisal Institute acceptable to the Agent and commissioned by and
addressed to the Agent (acceptable to the Agent as to form, substance and appraisal date), having
at least the minimum qualifications required under Applicable Law governing the Agent and the
Lenders, including FIRREA, and determining the “as is” market value of the Florida Property as
between a willing buyer and a willing seller.

“Appraised Value” means the “as is” market value of the Florida Property as reflected
in the then most recent Appraisal prepared and then in effect pursuant to this Agreement of the
Florida Property; provided, however, that in the event of a Major Casualty and following the
delivery of an Appraisal made pursuant to Section 3.12(f)(i)(a)(i) of the Security Deed, the
Appraised Value as reflected in such Appraisal shall be increased on a dollar-for-dollar basis by
the amount of expenditures made for restoration of the Florida Property following the date of such
Appraisal as a result of the Major Casualty in question (as set forth in a certificate delivered to
Agent by MG Borrower setting forth in reasonable detail the nature and amount of such expenditures)
until a new Appraisal has been delivered pursuant to Section 4.2. (with each such increase
in the Appraised Value to be effective upon the delivery of the next Borrowing Base Certificate by
MG Borrower).

“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.

“Arranger” means Deutsche Bank Securities Inc., together with its successors and
permitted assigns.

“Assignee” has the meaning given that term in Section 13.5.(b).

 

2

 

“Assignment and Assumption” means an Assignment and Assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by
Section 13.5.), and accepted by the Agent, substantially in the form of Exhibit A
or otherwise in form and substance satisfactory to the Agent.

“Assignment of Leases and Rents” means an Assignment of Leases and Rents executed by
the Florida Borrower in favor of the Agent for the benefit of the Lenders, substantially in the
form of Exhibit L or otherwise in form and substance satisfactory to the Agent.

“Base Rate” means the per annum rate of interest equal to the greatest of (a) the
Prime Rate, (b) the Federal Funds Rate plus one-half of one percent (0.5%) and (c) one-month LIBOR,
which shall be determined on a daily basis, plus one percent (1.00%). Any change in the Base Rate
resulting from a change in the Prime Rate, the Federal Funds Rate or the one-month LIBOR shall
become effective as of 12:01 a.m. on the Business Day on which each such change occurs. The Base
Rate is a reference rate used by the Lender acting as the Agent in determining interest rates on
certain loans and is not intended to be the lowest rate of interest charged by the Lender acting as
the Agent or any other Lender on any extension of credit to any debtor. One-month LIBOR, for
purposes of determining the Base Rate, shall never be less than one percent (1.00%) per annum.

“Base Rate Loan” means a Loan bearing interest at a rate based on the Base Rate.

“Benefit Arrangement” means at any time an employee benefit plan within the meaning of
Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any member of the ERISA Group.

“Borrowers” means the MG Borrower and the Florida Borrower, collectively, and “a
Borrower”, “such Borrower” or “any Borrower” means either of the foregoing.

“Borrowing Base” means the Borrowing Base Value of the Florida Property.

“Borrowing Base Certificate” means a report certified by the chief financial officer
of the MG Borrower, setting forth the calculations required to establish the Borrowing Base as of a
specified date, substantially in the form of Exhibit R or otherwise in form and substance
satisfactory to the Agent.

“Borrowing Base Value” means, an amount equal to the lesser of (i) 55.0% of the
Appraised Value of the Florida Property and (ii) the quotient obtained by dividing (x) the
aggregate Adjusted Net Operating Income for the Florida Property by (y) eleven percent (11%).

“Business Day” means (a) any day other than a Saturday, Sunday or other day on which
banks in New York, New York are authorized or required to close and (b) with reference to a LIBOR
Loan, any such day that is also a day on which dealings in Dollar deposits are carried out in the
London interbank market.

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

 

3

 

“Cash Collateralize” means, to deposit in the Collateral Account or to pledge and
deposit with or deliver to the Issuing Bank, for the benefit of itself or one or more Lenders, as
collateral for Letter of Credit Liabilities or obligations of Lenders to fund participations in
respect of Letter of Credit Liabilities, cash or deposit account balances or, if the Issuing Bank
shall agree in its sole discretion, other credit support, in each case pursuant to documentation in
form and substance satisfactory to the Issuing Bank. “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 Control” means (a)(i) the cessation of Holdings being the sole managing
member of the MG Borrower or (ii) the gaining by any member of the MG Borrower (other than
Holdings) of the right to exercise control or management power over the business and affairs of the
MG Borrower, except as otherwise expressly permitted in the LLC Agreement and as required by
Applicable Law, (b) the acquisition of ownership, directly or indirectly, beneficially or of
record, by any Person or group (within the meaning of the Securities Exchange Act of 1934, as
amended, and the rules of the SEC thereunder), of Equity Interests representing more than 40% of
the aggregate total voting power represented by the issued and outstanding Equity Interests in
Holdings (excluding any Equity Interests held by Permitted Investors), (c) the occupation of a
majority of the seats (other than vacant seats) on the board of directors of Holdings by
individuals who were neither (i) nominated by the board of directors of Holdings or the Permitted
Investors nor (ii) appointed by directors so nominated or (d) the MG Borrower ceases to own and
control all of the legal, beneficial, economic and voting rights associated with all of the
outstanding Equity Interests of the Florida Borrower.

“Clift Hotel” means the hotel located at 495 Geary Street, San Francisco, California
94102.

“Collateral” means any real or personal property directly or indirectly securing any
of the Obligations or any other obligation of a Person under or in respect of any Loan Document to
which it is a party, and includes, without limitation, all “Collateral” under and as
defined in the Security Deed, any “Management Agreement” as defined in the Property
Management Contract Assignment, all “Leases” and all “Rents” each as defined in the
Assignment of Leases and Rents, all “Collateral” as defined in the Pledge Agreement, all
“Collateral” as defined in the Security Agreement, and all other property subject to a Lien
created by a Security Document.

“Collateral Account” means a special non-interest bearing deposit account or
securities account maintained by, or on behalf of, the Agent and under its sole dominion and
control.

 

4

 

“Commitment” means, as to each Lender, such Lender’s obligation (a) to make Loans
pursuant to Section 2.1. and (b) to issue (in the case of the Lender then acting as Issuing
Bank) or participate in (in the case of the other Lenders) Letters of Credit pursuant to
Section 2.2.(a) and 2.2.(i), respectively (but in the case of the Lender acting as
the Issuing Bank excluding the aggregate amount of participations in the Letters of Credit held by
the other Lenders), in each case, in an amount up to, but not exceeding, the amount set forth
opposite such Lender’s name on Schedule 2.1 under the caption “Commitment” or
opposite such caption 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.

“Commitment Percentage” means, as to each Lender, the ratio, expressed as a
percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate amount of the
Commitments of all Lenders; provided, however, that if at the time of determination the
Commitments have terminated or been reduced to zero, the “Commitment Percentage” of each Lender
shall be the Commitment Percentage of such Lender in effect immediately prior to such termination
or reduction.

“Compliance Certificate” has the meaning given that term in Section 9.3.(a).

“Communications” has the meaning given that term in Section 9.5.(d).

“Consolidated EBITDA” means, for the most recently completed four fiscal quarters, for
Holdings and its consolidated subsidiaries, Consolidated Net Income for such period (excluding
income related to the Clift Hotel), adjusted by (A) adding thereto to the extent actually deducted
in determining said Consolidated Net Income, (i) Consolidated Interest Expense, minority interest
and provision for taxes for such period, (ii) the amount of all consolidated amortization of
intangibles and depreciation for such period, (iii) any non-recurring non-cash charges in such
period to the extent that such non-cash charges do not give rise to a liability that would be
required to be reflected on the consolidated balance sheet of Holdings (and so long as no cash
payments or cash expenses will be associated therewith (whether in the current period or for any
future period)), (iv) other non-operating expense or loss, including restructuring, development and
disposal costs and impairment losses (or, if applicable, minus non-operating income or gain) in
each case as defined in Holdings’ consolidated statements of operations and comprehensive
loss/income for such period, (v) non-cash expenses resulting from the grant of stock options or
other equity-related incentives to any director, officer or employee of Holdings, the Borrowers or
any Subsidiary pursuant to a written plan or agreement approved by the board of directors of
Holdings, (vi) any payments to directors and officers of Holdings in lieu of stock pursuant to the
Outperformance Award Program (2011) and any payments made to directors and officers of Holdings
under the Executive Promoted Interest Bonus Pool (2011) from certain promoted interests that
Holdings, the MG Borrower or any Subsidiary has received from owners of hotels managed by Holdings,
the MG Borrower or any Subsidiary, and (vii) all amounts attributable to equity in income/loss of
unconsolidated affiliates, and (B) subtracting therefrom to the extent actually included in
determining said consolidated net income, the amount of non-recurring non-cash gains during such
period; provided, that Consolidated EBITDA shall be determined without giving effect to any
extraordinary gains or losses (including any taxes attributable to any such extraordinary gains or
losses) or gains or losses (including any taxes attributable to such gains or losses) from sales of
assets other than from sales of inventory (excluding real property) in the ordinary course of
business.

 

5

 

“Consolidated Fixed Charges” means, for the most recently completed four fiscal
quarters, for Holdings and its Subsidiaries, the sum (without duplication) of (i) Consolidated
Interest Expense for such period, plus (ii) the scheduled principal amount of all amortization
payments (but not final balloon payments at maturity) for such period on all indebtedness of
Holdings and its consolidated subsidiaries (other than any payments in respect of Indebtedness
associated with the Clift Hotel); plus (iii) preferred stock dividends paid by the Borrowers and
Guarantors during such period to the extent relating to amounts accrued during such period.

“Consolidated Interest Expense” means, for the most recently completed four fiscal
quarters, for Holdings and its Subsidiaries, the aggregate cash interest expense for such period,
including capitalized interest and the portion of any payments made in respect of capitalized lease
liabilities allocable to interest expense, but excluding (i) deferred financing costs, (ii) other
non-cash interest expense, (iii) any capitalized interest relating to construction financing for a
property to the extent an interest reserve or a loan “holdback” is maintained in respect of such
capitalized interest pursuant to the terms of such financing as reasonably approved by the Agent,
and (vi) interest expense related to the Clift Hotel.

“Consolidated Net Income” means, for any period, the net income or loss of Holdings,
the MG Borrower and the Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) the income of any
Subsidiary to the extent that the declaration or payment of dividends or other distributions by
such Subsidiary of that income is not at the time permitted by Applicable Law or any agreement or
instrument applicable to such Subsidiary, except to the extent of the amount of cash dividends or
other cash distributions actually paid to the MG Borrower or any Subsidiary during such period to
the extent such dividends or distribution are attributable to the operating income of such
Subsidiary, (b) the income/loss of any Unconsolidated Affiliate, except to the extent of the amount
of cash dividends or other cash distributions actually paid to the MG Borrower or any Subsidiary
during such period to the extent such dividends or distribution are attributable to the operating
income of such Unconsolidated Affiliate, and (c) the income/loss of the Excluded Subsidiary.

“Continue”, “Continuation” and “Continued” each refers to the
continuation of a LIBOR Loan from one Interest Period to another Interest Period pursuant to
Section 2.7.

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

“Convert”, “Conversion” and “Converted” each refers to the conversion
of a Loan of one Type into a Loan of another Type pursuant to Section 2.8.

“Convertible Notes” means Holdings’ Convertible Senior Subordinated Unsecured Notes
due October 2014 issued by Holdings during the month of October, 2007.

“Credit Event” means any of the following: (a) the making (or deemed making) of any
Loan, and (b) the issuance of a Letter of Credit.

 

6

 

“Customary Nonrecourse Exceptions” means customary exceptions for fraud,
misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary
bankruptcy and other customary exceptions to non-recourse liability at the time the related
Indebtedness is incurred.

“DBTCA” means Deutsche Bank Trust Company Americas, together with its successors and
assigns.

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, 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.

“Deemed FF&E Reserve” means a deemed reserve for FF&E equal to four percent (4%) of
Gross Hotel Revenues from the Florida Property.

“Deemed Management Fee” means a deemed base management fee in an amount equal to the
greater of the actual management fees payable and three and a half percent (3.5%) of Gross Hotel
Revenues from the Florida Property.

“Default” means any of the events specified in Section 11.1., whether or not
there has been satisfied any requirement for the giving of notice, the lapse of time, or both.

“Defaulting Lender” means, subject to Section 3.12(g), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans
were required to be funded hereunder unless such Lender notifies the Agent and the MG Borrower in
writing that such failure is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any applicable default,
shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Agent,
the Issuing Bank or any other Lender any other amount required to be paid by it hereunder
(including in respect of its participation in Letters of Credit) within two Business Days of the
date when due, (b) has notified the MG Borrower, the Issuing Bank or the Agent in writing that it
does not intend to comply with its funding obligations hereunder, or has made a public statement to
that effect (unless such writing or public statement relates to such Lender’s obligation to fund a
Loan hereunder and states that such position is based on such Lender’s determination that a
condition precedent to funding (which condition precedent, together with any applicable default,
shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has
failed, within three Business Days after written request by the Agent, the Issuing Bank or the MG
Borrower, to confirm in writing to the Agent and the MG Borrower that it will comply with its
prospective funding obligations hereunder (provided that such Lender shall cease to be a
Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the
Agent and the MG Borrower), 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, or (ii) had appointed for it a
receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business or assets, including the
Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in
such a capacity; provided that a Lender shall not be a

 

7

 

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 so long as such
ownership interest does not result in or provide such Lender with immunity from the jurisdiction of
courts within the United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or
disaffirm any contracts or agreements made with such Lender. Any determination by the Agent that a
Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding
absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to
Section 3.12.(g)) upon delivery of written notice of such determination to the MG Borrower
and each Lender.

“Defaulting Subsidiary” has the meaning given that term in Section 11.1.

“Delano License” means that certain License Agreement, effective as of February 17,
2006, between the MG Borrower and the Management Company.

“Delano Management Agreement” means that certain Amended and Restated Management
Agreement, dated June 23, 2011, between the Florida Borrower and the Management Company.

“Disqualified Preferred Stock” means Equity Interests that (a) mature or are
mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the option
of the holders thereof, in each case in whole or in part and whether upon the occurrence of any
event, pursuant to a sinking fund obligation on a fixed date or otherwise, prior to the date that
is 180 days after the Termination Date (other than (i) upon payment in full of the Obligations and
termination of the Commitments or (ii) upon a “change in control”; provided that any
payment required pursuant to this clause (ii) is contractually subordinated in right of payment to
the Obligations on terms reasonably satisfactory to the Agent and such requirement is applicable
only in circumstances that are market on the date of issuance of such Equity Interests), (b) except
in the case of the Trust Preferred Securities, require the maintenance or achievement of any
financial performance standards other than as a condition to the taking of specific actions, or
provide remedies to holders thereof (other than voting and management rights and increases in
pay-in-kind dividends) or (c) are convertible or exchangeable, automatically or at the option of
any holder thereof, into any Indebtedness (other than Indebtedness permitted under Section
10.1.), Equity Interests or other assets other than Preferred Stock or Trust Preferred
Securities otherwise permitted hereunder.

“Dollars” or “$” means the lawful currency of the United States of America.

“Effective Date” means the later of: (a) the Agreement Date; and (b) the date on which
all of the conditions precedent set forth in Section 6.1. shall have been fulfilled or
waived in writing by the Requisite Lenders.

 

8

 

“Eligible Assignee” means any Person other than a natural Person that is: (a) a
commercial bank organized under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000, (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic Cooperation
and Development (the “OECD”), or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000 (provided that such bank is acting
through a branch or agency located in the country in which it is organized or another country which
is also a member of the OECD), (c) a Person that is engaged in the business of commercial banking
and that is: (1) an Affiliate of a Lender or the Agent, (2) an Affiliate of a Person of which a
Lender or the Agent is an Affiliate, or (3) a Person of which a Lender or the Agent is a
Subsidiary, (d) an insurance company, mutual fund or other financial institution organized under
the laws of the United States, any state thereof, any other country which is a member of the OECD
or a political subdivision of any such country which invests in bank loans and has a net worth of
at least $500,000,000; or (e) a fund (other than a mutual fund) which invests in bank loans and
whose assets exceed $100,000,000; provided, however, that (i) no Person shall be an
“Eligible Assignee” unless at the time of the proposed assignment to such Person: (x) such Person
is able to make its Commitment Percentage of the Commitments in U.S. dollars, and (y) such Person
is exempt from withholding of tax on interest and is able to deliver the documents related thereto
pursuant to Section 3.13.(c) and (ii) no Borrower or any Affiliate of any Borrower shall be
an “Eligible Assignee”; and provided, further, that no Defaulting Lender shall be
an “Eligible Assignee” so long as such Lender remains a Defaulting Lender.

“Environmental Indemnity Agreement” means an Environmental Indemnity Agreement
executed by the Borrowers in favor of the Agent and the Lenders, substantially in the form of
Exhibit M or otherwise in form and substance satisfactory to the Agent.

“Environmental Laws” means any Applicable Law relating to environmental protection or
the manufacture, storage, remediation, disposal or clean-up of Hazardous Materials including,
without limitation, the following: Clean Air Act, 42 U.S.C. § 7401 et seq.; Federal Water Pollution
Control Act, 33 U.S.C. § 1251 et seq.; Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; National Environmental Policy Act, 42
U.S.C. § 4321 et seq.; regulations of the Environmental Protection Agency and any applicable rule
of common law and any judicial interpretation thereof relating primarily to the environment or
Hazardous Materials.

“Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person.

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

“ERISA Group” means the MG Borrower, any Subsidiary and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated) under common
control which, together with the MG Borrower or any Subsidiary, are treated as a single employer
under Section 414 of the Internal Revenue Code.

“Event of Default” means any of the events specified in Section 11.1.,
provided that any requirement for notice or lapse of time or any other condition has been
satisfied.

 

9

 

“Excluded Subsidiary” means Clift Holdings LLC (“Clift”), a Delaware limited
liability company.

“Excluded Taxes” has the meaning set forth in Section 3.13(a).

“Executive Promoted Interest Bonus Pool (2011)” means that certain executive long-term
incentive plan providing participants with the right, among other things, to receive an interest in
a bonus pool constituting certain promoted interests in hotel investments made by Holdings and its
Subsidiaries, as further described in that certain report on Form 8-K filed by Holdings on March
24, 2011, as in effect on the Effective Date.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code (as enacted on
the Effective Date and any amended or successor provisions that are substantively comparable and
not substantially more onerous to comply with) and the regulations promulgated thereunder or
published administrative guidance implementing such provisions.

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward to the
nearest 1/100th of 1%) 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, 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 quoted to the Agent by federal funds dealers selected by the Agent on
such day on such transaction as determined by the Agent.

“Fees” means the fees and commissions provided for or referred to in Section
3.7. and any other fees payable by the Borrowers hereunder or under any other Loan Document.

“FF&E” means furniture, fixtures and equipment.

“Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of Holdings and for purposes of Section 9.4.(e), shall include the
chief executive officer of Holdings.

“FIRREA” means the Financial Institution Recovery, Reform and Enforcement Act of 1989,
as amended.

“Fixed Charge Coverage Ratio” means the ratio (determined on a Pro Forma Basis in
accordance with Section 1.3.) of (A) Consolidated EBITDA for the period of four consecutive
fiscal quarters of Holdings most recently ending for which financial results have been delivered
pursuant to Sections 9.1. or 9.2., as applicable, to (B) Consolidated Fixed Charges
for such period.

“Florida Borrower” has the meaning set forth in the introductory paragraph hereof and
shall include the Florida Borrower’s successors and permitted assigns.

 

10

 

“Florida Property” means the Delano Hotel located in Miami Beach, Florida on the land
described in Exhibit A to the Security Deed.

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

“Foreign Subsidiary” means a Subsidiary that is not incorporated or organized under
the laws of any state of the United States or the District of Columbia.

“Free Cash Flow” means, for any fiscal quarter of Holdings and its Subsidiaries,
Consolidated EBITDA minus Consolidated Fixed Charges minus provisions for income taxes associated
with the operating income for such fiscal quarter of Holdings and its Subsidiaries;
provided that for purposes of this definition Consolidated EBITDA and Consolidated Fixed
Charges shall be calculated for the most recently completed fiscal quarter for which financial
results have been delivered pursuant to Sections 9.1. or 9.2. and shall not be
calculated for the most recently completed four fiscal quarters of Holdings and its Subsidiaries.

“Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to
Issuing Bank, such Defaulting Lender’s Commitment Percentage of the outstanding Letter of Credit
Liabilities with respect to Letters of Credit issued by Issuing Bank other than Letter of Credit
Liabilities as to which such Defaulting Lender’s participation obligation has been reallocated to
other Lenders or Cash Collateralized in accordance with the terms hereof.

“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 activities.

“GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant segment of the
accounting profession.

“Governmental Approvals” means all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and reports to, all Governmental Authorities.

“Governmental Authority” means any national, state or local government (whether
domestic or foreign), any political subdivision thereof or any other governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau,
commission, board, department or other entity (including, without limitation, the Federal Deposit
Insurance Corporation, the Comptroller of the Currency or the Federal Reserve Board, any central
bank or any comparable authority) or any arbitrator with authority to bind a party at law.

 

11

 

“Gross Hotel Revenues” means all revenues and receipts of every kind derived from
operating the Florida Property, and parts thereof, including, but not limited to: income
(from both cash and credit transactions), before commissions and discounts for prompt or cash
payments, from rentals or sales of rooms, cabanas, stores, offices, meeting space, exhibit space,
or sales space of every kind; license, lease, and concession fees and rentals (not including gross
receipts of licensees, lessees, and concessionaires); net income from vending machines; spa and
health club fees and revenues; food and beverage sales; parking; sales of merchandise (other than
proceeds from the sale of FF&E no longer necessary to the operation of the Florida Property);
service charges, to the extent not distributed to the employees at the Florida Property as, or in
lieu of, gratuities; and proceeds, if any, from business interruption or other loss of income
insurance; provided, however, that Gross Hotel Revenues shall not include the following:
gratuities to employees of the Florida Property; federal, state, or municipal excise, sales, use,
or similar taxes collected directly from tenants, patrons, or guests or included as part of the
sales price of any goods or services; insurance proceeds (other than proceeds from business
interruption or other loss of income insurance) or condemnation proceeds.

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

“Guarantor” means any Person that is a party to the Guaranty as a “Guarantor”
and in any event shall include Holdings and the Management Company.

“Guaranty” means the Guaranty to which the Guarantors are parties substantially in the
form of Exhibit J or otherwise in form and substance satisfactory to the Agent.

“Hazardous Materials” means all or any of the following: (a) substances that are
defined or listed in, or otherwise classified pursuant to, any applicable Environmental Laws as
“hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic substances” or any other
formulation intended to define, list or classify substances by reason of deleterious properties
such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, “TCLP”
toxicity or “EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural gas, natural
gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil, natural gas or geothermal resources; (c)
any explosives or any radioactive materials; (d) asbestos in any form; (e) toxic mold; and (f)
electrical equipment which contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per million.

 

12

 

“Holdings” has the meaning set forth in the introductory paragraph hereof and shall
include Holding’s successors and permitted assigns.

“Hudson Hotel” shall mean the asset owned by MG Borrower’s Subsidiaries located at 356
West 58th Street, New York, NY 10019.

“Incremental Commitment” shall mean, for any Lender, any Commitment provided by such
Lender after the Effective Date in an Incremental Commitment Agreement delivered pursuant to
Section 2.12.; it being understood, however, that on each date upon which an Incremental
Commitment of any Lender becomes effective, such Incremental Commitment of such Lender shall be
added to (and thereafter become a part of) the Commitment of such Lender for all purposes of this
Agreement as contemplated by Section 2.12.

“Incremental Commitment Agreement” shall mean each Incremental Commitment Agreement in
substantially the form of Exhibit S (appropriately completed, and with such modifications
as may be reasonably satisfactory to the Agent) executed and delivered in accordance with
Section 2.12.

“Incremental Commitment Date” shall mean each date upon which an Incremental
Commitment under an Incremental Commitment Agreement becomes effective as provided in Section
2.12.(b).

“Incremental Commitment Requirements” shall mean, with respect to any provision of an
Incremental Commitment on a given Incremental Commitment Date, the satisfaction of each of the
following conditions on the Incremental Commitment Date of the respective Incremental Commitment
Agreement: (i) no Default or Event of Default exists or would exist after giving effect thereto;
(ii) the representations and warranties made or deemed made by each Loan Party in the Loan
Documents to which any of them is a party, shall be true and correct in all material respects on
the Incremental Commitment Date of the respective Incremental Commitment Agreement with the same
force and effect as if made on and as of such date except to the extent that such representations
and warranties expressly relate solely to an earlier date (in which case such representations and
warranties shall have been true and correct in all material respects on and as of such earlier
date) and except for changes in factual circumstances not prohibited under the Loan Documents
(other than a change in factual circumstances since the Effective Date, that constitutes a material
adverse change in the business, assets, liabilities, financial condition or results of operations
of Holdings and its Subsidiaries taken as a whole); (iii) the delivery by the MG Borrower to the
Agent of an acknowledgment, in form and substance reasonably satisfactory to the Agent and executed
by each Loan Party, acknowledging that such Incremental Commitment and all Loans subsequently
incurred, and Letters of Credit issued, as applicable, pursuant to such Incremental Commitment
shall constitute Obligations under the Loan Documents and secured on a pari passu basis with the
Obligations under the Security Documents; (iv) the delivery by each Loan Party to the Agent of such
other officers’ certificates, board of director (or equivalent governing body) resolutions and
evidence of good standing (to the extent available under Applicable Law) as the Agent shall
reasonably request; (v) the MG Borrower shall have delivered a certificate executed by an
authorized officer of the MG Borrower, certifying to such officer’s knowledge, compliance with the
requirements of preceding clauses (i) and (ii); and (vi) the completion by each Loan Party of
(x) such other conditions precedent that may be included in the respective Incremental
Commitment Agreement and (y) such other actions as the Agent may reasonably request in connection
with such Incremental Commitment in order to create, continue or maintain the security interest of
the Agent in the Collateral and the perfection thereof (including, without limitation, any
amendments to the Security Documents, title insurance policies and such other documents reasonably
requested by the Agent to be delivered in connection therewith).

 

13

 

“Incremental Lender” shall have the meaning provided in Section 2.12.(b).

“Incremental Security Documents” shall have the meaning provided in Section
2.12.(b).

“Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property acquired by such
Person, (e) all obligations of such Person in respect of the deferred purchase price of property or
services (excluding trade accounts payable and other accrued obligations, in each case incurred in
the ordinary course of business), (f) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any
Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby
has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital
Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as
an account party in respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of
any Person shall include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the
foregoing, in connection with any Permitted Acquisition, the term “Indebtedness” shall not
include contingent post-closing purchase price adjustments or earn-outs to which the seller in such
Permitted Acquisition may become entitled.

“Indemnified Person” has the meaning given that term in Section 13.2.(a).

“Information” has the meaning given that term in Section 9.5.(a).

“Intellectual Property” has the meaning given that term in Section 7.1.(t).

“Interest Period” means with respect to any LIBOR Loan, each period commencing on the
date such LIBOR Loan is made, or in the case of the Continuation of a LIBOR Loan the last day of
the preceding Interest Period for such Loan, and ending 1, 2 or 3 months, as the MG Borrower may
select in a Notice of Borrowing, Notice of Continuation or Notice of Conversion, as the case may
be, except that each Interest Period that commences on the last Business Day of a calendar month,
or on a date for which there is no corresponding date
in the appropriate subsequent calendar month, shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (i) if any Interest Period
would otherwise end after the Termination Date, such Interest Period shall end on the Termination
Date; and (ii) each Interest Period that would otherwise end on a day which is not a Business Day
shall end on the immediately following Business Day (or, if such immediately following Business Day
falls in the next calendar month, on the immediately preceding Business Day).

 

14

 

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

“Issuing Bank” shall mean DBTCA (except as otherwise provided in Section
12.9.) and any other Lender reasonably acceptable to the Agent which agrees to issue Letters of
Credit hereunder. Any Issuing Bank may, in its discretion, arrange for one or more Letters of
Credit to be issued by one or more Affiliates of such Issuing Bank (and such Affiliate shall be
deemed to be an “Issuing Bank” for all purposes of the Loan Documents).

“L/C Commitment Amount” equals $15,000,000.

“Lender” means each financial institution from time to time party hereto as a
“Lender,” together with its respective successors and permitted assigns.

“Lending Office” means, for each Lender and for each Type of Loan, the office of such
Lender specified as such on its signature page hereto or in the applicable Assignment and
Assumption, or such other office of such Lender of which such Lender may notify the Agent in
writing from time to time.

“Letter of Credit” has the meaning given that term in Section 2.2.(a).

“Letter of Credit Documents” means, with respect to any Letter of Credit,
collectively, any application therefor, any certificate or other document presented in connection
with a drawing under such Letter of Credit and any other agreement, instrument or other document
governing or providing for (a) the rights and obligations of the parties concerned or at risk with
respect to such Letter of Credit or (b) any collateral security for any of such obligations.

“Letter of Credit Liabilities” means, without duplication, at any time and in respect
of any Letter of Credit, the sum of (a) the Stated Amount of such Letter of Credit plus (b) the
aggregate unpaid principal amount of all Reimbursement Obligations of the MG Borrower at such time
due and payable in respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Lender (other than the Lender acting as the Issuing Bank) shall be deemed to hold a
Letter of Credit Liability in an amount equal to its participation interest in the related Letter
of Credit under Section 2.2.(i), and the Lender acting as the Issuing Bank shall be deemed
to hold a Letter of Credit Liability in an amount equal to its retained interest in the related
Letter of Credit after giving effect to the acquisition by the Lenders other than the Lender acting
as the Issuing Bank of their participation interests under such Section.

 

15

 

“LIBOR” means, for any LIBOR Loan and any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for any reason such rate is not
available, the term “LIBOR” shall mean, for any LIBOR Loan and any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on the Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on the Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates. If for any reason none of the foregoing rates is available,
LIBOR shall be, for any LIBOR Loan and any Interest Period therefor, the rate per annum reasonably
determined by the Agent as the rate of interest at which Dollar deposits in the approximate amount
of the LIBOR Loan comprising part of such borrowing would be offered by the Agent to major banks in
the London interbank Eurodollar market at their request at or about 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term comparable to such Interest
Period. Notwithstanding the foregoing, LIBOR, for any LIBOR Loan and any Interest Period therefor,
shall never be less than one percent (1.00%) per annum.

“LIBOR Loan” means a Loan bearing interest at a rate based on LIBOR.

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

“LLC Agreement” means the amended and restated limited liability agreement of the MG
Borrower dated as of February 17, 2006 as amended from time to time to the extent not prohibited by
Section 10.10.

“Loan” means a loan made by a Lender to the Borrowers pursuant to Section
2.1.(a)(i).

“Loan Document” means this Agreement, each Note, each Letter of Credit Document, the
Guaranty, each Security Document and each other document or instrument now or hereafter executed
and delivered by a Loan Party in connection with, pursuant to or relating to this Agreement.

“Loan Modification Agreement” has the meaning given that term in Section 13.6.(d).

“Loan Party” means each of Holdings, the MG Borrower, the Florida Borrower and the
Management Company and any other Guarantor.

“Lockbox Account” has the meaning given that term in Section 3.4(a).

 

16

 

“Lockbox Budget” means a detailed operating budget for the Florida Property which (a)
is in the form most recently delivered to each Lender pursuant to Section 9.4.(b)(ii) and
(b) has been approved by the Agent following the occurrence of such Trigger Event.

“Major Casualty” has the meaning given that term in the Security Deed.

“Management Company” means Morgans Hotel Group Management LLC, a limited liability
company formed under the laws of the State of Delaware, and its successors and permitted assigns.

“Material Adverse Effect” means a materially adverse effect on (a) the business,
assets, liabilities, financial condition or results of operations of the MG Borrower and its
Subsidiaries taken as a whole, (b) the ability of the MG Borrower and the other Loan Parties, taken
as a whole, to perform their obligations under the Loan Documents, (c) the validity or
enforceability of any of the Loan Documents, (d) the rights and remedies of the Lenders, the
Issuing Bank and the Agent under any of the Loan Documents or (e) the timely payment of the
principal of or interest on the Loans or other amounts payable in connection therewith or the
timely payment of all Reimbursement Obligations.

“Material Contract” means any contract or other arrangement (other than Loan
Documents), whether written or oral, to which the MG Borrower, any Subsidiary or any other Loan
Party is a party or to which its property is bound as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.

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

“Material Subsidiary” means any Subsidiary which is a “significant subsidiary” of the
MG Borrower within the meaning of Rule 1-02 of Regulation S-X promulgated by the SEC as in effect
on August 5, 1998. Notwithstanding the foregoing, the Material Subsidiaries as of any date of
determination shall be determined as of the end of the most recent fiscal quarter for which
financial statements have been delivered pursuant to Sections 9.1. or 9.2.
Schedule 1.1(A) sets forth the Material Subsidiaries as of the Agreement Date.

“MG Borrower” has the meaning set forth in the introductory paragraph hereof and
shall include the MG Borrower’s successors and permitted assigns.

“Minimum Collateral Amount” means, at any time, (i) with respect to Cash Collateral
consisting of cash or deposit account balances, an amount equal to 105% of the Fronting Exposure of
the Issuing Bank with respect to Letters of Credit issued and outstanding at such time and (ii)
otherwise, an amount determined by the Issuing Bank in its sole discretion.

 

17

 

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

“Multiemployer Plan” means at any time a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA Group during such
five year period.

“Net Operating Income” means, for any period, the amount obtained by subtracting
Operating Expenses from Operating Income.

“Net Sale Proceeds” means for any sale or other disposition of assets, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a promissory note,
receivable or otherwise, but only as and when received) received from such sale or other
disposition of assets, net of (i) reasonable transaction costs (including, without limitation, any
underwriting, brokerage or other customary selling commissions, reasonable legal, advisory and
other fees and expenses (including title and recording expenses), associated therewith and sales,
VAT and transfer taxes arising therefrom), (ii) payments of unassumed liabilities relating to the
assets sold or otherwise disposed of at the time of, or within 30 days after, the date of such sale
or other disposition, (iii) the amount of such gross cash proceeds required to be used to
permanently repay any Indebtedness which is secured by the respective assets which were sold or
otherwise disposed of, and (iv) the estimated increase or decrease, as applicable, in income taxes
which will be payable by Holdings’ consolidated group or any Subsidiary of Holdings with respect to
the fiscal year of Holdings in which the sale or other disposition occurs as a result of such sale
or other disposition; provided, however, that such gross proceeds shall not include any portion of
such gross cash proceeds which Holdings determines in good faith should be reserved for
post-closing adjustments (to the extent Holdings delivers to the Lenders a certificate signed by a
duly authorized officer as to such determination), it being understood and agreed that on the day
that all such post-closing adjustments have been determined (which shall not be later than six
months following the date of the respective asset sale), the amount (if any) by which the reserved
amount in respect of such sale or disposition exceeds the actual post-closing adjustments payable
by Holdings or any of its Subsidiaries shall constitute Net Sale Proceeds on such date received by
Holdings and/or any of its Subsidiaries from such sale or other disposition.

“Non-Consenting Lender” has the meaning given that term in Section 13.6.(c).

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.

“Nonrecourse Indebtedness” means, with respect to a Person, Indebtedness for borrowed
money in respect of which recourse for payment (except for Customary Nonrecourse Exceptions) is
contractually and solely limited to specific assets of such Person encumbered by a Lien securing
such Indebtedness.

“Note” has the meaning given that term in Section 2.9.(a).

 

18

 

“Notice of Borrowing” means a notice in the form of Exhibit B to be delivered
to the Agent pursuant to Section 2.1.(b) evidencing the MG Borrower’s request for a
borrowing of Loans.

“Notice of Continuation” means a notice in the form of Exhibit C to be
delivered to the Agent pursuant to Section 2.7. evidencing the MG Borrower’s request for
the Continuation of a LIBOR Loan.

“Notice of Conversion” means a notice in the form of Exhibit D to be delivered
to the Agent pursuant to Section 2.8. evidencing the MG Borrower’s request for the
Conversion of a Loan from one Type to another Type.

“Obligations” means, individually and collectively: (a) the aggregate principal
balance of, and all accrued and unpaid interest on, all Loans (including all interest which
accrues after the commencement of any case or proceeding in bankruptcy after the insolvency of, or
for the reorganization of, Holdings or any of its Subsidiaries, whether or not allowed in such case
or proceeding); (b) all Reimbursement Obligations and all other Letter of Credit Liabilities; and
(c) all other indebtedness, amounts, liabilities, obligations, covenants and duties of the MG
Borrower and the other Loan Parties owing to the Agent, the Issuing Bank or any Lender of every
kind, nature and description, under or in respect of this Agreement or any of the other Loan
Documents, including, without limitation, the Fees and indemnification obligations, whether direct
or indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any promissory note.

“OFAC” means U.S. Department of the Treasury’s Office of Foreign Assets Control and
any successor Governmental Authority.

“Operating Expenses” means, with respect to the Florida Property for any period, the
actual costs and expenses of owning, operating, managing, and maintaining the Florida Property
during such period, determined on an accrual basis, excluding (i) depreciation or amortization or
other noncash items, (ii) the principal of and interest on indebtedness for borrowed money, (iii)
income taxes or other taxes in the nature of income taxes, (iv) distributions to the shareholders
of the Florida Borrower, (v) capital expenditures, payments (without duplication) for FF&E or into
FF&E reserves and (vi) management fees actually paid or payable during such period.

“Operating Income” means, with respect to the Florida Property for any period, all
income received from any Person during such period in connection with the ownership or operation of
the Florida Property, determined on an accrual basis, and including the following:

(i) Gross Hotel Revenues;

(ii) all amounts payable pursuant to any reciprocal easement and/or operating agreements,
covenants, conditions and restrictions, condominium documents and similar agreements affecting the
Florida Property, but specifically excluding any management agreement; and

 

19

 

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

“Operational Covenants” means covenants contained in any agreement relating to
indebtedness that impose requirements or limitations on (i) the operation of the business of
Holdings and its Subsidiaries, including the consummation of acquisitions, investments and
dispositions or (ii) the incurrence, payment or modification of obligations to third parties,
including indebtedness, contingent obligations, liens and restricted payments; provided, however,
Operational Covenants shall not include any interest, premium, fee or indemnification obligations,
registration rights, trustee matters or securities law obligations that relate solely to the terms
of such indebtedness.

“Outperformance Award Program (2011)” means that certain executive long-term incentive
plan providing participants with the right, among other things, to receive a participating
percentage in an outperformance pool, as further described in that certain report on Form 8-K filed
by Holdings on March 24, 2011, as in effect on the Effective Date.

“Participant” has the meaning given that term in Section 13.5.(d).

“PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.

“Permitted Acquisition” means any acquisition by the MG Borrower or a Wholly Owned
Subsidiary of all the outstanding Equity Interests (other than directors’ qualifying shares) in,
all or substantially all the assets of, or all or substantially all the assets constituting a
division or line of business of, a Person if (a) no Default or Event of Default has occurred and is
continuing or would result therefrom, (b) such acquisition and all transactions related thereto are
consummated in accordance with Applicable Laws, (c) Holdings is in compliance, on a Pro Forma Basis
after giving effect to such acquisition as of the last day of the most-recently ended fiscal
quarter of Holdings, with the covenant contained in Section 10.11., (d) the business of
such Person or such assets, as the case may be, constitutes a business permitted by Section
10.3.(b), and (e) the MG Borrower has delivered to the Agent a certificate of a Financial
Officer to the effect set forth in clauses (a), (b), (c), and (d) above, together with all relevant
financial information for the Person or assets to be acquired and setting forth reasonably detailed
calculations demonstrating compliance with clause (c) above (which calculations shall, if made as
of the last day of any fiscal quarter of Holdings for which the MG Borrower has not delivered to
the Agent the financial statements and certificate of a Financial Officer required to be
periodically delivered by Sections 9.1. and 9.2. and Section 9.3.(a),
respectively, be accompanied by a reasonably detailed calculation of Consolidated EBITDA and
Consolidated Fixed Charges for the relevant period).

“Permitted Amendment” has the meaning given that term in Section 13.6.(d).

 

20

 

“Permitted Investments” means (a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of
acquisition thereof; (b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s; (c) investments in certificates of deposit, banker’s
acceptances and time or demand deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered
by, any domestic office of any commercial bank organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus and undivided profits of not
less than $500,000,000; (d) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a financial institution
satisfying the criteria described in clause (c) above; and (e) investments in “money market funds”
within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially
all of whose assets are invested in investments of the type described in clauses (a) through (d)
above.

“Permitted Investors” means OTK Associates, David T. Hamamoto and Yucaipa.

“Permitted Liens” means (a) Liens imposed by law for taxes, assessments or other
governmental charges that are not yet due or are being contested in compliance with Section
8.5.; (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlords’ and
other like Liens imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in compliance with
Section 8.5.; (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social security laws or
regulations; (d) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in
each case in the ordinary course of business; (e) judgment liens in respect of judgments that do
not constitute an Event of Default under Section 11.1.(k); (f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in
the ordinary course of business that do not secure any monetary obligations and do not materially
detract from the value of the Florida Property or interfere with the ordinary conduct of business
of the MG Borrower or any Subsidiary; (g) Liens arising from Permitted Investments described in
clause (d) of the definition of the term “Permitted Investments”; and (h) any cash
collateral or other credit support provided to the Agent or the Issuing Bank in respect of a
Defaulting Lender pursuant to Section 11.5. or Section 3.12.

“Person” means an individual, corporation, partnership, limited liability company,
association, trust or unincorporated organization, or a government or any agency or political
subdivision thereof.

“Plan” means at any time an employee pension benefit plan (other than a Multiemployer
Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and either (a) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the ERISA Group or (b) has at any time
within the preceding five years been maintained, or contributed to, by any Person which was at such
time a member of the ERISA Group for employees of any Person which was at such time a member of the
ERISA Group.

 

21

 

“Platform” has the meaning given that term in Section 9.5.(a).

“Pledge Agreement” means the Pledge Agreement executed by the MG Borrower in favor of
the Agent for the benefit of the Lenders, substantially in the form of Exhibit P or
otherwise in form and substance satisfactory to the Agent.

“Post-Default Rate” means a rate per annum equal to the Base Rate as in effect from
time to time plus the Applicable Margin for Base Rate Loans plus three percent
(3.0%).

“Preferred Dividends” means, for any period and without duplication, all Restricted
Payments paid during such period on Preferred Equity Interests issued by Holdings, the MG Borrower
or a Subsidiary. Preferred Dividends shall not include dividends or distributions (a) to the
extent paid solely in Equity Interests payable to holders of such class of Equity Interests; (b)
paid or payable to Holdings, the MG Borrower or a Subsidiary; or (c) constituting or resulting in
the redemption or repurchase of Preferred Equity Interests, other than scheduled redemptions not
constituting balloon, bullet or similar redemptions in full. Payments made with respect to the
Trust Preferred Securities (other than repurchases pursuant to Section 10.4.(n)) will be
considered Preferred Dividends.

“Preferred Equity Interest” means, with respect to any Person, Equity Interests in
such Person which are entitled to preference or priority over any other Equity Interest in such
Person in respect of the payment of dividends or distribution of assets upon liquidation or both,
and in the case of the MG Borrower, shall include the Trust Preferred Securities. Preferred Equity
Interests include Equity Interests in the form of preferred stock, trust preferred securities and
other similar securities with regularly scheduled cash or payment-in-kind dividend payments and
other “debt-like” characteristics, but do not include customary real estate joint venture and other
similar equity ownership arrangements, even if such arrangements involve some disproportionate
sharing of cash flows of the applicable entity.

“Preferred Stock” means Preferred Equity Interests of Holdings, the MG Borrower or any
Subsidiary (other than the Florida Borrower or any of its Subsidiaries) other than Disqualified
Preferred Stock and common stock (and equivalent interests in a limited liability company or
partnership).

“Prime Rate” means the rate of interest per annum announced publicly by the Lender
then acting as the Agent as its prime rate from time to time. The Prime Rate is not necessarily
the best or the lowest rate of interest offered by the Lender acting as the Agent or any other
Lender.

“Principal Office” means the address of the Agent specified in Section 13.1.,
or any subsequent office which the Agent shall have specified by written notice to the MG Borrower
and Lenders as the Principal Office referred to herein, to which payments due are to be made and at
which Loans will be disbursed and Letters of Credit requested.

 

22

 

“Pro Forma Basis” means, with respect to the calculation of the financial covenant
contained in Section 10.11. as of any date, that such calculation shall give pro forma
effect to all acquisitions and other investments, all issuances, incurrences or assumptions of
Indebtedness in connection therewith (with any such Indebtedness being deemed to be amortized
during the applicable testing period in accordance with its terms) and all sales, transfers or
other dispositions of any material assets outside the ordinary course of business (including all
permanent repayments of Indebtedness associated with such transfer or disposition) that have
occurred during the four consecutive fiscal quarter period of the MG Borrower most-recently ended
on or prior to such date as if they occurred on the first day of such four consecutive fiscal
quarter period (including cost savings to the extent such cost savings would be permitted to be
reflected in pro forma financial information complying with the requirements of GAAP and
Article XI of Regulation S-X under the Securities Act, as interpreted by the Staff of the
SEC, and as certified by a Financial Officer).

“Property” means any parcel of real property owned or leased (in whole or in part) or
operated by the MG Borrower or any Subsidiary.

“Property Debt” has the meaning specified in Section 11.1.

“Property Management Agreement” means, collectively, all agreements entered into by a
Loan Party pursuant to which such Loan Party engages a Person to advise it with respect to the
management of the Florida Property.

“Property Management Contract Assignment” means an Assignment of Management Agreement
and Subordination of Management Fees executed by a Loan Party in favor of the Agent for the benefit
of the Lenders substantially in the form of Exhibit O or otherwise in form and substance
reasonably satisfactory to the Agent. Such document may, at the Agent’s election, constitute a
subordination of the relevant Property Management Agreement, rather than an assignment thereof.

“Receipt” has the meaning given that term in Section 3.4.

“Register” has the meaning given that term in Section 13.5.(c).

“Regulatory Change” means, with respect to any Lender, any change effective after the
Agreement Date in Applicable Law (including without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks, including such Lender, of or
under any Applicable Law (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) by any Governmental Authority or monetary authority charged
with the interpretation or administration thereof or compliance by any Lender with any request or
directive regarding capital adequacy. For purposes of this Agreement, (x) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, regulations, publications,
orders, guidelines and directives thereunder or issued in connection therewith and (y) all
requests, rules, guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar authority) or the United
States or foreign regulatory authorities, in each case, shall be deemed to have been adopted and
gone into effect after the Agreement Date regardless of when adopted, enacted or issued.

 

23

 

“Reimbursement Obligation” means the absolute, unconditional and irrevocable
obligation of the MG Borrower to reimburse the Issuing Bank for any drawing honored by the Issuing
Bank under a Letter of Credit.

“Requisite Lenders” means, as of any date, Lenders having more than 50.0% of the
aggregate amount of the Commitments (not held by Defaulting Lenders, who are not entitled to vote),
or, if the Commitments have been terminated or reduced to zero, Lenders holding more than 50.0% of
the principal amount of the aggregate outstanding Loans and Letter of Credit Liabilities (not held
by Defaulting Lenders, who are not entitled to vote). Commitments, Loans and Letter of Credit
Liabilities held by Defaulting Lenders shall be disregarded when determining the Requisite Lenders.
For purposes of this definition, a Lender shall be deemed to hold a Letter of Credit Liability to
the extent such Lender has acquired a participation therein under the terms of this Agreement and
has not failed to perform its obligations in respect of such participation.

“Restricted Payment” means (i) any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in Holdings, the MG Borrower or
any Subsidiary, (ii) 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 Equity Interests in Holdings, the MG Borrower or any Subsidiary
or any option, warrant or other right to acquire any such Equity Interests in Holdings, the MG
Borrower or any Subsidiary, or any other payment (including any payment under any Swap Agreement)
that has a substantially similar effect to any of the foregoing or (iii) any unscheduled dividend,
payment, redemption, repurchase, retirement, cancellation or termination of the Convertible Notes
or Trust Preferred Securities.

“Restricted Payment Cap Amount” means at any date of determination, the sum of (a)
$25,000,000 plus (b) an amount equal to 50% of Free Cash Flow for each fiscal quarter of the MG
Borrower beginning with the fiscal quarter ended June 30, 2011 plus (c) the aggregate net proceeds
of new Equity Interests issuances in Holdings after the Effective Date.

“Sanctioned Entity” means (a) an agency of the government of, (b) an organization
directly or indirectly controlled by, or (c) a Person resident in, in each case, a country that is
subject to a sanctions program identified on the list maintained by the OFAC and published from
time to time, as such program may be applicable to such agency, organization or Person.

“Sanctioned Person” means a Person named on the list of Specially Designated Nationals
or Blocked Persons maintained by the OFAC as published from time to time.

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

“Securities Act” means the Securities Act of 1933, as amended from time to time,
together with all rules and regulations issued thereunder.

 

24

 

“Security Agreement” means the Security Agreement executed by the Florida Borrower in
favor of the Agent for the benefit of the Lenders, substantially in the form of Exhibit Q
or otherwise in form and substance satisfactory to the Agent.

“Security Deed” means the mortgage executed by the Florida Borrower in favor of the
Agent for the benefit of the Lenders, substantially in the form of Exhibit K or otherwise
in form and substance satisfactory to the Agent.

“Security Document” means the Security Deed, the Assignment of Leases and Rents, the
Property Management Contract Assignment, the Pledge Agreement, the Security Agreement and any other
security agreement, financing statement, or other document, instrument or agreement creating,
evidencing or perfecting any of the Agent’s Liens in any of the Collateral or any Lien of the
Borrowers in any Collateral that has been collaterally assigned to the Agent for the benefit of the
Lenders under any Security Document.

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

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc., and its successors.

“Stated Amount” means the amount available to be drawn by a beneficiary under a Letter
of Credit from time to time, as such amount may be increased or reduced from time to time in
accordance with the terms of such Letter of Credit.

“Subject Property” has the meaning specified in Section 11.1.

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

“Swap Agreement” means any agreement with respect to any cap, swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions, provided that in no event
shall a Swap Agreement include (i) any phantom stock or other employee benefit plan or agreement on
account of services provided by current or former directors, officers, employees or consultants of
Holdings, the Borrower or the Subsidiaries or (ii) any warrants or options issued by Holdings or
its Subsidiaries.

 

25

 

“Taxes” has the meaning given that term in Section 3.13.

“Termination Date” means July 28, 2014.

“Titled Agents” means the Arranger, any documentation agent, any other Person awarded
a similar honorific title in connection with the Agreement, and their respective successors and
permitted assigns.

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

“Treasury Management Services Agreement” means any agreement for cash management,
controlled disbursement services, or related services including the automatic clearing house
transfer of funds of the account of the MG Borrower or any Subsidiary.

“Trigger Event” has the meaning given that term in Section 3.4.

“Trust Preferred Securities” means (a) the $50,000,000 in trust preferred securities
issued by MHG Capital Trust I, a Subsidiary of the MG Borrower, the proceeds of which were used by
such Subsidiary to acquire the MG Borrower’s Junior Subordinated Notes due October 30, 2036 and (b)
any other trust preferred securities issued by any Subsidiary of the MG Borrower on then applicable
market terms and otherwise substantially similar thereto, the proceeds of which are used to acquire
notes from the MG Borrower that are subordinated to the Loans and other Obligations on terms no
less favorable to the Lenders than the Junior Subordinated Notes referred to in the immediately
preceding clause (a) and none of which securities or notes mature prior to the date 10 years after
the Termination Date and cannot be required to be repurchased, repaid or otherwise retired at the
option of the holders thereof prior to the date 10 years after the Termination Date.

“Type” with respect to any Loan, refers to whether such Loan is a LIBOR Loan or Base
Rate Loan.

“Unconsolidated Affiliate” means, with respect to any Person, any other Person in whom
such Person holds an investment, which investment is accounted for in the financial statements of
such Person on an equity basis of accounting and whose financial results would not be consolidated
under GAAP with the financial results of such Person on the consolidated financial statements of
such Person.

“Unfunded Liabilities” means, with respect to any Plan at any time, the amount (if
any) by which (a) the value of all benefit liabilities under such Plan, determined on a plan
termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds (b) the fair market value of all Plan assets allocable to such liabilities under
Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV
of ERISA.

 

26

 

“Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which all of
the equity securities or other ownership interests (other than, in the case of a corporation,
directors’ qualifying shares) are at the time directly or indirectly owned or controlled by such
Person or one or more other Subsidiaries of such Person or by such Person and one or more other
Subsidiaries of such Person.

Section 1.2 General; References to Times. References in this Agreement to “Sections”, “Articles”, “Exhibits”, “Schedules” and
“Annexes” are to sections, articles, exhibits, schedules and annexes herein and hereto unless
otherwise indicated. References in this Agreement to any document, instrument or agreement (a)
shall include all exhibits, schedules and other attachments thereto, (b) shall include all
documents, instruments or agreements issued or executed in replacement thereof, to the extent
permitted hereby and (c) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, supplemented, restated or otherwise modified as of the date of
this Agreement and from time to time thereafter to the extent not prohibited hereby and in effect
at any given time. Wherever from the context it appears appropriate, each term stated in either
the singular or plural shall include the singular and plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, the feminine and the neuter. Unless
explicitly set forth to the contrary, a reference to “Subsidiary” means a Subsidiary of the
MG Borrower or a Subsidiary of such Subsidiary and a reference to an “Affiliate” means a
reference to an Affiliate of Holdings. Titles and captions of Articles, Sections, subsections and
clauses in this Agreement are for convenience only, and neither limit nor amplify the provisions of
this Agreement. Unless otherwise indicated, all references to time are references to New York, New
York time.

Section 1.3 GAAP. Unless otherwise indicated, all accounting terms, ratios and measurements shall be
interpreted or determined in accordance with GAAP as in effect from time to time; provided
that, (i) all computations and all definitions (including accounting terms) used in determining
compliance with Section 10.11. and (ii) the definition of “Capital Lease Obligations”, in
each case, shall utilize GAAP and policies in conformity with those used to prepare the audited
financial statements of Holdings and its Subsidiaries referred to in Section 7.1.(k) for
the fiscal year ended December 31, 2010.

Section 1.4 Pro Forma Calculations. With respect to any period during which any transaction described in the definition of Pro
Forma Basis occurs, for purposes of determining compliance with the covenants contained in
Section 10.11., or for purposes of determining the Consolidated EBITDA, Consolidated Fixed
Charges or Consolidated Interest Expense, calculations with respect to such period shall be made on
a Pro Forma Basis.

 

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Section 1.5 Florida Borrower Representative. The Florida Borrower hereby appoints the MG Borrower to act as the Florida Borrower’s
exclusive agent for all purposes under this Agreement and the other Loan Documents
(including, without limitation, with respect to all matters related to the borrowing,
repayment and administration of Loans as described in Articles II. and III.). The
Florida Borrower acknowledges and agrees that (a) the MG Borrower may execute such documents on
behalf of the Florida Borrower as the MG Borrower deems appropriate in its sole discretion and the
Florida Borrower shall be bound by and obligated by all of the terms of any such document executed
by the MG Borrower on behalf of the Florida Borrower, (b) any notice or other communication
delivered by the Agent or any Lender hereunder to the MG Borrower shall be deemed to have been
delivered to the Florida Borrower and (c) the Agent and each of the Lenders shall accept (and shall
be permitted to rely on) any document or agreement executed by the MG Borrower on behalf of the
Florida Borrower. The Florida Borrower must act through the MG Borrower for all purposes under this
Agreement and the other Loan Documents. Notwithstanding anything contained herein to the contrary,
to the extent any provision in this Agreement requires the Florida Borrower to interact in any
manner with the Agent or the Lenders, the Florida Borrower shall do so through the MG Borrower.

Section 1.6 Joint and Several Obligations. EACH OF THE BORROWERS SHALL BE JOINTLY AND SEVERALLY OBLIGATED IN RESPECT OF THE
OBLIGATIONS OF THE OTHER BORROWER, AND ACCORDINGLY, THE BORROWERS CONFIRM THAT EACH BORROWER IS
LIABLE FOR THE FULL AMOUNT OF THE “OBLIGATIONS” AND ALL OF THE OTHER OBLIGATIONS AND LIABILITIES OF
THE BORROWERS HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS.

ARTICLE II

Credit Facility

Section 2.1 Loans.

(a) Generally.

(i) Loans to the Borrowers. Subject to the terms and conditions hereof,
including without limitation, Section 2.11., during the period from the Effective
Date to but excluding the Termination Date, each Lender severally and not jointly agrees to
make Loans to the Borrowers in an aggregate principal amount at any one time outstanding up
to, but not exceeding, the lesser of (x) the amount of such Lender’s Commitment and (y) such
Lender’s Commitment Percentage of the Borrowing Base.

(ii) Revolving Nature of Loans. Subject to the terms and conditions of this
Agreement, during the period from the Effective Date to but excluding the Termination Date,
the Borrowers may borrow, repay and reborrow Loans hereunder.

(b) Requesting Loans. The MG Borrower shall give the Agent notice pursuant to a
Notice of Borrowing or telephonic notice of each borrowing of Loans. Each Notice of Borrowing
shall be delivered to the Agent before 11:00 a.m. (i) in the case of LIBOR Loans,
on the date three Business Days prior to the proposed date of such borrowing and (ii) in the
case of Base Rate Loans, on the date one Business Day prior to the proposed date of such borrowing.
Any such telephonic notice shall include all information to be specified in a written Notice of
Borrowing and shall be promptly confirmed in writing by the MG Borrower pursuant to a Notice of
Borrowing sent to the Agent by telecopy on the same day of the giving of such telephonic notice.
The Agent will provide notice of the Notice of Borrowing (or the information contained in such
Notice of Borrowing) to each Lender promptly upon receipt by the Agent. Each Notice of Borrowing
or telephonic notice of each borrowing shall be irrevocable once given and binding on the
Borrowers.

 

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(c) Disbursements of Loan Proceeds. No later than 1:00 p.m. on the date specified in
the Notice of Borrowing, each Lender will make available for the account of its applicable Lending
Office to the Agent at the Principal Office, in immediately available funds, the proceeds of the
Loan to be made by such Lender. Unless the Agent shall have been notified by any Lender prior to
the specified date of borrowing that such Lender does not intend to make available to the Agent the
Loan to be made by such Lender on such date, the Agent may assume that such Lender will make the
proceeds of such Loan available to the Agent on the date of the requested borrowing as set forth in
the Notice of Borrowing and the Agent may (but shall not be obligated to), in reliance upon such
assumption, make available to the Borrowers the amount of such Loan to be provided by such Lender.
Subject to satisfaction of the applicable conditions set forth in Article VI. for such
borrowing, the Agent will make the proceeds of such borrowing available to the Borrowers no later
than 3:00 p.m. on the date and at the account specified by the MG Borrower in such Notice of
Borrowing.

Section 2.2 Letters of Credit.

(a) Letters of Credit. Subject to the terms and conditions of this Agreement,
including without limitation Section 2.11, the Issuing Bank, on behalf of the Lenders,
agrees to issue for the account of the Borrowers during the period from and including the Effective
Date to, but excluding, the date 30 days prior to the Termination Date one or more letters of
credit (each a “Letter of Credit”) up to a maximum aggregate Stated Amount at any one time
outstanding not to exceed the L/C Commitment Amount.

(b) Terms of Letters of Credit. At the time of issuance, the amount, form, terms and
conditions of each Letter of Credit, and of any drafts or acceptances thereunder, shall be subject
to approval by the Issuing Bank and the MG Borrower. Notwithstanding the foregoing, in no event
may the expiration date of any Letter of Credit extend beyond the earlier of (i) the date one year
from its date of issuance or (ii) the date that is 5 days prior to the Termination Date;
provided, however, a Letter of Credit may (i) contain a provision providing for the
automatic extension of the expiration date in the absence of a notice of non-renewal from the
Issuing Bank and (ii) contain an expiration date beyond the Termination Event provided that at the
time of issuance or extension of such Letter of Credit, the MG Borrower shall have posted with the
Issuing Bank Cash Collateral in an amount equal to 100% of the Fronting Exposure of the Issuing
Bank with respect to such Letter of Credit.

(c) Requests for Issuance of Letters of Credit. The MG Borrower shall give the Agent
written notice of a letter of credit request in the form of Exhibit H attached hereto at
least five Business Days prior to the requested date of issuance of a Letter of Credit, such notice
to describe in reasonable detail the proposed terms of such Letter of Credit and the nature of the
transactions or obligations proposed to be supported by such Letter of Credit, and in any event
shall set forth with respect to such Letter of Credit the proposed (i) Stated Amount, (ii)
beneficiary, and (iii) expiration date. Provided the MG Borrower has given the notice prescribed by
the first sentence of this subsection and subject to the other terms and conditions of this
Agreement, including the satisfaction of any applicable conditions precedent set forth in
Article VI. and delivery to the Issuing Bank of all items required to be delivered in
connection with the issuance of such Letter of Credit, the Issuing Bank shall issue the requested
Letter of Credit on the requested date

 

29

 

of
issuance for the benefit of the stipulated beneficiary. The Issuing Bank shall not at any time be obligated to issue any Letter of Credit if such issuance
would conflict with, or cause the Issuing Bank or any Lender to exceed any limits imposed by, any
Applicable Law. In addition, the Issuing Bank shall not at any time be obligated to issue any
Letter of Credit if any Lender is then in default of its obligations to fund under Section
2.2.(e) or Section 2.2.(j) or is otherwise a Defaulting Lender, unless the Issuing Bank
shall no longer have Fronting Exposure as a result of the operation of Sections 3.12. and
11.5., as applicable. References herein to “issue” and derivations thereof with respect to
Letters of Credit shall also include extensions or modifications of any outstanding Letters of
Credit, unless the context otherwise requires. Upon the written request of the MG Borrower, the
Issuing Bank shall deliver to the MG Borrower a copy of each issued Letter of Credit within a
reasonable time after the date of issuance thereof. To the extent any term of a Letter of Credit
Document is inconsistent with a term of any Loan Document, the term of such Loan Document shall
control.

(d) Reimbursement Obligations. Upon receipt by the Issuing Bank from the beneficiary
of a Letter of Credit of any demand for payment under such Letter of Credit, the Issuing Bank shall
promptly notify the MG Borrower of the amount to be paid by the Issuing Bank as a result of such
demand and the date on which payment is to be made by the Issuing Bank to such beneficiary in
respect of such demand; provided, however, the Issuing Bank’s failure to give, or
delay in giving, such notice shall not discharge the Borrowers in any respect from the applicable
Reimbursement Obligation. The Borrowers hereby unconditionally and irrevocably agree to pay and
reimburse the Issuing Bank for the amount of each demand for payment under such Letter of Credit on
or prior to the date on which payment is to be made by the Issuing Bank to the beneficiary
thereunder or otherwise in accordance with the provisions of clause (e) below, without presentment,
demand, protest or other formalities of any kind (other than notice as provided in this
subsection). Upon receipt by the Issuing Bank of any payment in respect of any Reimbursement
Obligation, the Issuing Bank shall promptly pay to each Lender that has acquired a participation
therein under the second sentence of Section 2.2.(i) such Lender’s Commitment Percentage of
such payment.

(e) Manner of Reimbursement. Upon its receipt of a notice referred to in the
immediately preceding subsection (d), the MG Borrower shall advise the Issuing Bank whether or not
the Borrowers intend to borrow hereunder to finance their obligation to reimburse the Issuing Bank
for the amount of the related demand for payment and, if it does, the MG Borrower shall submit a
timely request for such borrowing of Loans as provided in the applicable provisions of this
Agreement. If the MG Borrower fails to so advise the Issuing Bank, or if the
Borrowers fail to reimburse the Issuing Bank for a demand for payment under a Letter of Credit
by the date of such payment, then (i) if the applicable conditions contained in Article VI.
would permit the making of Loans, the Borrowers shall be deemed to have requested a borrowing of
Loans in an amount equal to the unpaid Reimbursement Obligation and the Issuing Bank shall give
each Lender prompt notice of the amount of the Loan to be made available to the Issuing Bank not
later than the applicable time specified in Section 2.2.(j) and (ii) if such conditions
would not permit the making of Loans, the provisions of subsection (j) of this Section shall apply.
The limitations of Section 3.6.(a) shall not apply to any borrowing of Base Rate Loans
under this subsection.

 

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(f) Effect of Letters of Credit on Commitments. Upon the issuance by the Issuing Bank
of any Letter of Credit and until such Letter of Credit shall have expired or been terminated, the
Commitment of each Lender shall be deemed to be utilized for all purposes of this Agreement in an
amount equal to the product of (i) such Lender’s Commitment Percentage and (ii) the sum of (A) the
Stated Amount of such Letter of Credit plus (B) any related Reimbursement Obligations then
outstanding.

(g) Issuing Bank’s Duties Regarding Letters of Credit; Unconditional Nature of
Reimbursement Obligations. In determining whether to pay under any Letter of Credit, the
Issuing Bank shall have no obligation relative to the other Lenders other than to confirm that any
documents required to be delivered under such Letter of Credit appear to have been delivered and
that they appear to substantially comply on their face with the requirements of such Letter of
Credit. The MG Borrower assumes all risks of the acts and omissions of, or misuse of the Letters
of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, neither the Issuing Bank nor any of the Lenders shall be responsible
for, and the Borrowers’ obligations in respect of the Letters of Credit shall not be affected in
any manner by, (i) the form, validity, sufficiency, accuracy, genuineness or legal effects of any
document submitted by any party in connection with the application for and issuance of or any
drawing honored under any Letter of Credit even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign any 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; (iii) failure of the beneficiary of any Letter
of Credit to comply fully with conditions required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by
mail, cable, telex, telecopy or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit, or of the proceeds
thereof; (vii) the misapplication by the beneficiary of the proceeds of any drawing under any
Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Issuing
Bank or the Lenders. None of the above shall affect, impair or prevent the vesting of any of the
Issuing Bank’s or any Lender’s rights or powers hereunder. Any action taken or omitted to be taken
by the Issuing Bank under or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final, non-appealable judgment), shall not create against the Issuing Bank or any
Lender any liability to the Borrowers or any Lender. In this regard, the obligation of the
Borrowers to reimburse

 

31

 

the
Issuing Bank for any drawing made under any Letter of Credit, and to repay a Loan made pursuant to the second sentence of Section 2.2.(e),
shall be absolute, unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement and any other applicable Letter of Credit Document under all circumstances
whatsoever, including without limitation, the following circumstances: (A) any lack of validity or
enforceability of any Letter of Credit Document or any term or provision therein; (B) any amendment
or waiver of or any consent to departure from all or any of the Letter of Credit Documents; (C) the
existence of any claim, setoff, defense or other right which the Borrowers may have at any time
against the Issuing Bank, any Lender, any beneficiary of a Letter of Credit or any other Person,
whether in connection with this Agreement, the transactions contemplated hereby or in the Letter of
Credit Documents or any unrelated transaction; (D) any breach of contract or dispute between the
Borrowers, the Issuing Bank, any Lender or any other Person; (E) any demand, statement or any other
document presented under a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein or made in connection therewith being untrue
or inaccurate in any respect whatsoever; (F) any non-application or misapplication by the
beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of Credit; (G)
payment by the Issuing Bank under any Letter of Credit against presentation of a draft or
certificate which does not strictly comply with the terms of such Letter of Credit; and (H) any
other act, omission to act, delay or circumstance whatsoever that might, but for the provisions of
this Section, constitute a legal or equitable defense to or discharge of the Borrowers’
Reimbursement Obligations. Notwithstanding anything to the contrary contained in this Section or
Section 13.2., but not in limitation of the Borrowers’ unconditional obligation to
reimburse the Issuing Bank for any drawing made under a Letter of Credit as provided in this
Section and to repay a Loan made pursuant to the second sentence of the immediately preceding
subsection (e), the Borrowers shall have no obligation to indemnify the Issuing Bank or any Lender
in respect of any liability incurred by the Issuing Bank or such Lender arising solely out of the
gross negligence or willful misconduct of the Issuing Bank or such Lender in respect of a Letter of
Credit as determined by a court of competent jurisdiction in a final, non-appealable judgment.
Except as otherwise provided in this Section, nothing in this Section shall affect any rights the
Borrowers may have with respect to the gross negligence or willful misconduct of the Issuing Bank
or any Lender with respect to any Letter of Credit.

(h) Amendments, Etc. The issuance by the Issuing Bank of any amendment, supplement or
other modification to any Letter of Credit shall be subject to the same conditions applicable under
this Agreement to the issuance of new Letters of Credit (including, without limitation, that the
request therefor be made through the Issuing Bank), and no such amendment, supplement or other
modification shall be issued unless either (i) the respective Letter of Credit affected thereby
would have complied with such conditions had it originally been issued hereunder in such amended,
supplemented or modified form or (ii) the Requisite Lenders (or all of the Lenders if required by
Section 13.6.) shall have consented thereto. In connection with any such amendment,
supplement or other modification, the Borrowers shall pay the Fees, if any, payable under the last
sentence of Section 3.7.(b).

(i) Lenders’ Participation in Letters of Credit. Immediately upon the issuance by the
Issuing Bank of any Letter of Credit each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation to the extent of such Lender’s Commitment Percentage of the
liability of the Issuing Bank with respect to such Letter of Credit, and each Lender thereby
shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as
surety, and shall be unconditionally obligated to the Issuing Bank to pay and discharge when due,
such Lender’s Commitment Percentage of the Issuing Bank’s liability under such Letter of Credit.
In addition, upon the making of each payment by a Lender to the Issuing Bank in respect of any
Letter of Credit pursuant to the immediately following subsection (j), such Lender shall,
automatically and without any further action on the part of the Issuing Bank or such Lender,
acquire (i) a participation in an amount equal to such payment in the Reimbursement Obligation
owing to the Issuing Bank by the Borrowers in respect of such Letter of Credit and (ii) a
participation in a percentage equal to such Lender’s Commitment Percentage in any interest or other
amounts payable by the Borrowers in respect of such Reimbursement Obligation (other than the Fees
payable to the Issuing Bank pursuant to the third and last sentences of Section 3.7.(b)).

 

32

 

(j) Payment Obligation of Lenders. Each Lender severally agrees to pay to the Issuing
Bank on demand in immediately available funds in Dollars the amount of such Lender’s Commitment
Percentage of each drawing paid by the Issuing Bank under each Letter of Credit to the extent such
amount is not reimbursed by the Borrowers pursuant to Section 2.2.(d); provided,
however, that in respect of any drawing under any Letter of Credit, the maximum amount that
any Lender shall be required to fund, whether as a Loan or as a participation, shall not exceed
such Lender’s Commitment Percentage of such drawing. If the notice referenced in the second
sentence of Section 2.2.(e) is received by a Lender not later than 11:00 a.m., then such
Lender shall make such payment available to the Issuing Bank not later than 2:00 p.m. on the date
of demand therefor; otherwise, such payment shall be made available to the Issuing Bank not later
than 1:00 p.m. on the next succeeding Business Day. Each Lender’s obligation to make such payments
to the Issuing Bank under this subsection, and the Issuing Bank’s right to receive the same, shall
be absolute, irrevocable and unconditional and shall not be affected in any way by any circumstance
whatsoever, including without limitation, (i) the failure of any other Lender to make its payment
under this subsection, (ii) the financial condition of the MG Borrower or any other Loan Party,
(iii) the existence of any Default or Event of Default, including any Event of Default described in
Section 11.1.(h) or 11.1.(i) or (iv) the termination of the Commitments. Each such
payment to the Issuing Bank shall be made without any offset, abatement, withholding or deduction
whatsoever.

(k) Information to Lenders. Promptly after issuance, amendment or payment of a Letter
of Credit, the Issuing Bank shall notify each Lender in writing of such issuance or amendment or
payment and, if so requested by any Lender, the Issuing Bank shall furnish such Lender with a copy
of the issued Letter of Credit or such amendment. Other than as set forth in this subsection, the
Issuing Bank shall have no duty to notify the Lenders regarding the issuance or other matters
regarding Letters of Credit issued hereunder. The failure of the Issuing Bank to perform its
requirements under this subsection shall not relieve any Lender from its obligations under
Section 2.2.(j).

Section 2.3 Rates and Payment of Interest on Loans.

(a) Rates. (i) The MG Borrower and the Florida Borrower, jointly and severally,
promise to pay to the Agent for the account of each Lender interest on the unpaid principal amount
of each Loan made by such Lender, for the period from and including the date of the making of such
Loan to but excluding the date such Loan shall be paid in full, at the following per annum rates:

(A) during such periods as such Loan is a Base Rate Loan, at the Base Rate (as in
effect from time to time) plus the Applicable Margin; and

(B) during such periods as such Loan is a LIBOR Loan, at Adjusted LIBOR for such Loan
for the Interest Period therefor plus the Applicable Margin.

 

33

 

Notwithstanding the foregoing, automatically upon the occurrence and during the continuance of
an Event of Default pursuant to Sections 11.1.(a), (b), (h), (i) or
(j) and at the request of the Requisite Lenders upon the occurrence and during the
continuance of any other Event of Default, the MG Borrower and the Florida Borrower each shall pay
to the Agent for the account of each Lender interest at a rate per annum equal to the rate which is
3% in excess of the rate then borne on the outstanding principal amount of any Loan made by such
Lender to or for the benefit of the MG Borrower or the Florida Borrower, as the case may be, on all
Reimbursement Obligations and on any other amount payable by the MG Borrower or the Florida
Borrower, as applicable, hereunder or under the Notes held by such Lender to or for the account of
such Lender (including without limitation, accrued but unpaid interest to the extent permitted
under Applicable Law), which interest shall be payable from time to time on demand.

(b) Payment of Interest. Accrued and unpaid interest on each Loan shall be payable
(i) in the case of a Base Rate Loan, monthly in arrears on the first day of each calendar month,
(ii) in the case of a LIBOR Loan, in arrears on the last day of each Interest Period therefor, and
(iii) in the case of any Loan, in arrears upon the payment, prepayment or Continuation thereof or
the Conversion of such Loan to a Loan of another Type (but only on the principal amount so paid,
prepaid, Continued or Converted). Interest payable at the Post-Default Rate shall be payable from
time to time on demand. Promptly after the determination of any interest rate provided for herein
or any change therein, the Agent shall give notice thereof to the Lenders to which such interest is
payable and to the MG Borrower. All determinations by the Agent of an interest rate hereunder
shall be conclusive and binding on the Lenders and the Borrowers for all purposes, absent manifest
error.

Section 2.4 Number of Interest Periods. There may be no more than 8 different Interest Periods for LIBOR Loans outstanding at the
same time.

Section 2.5 Repayment of Loans. On the Termination Date, the MG Borrower and the Florida Borrower, jointly and severally,
agree to repay the entire outstanding principal amount of, and all accrued but unpaid interest on,
the Loans.

Section 2.6 Prepayments.

(a) Optional. Subject to Section 5.4., the Borrowers may prepay any Loan
owing by it at any time without premium or penalty. The MG Borrower shall give the Agent at least
one Business Day’s prior written notice of the prepayment of any Loan.

(b) Mandatory. If at any time the aggregate principal amount of all outstanding
Loans plus the aggregate amount of all Letter of Credit Liabilities exceeds the lesser of
(A) the aggregate amount of the Commitments in effect at such time or (B) the Borrowing Base at
such time, then (subject to Section 4.1.) the Borrowers shall within five Business Days
prepay Loans and (after all Loans have been prepaid) Cash Collateralize the Letter of Credit
Liabilities in an aggregate amount equal to such excess.

(c) Application of Prepayments. All payments under the immediately preceding
subsection (b) shall be applied to pay all amounts of principal outstanding on the Loans and any
Reimbursement Obligations pro rata in accordance with Section 3.2. and if any Letters of
Credit are outstanding at such time the remainder, if any, shall be deposited into the Collateral
Account for application to future Reimbursement Obligations. If as a result of this Section any
outstanding LIBOR Loan is prepaid prior to the end of the applicable Interest Period therefor, the
Borrowers shall pay all amounts due under Section 5.4.

 

34

 

Section 2.7 Continuation. So long as no Default or Event of Default shall exist, the MG Borrower may on any Business
Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan or any portion thereof as a
LIBOR Loan by selecting a new Interest Period for such LIBOR Loan. Each new Interest Period
selected under this Section shall commence on the last day of the immediately preceding Interest
Period. Each selection of a new Interest Period shall be made by the MG Borrower giving to the
Agent a Notice of Continuation not later than 11:00 a.m. on the third Business Day prior to the
date of any such Continuation. Such notice by the MG Borrower of a Continuation shall be by
telephone or telecopy, confirmed promptly in writing if by telephone, in the form of a Notice of
Continuation, specifying (a) the proposed date of such Continuation, (b) the LIBOR Loans and
portions thereof subject to such Continuation and (c) the duration of the selected Interest Period,
all of which shall be specified in such manner as is necessary to comply with all limitations on
Loans outstanding hereunder. Each Notice of Continuation shall be irrevocable by and binding on
the Borrowers once given. Promptly after receipt of a Notice of Continuation, the Agent shall
notify each Lender by telecopy, or other similar form of transmission, of the proposed
Continuation. If the MG Borrower shall fail to select in a timely manner a new Interest Period for
any LIBOR Loan in accordance with this Section, or if a Default or Event of Default shall exist,
such Loan will automatically, on the last day of the current Interest Period therefor, Convert into
a Base Rate Loan notwithstanding the first sentence of Section 2.8. or the MG Borrower’s
failure to comply with any of the terms of such Section.

Section 2.8 Conversion. The MG Borrower may on any Business Day, upon the MG Borrower’s giving of a Notice of
Conversion to the Agent, Convert all or a portion of a Loan of one Type into a Loan of another
Type; provided, however, a Base Rate Loan may not be Converted to a LIBOR Loan if a
Default or Event of Default shall exist. Any Conversion of a LIBOR Loan into a Base Rate Loan
shall be made on, and only on, the last day of an Interest Period for such LIBOR Loan and, upon
Conversion of a Base Rate Loan into a LIBOR Loan, the Borrowers shall pay accrued interest to the
date of Conversion on the principal amount so Converted. Each such Notice of Conversion shall be
given not later than 11:00 a.m. on the Business Day prior to the date of any proposed Conversion
into Base Rate Loans and on the third Business Day prior to the date of any proposed Conversion
into LIBOR Loans. Promptly after receipt of a Notice of Conversion, the Agent shall notify each
Lender by telecopy, or other similar form of transmission, of the proposed Conversion. Subject to
the restrictions specified above, each Notice of Conversion shall be by telephone (confirmed
promptly in writing) or telecopy in the form of a Notice of Conversion specifying (a) the requested
date of such Conversion, (b) the Type of Loan to be Converted, (c) the portion of such Type of Loan
to be Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if such Conversion
is into a LIBOR Loan, the requested duration of the Interest Period of such Loan. Each Notice of
Conversion shall be irrevocable by and binding on the Borrowers once given.

Section 2.9 Notes.

(a) Note. The Loans made by each Lender to or for the benefit of the Borrowers shall,
in addition to this Agreement, also be evidenced by a promissory note of the Borrowers
substantially in the form of Exhibit F, payable to such Lender or its registered assigns in
a principal amount equal to the amount of its Commitment as originally in effect and otherwise duly
completed. Each promissory note described in this subsection is referred to as a “Note.”

 

35

 

(b) Records. The date, amount, interest rate, Type and duration of Interest Periods
(if applicable) of each Loan made by each Lender, and each payment made on account of the principal
thereof, shall be recorded by such Lender on its books and such entries shall be binding on the
Borrowers, absent manifest error; provided, however, that the failure of a Lender
to make any such record shall not affect the obligations of the Borrowers under any of the Loan
Documents.

(c) Lost, Stolen, Destroyed or Mutilated Notes. Upon receipt by the MG Borrower of
(i) written notice from a Lender that a Note of such Lender has been lost, stolen, destroyed or
mutilated, and (ii) (A) in the case of loss, theft or destruction, an unsecured agreement of
indemnity from such Lender in form reasonably satisfactory to the Borrowers, or (B) in the case of
mutilation, upon surrender and cancellation of such Note, the Borrowers shall at its own expense
cause to be executed and delivered to such Lender a new Note dated the date of such lost, stolen,
destroyed or mutilated Note.

Section 2.10 Voluntary Reductions of the Commitment. The Borrowers shall have the right to terminate or reduce the aggregate unused amount of
the Commitments (for which purpose use of the Commitments shall be deemed to include the aggregate
amount of Letter of Credit Liabilities) at any time and from time to time without penalty or
premium upon not less than five Business Days’ prior written notice to the Agent of each such
termination or reduction, which notice shall specify the effective date thereof and the amount of
any such reduction and shall (other than in connection with a termination of all Commitments
relating to the anticipated closing of a refinancing or other transaction, the proceeds of which
are to be applied to repay amounts owing hereunder) be irrevocable once given and effective only
upon receipt by the Agent; provided, however, the Borrowers shall compensate the
Lenders (in accordance with Section 5.4.) for any losses attributable to a permitted
revocation of such notice; and provided, further, if the Borrowers seek to reduce
the aggregate amount of all Commitments below $25,000,000, then the Commitments shall all
automatically and permanently be reduced to zero. The Agent will promptly transmit such notice to
each Lender. The Commitments, once terminated or reduced, may not be increased or reinstated
(other than pursuant to Section 2.12.).

Section 2.11 Amount Limitations. Notwithstanding any other term of this Agreement or any other Loan Document, no Lender
shall be required to make a Loan, the Issuing Bank shall not be required to issue a Letter of
Credit and no reduction of the Commitments pursuant to Section 2.10. shall take effect, if
immediately after the making of such Loan, the issuance of such Letter of Credit or such reduction
in the Commitments, the aggregate principal amount of all outstanding Loans, together with the
aggregate amount of all Letter of Credit Liabilities, would exceed the lesser of (i) the aggregate
amount of the Commitments at such time and (ii) the Borrowing Base at such time.

 

36

 

Section 2.12 Incremental Commitments. (a) The MG Borrower shall have the right, in consultation and coordination with the Agent
as to all of the matters set forth below in this Section 2.12., but without requiring the
consent of the Agent or the Lenders (except, in either case, as otherwise provided in this
Section 2.12.), to request at any time and from time to time after the Effective Date and
prior to the day immediately preceding the second anniversary of the Effective Date that one or
more Lenders (and/or one or more other Persons which are Eligible Assignees and which will become
Lenders) provide Incremental Commitments and, subject to the applicable terms and conditions
contained in this Agreement and the relevant Incremental Commitment Agreement, make Loans and
participate in Letters of Credit pursuant thereto; provided that (i) no Lender shall be
obligated to provide an Incremental Commitment, and until such time, if any, as such Lender has
agreed in its sole discretion to provide an Incremental Commitment and executed and delivered to
the Agent and the Borrowers an Incremental Commitment Agreement as provided in clause (b) of this
Section 2.12., such Lender shall not be obligated to fund any Loans in excess of its
Commitment (if any) or participate in any Letters of Credit, in each case, as in effect prior to
giving effect to such Incremental Commitment provided pursuant to this Section 2.12.;
provided, that the Lenders shall have at least 10 Business Days following the MG Borrower’s
request for Incremental Commitments to decide whether or not to provide any such Incremental
Commitments (and, to the extent that any Lender fails to respond within such 10 Business Day
period, such Lender shall be deemed to have rejected to provide an Incremental Commitment),
(ii) any Lender (including any Person which is an Eligible Assignee who will become a Lender) may
so provide an Incremental Commitment without the consent of the Agent or any other Lender;
provided that (x) any Person that is not a Lender prior to the effectiveness of its
Incremental Commitment shall require the consent of the Agent (which consent shall not be
unreasonably withheld) to provide an Incremental Commitment pursuant to this Section 2.12.,
(iii) the aggregate amount of each request (and provision therefor) for Incremental Commitments
shall be in a minimum aggregate amount for all Lenders which provide an Incremental Commitment
pursuant to a given Incremental Commitment Agreement pursuant to this Section 2.12.
(including Persons who are Eligible Assignees and will become Lenders) of at least $5,000,000 (or
such lesser amount that is acceptable to the Agent), (iv) the aggregate amount of all Incremental
Commitments permitted to be provided pursuant to this Section 2.12. shall not exceed in the
aggregate $10,000,000, (v) the MG Borrower shall not increase the Commitment pursuant to this
Section 2.12. more than two times, (vi) the Applicable Margins, Termination Date and all
other terms of the Loans to be incurred pursuant to an Incremental Commitment shall the same in all
respects as those applicable to any other Loans, (vii) all Loans incurred pursuant to an
Incremental Commitment (and all interest, fees and other amounts payable thereon) shall be
Obligations under this Agreement and the other applicable Loan Documents and shall be secured by
the relevant Security Documents, and guaranteed under the Guaranty, on a pari passu basis will all
other Loans (and related Obligations) secured by each relevant Security Document and guaranteed
under the Guaranty, and (viii) each Lender (including any Person which is an Eligible Assignee who
will become a Lender) agreeing to provide an Incremental Commitment pursuant to an Incremental
Commitment Agreement shall, subject to the satisfaction of the relevant conditions set forth in
this Agreement, participate in Letters of Credit pursuant to Sections 2.2(j) and make
Loans as provided in Section 2.1 and such Loans shall constitute Loans for all purposes of
this Agreement and the other applicable Loan Documents.

 

37

 

(b) At the time of the provision of Incremental Commitments pursuant to this Section
2.12., (I) the Borrowers, each Guarantor and the Agent and each such Lender or other Eligible
Assignee which agrees to provide an Incremental Commitment (each, an “Incremental Lender”)
shall execute and deliver to the MG Borrower and the Agent an Incremental Commitment Agreement,
appropriately completed (with the effectiveness of the Incremental Commitment provided therein to
occur on the date set forth in such Incremental Commitment Agreement, which date in any event
shall be no earlier than the date on which (i) all fees required to be paid in connection
therewith at the time of such effectiveness shall have been paid, (ii) all Incremental Commitment
Requirements have been satisfied, (iii) all conditions set forth in this Section 2.12.
shall have been satisfied and (iv) all other conditions precedent that may be set forth in such
Incremental Commitment Agreement shall have been satisfied) and (II) the Borrowers, each
Guarantor, the Agent and each Incremental Lender (as and if applicable) shall execute and deliver
to the Agent such additional Security Documents and/or amendments to the Security Documents which
are necessary to ensure that all Loans incurred pursuant to the Incremental Commitments are
secured by each relevant Security Document (the “Incremental Security Documents”). The
Agent shall promptly notify each Lender as to the effectiveness of each Incremental Commitment
Agreement and, at such time, Schedule 2.1 shall be deemed modified to reflect the
Incremental Commitments of such Incremental Lenders.

(c) It is understood and agreed that the Incremental Commitments provided by an Incremental
Lender or Incremental Lenders, as the case may be, pursuant to each Incremental Commitment
Agreement shall constitute part of, and be added to, the Commitments and each Incremental Lender
shall constitute a Lender for all purposes of this Agreement and each other Loan Document.

(d) At the time of any provision of Incremental Commitments pursuant to this Section
2.12., the Borrowers shall, in coordination with and if requested by the Agent, repay
outstanding Loans of certain of the Lenders (notwithstanding the provisions of Section
3.2.), and incur additional Loans from certain other Lenders (including the Incremental
Lenders), in each case to the extent necessary so that all of the Lenders participate in each
outstanding borrowing of Loans pro rata on the basis of their respective
Commitments (after giving effect to any increase in the Commitments pursuant to this Section
2.12.) and with the Borrowers being obligated to pay to the respective Lenders any costs of
the type referred to in Section 5.4 in connection with any such repayment and/or
borrowing.

ARTICLE III

Payments, Fees and Other General Provisions

Section 3.1 Payments. Except to the extent otherwise provided herein, all payments of principal, interest and
other amounts to be made by the Borrowers under this Agreement or any other Loan Document shall be
made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the
Agent at its Principal Office, not later than 2:00 p.m. on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed to have been made
on the next succeeding Business Day). Subject to Section 11.4., the MG Borrower may, at
the time of making each payment under this Agreement or any Note, specify to the Agent the amounts
payable by the Borrowers hereunder to which such payment is to be applied. Each payment received
by the Agent for the account of a Lender under this Agreement or any Note shall be paid promptly to
such Lender at the applicable Lending Office of such Lender. If the Agent fails to pay such amount
to a Lender as provided in the previous sentence, the Agent shall pay interest on such amount until
paid at a rate per annum equal to the Federal Funds Rate from time to time in effect. If the due
date of any payment under this Agreement or any other Loan Document would otherwise fall on a day
which is not a Business Day such date shall be extended to the next succeeding Business Day and
interest shall be payable for the period of such extension.

 

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Section 3.2 Pro Rata Treatment. Except to the extent otherwise provided herein: (a) each borrowing from the Lenders under
Section 2.1.(a) and 2.2.(e) shall be made from the Lenders, each payment of the
Fees under Section 3.7.(a) and the first sentence of Section 3.7.(b) shall be made
for the account of the Lenders, and each termination or reduction of the amount of the Commitments
under Section 2.10. shall be applied to the respective Commitments of the Lenders, pro rata
according to the amounts of their respective Commitments; (b) each payment or prepayment of
principal of
Loans by the Borrowers shall be made for the account of the Lenders pro rata in accordance
with the respective unpaid principal amounts of the Loans held by them and owing by the Borrowers,
provided that if immediately prior to giving effect to any such payment in respect of any
Loans the outstanding principal amount of the Loans shall not be held by the Lenders pro rata in
accordance with their respective Commitments in effect at the time such Loans were made, then such
payment shall be applied to the Loans in such manner as shall result, as nearly as is practicable,
in the outstanding principal amount of the Loans being held by the Lenders pro rata in accordance
with their respective Commitments; (c) each payment of interest on Loans by the Borrowers shall be
made for the account of the Lenders pro rata in accordance with the amounts of interest on such
Loans then due and payable to the respective Lenders; (d) the making, Conversion and Continuation
of Loans of a particular Type (other than Conversions provided for by Section 5.5.) shall
be made pro rata among the Lenders according to the amounts of their respective Commitments (in the
case of making of Loans) or their respective Loans (in the case of Conversions and Continuations of
Loans) and the then current Interest Period for each Lender’s portion of each Loan of such Type
shall be coterminous; and (e) the Lenders’ participation in, and payment obligations in respect of,
Letters of Credit under Section 2.2., shall be pro rata in accordance with their respective
Commitments.

Section 3.3 Sharing of Payments, Etc. If a Lender shall obtain payment of any principal of, or interest on, any Loan, or shall
obtain payment on any other Obligation owing by the MG Borrower or any other Loan Party through the
exercise of any right of set-off, banker’s lien or counterclaim or similar right or otherwise or
through voluntary prepayments directly to a Lender or other payments made by a Loan Party to a
Lender not in accordance with the terms of this Agreement and such payment should be distributed to
the Lenders pro rata in accordance with Section 3.2. or Section 11.4., as
applicable, such Lender shall promptly purchase from the other Lenders participations in (or, if
and to the extent specified by such Lender, direct interests in) the Loans made by the other
Lenders or other Obligations owed to such other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the Lenders shall share
the benefit of such payment (net of any reasonable expenses which may be incurred by such Lender in
obtaining or preserving such benefit) pro rata in accordance with Section 3.2. or
Section 11.4., as applicable. To such end, all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise) if such payment is
rescinded or must otherwise be restored. Each of the Borrowers agrees that any Lender so
purchasing a participation (or direct interest) in the Loans or other Obligations owed by such
Borrower to such other Lenders may exercise all rights of set-off, banker’s lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender were a direct holder
of Loans in the amount of such participation. Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or obligation of the
Borrowers, and the provisions of this Section 3.3. shall not be construed to apply to any
cash collateral or other credit support provided to the Agent in respect of a Defaulting Lender
pursuant to Section 11.5. or Section 3.12.

 

39

 

Section 3.4 Lockbox Account. Upon the occurrence and during the continuance of (x) an Event of Default (provided, that in
the case of an Event of Default due to a failure to comply with Section 10.11 hereof, such
Event of Default shall cease to continue for purposes of this Section 3.4 if, after the
occurrence of such Event of Default, the Loan Parties are in compliance with Section 10.11
for two consecutive fiscal quarters and no other Events of Default have occurred) or (y) any event
set forth in Section 2.6(b) (each of (x) or (y), a “Trigger Event”), all cash
produced by, and all other cash proceeds (including, without limitation, cash proceeds produced
from the operation) of, the Florida Property received by Holdings, the MG Borrower, any
Subsidiaries, the Management Company or any agent or successor of any of the foregoing
(collectively, “Receipts”) shall be managed as provided in this Section 3.4.;
provided, that fee and reimbursement payments under the Delano Management Agreement
received by the Management Company shall not be deemed to be Receipts for purposes of this
Section 3.4.

(a) From and after the Effective Date, a non-interest bearing deposit account shall be
maintained with the Agent by the Florida Borrower at the Florida Borrower’s expense (the
“Lockbox Account”). Upon the occurrence and during the continuance of a Trigger Event,
each of Holdings and the MG Borrower shall, and shall cause the Florida Borrower and each other
Subsidiary, the Management Company and any agent or successor of any of the foregoing to, ensure
that all Receipts are either (x) paid directly into the Lockbox Account or (y) within one (1)
Business Day after receipt by Holdings, the MG Borrower, the Florida Borrower and each other
Subsidiary, the Management Company or any other manager or agent of any of the foregoing, deposited
into the Lockbox Account, in each case in accordance with procedures and arrangements acceptable to
the Agent and subject only to such changes as may be approved in advance by the Agent.

(b) Each of Holdings and the Borrowers acknowledges and agrees that neither it nor any
Subsidiary, the Management Company or any other manager or agent of any of the foregoing shall have
any right to object to or seek to delay or to cause any application of any Receipts deposited
and/or paid into the Lockbox Account or any transfer of funds in accordance with the provisions of
this Section 3.4.

(c) Each of Holdings and the Borrowers acknowledges that the Lockbox Account will be subject
to the control of the Agent and, upon the occurrence and during the continuance of a Trigger Event,
the funds in the Lockbox Account shall only be used (x) to pay expenses in any Lockbox Budget
approved by the Agent and debt service and other amounts due under this Agreement or the other Loan
Documents, in each case to the extent not already funded by the Loan Parties and/or (y) at the
Agent’s discretion, with the Requisite Lenders’ consent, to prepay the Loans and/or cash
collateralize the Letters of Credit.

 

40

 

(d) At all times after the termination of a Trigger Event or at any time when no Trigger Event
exists, the Agent shall cause all of the available balance in the Lockbox Account to be released to
the Florida Borrower, such release to be made as promptly as practicable to such deposit account as
the Florida Borrower may designate. Funds are not available if, in the determination of the Agent,
they are subject to a hold, dispute or legal process preventing their withdrawal, are not
“collected funds” or, if funds are made available by the Agent in its sole discretion prior to such
funds being “collected funds”, are subject to a reserve established by the Agent for settlement of
funds and returned items. Each of Holdings and the
Borrowers acknowledges and agrees that the Agent may debit the Lockbox Account for any
entries, whether credit or debit, that are subsequently returned for any reason. Notwithstanding
the foregoing or anything else in this Section 3.4. to the contrary, the Agent shall be
permitted to comply with any writ, levy order or other similar judicial or regulatory order or
process concerning the Lockbox Account or any check or other payment instruction and shall not be
in violation of this Section 3.4. for so doing.

(e) To the extent that any Receipts are not sent directly to the Lockbox Account but are
received by Holdings, the MG Borrower or any Subsidiary after a Trigger Event, such Receipts shall
be held in trust for the benefit of the Agent and remitted as promptly as practicable (and in any
event, no later than one (1) Business Day after receipt thereof) in the form received, to the
Lockbox Account. Each of Holdings and the Borrowers acknowledges and agrees that its compliance
with the terms of this Section 3.4. is essential.

(f) Each of Holdings and the Borrowers hereby irrevocably appoints and makes each of the
officers of the Agent the true and lawful attorney for each of Holdings and the Borrowers (without
requiring any of them to act as such) with full power of substitution to endorse the name of
Holdings or the Borrowers upon any and all checks, drafts, money orders, and other instruments for
the payment of money that are payable to Holdings or the Borrowers. In addition, if Holdings or
the Borrowers breaches its obligation hereunder to direct Receipts to the Lockbox Account, the
Agent, as the true and lawful attorney for Holdings or the Borrowers, may, by the signature or
other act of any of the Agent’s officers (without requiring any of them to do so), direct any
account debtor or other applicable Person to make payments of or with respect to Receipts to the
Lockbox Account.

Section 3.5 Several Obligations. No Lender shall be responsible for the failure of any other Lender to make a Loan or to
perform any other obligation to be made or performed by such other Lender hereunder, and the
failure of any Lender to make a Loan or to perform any other obligation to be made or performed by
it hereunder shall not relieve the obligation of any other Lender to make any Loan or to perform
any other obligation to be made or performed by such other Lender.

Section 3.6 Minimum Amounts.

(a) Borrowings and Conversions. Except as otherwise provided in Section
2.2.(e), each borrowing of Base Rate Loans shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $100,000 in excess thereof. Each borrowing, Conversion and
Continuation of LIBOR Loans shall be in an aggregate minimum amount of $1,000,000 and integral
multiples of $100,000 in excess of that amount.

 

41

 

(b) Prepayments. Each voluntary prepayment of Loans shall be in an aggregate minimum
amount of $500,000 and integral multiples of $100,000 in excess thereof (or, if less, the aggregate
principal amount of Loans then outstanding).

(c) Reductions of Commitments. Each reduction of the Commitments under Section
2.10. shall be in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof.

(d) Letters of Credit. The initial Stated Amount of each Letter of Credit shall be at
least $25,000.

Section 3.7 Fees.

(a) Unused Fee. During the period from the Effective Date to but excluding the
Termination Date, the Borrowers agree to pay to the Agent for the account of the Lenders an unused
facility fee with respect to the daily difference between the (i) aggregate amount of the
Commitments and (ii) the aggregate principal amount of all outstanding Loans plus the aggregate
amount of all Letter of Credit Liabilities (the “Unused Amount”). Such fee shall be
computed by multiplying the Unused Amount with respect to the applicable day by one-half of
one-percent (0.50%). Such fee shall be payable in arrears on the last day of each March, June,
September or December of each calendar year and shall be nonrefundable. Any such accrued and
unpaid fee shall also be payable on the Termination Date or any earlier date of termination of the
Commitments or reduction of the Commitments to zero.

(b) Letter of Credit Fees. The Borrowers agree to pay to the Agent for the account of
each Lender a letter of credit fee at a rate per annum equal to the Applicable Margin for LIBOR
Loans (or automatically upon the occurrence and during the continuance of an Event of Default
pursuant to Sections 11.1(a), (b), (h), (i) or (j) and at
the request of the Requisite Lenders upon the occurrence and during the continuance of any other
Event of Default, at a per annum rate equal to 3.0% in excess of the Applicable Margin for LIBOR
Loans) times the daily Stated Amount of each Letter of Credit for the period from and including the
date of issuance of such Letter of Credit (x) through and including the date such Letter of Credit
expires or is terminated or (y) to but excluding the date such Letter of Credit is drawn in full
and is not subject to reinstatement, as the case may be. The fees provided for in the immediately
preceding sentence shall be nonrefundable and payable in arrears on (i) the last day of March,
June, September and December in each year, (ii) the Termination Date, (iii) the date the
Commitments are terminated or reduced to zero and (iv) following the occurrence of the events
described in clauses (ii) and (iii), from time to time on demand of the Agent. In addition, the
Borrowers shall pay to the Issuing Bank for its own account and not the account of any Lender, an
issuance fee in respect of each Letter of Credit equal to the greater of (i) $1,500 or (ii)
one-eighth of one percent (0.125%) of the initial Stated Amount of such Letter of Credit payable
(A) for the period from and including the date of issuance of such Letter of Credit through and
including the expiration date of such Letter of Credit and (B) if the expiration date of any Letter
of Credit is extended (whether as a result of the operation of an automatic extension clause or
otherwise), for the period from but excluding the previous expiration date to and including the
extended expiration date. The fees provided for in the immediately preceding sentence shall be
nonrefundable and payable in arrears (i) on the last day of March, June, September and December in
each year, (ii) the Termination Date, (iii) the date the Commitments are terminated and (iv)
thereafter from time to time on demand of the Issuing Bank. The Borrowers shall pay directly to
the Issuing Bank from time to time on demand all commissions, charges, costs and expenses in the
amounts customarily charged by the Issuing Bank from time to time in like circumstances with
respect to
the issuance of each Letter of Credit, drawings, amendments and other transactions relating
thereto.

 

42

 

(c) Administrative and Other Fees. The Borrowers agree to pay the administrative and
other fees of the Agent as may be agreed to in writing by the Borrowers and the Agent from time to
time.

Section 3.8 Computations. Unless otherwise expressly set forth herein, any accrued interest on any Loan, any Fees or
any other Obligations due hereunder shall be computed on the basis of a year of 360 days and the
actual number of days elapsed; provided, however, interest on Base Rate Loans shall
be computed on the basis of a year of 365 or 366 days, as applicable, and the actual number of days
elapsed.

Section 3.9 Usury. In no event shall the amount of interest due or payable on the Loans or other Obligations
exceed the maximum rate of interest allowed by Applicable Law and, if any such payment is paid by
any Loan Party or received by any Lender, then such excess sum shall be credited as a payment of
principal, unless the Borrowers shall notify the respective Lender in writing that the Borrowers
elect to have such excess sum returned to it forthwith. It is the express intent of the parties
hereto that the Borrowers not pay and the Lenders not receive, directly or indirectly, in any
manner whatsoever, interest in excess of that which may be lawfully paid by the Borrowers under
Applicable Law.

Section 3.10 Agreement Regarding Interest and Charges. The parties hereto hereby agree and stipulate that the only charge imposed upon the
Borrowers for the use of money in connection with this Agreement is and shall be the interest
specifically described in Sections 2.3.(a)(i). Notwithstanding the foregoing, the parties
hereto further agree and stipulate that all agency fees, syndication fees, facility fees, closing
fees, letter of credit fees, unused fees, underwriting fees, default charges, late charges, funding
or “breakage” charges, increased cost charges, attorneys’ fees and reimbursement for costs and
expenses paid by the Agent or any Lender to third parties or for damages incurred by the Agent or
any Lender, in each case in connection with the transactions contemplated by this Agreement and the
other Loan Documents, are charges made to compensate the Agent or any such Lender for underwriting
or administrative services and costs or losses performed or incurred, and to be performed or
incurred, by the Agent and the Lenders in connection with this Agreement and shall under no
circumstances be deemed to be charges for the use of money. All charges other than charges for the
use of money shall be fully earned and nonrefundable when due.

Section 3.11 Statements of Account. The Agent will account to the Borrowers monthly with a statement of Loans, Letters of
Credit, accrued interest and Fees, charges and payments made pursuant to this Agreement and the
other Loan Documents, and such account rendered by the Agent shall be deemed conclusive and binding
on the Lenders and the Borrowers absent manifest error. The
failure of the Agent to deliver such a statement of accounts shall not relieve or discharge
the Borrowers from any of their respective obligations hereunder.

 

43

 

Section 3.12 Defaulting Lenders. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes
a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the
extent permitted by Applicable Law:

(a) Waivers and Amendments. Such 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
the definition of Requisite Lenders and in Section 13.6.

(b) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other
amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or
mandatory, at maturity, pursuant to Article XI or otherwise) or received by the Agent from
a Defaulting Lender pursuant to Section 13.3. shall be applied at such time or times as may
be determined by the Agent as follows: first, to the payment of any amounts owing by such
Defaulting Lender to the Agent hereunder; second, to Cash Collateralize the Issuing Bank’s Letter
of Credit Liabilities with respect to such Defaulting Lender in accordance with Section
11.5; third, as the MG Borrower may request (so long as no Default or Event of Default exists),
to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its
portion thereof as required by this Agreement, as determined by the Agent; fourth, if so determined
by the Agent and the MG Borrower, to be held in a deposit account and released pro rata in order to
(x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans
under this Agreement and (y) Cash Collateralize the Issuing Bank’s future Letter of Credit
Liabilities with respect to such Defaulting Lender with respect to future Letters of Credit issued
under this Agreement, in accordance with Section 11.5; fifth, to the payment of any amounts
owing to the Lenders or the Agent as a result of any judgment of a court of competent jurisdiction
obtained by any Lender or the Agent against such Defaulting Lender as a result of such Defaulting
Lender’s breach of its obligations under this Agreement; sixth, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of
a court of competent jurisdiction obtained by the Borrowers against such Defaulting Lender as a
result of such Defaulting Lender’s breach of its obligations under this Agreement; and seventh, to
such 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
Reimbursement Obligations in respect of which such Defaulting Lender has not fully funded its
appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a
time when the conditions set forth in Section 6.2 were satisfied or waived, such payment
shall be applied solely to pay the Loans of, and Reimbursement Obligations owed to, all
Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of,
or Reimbursement Obligations owed to, such Defaulting Lender until such time as all Loans and
funded and unfunded participations in Letter of Credit Liabilities are held by the Lenders pro rata
in accordance with the Commitments without giving effect to Section 3.12.(e). 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 3.12.(b) shall be deemed paid to and redirected by such Defaulting Lender, and
each Lender irrevocably consents hereto.

 

44

 

(c) Certain Fees. No Defaulting Lender shall be entitled to receive any fee pursuant
to Section 3.7(a) for any period during which that Lender is a Defaulting Lender (and the
Borrowers shall not be required to pay any such fee that otherwise would have been required to have
been paid to that Defaulting Lender). Each Defaulting Lender shall be entitled to receive fees
pursuant to Section 3.7(b) for any period during which that Lender is a Defaulting Lender
only to the extent allocable to its Commitment Percentage of the Stated Amount of Letters of Credit
for which it has provided Cash Collateral pursuant to Section 11.5.

(d) With respect to any fee pursuant to Section 3.7 not required to be paid to any
Defaulting Lender pursuant to clause (c) above, the Borrowers shall (x) pay to each Non-Defaulting
Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to
such Defaulting Lender’s participation in Letter of Credit Liabilities that has been reallocated to
such Non-Defaulting Lender pursuant to clause (e) below, (y) pay to Issuing Bank the amount of any
such fee otherwise payable to such Defaulting Lender to the extent allocable to Agent’s Fronting
Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such
fee.

(e) Reallocation of Participations to Reduce Fronting Exposure. All or any part of
such Defaulting Lender’s participation in Letter of Credit Liabilities shall be reallocated among
the Non-Defaulting Lenders in accordance with their respective Commitment Percentages (calculated
without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the
conditions set forth in Section 6.2 are satisfied at the time of such reallocation (and,
unless the MG Borrower shall have otherwise notified the Agent at such time, the Borrowers shall be
deemed to have represented and warranted that such conditions are satisfied at such time), and (y)
such reallocation does not cause the aggregate amount of the Loans and Letter of Credit Liabilities
of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. No reallocation
hereunder shall constitute a waiver or release of any claim of any party hereunder against a
Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim
of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following
such reallocation.

(f) Cash Collateral. If the reallocation described in clause (e) above cannot, or can
only partially, be effected, the Borrowers shall, without prejudice to any right or remedy
available to it hereunder or under law, Cash Collateralize the Agent’s Fronting Exposure in
accordance with the procedures set forth in Section 11.5.

(g) Defaulting Lender Cure. If the MG Borrower and the Agent agree in writing that a
Lender is no longer a Defaulting Lender, the 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 at par that portion of outstanding Loans of the other Lenders or take
such other actions as the Agent may determine to be necessary to cause the Loans and funded and
unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with
the Commitments (without giving effect to Section 3.12(e)),
whereupon such 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 Borrowers 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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(h) New Letters of Credit. So long as any Lender is a Defaulting Lender, the Issuing
Bank shall not be required to issue, extend, renew or increase any Letter of Credit unless it is
satisfied that it will have no Fronting Exposure after giving effect thereto.

Section 3.13 Taxes.

(a) Taxes Generally. All payments by or on behalf of the Borrowers of principal of,
and interest on, the Loans and all other Obligations shall be made free and clear of and without
deduction for any present or future excise, stamp or other taxes, fees, duties, levies, imposts,
charges, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing
authority (but excluding (i) any taxes imposed on or measured by any Lender’s net income or branch
profits in each case by the United States or by the jurisdiction under the laws of which such
Lender is organized or the jurisdiction in which the principal office or applicable Lending Office
of such Lender is located, (ii) any taxes (other than withholding taxes) with respect to the Agent
or a Lender that would not be imposed but for a connection between the Agent or such Lender and the
jurisdiction imposing such taxes (other than a connection arising solely by virtue of the
activities of the Agent or such Lender pursuant to or in respect of this Agreement or any other
Loan Document or as a result of having received a payment under, received or perfected a security
interest under or sold or assigned an interest in any Loan Document), and (iii) any withholding
taxes imposed as a result of the failure of the Agent or a Lender, as applicable, to provide (to
the extent able) the forms or certificates required to be provided under Section 3.13.(c)
and (iv) taxes arising under FATCA such excluded taxes being collectively called “Excluded
Taxes” and such non-excluded items being collectively called “Taxes”). If any
withholding or deduction from any payment to be made by or on behalf of a Borrower hereunder is
required in respect of any Taxes pursuant to any Applicable Law, then such Borrower or Guarantor,
as applicable, will:

(i) pay directly to the relevant Governmental Authority the full amount required to be
so withheld or deducted;

(ii) promptly forward to the Agent an official receipt or other documentation
satisfactory to the Agent evidencing such payment to such Governmental Authority; and

(iii) pay to the Agent for its account or the account of the applicable Lender, as the
case may be, such additional amount or amounts as is necessary to ensure that the net amount
actually received by the Agent or such Lender will equal the full amount that the Agent or
such Lender would have received had no such withholding or deduction been required.

(b) Tax Indemnification. If any Borrower or Guarantor fails to pay any Taxes when due
to the appropriate Governmental Authority or fails to remit to the Agent, for its account or the
account of the respective Lender, as the case may be, the required receipts or other required
documentary evidence, such Borrower or Guarantor shall indemnify the Agent and the Lenders for any
incremental Taxes, interest or penalties that may become payable by the Agent or any Lender as a
result of any such failure. For purposes of this Section, a distribution hereunder by the Agent or
any Lender to or for the account of any Lender shall be deemed a payment by the Borrowers.

 

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(c) Tax Forms. Each Foreign Lender agrees to deliver to the Borrowers and the Agent
on or prior to the Effective Date, or in the case of (x) a Lender that is an Assignee of an
interest under this Agreement (unless the respective Lender was already a Lender hereunder
immediately prior to such assignment) or (y) an Eligible Assignee that becomes a Lender, on the
date of such assignment or on the date such Eligible Assignee becomes a Lender hereunder, as the
case may be, (i) two accurate and complete original signed copies of Internal Revenue Service
(“IRS”) Form W-8ECI or Form W-8BEN (with respect to a complete exemption under an income
tax treaty) (or successor forms) certifying to such Lender’s entitlement as of such date to a
complete exemption from United States withholding tax with respect to payments to be made by the
Borrowers under this Agreement and under any Note or (ii) if the Foreign Lender is not a “bank”
within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code and cannot deliver either
IRS Form W-8ECI or W-8BEN (with respect to a complete exemption under an income tax treaty) (or
successor forms) pursuant to clause (i) above, (x) a certificate representing that such Lender is
not a “bank” within the meaning of 881(c)(3)(A) of the Internal Revenue Code (“Non-Bank
Certificate”) and (y) two accurate and complete original signed copies of IRS Form W-8BEN (with
respect to the portfolio interest exemption) (or successor form) certifying to such Lender’s
entitlement as of such date to a complete exemption from US withholding tax with respect to
payments of interest to be made by the Borrowers under this Agreement and under any Note or (iii)
in the case of a Lender that is a flow-through entity for US federal income tax purposes, two
accurate and complete signed copies of IRS Form W-8IMY (and all necessary attachments) establishing
a complete exemption from United States withholding tax with respect to payments made to the Lender
under this Agreement or under any Note. In addition, each Foreign Lender shall, in the case of any
payment made after December 31, 2012 in respect of any Loan, Letters of Credit, Note or obligation
that was not treated as outstanding for purposes of FATCA on March 18, 2012, provide any forms,
documentation, or other information as shall be prescribed by the Internal Revenue Service to
demonstrate that the relevant Foreign Lender has complied with the applicable reporting
requirements of FATCA so that such payments made to such Foreign Lender hereunder would not be
subject to U.S. federal withholding taxes imposed by FACTA. Each Lender that is a United States
person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S.
federal income tax purposes, agrees to deliver to the Borrowers and the Agent on or prior to the
date it becomes a party to this Agreement, two accurate and complete original signed copies of IRS
Form W-9 certifying to such Person’s entitlement to exemption from United States federal backup
withholding, unless such Lender demonstrates that it is treated as an exempt recipient under
Treasury Regulation Section 1.6049-4(c)(1)(ii). In addition, each Lender agrees that from time to
time after the Effective Date, when a lapse in time or change in circumstances renders the previous
forms or certifications obsolete or inaccurate in any material respect, such Lender will deliver to
the Borrowers and the Agent two new accurate and complete original signed

 

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copies
of IRS Form W-8ECI, Form W-8BEN (with respect to the benefits of any income tax treaty), or Form
W-8BEN (with respect to the portfolio interest exemption) and a Non-Bank Certificate or Form W-8IMY
(with respect to a flow-through entity) or Form W-9 (with respect to backup withholding), as the
case may be, and any successor forms as may be required in order to confirm or establish the
entitlement of such Lender to a continued exemption from or reduction in United States withholding
tax or backup withholding with respect to payments by the Borrowers under this Agreement and under
any Note, or it shall immediately notify the Borrowers and the Agent of its inability to deliver
any such form or certificate in which case such Lender shall not be required to deliver any such
form or certificate pursuant to this Section 3.13.(c). Notwithstanding anything to the
contrary contained in Section 3.13.(a), but subject to the immediately succeeding sentence,
(x) the Borrowers shall be entitled, to the extent they are required to do so by law, to deduct or
withhold income or similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, Fees or other amounts payable hereunder for the
account of any Lender that is lending to the Borrowers to the extent that such Lender has not
provided to the Borrowers, the IRS Forms that establish a complete exemption from such deduction or
withholding and (y) the Borrowers shall not be obligated pursuant to Section 3.13.(a) to
gross-up payments to be made to a Lender in respect of income or similar taxes imposed by the
United States if such Lender has not provided to the Borrowers the IRS Forms required to be
provided to the Borrowers pursuant to this Section 3.13.(c) (except, in the case of an
Eligible Assignee or Assignee, to the extent the Borrowers were required to gross-up payments to
the relevant assignor). Notwithstanding anything to the contrary contained in the preceding
sentence, the Borrowers agree to pay any additional amounts or indemnify (in the case of a payment
made by a Lender) each Lender in the manner set forth in Section 3.13.(a) and (b)
(without regard to the identity of the jurisdiction requiring the deduction or withholding) in
respect of any amounts deducted or withheld by the Borrowers (or paid by a Lender) as described in
the immediately preceding sentence as a result of any changes that are effective after the
Effective Date in any Applicable Law, treaty, governmental rule, regulation, guideline or order, or
in the interpretation thereof, relating to the deducting or withholding of income or similar Taxes.
If any Governmental Authority asserts that the Agent did not properly withhold or backup withhold,
as the case may be, any tax or other amount from payments made to or for the account of any Lender,
such Lender shall indemnify the Agent therefor, including all penalties and interest, any taxes
imposed by any jurisdiction on the amounts payable to the Agent under this Section, and costs and
expenses (including all reasonable fees and disbursements of any law firm or other external counsel
and the allocated cost of internal legal services and all disbursements of internal counsel) of the
Agent. The obligation of the Lenders under this Section shall survive the termination of the
Commitments, repayment of all Obligations and the resignation or replacement of the Agent.

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

 

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Section 3.14 Mitigation Obligations; Replacement of Lenders.

(a) If (i) any Lender requests compensation under Section 5.1., (ii) the Borrowers are
required to pay any additional amount to any Lender, the Agent or any Governmental Authority for
the account of any Lender or the Agent pursuant to Section 3.13.(a) (provided that this
clause (ii) shall not be applicable if the Borrowers are required to pay any additional amount to
the Requisite Lenders pursuant to Section 3.13.(a)), (iii) any Lender is a Non-Consenting
Lender, (iv) any Lender shall have given notice under Section 5.1.(b) or Section
5.3. of its inability to make or maintain as such any LIBOR Loan (provided that this clause
(iv) shall not be applicable if the Requisite Lenders have given such notice) or (v) any Lender
becomes a Defaulting Lender (any such Defaulting Lender and any Lender referred to in (i) through
(iv) above being herein referred to as an “Affected Lender”), then the MG Borrower may, by
giving written notice thereof to the Agent, such Affected Lender and the other Lenders, demand that
such Affected Lender assign its Commitment and all of its other interests, rights and obligations
under this Agreement and the other Loan Documents to an Eligible Assignee subject to and in
accordance with the provisions of Section 13.5.(b), in consideration of the applicable
payments provided for in subsection (b) below, and upon such demand the Affected Lender shall
promptly, assign its Commitment and all of its other interests, rights and obligations under this
Agreement and the other Loan Documents to such Eligible Assignee. Upon any such assignment, the
Affected Lender’s interest in the Loans and its rights hereunder (but not its liability in respect
thereof or under the Loan Documents to the extent the same relate to the period prior to the
effective date of the purchase) shall terminate on the date of purchase, and the Affected Lender
shall promptly execute all documents reasonably requested to surrender and transfer such interest
to the purchaser or assignee thereof, including an appropriate Assignment and Assumption Agreement,
and shall pay to the Agent an assignment fee as provided in Section 13.5.(b)(iv).
Notwithstanding the foregoing, an Affected Lender shall not be required to make any such assignment
if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstance entitling
the MG Borrower to require such assignment and delegation cease to apply. In the case of any such
assignment resulting from a claim for compensation under Section 5.1. or payments required
to be made pursuant to Section 3.13.(a) it shall be a condition to such assignment that
such assignment will result in a reduction in such compensation or payments.

(b) In the case of an Affected Lender, the sum required to be paid upon assignment of its
Commitment shall be (i) the purchase price equal to the outstanding principal of its Loans, accrued
interest thereon and all accrued fees owing to such Affected Lender, all of which shall be paid by
the Assignee, and (ii) all other amounts payable by the Borrowers to such Affected Lender hereunder
(including amounts, if any, payable under Section 3.13.(a) or Section 5.1), all of
which shall be paid by the Borrowers.

 

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ARTICLE IV

Florida Property

Section 4.1 Frequency of Calculations of Borrowing Base. Initially, the Borrowing Base shall be the amount set forth as such in the Borrowing Base
Certificate delivered under Section 6.1. Thereafter, the Borrowing Base shall be the
amount set forth as such in the Borrowing Base Certificate delivered from time to time under this
Section 4.1, Section 4.2.(b) or 9.3.(b). Any change in the Borrowing Base
Value of the Florida Property shall become effective as of the date the next Borrowing Base
Certificate is delivered, provided that the applicable Borrowing Base Certificate
substantiates such change. Any change in the Borrowing Base Value of the Florida Property
determined pursuant to an Appraisal described in Section 4.2. or Section 4.3. shall
be effective immediately upon Agent’s delivery of notice to the MG Borrower that the Agent has
accepted the applicable Appraisal, and shall be reflected in a Borrowing Base Certificate
reflecting such new Borrowing Base Value, which certificate shall be delivered by the MG Borrower
to the Agent within five Business Days of the MG Borrower’s receipt of such notice from the Agent.
Notwithstanding the foregoing, to the extent that any decrease in the Borrowing Base Value of the
Florida Property resulting from an Appraisal would require the Borrowers to prepay any Loan or cash
collateralize any Letter of Credit pursuant to Section 2.6(b), such prepayment or cash
collateral shall be due within five Business Days after the date that the Agent has delivered to
the MG Borrower notice that the Agent has accepted such Appraisal; provided further,
however, that nothing contained in this sentence shall delay the effectiveness of such decrease in
the Borrowing Base Value of the Florida Property for the purposes of determining whether any
condition is met for the making of any Loan or the issuance of any Letter of Credit.

Section 4.2 Frequency of Appraisals. The Appraised Value of the Florida Property shall be determined or redetermined, as
applicable, under each of the following circumstances:

(a) The Agent will obtain a new Appraisal for the Florida Property in the second fiscal
quarter of 2012, and such Appraisal shall be at the sole cost of the Borrowers;

(b) The Agent may also obtain a new Appraisal of the Florida Property once during every
twelve (12) months following the date of the Appraisal described in subsection (a) above, or
at any time and more frequently if a Default or an Event of Default exists. Any such
Appraisal will be at the sole cost of the Borrowers. The Agent
will also be allowed to obtain a new Appraisal of the Florida Property at any other
time that the Agent has a reasonable basis to believe that the value of the Florida Property
has changed (but in no event more than once every 6 months), in its discretion or at the
request of the Requisite Lenders; provided, that any such Appraisal will be at the
sole cost of the Lenders. The Borrowing Base shall be redetermined as a result of delivery
of any new Appraisal performed under this Section 4.2. or under Section 4.3.
below, in each case to the extent such Appraisal is accepted by the Agent pursuant to
Section 4.1.; and within five Business Days after MG Borrower’s receipt of notice
from the Agent that the Agent has accepted such Appraisal, the MG Borrower shall deliver to
the Agent, a Borrowing Base Certificate reflecting the Borrowing Base after giving effect to
the new Appraised Value of any applicable Properties.

 

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(c) Following any Major Casualty or any “Major Taking” under and as defined in
any Security Deed, and such Appraisal shall be at the sole cost of the Borrowers; and

(d) Upon the MG Borrower’s written request for a redetermination of the Appraised Value
of the Florida Property, the Agent shall redetermine the Appraised Value of the Florida
Property (based on a new Appraisal of the Florida Property obtained by the Agent), all at
the Borrowers’ expense; provided, that the MG Borrower may request a new Appraisal
of the Florida Property pursuant to this subsection only 2 times.

Section 4.3 Additional Appraisals Required under Applicable Law. If under FIRREA or any other Applicable Law, the Agent or any Lender is required to obtain
an Appraisal of the Florida Property in addition to any other Appraisal previously obtained with
respect to the Florida Property pursuant to this Agreement, the Agent shall have the right to cause
such an Appraisal to be prepared at the Borrowers’ cost and expense. The Borrowing Base shall be
redetermined as a result of delivery of any such new Appraisal if Applicable Law requires such
redetermination, in which case the Borrowing Base shall be redetermined in the manner required
under such Applicable Law.

ARTICLE V

Yield Protection, Etc.

Section 5.1 Additional Costs; Capital Adequacy.

(a) Additional Costs. The Borrowers shall promptly pay to the Agent for the account
of each affected Lender from time to time such amounts as such Lender may determine to be necessary
to compensate such Lender for any costs incurred by such Lender that it determines are attributable
to its making or maintaining of any LIBOR Loans or its obligation to make any LIBOR Loans
hereunder, any reduction in any amount receivable by such Lender under this Agreement or any of the
other Loan Documents in respect of any of such Loans or such obligation or the maintenance by such
Lender of capital in respect of its Loans or its Commitment (such increases in costs and reductions
in amounts receivable being herein called
“Additional Costs”), in each case to the extent resulting from any Regulatory Change
that: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement
or any of the other Loan Documents in respect of any of such Loans or its Commitment (other than
Taxes that are provided for in Section 3.3. and Excluded Taxes); or (ii) imposes or
modifies any reserve, special deposit or similar requirements (other than Regulation D of the Board
of Governors of the Federal Reserve System or other reserve requirement to the extent utilized in
the determination of Adjusted LIBOR for such Loan) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Lender, or any Commitment of such
Lender (including, without limitation, the Commitment of such Lender hereunder); or (iii) has or
would have the effect of reducing the rate of return on capital of such Lender to a level below
that which such Lender could have achieved but for such Regulatory Change (taking into
consideration such Lender’s policies with respect to capital adequacy).

 

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(b) Lender’s Suspension of LIBOR Loans. Without limiting the effect of the provisions
of the immediately preceding subsection (a), if, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such Lender that includes deposits by
reference to which the interest rate on LIBOR Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Lender that includes LIBOR Loans or (ii)
becomes subject to restrictions on the amount of such a category of liabilities or assets that it
may hold, then, if such Lender so elects by notice to the MG Borrower (with a copy to the Agent),
the obligation of such Lender to make or Continue, or to Convert any other Type of Loans into,
LIBOR Loans hereunder shall be suspended until such Regulatory Change ceases to be in effect (in
which case the provisions of Section 5.5. shall apply).

(c) Additional Costs in Respect of Letters of Credit. Without limiting the
obligations of the Borrowers under the preceding subsections of this Section (but without
duplication), if as a result of any Regulatory Change or any risk-based capital guideline or other
requirement heretofore or hereafter issued by any Governmental Authority there shall be imposed,
modified or deemed applicable any tax, reserve, special deposit, capital adequacy or similar
requirement against or with respect to or measured by reference to Letters of Credit (other than
Taxes that are provided for in Section 3.3. and Excluded Taxes) and the result shall be to
increase the cost to the Issuing Bank of issuing (or any Lender of purchasing participations in) or
maintaining its obligation hereunder to issue (or purchase participations in) any Letter of Credit
or reduce any amount receivable by the Issuing Bank or any Lender hereunder in respect of any
Letter of Credit, then, upon demand by the Issuing Bank or such Lender, the Borrowers shall pay
promptly, and in any event within 10 days of demand, to the Issuing Bank for its account or the
account of such Lender, as applicable, from time to time as specified by the Issuing Bank or a
Lender, such additional amounts as shall be sufficient to compensate the Issuing Bank or such
Lender for such increased costs or reductions in amount.

(d) Notification and Determination of Additional Costs. Each of the Agent, the
Issuing Bank and each Lender agrees to notify the MG Borrower of any event occurring after the
Agreement Date entitling the Agent, the Issuing Bank or such Lender to compensation under any of
the preceding subsections of this Section as promptly as practicable; provided,
however, the failure of the Agent, the Issuing Bank or any Lender to give such notice shall
not release the
Borrowers from any of its obligations hereunder (and in the case of a Lender, to the Agent);
provided further, that (i) none of the Agent, the Issuing Bank or any Lender shall
be entitled to claim any additional cost, reduction in amounts, loss, tax or other additional
amount under this Section 5.1. if such Person fails to provide such notice to the MG
Borrower within 270 days of the date the Agent, the Issuing Bank or such Lender becomes aware of
the occurrence of the event giving rise to the additional cost, reduction in amounts, loss, tax or
other additional amount and (ii) it shall be a condition precedent to any claim under this
Section 5.1. that the claimant is generally imposing similar claims or charges on its other
similarly situated borrowers. The Agent, the Issuing Bank or such Lender agrees to furnish to the
MG Borrower (and in the case of a Lender, to the Agent) a certificate setting forth in reasonable
detail the basis and amount of each request by the Agent, the Issuing Bank or such Lender for
compensation under this Section. Absent manifest error, determinations by the Agent, the Issuing
Bank or any Lender of the effect of any Regulatory Change shall be conclusive, provided
that such determinations are made on a reasonable basis and in good faith.

 

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Section 5.2 Suspension of LIBOR Loans. Anything herein to the contrary notwithstanding, if, on or prior to the determination of
Adjusted LIBOR for any Interest Period:

(a) the Agent reasonably determines (which determination shall be conclusive) that by
reason of circumstances affecting the relevant market, adequate and reasonable means do not
exist for ascertaining Adjusted LIBOR for such Interest Period, or

(b) the Agent reasonably determines (which determination shall be conclusive) that
Adjusted LIBOR will not adequately and fairly reflect the cost to the Lenders of making or
maintaining LIBOR Loans for such Interest Period;

then the Agent shall give the MG Borrower and each Lender prompt notice thereof and, so long as
such condition remains in effect, the Lenders shall be under no obligation to, and shall not, make
additional LIBOR Loans, Continue LIBOR Loans or Convert Loans into LIBOR Loans and the Borrowers
shall, on the last day of each current Interest Period for each outstanding LIBOR Loan, either
cause such Loan to be repaid or cause such Loan to be Converted into a Base Rate Loan.

Section 5.3 Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall reasonably
determine (which determination shall be conclusive and binding) that it has become unlawful for
such Lender to honor its obligation to make or maintain LIBOR Loans hereunder, then such Lender
shall promptly notify the MG Borrower thereof (with a copy to the Agent) and such Lender’s
obligation to make or Continue, or to Convert Loans of any other Type into, LIBOR Loans shall be
suspended until such time as such Lender may again make and maintain LIBOR Loans (in which case the
provisions of Section 5.5. shall be applicable).

Section 5.4 Compensation. The Borrowers shall pay to the Agent for the account of each Lender, upon the request of
such Lender through the Agent, such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss (but not lost profits), cost or expense that
such Lender reasonably determines is attributable to:

(a) any payment or prepayment (whether mandatory or optional) of a LIBOR Loan, or
Conversion of a LIBOR Loan, made by such Lender for any reason (including, without
limitation, acceleration) on a date other than the last day of the Interest Period for such
Loan;

(b) any failure by any Borrower for any reason (including, without limitation, the
failure of any of the applicable conditions precedent specified in Article VI. to be
satisfied) to borrow a LIBOR Loan from such Lender on the requested date for such borrowing,
or to Convert a Base Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on the requested
date of such Conversion or Continuation; or

 

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(c) any revocation of a notice of termination of Commitments delivered by the MG
Borrower pursuant to Section 2.10.

Upon the MG Borrower’s request, any Lender requesting compensation under this Section shall
provide the MG Borrower with a statement setting forth in reasonable detail the basis for
requesting such compensation and the method for determining the amount thereof. Absent manifest
error, determinations by any Lender in any such statement shall be conclusive, provided
that such determinations are made on a reasonable basis and in good faith.

Section 5.5 Treatment of Affected Loans. If the obligation of any Lender to make LIBOR Loans or to Continue, or to Convert Base Rate
Loans into, LIBOR Loans shall be suspended pursuant to Section 5.1.(b) or 5.3.,
then such Lender’s LIBOR Loans shall be automatically Converted into Base Rate Loans on the last
day(s) of the then current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion
required by Section 5.1.(b) or 5.3., on such earlier date as such Lender may
specify to the MG Borrower with a copy to the Agent) and, unless and until such Lender gives notice
as provided below that the circumstances specified in Section 5.1. or 5.3. that
gave rise to such Conversion no longer exist:

(a) to the extent that such Lender’s LIBOR Loans have been so Converted, all payments
and prepayments of principal that would otherwise be applied to such Lender’s LIBOR Loans
shall be applied instead to its Base Rate Loans; and

(b) all Loans that would otherwise be made or Continued by such Lender as LIBOR Loans
shall be made or Continued instead as Base Rate Loans, and all Base Rate Loans of such
Lender that would otherwise be Converted into LIBOR Loans shall remain as Base Rate Loans.

If such Lender gives notice to the MG Borrower (with a copy to the Agent) that the
circumstances specified in Section 5.1. or 5.3. that gave rise to the Conversion of
such Lender’s LIBOR Loans pursuant to this Section no longer exist (which such Lender agrees to do
promptly upon such circumstances ceasing to exist) at a time when LIBOR Loans made by other
Lenders are outstanding, then such Lender’s Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding LIBOR
Loans and by such Lender are held pro rata (as to principal amounts, Types and Interest Periods) in
accordance with their respective Commitments.

Section 5.6 Change of Lending Office. Each Lender agrees that it will use reasonable efforts to designate an alternate Lending
Office with respect to any of its Loans affected by the matters or circumstances described in
Section 3.12., 5.1. or 5.3. to reduce the liability of the Borrowers or
avoid the results provided thereunder, so long as such designation is not disadvantageous to such
Lender as determined by such Lender in its sole discretion, except that such Lender shall have no
obligation to designate a Lending Office located in the United States of America.

 

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Section 5.7 Assumptions Concerning Funding of LIBOR Loans. Calculation of all amounts payable to a Lender under this Article V. shall be made
as though such Lender had actually funded LIBOR Loans through the purchase of deposits in the
relevant market bearing interest at the rate applicable to such LIBOR Loans in an amount equal to
the amount of the LIBOR Loans and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any manner
it sees fit and the foregoing assumption shall be used only for calculation of amounts payable
under this Article V.

ARTICLE VI

Conditions Precedent

Section 6.1 Initial Conditions Precedent. The obligation of the Lenders to effect or permit the occurrence of the first Credit Event
hereunder, whether as the making of a Loan or the issuance of a Letter of Credit, is subject to the
following conditions precedent:

(a) The Agent shall have received each of the following, in form and substance
satisfactory to the Agent:

(i) counterparts of this Agreement executed by each of the parties hereto;

(ii) Notes executed by the Borrowers payable to each Lender and complying with
the applicable provisions of Section 2.9.;

(iii) the Guaranty executed by Holdings and the Management Company;

(iv) a Security Deed executed by the Florida Borrower;

(v) an Assignment of Leases and Rents executed by the Florida Borrower;

(vi) an Environmental Indemnity Agreement executed by the Florida Borrower and
the MG Borrower;

(vii) Intentionally Omitted;

(viii) the Pledge Agreement executed by the MG Borrower as the owner of all the
outstanding Equity Interests of the Florida Borrower, subjecting all such Equity
Interests to the Lien of the Pledge Agreement and all certificates, if any,
representing any such Equity Interests, together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the MG
Borrower, together with an Acknowledgment and Consent, substantially in the form of
Schedule 2 to the Pledge Agreement, duly executed by the Florida Borrower as the
issuer of such Equity Interest;

(ix) the Security Agreement executed by the Florida Borrower;

 

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(x) each document (including, without limitation, any UCC financing statement)
required by the Pledge Agreement, the Security Agreement or under Applicable Law or
reasonably deemed necessary or appropriate by the Agent to be entered into, filed,
registered or recorded in order to create in favor of the Agent, for the benefit of
the Lenders, a perfected first-priority Lien in (i) the Equity Interests in the
Florida Borrower and all other related Collateral (as defined in the Pledge
Agreement) and (ii) such reserves, operating accounts, deposit accounts, trademarks,
copyrights, other Intellectual Property and all other related Collateral (as defined
in the Security Agreement), shall have been entered into, filed, registered or
recorded or shall have been delivered to the Agent and be in proper form for filing,
registration or recordation, as appropriate;

(xi) a Property Management Contract Assignment executed by the Florida Borrower
and the Management Company;

(xii) Intentionally Omitted;

(xiii) an opinion or opinions of counsel to the Loan Parties, addressed to the
Agent, the Issuing Bank and the Lenders;

(xiv) the articles of incorporation, articles of organization, certificate of
limited partnership or other comparable organizational instrument of each Loan Party
certified as of a recent date by the Secretary of State of the state of formation of
such Loan Party;

(xv) a certificate of good standing or certificate of similar meaning with
respect to each Loan Party issued as of a recent date by the Secretary of State of
the state of formation of such Loan Party and certificates of qualification to
transact business or other comparable certificates issued by each Secretary of State
(and any state department of taxation, as applicable) of each state in which such
Loan Party is required to be so qualified and where the failure to be so qualified
could reasonably be expected to have a Material Adverse Effect;

(xvi) a certificate of incumbency signed by the Secretary or Assistant
Secretary (or other individual performing similar functions) of each Loan Party with
respect to each of the officers of such Loan Party authorized to execute and deliver
the Loan Documents to which such Loan Party is a party, and in the case of the MG
Borrower, the officers of the MG Borrower then authorized to deliver Notices of
Borrowings, Notices of Continuation and Notices of Conversion and to request the
issuance of Letters of Credit;

(xvii) copies certified by the Secretary or Assistant Secretary (or other
individual performing similar functions) of each Loan Party of (i) the by-laws of
such Loan Party, if a corporation, the operating agreement of such Loan Party, if a
limited liability company, the partnership agreement of such Loan Party, if a
limited or general partnership, or other comparable document in the case of any
other form of legal entity and (ii) all corporate, partnership, member or other
necessary action taken by such Loan Party to authorize the execution, delivery and
performance of the Loan Documents to which it is a party;

 

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(xviii) closing certificates in the form of Exhibit T attached hereto
(or otherwise in form and substance satisfactory to the Agent) duly completed and
executed by the Borrowers;

(xix) evidence of the payment of all Fees then due and payable under
Section 3.7., and any other Fees payable to the Agent, the Titled Agents and
the Lenders on or prior to the Effective Date;

(xx) a Borrowing Base Certificate calculated as of June 30, 2011;

(xxi) copies of all Property Management Agreements, franchise or license
agreements and all other material contracts, if any, which relate to the use,
occupancy, operation, management, maintenance, enjoyment or ownership of the Florida
Property;

(xxii) copies of all material occupancy and operating permits and licenses
relating to the use, occupancy, operation, maintenance, enjoyment or ownership of
the Florida Property;

(xxiii) an ALTA 2006 Form mortgagee’s policy of title insurance or other form
acceptable to the Agent in favor of the Agent for the benefit of the Lenders with
respect to the Florida Property, including endorsements with respect to such items
of coverage as the Agent may reasonably request (and which endorsements are
available in Florida), in a coverage amount equal to no less than $100,000,000,
issued by Chicago Title Insurance Company, showing the fee
simple title to the land and improvements described in the Security Deed as
vested in the Florida Borrower, and insuring that the Lien granted by the Security
Deed is a valid first priority Lien, subject only to such restrictions,
encumbrances, easements and reservations as are acceptable to the Agent and
nonconsensual Liens permitted by Section 10.2. and copies of all documents
of record reflected in Schedule B of such policy of title insurance;

(xxiv) a certified survey of the Florida Property prepared by a surveyor
licensed in Florida in accordance with the then effective Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys;

(xxv) a “life of loan” Federal Emergency Management Agency Standard Flood
Hazard Determination with respect to the Florida Property, in form and substance
acceptable to the Agent (together with notice about special flood hazard area status
and flood disaster assistance, duly executed by the Florida Borrower and evidence
of flood insurance, in the event any improved parcel of the Florida Property is
located in a special flood hazard area);

(xxvi) evidence in the form of (x) a zoning report prepared by the Planning
Zoning Resource Corporation or (y) an ALTA 3.1 zoning endorsement to the title
policy for the Florida Property indicating that the Florida Property complies with
applicable zoning and land use laws or that the Florida Property is the subject of a
legal non-conforming use;

 

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(xxvii) final certificates of occupancy for all improvements located at the
Florida Property which require a certificate of occupancy under Applicable Law;

(xxviii) an Appraisal of the Florida Property acceptable to the Agent;

(xxix) an inspection report prepared by an architect or engineer acceptable to
the Agent and addressed to the Agent for the benefit of the Lenders with respect to
the Florida Property;

(xxx) copies of all engineering, mechanical, structural and maintenance studies
performed with respect to the Florida Property not more than 12 months old;

(xxxi) evidence that the insurance that will be required under the applicable
Loan Document for the Florida Property is in effect;

(xxxii) a “Phase I” (and a “Phase II” if warranted) environmental assessment of
the Florida Property not more than 12 months old prepared by an environmental
engineering firm acceptable to the Agent and upon which the Agent and the Lenders
are expressly permitted to rely, and any additional environmental studies or
assessments available to any Borrower performed with respect to the Florida
Property;

(xxxiii) UCC, tax, judgment and lien search reports with respect to all
applicable Loan Parties and the Florida Property in all necessary or appropriate
jurisdictions and under all legal and appropriate trade names indicating that there
are no Liens of record on the Florida Property or any of the Collateral relating
thereto other than Liens expressly permitted under the Loan Documents to exist on
the Florida Property or any of the Collateral relating thereto;

(xxxiv) copies of all leases of the Florida Property; and

(xxxv) such other due diligence materials, documents, agreements and
instruments as the Agent on behalf of the Lenders may reasonably request.

(b) In the good faith judgment of the Agent and the Lenders:

(i) there shall not have occurred or become known to the Agent or any of the
Lenders any event, condition, situation or circumstance since the date of the
information contained in the financial and business projections, budgets, pro forma
data and forecasts concerning Holdings, the MG Borrower, the other Loan Parties and
the other Subsidiaries delivered to the Agent and the Lenders prior to the Effective
Date that has had or could reasonably be expected to result in a Material Adverse
Effect;

 

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(ii) no litigation, action, suit, investigation or other arbitral,
administrative or judicial proceeding shall be pending or threatened which could
reasonably be expected to (1) result in a Material Adverse Effect or (2) restrain or
enjoin, impose materially burdensome conditions on, or otherwise materially and
adversely affect the ability of any Loan Party to fulfill its obligations under the
Loan Documents to which it is a party;

(iii) Holdings, the MG Borrower, the other Loan Parties and the other
Subsidiaries shall have received all approvals, consents and waivers, and shall have
made or given all necessary filings and notices, as shall be required to consummate
the transactions contemplated hereby without the occurrence of any default under,
conflict with or violation of (1) any Applicable Law or (2) any agreement, document
or instrument to which the MG Borrower or any other Loan Party is a party or by
which any of them or their respective properties is bound, except for such
approvals, consents, waivers, filings and notices the receipt, making or giving of
which would not reasonably be likely to (A) have a Material Adverse Effect, or (B)
restrain or enjoin, impose materially burdensome conditions on, or otherwise
materially and adversely affect the ability of any Loan Party to fulfill its
obligations under the Loan Documents to which it is a party; and

(iv) there shall not have occurred or exist any other material disruption of
financial or capital markets that could reasonably be expected to materially and
adversely affect the transactions contemplated by the Loan Documents.

(c) When all of the conditions contained in the immediately preceding subsections (a) and (b)
have been satisfied or waived in accordance with the terms hereof, the Agent shall promptly notify
the MG Borrower and the Lenders thereof.

Section 6.2 Conditions Precedent to All Loans and Letters of Credit. The obligations of the Lenders to make any Loans and of the Issuing Bank to issue any
Letters of Credit are all subject to the further conditions precedent that: (a) no Default or Event
of Default shall exist as of the date of the making of such Loan or date of issuance of such Letter
of Credit or would exist immediately after giving effect thereto and (b) the representations and
warranties made or deemed made by each Loan Party in the Loan Documents to which any of them is a
party, shall be true and correct in all material respects on and as of the date of the making of
such Loan or date of issuance of such Letter of Credit with the same force and effect as if made on
and as of such date except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date) and except for changes in
factual circumstances not prohibited under the Loan Documents (other than a change in factual
circumstances since the Effective Date, that constitutes a material adverse change in the business,
assets, liabilities, financial condition or results of operations of Holdings and its Subsidiaries
taken as a whole). Each Credit Event shall constitute a certification by the Borrowers to the
effect set forth in the preceding sentence (both as of the date of the giving of notice relating to
such Credit Event and, unless the Borrowers otherwise notify the Agent prior to the date of such
Credit Event, as of the date of the occurrence of such Credit Event). In addition, the Borrowers
shall be deemed to have represented to the Agent, the Issuing Bank and the Lenders at the time such
Loan is made or Letter of Credit issued that all conditions to the occurrence of such Credit Event
contained in this Article VI. have been satisfied.

 

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ARTICLE VII

Representations and Warranties

Section 7.1 Representations and Warranties. In order to induce the Agent, the Issuing Bank and each Lender to enter into this Agreement
and to make Loans and issue Letters of Credit, Holdings and each of the Borrowers represents and
warrants to the Agent, the Issuing Bank and each Lender as follows:

(a) Organization; Power; Qualification. Each of Holdings, the MG Borrower,
each other Loan Party and each other Subsidiary is a corporation, partnership or other legal
entity, duly organized or formed, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation, has the power and authority to own or
lease its respective properties and to carry on its respective business as now being and
hereafter proposed to be conducted and is duly qualified and is in good standing as a
foreign corporation, partnership or other legal entity, and authorized to do business, in
each jurisdiction in which the character of its properties or the nature of its business
requires such qualification or authorization and where the failure to be so qualified or
authorized could reasonably be expected to have, in each instance, a Material Adverse
Effect.

(b) Ownership Structure. Part I of Schedule 7.1.(b) sets forth, as of
the Effective Date, a complete and correct list in all material respects of all Subsidiaries
of Holdings setting forth for each such Subsidiary, (i) the jurisdiction of organization of
such Subsidiary, (ii) each Person holding any Equity Interests in such Subsidiary, (iii) the
nature of the Equity Interests held by each such Person, (iv) the percentage of ownership of
such Subsidiary represented by such Equity Interests and (v) whether such Subsidiary is a
Material Subsidiary and/or a Foreign Subsidiary. Except as disclosed in such Schedule (i)
each of Holdings, the MG Borrower, the other Loan Parties and the other Subsidiaries owns,
free and clear of all Liens (other than Liens permitted under Section 10.2.), and
has the unencumbered right to vote, all outstanding Equity Interests in each Person shown to
be held by it on such Schedule, (ii) all of the issued and outstanding capital stock of each
such Person that is a Subsidiary of Holdings organized as a corporation is validly issued,
fully paid and nonassessable and (iii) there are no outstanding subscriptions, options,
warrants, commitments, preemptive rights or agreements of any kind (including, without
limitation, any stockholders’ or voting trust agreements) for the issuance, sale,
registration or voting of, or outstanding securities convertible into, any additional shares
of capital stock of any class, or partnership or other ownership interests of any type in,
any such Person. Part II of Schedule 7.1.(b) sets forth, as of the Effective Date, a
complete and correct list in all material respects of all Unconsolidated Affiliates of the
MG Borrower setting forth for each such Unconsolidated Affiliate, (i) the jurisdiction of
organization of such Unconsolidated Affiliate, (ii) each Person that is a Loan Party or a
Subsidiary of Holdings holding any Equity Interests in such Unconsolidated Affiliate and
(iii) the percentage of ownership of such Unconsolidated Affiliate represented by such
Equity Interests.

 

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(c) Authorization of Agreement, Etc. The Borrowers have the right and power,
and have taken all necessary action to authorize them, to borrow and obtain other extensions
of credit hereunder. Each Loan Party has the right and power, and has taken all necessary
action to authorize it, to execute, deliver and perform each of the Loan Documents to which
it is a party in accordance with their respective terms and to consummate the transactions
contemplated hereby and thereby. The Loan Documents to which any Loan Party is a party have
been duly executed and delivered by the duly authorized officers of such Loan Party and each
is a legal, valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its respective terms except as the same may be limited by
bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally
and the availability of equitable remedies for the enforcement of certain obligations (other
than the payment of principal) contained herein or therein and as may be limited by
equitable principles generally.

(d) Compliance of Loan Documents with Laws, Etc. The execution, delivery and
performance of this Agreement and the other Loan Documents to which any Loan Party is a
party in accordance with their respective terms and the borrowings and other extensions of
credit hereunder do not and will not, by the passage of time, the giving of notice, or both:
(i) except as set forth in Schedule 7.1.(d), require any Governmental
Approval or violate any Applicable Law (including all Environmental Laws) relating to
any Loan Party; (ii) violate, result in a breach of or constitute a default under the
organizational documents of any Loan Party, or any indenture, agreement or other instrument
to which any Loan Party is a party or by which it or any of its respective properties may be
bound; or (iii) result in or require the creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by any Loan Party other than Liens
created pursuant to the Security Documents.

(e) Compliance with Law; Governmental Approvals. Each of Holdings, the MG
Borrower, each other Loan Party and each other Subsidiary is in compliance with each
Governmental Approval applicable to it and in compliance with all other Applicable Laws
(including without limitation, Environmental Laws) relating to such Person except for
noncompliances which, and Governmental Approvals the failure to possess which, could not,
individually or in the aggregate, reasonably be expected to cause a Default or Event of
Default or have a Material Adverse Effect.

(f) Title to Properties; Liens. Schedule 7.1.(f) is a complete and
correct listing of all of the real property owned or leased by Holdings, the MG Borrower,
each other Loan Party and each other Subsidiary as of the Effective Date. Each such Person
has good, marketable and legal title to, or a valid leasehold interest in, its respective
assets. Except as set forth on such Schedule, there are no Liens against any assets of
Holdings, the MG Borrower, any other Loan Party or any other Subsidiary except for Liens
permitted under Section 10.2.

 

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(g) Existing Indebtedness. Schedule 7.1.(g) is a complete and correct
listing, as of the Effective Date of all Indebtedness for borrowed money of Holdings, the MG
Borrower and its Subsidiaries, including without limitation, Indebtedness in respect of
Guarantees, in each case, that is not otherwise disclosed on the financial statements
referenced in Section 7.1(k)(ii).

(h) Material Contracts. Schedule 7.1.(h) is a true, correct and
complete listing of all Material Contracts as of the Effective Date. As of the Effective
Date, no event or condition exists which with the giving of notice, the lapse of time, or
both, would permit any party (other than the Loan Parties and their Subsidiaries) to any
such Material Contract to terminate such Material Contract as a result of any default
condition thereunder.

(i) Litigation. Except as set forth on Schedule 7.1.(i), there are no
actions, suits, investigations or proceedings pending (nor, to the knowledge of Holdings or
the Borrowers, are there any actions, suits or proceedings threatened) against or in any
other way relating adversely to or affecting Holdings, the MG Borrower, any other Loan
Party, any other Subsidiary or any of their respective property in any court or before any
arbitrator of any kind or before or by any other Governmental Authority which could
reasonably be expected to have a Material Adverse Effect. There are no strikes, slow downs,
work stoppages or walkouts or other labor disputes in progress or, to Holdings or the
Borrowers’ knowledge, threatened relating to Holdings, the MG Borrower, any other
Loan Party or any other Subsidiary which could reasonably be expected to have a
Material Adverse Effect.

(j) Taxes. All federal, state and other tax returns of Holdings, the MG
Borrower, the other Loan Parties and the other Subsidiaries required by Applicable Law to be
filed have been duly filed, and all federal, state and other taxes, assessments and other
governmental charges or levies upon Holdings, the MG Borrower, each other Loan Party, each
other Subsidiary and their respective properties, income, profits and assets which are due
and payable have been paid, except any such nonpayment which is at the time permitted under
Section 8.5. As of the Effective Date, none of the United States income tax returns
of Holdings, the MG Borrower, any other Loan Party or any other Subsidiary is under audit.
All charges, accruals and reserves on the books of Holdings, the MG Borrower, each other
Loan Party and each other Subsidiary in respect of any taxes or other governmental charges
are in accordance with GAAP.

(k) Financial Statements. The MG Borrower has furnished to each Lender copies
of (i) the audited consolidated balance sheet of Holdings and its Subsidiaries for the
fiscal year ending December 31, 2010, and the related audited consolidated statements of
operations and comprehensive loss, cash flows and net assets (deficit) for the fiscal year
ending on such dates, with the opinion thereon of BDO Seidman, LLP, and (ii) the unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries for the fiscal
quarter ending March 31, 2011, and the related unaudited consolidated statements of
operations and comprehensive loss, cash flows and net assets (deficit) for the period of one
fiscal quarter ending on such date. Such financial statements (including in each case
related schedules and notes) present fairly, in all material respects and in accordance with
GAAP consistently applied throughout the periods involved, the consolidated financial
position of Holdings and its consolidated Subsidiaries as at their respective dates and the
results of operations and the cash flow for such periods (subject, as to interim statements,
to changes resulting from normal year-end audit adjustments). As of the Effective Date,
neither Holdings nor any of its Subsidiaries has any contingent liabilities, liabilities,
liabilities for taxes, unusual or long-term commitments or unrealized or forward anticipated
losses from any unfavorable commitments that would be required to be set forth in its
financial statements or in the notes thereto, except as referred to or reflected or provided
for in said financial statements.

 

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(l) No Material Adverse Change. Since December 31, 2010, there has been no
material adverse change in the business, assets, liabilities, financial condition or results
of operations of Holdings and its Subsidiaries taken as a whole. As of the Effective Date,
each of Holdings, the Borrowers and the Management Company is Solvent. Holdings is Solvent
on a consolidated basis and each of the Borrowers is Solvent.

(m) ERISA. Each member of the ERISA Group is in compliance with its
obligations under the minimum funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance with the presently applicable provisions of ERISA
and the Internal Revenue Code with respect to each Plan, except in
each case for noncompliances which could not reasonably be expected to have a Material
Adverse Effect. As of the Effective Date, no “reportable event” (as defined in Section 4043
of ERISA) has occurred with respect to any Plan. As of the Effective Date, no member of the
ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or
payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made
any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.

(n) Not Plan Assets; No Prohibited Transaction. None of the assets of
Holdings, the MG Borrower, any other Loan Party or any other Subsidiary constitutes “plan
assets” within the meaning of ERISA, the Internal Revenue Code and the respective
regulations promulgated thereunder. The execution, delivery and performance of this
Agreement and the other Loan Documents, and the borrowing and repayment of amounts
hereunder, do not and will not constitute “prohibited transactions” under ERISA or the
Internal Revenue Code.

(o) Absence of Defaults. None of Holdings, the MG Borrower, any other Loan
Party or any other Subsidiary is in default under its articles of incorporation, bylaws,
partnership agreement or other similar organizational documents, and no event has occurred,
which has not been remedied, cured or waived, which, in any such case: (i) constitutes a
Default or an Event of Default; or (ii) constitutes, or which with the passage of time, the
giving of notice, or both, would constitute, a default or event of default by any such
person under any agreement (other than this Agreement) or judgment, decree or order to which
any such Person is a party or by which any such Person or any of its respective properties
may be bound where such default or event of default could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

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(p) Environmental Laws. Each of Holdings, the MG Borrower, the other Loan
Parties and the other Subsidiaries has obtained all Governmental Approvals which are
required under Environmental Laws and is in compliance with all terms and conditions of such
Governmental Approvals which the failure to obtain or to comply with could reasonably be
expected to have a Material Adverse Effect. Except for any of the following matters that
could not be reasonably expected to have a Material Adverse Effect, (i) neither Holdings nor
any of the Borrowers is aware of, or has received notice of, any past, present or future
events, conditions, circumstances, activities, practices, incidents, actions, or plans
which, with respect to Holdings, the MG Borrower, any other Loan Party or any other
Subsidiary, may interfere with or prevent compliance or continued compliance with
Environmental Laws, or may give rise to any common-law or legal liability, or otherwise form
the basis of any claim, action, demand, suit, proceeding, hearing, study, or investigation,
arising under Environmental Laws or based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling or the emission,
discharge, release or threatened release into the environment,
of any Hazardous Material, and (ii) there is no civil, criminal, or administrative
action, suit, demand, claim, hearing, notice, or demand letter, notice of violation,
investigation, or proceeding pending or, to the knowledge of Holdings or the Borrowers,
threatened, against Holdings, the MG Borrower, any other Loan Party or any other Subsidiary
relating to Environmental Laws.

(q) Investment Company; Etc. None of Holdings, the MG Borrower, any other Loan
Party or any other Subsidiary is (i) an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940, as amended,
or (ii) subject to any other Applicable Law which purports to regulate or restrict its
ability to borrow money or to consummate the transactions contemplated by this Agreement or
to perform its obligations under any Loan Document to which it is a party.

(r) Margin Stock. No part of the proceeds of the Loans, and no Letter of
Credit, will be used to purchase or carry any “margin stock” within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System or to extend credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying such margin
stock. Neither the making of any Loan nor the use of the proceeds thereof nor the issuance
of any Letter of Credit will violate the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

(s) Affiliate Transactions. Except as permitted by Section 10.8., None
of Holdings, the MG Borrower, any other Loan Party or any other Subsidiary is a party to any
transaction with an Affiliate.

 

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(t) Intellectual Property. Each of Holdings, the MG Borrower, each other Loan
Party and each other Subsidiary owns or has the right to use, under valid license agreements
or otherwise, all patents, licenses, franchises, trademarks, trademark rights, service
marks, service mark rights, trade names, trade name rights, rights in trade dress, trade
secrets and copyrights (including, without limitation, in the case of the Florida Borrower
the right to use of the name “Delano” in connection with the ownership and operation of the
Florida Property pursuant to the Delano Management Agreement) (collectively,
“Intellectual Property”), necessary or material to the conduct of its businesses as
now conducted and as contemplated by the Loan Documents, without known conflict with any
patent, license, franchise, trademark, trademark right, service mark, service mark right,
trade secret, trade name, trade dress right, copyright or other proprietary right of any
other Person. Each of Holdings, the MG Borrower, each other Loan Party and each other
Subsidiary has taken all steps as they deem reasonably necessary to protect their respective
rights under and with respect to such Intellectual Property. As of the Effective Date, no
claim has been asserted by any Person with respect to the use of any such Intellectual
Property by Holdings, the MG Borrower, any other Loan Party or any other Subsidiary, or
challenging or questioning the validity or effectiveness of any such Intellectual Property.
The current operation and development of boutique hotels by Holdings, the MG Borrower, the
other Loan Parties and the other Subsidiaries does not infringe on the rights of any Person,
subject to such claims and infringements as do not, in the aggregate, give rise to any
liabilities on the part of
Holdings, the MG Borrower, any other Loan Party or any other Subsidiary that could
reasonably be expected to have a Material Adverse Effect. There is no requirement under
Applicable Law that the Florida Property be known as or operated under the name “The Delano”
or any other name.

(u) Business. Holdings, the MG Borrower, the other Loan Parties and the other
Subsidiaries are engaged in the business of operating, owning, acquiring and redeveloping
boutique hotels, together with other business activities incidental thereto.

(v) Broker’s Fees. No broker’s or finder’s fee, commission or similar
compensation will be payable with respect to the transactions contemplated hereby, except
for any compensation that will have been paid on or prior to the Effective Date.

(w) Accuracy and Completeness of Information. No written information, report
or other papers or data (excluding financial projections and other forward looking
statements) furnished to the Agent or any Lender by, on behalf of, or at the direction of,
Holdings, the MG Borrower, any other Loan Party or any other Subsidiary in connection with,
pursuant to or relating in any way to this Agreement, contained any untrue statement of a
fact material to the creditworthiness of Holdings, the MG Borrower, any other Loan Party or
any other Subsidiary or omitted to state a material fact necessary in order to make such
statements contained therein, in light of the circumstances under which they were made, not
misleading. All financial statements (including in each case all related schedules and
notes) furnished to the Agent or any Lender by, on behalf of, or at the direction of,
Holdings, the MG Borrower, any other Loan Party or any other Subsidiary in connection with,
pursuant to or relating in any way to this Agreement, present fairly, in all material
respects and in accordance with GAAP consistently applied throughout the periods involved,
the financial position of the Persons involved as at the date thereof and the results of
operations for such periods (subject, as to interim statements, to changes resulting from
normal year-end audit adjustments). All financial projections and other forward looking
statements prepared by or on behalf of Holdings, the MG Borrower, any other Loan Party or
any other Subsidiary that have been or may hereafter be made available to the Agent or any
Lender were or will be prepared in good faith based on reasonable assumptions.

 

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(x) Foreign Assets Control. None of Holdings, the MG Borrower, any other Loan
Party, any other Subsidiary or to the knowledge of Holdings or the Borrowers any Affiliate;
(i) is a Sanctioned Person, (ii) has any of its assets in Sanctioned Entities in a manner
that violates Applicable Law, (iii) derives any of its operating income from investments in,
or transactions with, Sanctioned Persons or Sanctioned Entities in a manner that violates
Applicable Law, or (iv) will apply the proceeds of this Credit Agreement in any way that
would cause any of the parties to the Agreement to violate Applicable Law; provided,
however, that with respect to transactions with individual hotel guests, the above
representations are made to the best of knowledge and belief.

(y) Swap Agreements. As of the Effective Date, except for the Swap Agreements
listed on Schedule 7.1.(y), (i) no Loan Party is a party to or a guarantor of any
Swap Agreement; (ii) no Swap Agreement is secured by any assets of any Loan
Party; and (iii) no Loan Party has any direct or contingent obligation with respect to
any Swap Agreement.

Section 7.2 Survival of Representations and Warranties, Etc.
All statements contained in any certificate, financial statement or other instrument delivered
by or on behalf of Holdings, the MG Borrower, any other Loan Party or any other Subsidiary to the
Agent or any Lender pursuant to or in connection with this Agreement or any of the other Loan
Documents (including, but not limited to, any such statement made in or in connection with any
amendment hereto or thereto or any statement contained in any certificate, financial statement or
other instrument delivered by or on behalf of Holdings or the Borrowers or any other Loan Party
prior to the Effective Date and delivered to the Agent or any Lender in connection with the
underwriting or closing of the transactions contemplated hereby) shall constitute representations
and warranties made by the Borrowers to the Agent and the Lenders under this Agreement. All
representations and warranties made under this Agreement and the other Loan Documents shall be
deemed to be made at and as of the Effective Date and the date of the occurrence of any Credit
Event, except to the extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been true and correct in
all material respects on and as of such earlier date) and except for changes in factual
circumstances not prohibited under the Loan Documents (other than a change in factual circumstances
since the Effective Date, that constitutes a material adverse change in the business, assets,
liabilities, financial condition or results of operations of Holdings and its Subsidiaries taken as
a whole). All such representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the Loan Documents and the making of the Loans and the
issuance of the Letters of Credit.

 

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ARTICLE VIII

Affirmative Covenants

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required
pursuant to Section 13.6., each of the Lenders directly and adversely affected thereby)
shall otherwise consent in the manner provided for in Section 13.6., each of Holdings and
the Borrowers, as applicable, shall comply with the following covenants:

Section 8.1 Preservation of Existence and Similar Matters. Except as otherwise permitted under Section 10.3., Holdings and the MG Borrower
shall, and shall cause each other Loan Party and each other Subsidiary to, preserve and maintain
its respective existence, rights, franchises, licenses and privileges in the jurisdiction of its
incorporation or formation and qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its business requires such
qualification and authorization and where the failure to be so authorized and qualified could
reasonably be expected to have a Material Adverse Effect.

Section 8.2 Compliance with Applicable Law and Material Contracts. Holdings and the MG Borrower shall, and shall cause each other Loan Party and each other
Subsidiary to, comply with (a) all Applicable Laws, including the obtaining of all Governmental
Approvals, the failure with which to comply could reasonably be expected to have a Material Adverse
Effect, and (b) all terms and conditions of (i) all Material Contracts to which it is a party, (ii)
the Delano Management Agreement and (iii) the Delano License, in each case if the failure with
which to comply could give any other party thereto the right to terminate such Material Contract,
the Delano Management Agreement or the Delano License, as applicable.

Section 8.3 Maintenance of Property. In addition to the requirements of any of the other Loan Documents, Holdings and the MG
Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, (a) protect and
preserve all of its respective material properties, including, but not limited to, all Intellectual
Property, and maintain in good repair, working order and condition all material tangible
properties, ordinary wear and tear and casualty and condemnation events (subject to Sections 3.12.
and 4.1. of the Security Deed) excepted, and (b) make or cause to be made all needed and
appropriate repairs, renewals, replacements and additions to such material properties, so that the
business carried on in connection therewith may be properly and advantageously conducted at all
times.

Section 8.4 Insurance. In addition to the requirements of any of the other Loan Documents, Holdings and the MG
Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, maintain
insurance (on a replacement cost basis) with financially sound and reputable insurance companies
(with an A.M. Best policyholders rating of at least A-IX (with respect to liability) or A-X (with
respect to property damage)) against such risks (including, without limitation, acts of terrorism)
and in such amounts as are customarily maintained by prudent Persons engaged in similar businesses
and in similar locations and in any event as may be required by Applicable Law, and from time to
time deliver to the Agent upon its request a detailed list, together with copies of all policies of
the insurance then in effect, stating the names of the insurance companies, the amounts and rates
of the insurance, the dates of the expiration thereof and the properties and risks covered thereby.
In addition to the requirements of the immediately preceding sentence, Holdings and the Borrowers
will at all times cause insurance coverage on the Florida Property to be maintained consistent in
all material respects with such insurance coverage maintained on the Effective Date, including,
without limitation, wind damage insurance in the amount of $100,000,000, provided that if such wind
damage insurance is not available on commercially reasonable terms, then such other amount as may
be reasonably approved by the Agent.

 

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Section 8.5 Payment of Taxes and Claims. Holdings and the MG Borrower shall, and shall cause each other Loan Party and each other
Subsidiary to, pay and discharge when due (a) all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or upon any properties belonging to it, and
(b) all lawful claims of materialmen, mechanics, carriers, warehousemen and landlords for labor,
materials, supplies and rentals which, if unpaid, might
become a Lien on any properties of such Person; provided, however, that this
Section shall not require the payment or discharge of any such tax, assessment, charge, levy or
claim which is being contested in good faith by appropriate proceedings which operate to suspend
the collection thereof and for which adequate reserves have been established on the books of
Holdings, the MG Borrower, such other Loan Party or such other Subsidiary, as applicable, in
accordance with GAAP.

Section 8.6 Visits and Inspections. Holdings and the MG Borrower shall, and shall cause each other Loan Party and each other
Subsidiary to, permit representatives or agents of any Lender or the Agent, from time to time after
reasonable prior notice if no Event of Default shall be in existence, as often as may be reasonably
requested, but only during normal business hours and at the expense of such Lender or the Agent
(unless a Default or Event of Default shall exist, in which case the exercise by the Agent or such
Lender of its rights under this Section shall be at the expense of the Borrowers), as the case may
be, to: (a) visit and inspect all properties of Holdings, the MG Borrower, such other Loan Party or
such other Subsidiary to the extent any such right to visit or inspect is within the control of
such Person; (b) inspect and make extracts from their respective books and records, including but
not limited to management letters prepared by independent accountants; and (c) discuss with its
officers and employees, and its independent accountants, its business, properties, condition
(financial or otherwise), results of operations and performance. If requested by the Agent, each
of Holdings and the Borrowers shall execute an authorization letter addressed to its accountants
authorizing the Agent or any Lender to discuss the financial affairs of Holdings, the MG Borrower,
any other Loan Party or any other Subsidiary with its accountants.

Section 8.7 Use of Proceeds; Letters of Credit. The Borrowers shall use the proceeds of the Loans and the Letters of Credit for general
corporate purposes only and not to fund or support any activity that this Agreement does not permit
the Borrowers to undertake. No part of the proceeds of any Loan or Letter of Credit will be used
(a) for the purpose of buying or carrying “margin stock” within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or (b) to fund any operations in, to finance any
investments or activities in, or to make any payments to, a Sanctioned Person or Sanctioned Entity.

 

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Section 8.8 Environmental Matters. Holdings and the MG Borrower shall, and shall cause the other Loan Parties and the other
Subsidiaries to, comply with all Environmental Laws and to maintain their Property in compliance
with all Environmental Laws, the failure to comply with which could reasonably be expected to have
a Material Adverse Effect. If Holdings, the MG Borrower, any other Loan Party or any other
Subsidiary shall (a) receive notice that any violation of any Environmental Law may have been
committed or is about to be committed by such Person, (b) receive notice that any administrative or
judicial complaint or order has been filed or is about to be filed against Holdings, the MG
Borrower, any other Loan Party or any other Subsidiary alleging violations of
any Environmental Law or requiring Holdings, the MG Borrower, any other Loan Party or any
other Subsidiary to take any action in connection with the release of Hazardous Materials or (c)
receive notice from a Governmental Authority or private party alleging that Holdings, the MG
Borrower, any other Loan Party or any other Subsidiary may be liable or responsible for costs
associated with a response to or cleanup of a release of Hazardous Materials or any damages caused
thereby, and the matters referred to in such notices, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, the MG Borrower shall provide the Agent
with a copy of such notice promptly, and in any event within 10 Business Days, after the receipt
thereof by Holdings, the MG Borrower, any other Loan Party or any other Subsidiary. Holdings and
the MG Borrower shall, and shall cause the other Loan Parties and the other Subsidiaries to, take
promptly all actions necessary to prevent the imposition of any Liens on any of their respective
properties arising out of or related to any Environmental Laws.

Section 8.9 Books and Records. Holdings and the MG Borrower shall, and shall cause the other Loan Parties and the other
Subsidiaries to, maintain books and records pertaining to its respective business operations in
such detail, form and scope as is consistent with good business practice and in accordance with
GAAP.

Section 8.10 Further Assurances. The Borrowers shall, at the Borrowers’ cost and expense and upon request of the Agent,
execute and deliver or cause to be executed and delivered to the Agent such further instruments,
documents and certificates, and do and cause to be done such further acts, that may be necessary or
advisable in the reasonable opinion of the Agent to carry out the provisions and purposes of this
Agreement and the other Loan Documents.

Section 8.11 Exchange Listing. Holdings shall maintain at least one class of common shares of Holdings having trading
privileges on the New York Stock Exchange, the American Stock Exchange or the National Association
of Securities Dealers Automated Quotation System.

Section 8.12 Minimum Hedging Requirement. At all times not less than seventy percent (70%) of the consolidated funded indebtedness
(excluding the aggregate principal amount of all outstanding Loans plus the aggregate
amount of all Letter of Credit Liabilities) of Holdings shall bear interest at a fixed rate or be
the subject of one or more hedge arrangements which have the effect of making the indebtedness
which is the subject of such hedge arrangements bear interest at a fixed rate.

Section 8.13 Post-Closing Deliverables. Not later than 45 days following the
Effective Date (or such later date as may be permitted by the Agent in its sole discretion), the
Florida Borrower shall execute and deliver a deposit account control agreement, executed by the
Florida Borrower, Wells Fargo Bank, N.A. and the Agent, in form and substance reasonably
satisfactory to the Agent.

 

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ARTICLE IX

Information

For so long as this Agreement is in effect, unless the Requisite Lenders shall otherwise
consent in the manner set forth in Section 13.6., Holdings and the Borrowers, as
applicable, shall comply with the following covenants:

Section 9.1 Quarterly Financial Statements. Not later than 5 days following the filing by Holdings of its Form 10-Q with the SEC, and
in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal
year of Holdings, the MG Borrower shall furnish to the Agent a copy of Holdings’ unaudited
consolidated balance sheet and unaudited consolidated statements of operations and comprehensive
income, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by a Financial Officer as presenting fairly in all material
respects the financial condition and results of operations of Holdings and its Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes.

Section 9.2 Year-End Statements. Not later than 5 days following the filing by Holdings of its Form 10-K with the SEC, and
in any event within 90 days after the end of each fiscal year of Holdings, the MG Borrower shall
furnish to the Agent a copy of Holdings’ audited consolidated balance sheet and audited
consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows
as of the end of and for such year, and related notes thereto, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by BDO Seidman, LLP or
other independent registered public accountants of recognized national standing (without a “going
concern” or like qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements present fairly in
all material respects the financial condition and results of operations of Holdings and its
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.

Section 9.3 Compliance Certificate; Borrowing Base Certificate; Etc. Concurrently with the delivery of financial statements under Sections 9.1. and
9.2., the MG Borrower shall furnish to the Agent each of the following:

(a) Compliance Certificate. A certificate of a Financial Officer substantially
in the form of Exhibit I (a “Compliance Certificate”) (i) providing the
certification set forth therein as to the existence of a Default or Event of Default, if a
Default or Event of Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with the covenants contained in Section 10.11.
and (iii) stating
whether any change in the application of GAAP to the financial statements of Holdings
has occurred since the later of the date of the MG Borrower’s audited financial statements
referred to in Section 7.1.(k) and the date of the prior certificate delivered
pursuant to this Section indicating such a change and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying such
certificate;

 

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(b) Borrowing Base Certificate. A Borrowing Base Certificate including a
calculation of the Adjusted Net Operating Income of the Florida Property and setting forth
the other information to be contained therein as of the last day of the applicable fiscal
period; and

(c) Income Statements. An income statement for the Florida Property for the
period covered by the applicable financial statements.

Section 9.4 Other Information. Holdings or the MG Borrower, as applicable, shall furnish to the Agent each of the
following:

(a) Securities Filings. Within five Business Days of the filing thereof,
copies of all registration statements (excluding the exhibits thereto (unless requested by
the Agent) and any registration statements on Form S-8 or its equivalent), reports on Forms
10-K, 10-Q and 8-K (or their equivalents) and all other periodic reports which Holdings, the
MG Borrower, any other Loan Party or any other Subsidiary shall file with the SEC or any
national securities exchange;

(b) Budgets. Prior to the commencement of each fiscal year of Holdings, (i) a
detailed consolidated budget for such fiscal year (including a projected consolidated
balance sheet and consolidated statements of projected operations, comprehensive income and
cash flows as of the end of and for such fiscal year) and (ii) a detailed operating budget
for the Florida Property for such fiscal year (including a projected balance sheet and
statements of projected operations, comprehensive income and cash flows as of the end of and
for such fiscal year) and, in each case, promptly when available, any significant revisions
of any such budget;

(c) ERISA. If and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA)
with respect to any Plan which might constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice of such reportable event
given or required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Internal Revenue
Code, a copy of such application; (v) gives notice of intent to terminate any Plan
under Section 4041(c) of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a
copy of such notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any
Plan or Benefit Arrangement, which has resulted or could reasonably be expected to result in
the imposition of a Lien or the posting of a bond or other security, a certificate of the
chief executive officer or chief financial officer of Holdings setting forth details as to
such occurrence and the action, if any, which Holdings or applicable member of the ERISA
Group is required or proposes to take;

 

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(d) Change of Financial Condition. Prompt notice of any change in the
business, operations, properties, financial condition or results of operations of Holdings,
the MG Borrower, any other Loan Party or any other Subsidiary which has had or could
reasonably be expected to have a Material Adverse Effect;

(e) Default. Promptly upon a Financial Officer obtaining knowledge thereof,
notice of the occurrence of any Default or Event of Default;

(f) Patriot Act Information. From time to time and promptly upon each request,
information identifying any Loan Party as a Lender may request in order to comply with the
USA PATRIOT ACT (Title III of Pub. Law 107-56 (signed into law October 26, 2001)) (as
amended from time to time, the “Act”);

(g) Intentionally Omitted;

(h) Other Information. From time to time and promptly upon each request, such
data, certificates, reports, statements, documents or further information regarding the
business, assets, liabilities, financial condition, results of operations or business
prospects of Holdings, the MG Borrower, any other Loan Party or any other Subsidiary as the
Agent or any Lender may reasonably request;

(i) ADR, Etc. Within thirty (30) days after the end of each calendar month,
commencing with July, 2011, average daily rate, occupancy and revenue per available room
reports for the Florida Property for such calendar month; and

(j) STAR Reports. Within thirty (30) days after the end of each calendar
month, commencing with July, 2011, STAR reports from Smith Travel Research for the Florida
Property for such calendar month.

 

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Section 9.5 Electronic Delivery of Certain Information. (a) Holdings and the MG Borrower may deliver documents, materials and other information
required to be delivered pursuant to Article IX. (collectively, “Information”) in
an electronic format acceptable to the Agent by e-mailing any such Information to an e-mail address
of the Agent as specified by the Agent from time to time. The Agent shall promptly post such
Information (which the Agent shall do promptly upon receipt) on behalf of Holdings or the MG
Borrower, as applicable, on an internet or intranet website to which each Lender and the Agent
has access, whether a commercial, third-party website (such as Intralinks or SyndTrak) or a
website sponsored by the Agent (the “Platform”).

(b) In addition, Holdings and the MG Borrower may deliver Information required to be delivered
pursuant to Sections 9.1., 9.2., and 9.4.(a) by posting any such
Information to Holdings’ internet website (as of the Effective Date, www.morganshotelgroup.com).
Any such Information provided in such manner shall only be deemed to have been delivered to the
Agent or a Lender (i) on the date on which the Agent or such Lender, as applicable, receives notice
from Holdings or the MG Borrower that such Information has been posted to Holdings’ internet
website and (ii) only if such Information is publicly available without charge on such website. If
for any reason, the Agent or a Lender either did not receive such notice or after reasonable
efforts was unable to access such website, then the Agent or such Lender, as applicable, shall not
be deemed to have received such Information. In addition to any manner permitted by Section
13.1., Holdings and the MG Borrower may notify the Agent or a Lender that Information has been
posted to such a website by causing an e-mail notification to be sent to an e-mail address
specified from time to time by the Agent or such Lender, as applicable.

(c) Notwithstanding anything in this Section to the contrary Holdings and the MG Borrower
shall deliver paper copies of Information to the Agent or any Lender that requests Holdings and the
MG Borrower to deliver such paper copies until a written request to cease delivering paper copies
is given to Holdings and the MG Borrower by the Agent or such Lender, as applicable.

(d) Each of Holdings and the Borrowers acknowledges and agrees that the Agent may make
Information, as well as any other written information, reports, data, certificates, documents,
instruments, agreements and other materials relating to Holdings, the MG Borrower, any Subsidiary
or any other Loan Party or any other materials or matters relating to this Agreement, any of the
other Loan Documents or any of the transactions contemplated by the Loan Documents, in each case to
the extent that the Agent’s communication thereof to the Lenders is otherwise permitted hereunder
(collectively, the “Communications”) available to the Lenders by posting the same on the
Platform. Each of Holdings and the Borrowers acknowledges that (i) the distribution of material
through an electronic medium, such as the Platform, is not necessarily secure and that there are
confidentiality and other risks associated with such distribution, (ii) the Platform is provided
“as is” and “as available” and (iii) neither the Agent nor any of its affiliates warrants the
accuracy, adequacy or completeness of the Communications or the Platform and each expressly
disclaims liability for errors or omissions in the Communications or the Platform.

(e) The Agent shall have no obligation to request the delivery or to maintain copies of any of
the Information or other materials referred to above, and in no event shall have any responsibility
to monitor compliance by Holdings or the Borrowers with any such requests. Each Lender shall be
solely responsible for requesting delivery to it or maintaining its copies of such Information or
other materials.

 

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ARTICLE X

Negative Covenants

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required
pursuant to Section 13.6., all of the Lenders directly and adversely affected thereby)
shall otherwise consent in the manner set forth in Section 13.6., each of Holdings and the
Borrowers, as applicable, shall comply with the following covenants:

Section 10.1 Indebtedness; Certain Equity Securities. (a) The MG Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Indebtedness, except:

(i) Indebtedness created under the Loan Documents;

(ii) (1) Indebtedness existing on the Effective Date and set forth in Schedule
7.1(g) or otherwise disclosed on the financial statements referenced in Section
7.1(k)(ii), and (2) extensions, renewals and replacements of any Indebtedness set forth
on Schedule 7.1(g) (other than the Convertible Notes), provided that such
extending, renewal or replacement Indebtedness (A) other than in the case of extending,
renewing or replacing Indebtedness in respect of the Hudson Hotel, shall not be Indebtedness
of an obligor that was not an obligor with respect to the Indebtedness being extended,
renewed or replaced (unless such obligor is a Subsidiary formed specifically for that
purpose), (B) shall not be in a principal amount that exceeds the principal amount of the
Indebtedness being extended, renewed or replaced (plus any accrued but unpaid interest and
redemption premium thereon), and (C) shall not have an earlier maturity date or shorter
weighted average life than the Indebtedness being extended, renewed or replaced;

(iii) Nonrecourse Indebtedness of any Subsidiary that is not a Loan Party and
obligations of any Loan Party (other than the Florida Borrower or any of its Subsidiaries)
in respect of Customary Nonrecourse Exceptions; provided that after giving effect to
the incurrence of such Indebtedness, Holdings shall be in pro forma compliance with the
covenants set forth in Section 10.11;

(iv) Indebtedness of the MG Borrower to any Subsidiary and of any Subsidiary to the MG
Borrower or any other Subsidiary, provided (A) that Indebtedness of any Subsidiary that is
not a Loan Party to the MG Borrower or any Subsidiary that is a Loan Party shall be subject
to Section 10.4. and (B) Indebtedness of the MG Borrower to any Subsidiary and
Indebtedness of any Subsidiary that is a Loan Party to any Subsidiary that is not a Loan
Party shall be subordinated to the Obligations on terms set forth on Exhibit G or as
otherwise may be reasonably satisfactory to the Agent;

(v) Guarantees by the MG Borrower of Indebtedness of Holdings or any Subsidiary and by
any Subsidiary (other than the Florida Borrower or any of its Subsidiaries) of Indebtedness
of the MG Borrower or any other Subsidiary, provided that (A) the Indebtedness so
Guaranteed is permitted by this Section (other than clause (a)(ii) or (a)(vii)), (B)
Guarantees by the MG Borrower or any Subsidiary that is a Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to Section
10.4. and (C) Guarantees permitted under this clause (v) shall be subordinated to the
Obligations of the applicable Subsidiary that is a Loan Party to the same extent and on the
same terms as the Indebtedness so Guaranteed is subordinated to the Obligations;

 

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(vi) (A) Indebtedness of the MG Borrower or any Subsidiary (other than the Florida
Borrower or any of its Subsidiaries) incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease Obligations and any
Indebtedness assumed by the MG Borrower or any Subsidiary (other than the Florida Borrower
or any of its Subsidiaries) in connection with the acquisition of any such assets or secured
by a Lien on any such assets prior to the acquisition thereof, provided that such
Indebtedness is incurred prior to or within 180 days after such acquisition or the
completion of such construction or improvement, and (B) extensions, renewals and
replacements of any such Indebtedness so long as the principal amount of such extensions,
renewals and replacements does not exceed the principal amount of the Indebtedness being
extended, renewed or replaced (plus any accrued but unpaid interest and redemption premium
thereon); provided, however, that the aggregate principal amount of
Indebtedness permitted by this clause (vi) shall not exceed $5,000,000 at any time
outstanding, and any Indebtedness permitted by this clause (vi) that is incurred on or after
the Effective Date shall not be used to finance the acquisition, construction, improvement
or expansion of hotels not owned by the MG Borrower or its Subsidiaries;

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

(viii) other unsecured Indebtedness of the MG Borrower or any Subsidiary (other than
the Florida Borrower or any of its Subsidiaries) in an aggregate principal amount not
exceeding $5,000,000 at any time outstanding;

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

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

 

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(xi) Indebtedness in respect of Swap Agreements permitted by Section 10.6.;

(xii) to the extent constituting Indebtedness of the MG Borrower or any Subsidiary
(other than the Florida Borrower or any of its Subsidiaries) Investments made pursuant to
Section 10.4(l), (m) or (q);

(xiii) (A) Guarantees and/or indemnities (other than in respect of payment of principal
or interest) by the MG Borrower or any Subsidiary (other than the Florida Borrower or any of
its Subsidiaries) in respect of capital contributions, project completions and cost-overruns
and other performance matters and (B) Guarantees and/or indemnities by the MG Borrower or
any Subsidiary (other than the Florida Borrower or any of its Subsidiaries) in respect of
Customary Nonrecourse Exceptions, in each case in connection with investments or
Indebtedness otherwise permitted under this Agreement and (C) indemnities by the Florida
Borrower incurred in the ordinary course of business in connection with the ownership and
operation of the Florida Property, including, without limitation, pursuant to contracts for
the restoration or renovation of property owned by the Florida Borrower;

(xiv) unsecured Indebtedness incurred solely in connection with the acquisition of
Equity Interests in a Subsidiary or joint venture permitted pursuant to Section
10.4., provided that such unsecured Indebtedness (A) shall not exceed
$25,000,000 at any time outstanding, (B) shall not have an earlier maturity date or shorter
weighted average life than one (1) year after the Termination Date and (C) shall be an
obligation incurred by the buyer to the seller in connection with the acquisition of such
Equity Interests, and provided further that such unsecured Indebtedness may be
guaranteed by a Subsidiary (other than the Florida Borrower or any of its Subsidiaries) so
long as such Subsidiary concurrently becomes a Guarantor under the Guaranty;

(xv) unsecured Indebtedness incurred (other than by the Florida Borrower or any of its
Subsidiaries) to refinance the Trust Preferred Securities existing on the Effective Date,
provided that such unsecured Indebtedness (A) shall not be in a principal amount
that exceeds the principal amount of the Trust Preferred Securities being refinanced (plus
any accrued but unpaid interest and redemption premium thereon), (B) shall not have an
earlier maturity date or shorter weighted average life than two (2) years after the
Termination Date, (C) shall not contain any (i) financial maintenance covenants and (ii)
Operational Covenants that are more restrictive than the covenants contained in the Loan
Documents and (D) shall have an interest rate of less than 8.675%, and provided
further that such unsecured Indebtedness may be guaranteed by a Subsidiary (other than the
Florida Borrower or any of its Subsidiaries) so long as such Subsidiary concurrently becomes
a Guarantor under the Guaranty;

 

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(xvi) unsecured Indebtedness incurred (other than by the Florida Borrower or any of its
Subsidiaries) to refinance the Convertible Notes, provided that such unsecured
Indebtedness (A) shall not be in a principal amount that exceeds the principal amount of the
Convertible Notes being refinanced (plus any accrued but unpaid interest and redemption
premium thereon), (B) shall not have an earlier maturity date or shorter weighted average
life than two (2) years after the Termination Date, and (C) shall not
contain any (x) financial maintenance covenants (it being understood that this clause
shall not limit financial condition covenants that apply solely as conditions to the
consummation of specified transactions) and (y) Operational Covenants that are more
restrictive than the Operational Covenants contained in the Loan Documents, and
provided further that (i) Holdings is in compliance, on a Pro Forma Basis after
giving effect to such unsecured Indebtedness, with the covenant contained in Section
10.11., (ii) such unsecured Indebtedness may be guaranteed by a Subsidiary (other than
the Florida Borrower or any of its Subsidiaries) so long as such Subsidiary concurrently
becomes a Guarantor under the Guaranty and (iii) such unsecured Indebtedness may contain
Operational Covenants that are more restrictive than the Operational Covenants contained in
the Loan Documents so long as, if the Requisite Lenders shall so request, the Borrowers
shall, and shall cause the Guarantors to, enter into such agreements as may be reasonably
requested to modify the Loan Documents to contain those of the more restrictive Operational
Covenants applicable to such unsecured Indebtedness as may be specified in the request of
the Requisite Lenders (it being understood that the incorporation of any such Operational
Covenants shall also incorporate any applicable default notice and cure periods included in
such unsecured Indebtedness with respect to such incorporated Operational Covenants); and

(xvii) unsecured Indebtedness incurred (other than by the Florida Borrower or any of
its Subsidiaries) to refinance Preferred Stock existing on the Effective Date,
provided that such unsecured Indebtedness (A) shall not be in a principal amount
that exceeds the redemption price of the Preferred Stock being refinanced, (B) shall not
have an earlier maturity date or shorter weighted average life than two (2) years after the
Termination Date and (C) shall not contain any (i) financial maintenance covenants (it being
understood that this clause shall not limit financial condition covenants that apply solely
as conditions to the consummation of specified transactions) and (ii) Operational Covenants
that are more restrictive than the covenants contained in the Loan Documents,
provided further (i) that the Fixed Charge Coverage Ratio, on a Pro Forma Basis
after giving effect to such unsecured Indebtedness, shall be greater than or equal to 1.50
to 1.00, (ii) that such unsecured Indebtedness may be guaranteed by a Subsidiary (other than
the Florida Borrower or any of its Subsidiaries) so long as such Subsidiary concurrently
becomes a Guarantor under the Guaranty and (iii) such unsecured Indebtedness may contain
Operational Covenants that are more restrictive than the Operational Covenants contained in
the Loan Documents so long as, if the Requisite Lenders shall so request, the Borrowers
shall, and shall cause the Guarantors to, enter into such agreements as may be reasonably
requested to modify the Loan Documents to contain those of the more restrictive Operational
Covenants applicable to such unsecured Indebtedness as may be specified in the request of
the Requisite Lenders (it being understood that the incorporation of any such Operational
Covenants shall also incorporate any applicable default notice and cure periods included in
such unsecured Indebtedness with respect to such incorporated Operational Covenants).

(b) Holdings will not create, incur, assume or permit to exist any Indebtedness except (i)
Indebtedness created under the Loan Documents and (ii) Indebtedness that would be permitted to be
created, incurred or assumed by the MG Borrower or any Subsidiary under Sections
10.1.(a)(ii), (v), (ix), (x), (xi), (xiii),
(xiv), (xv), (xvi) and (xvii).

 

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(c) Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to, issue
after the Effective Date any Preferred Equity Interests except for Preferred Equity Interests that
(i) are Preferred Stock or (ii) issued pursuant to the Outperformance Award Program (2011);
provided that the Florida Borrower shall not issue any Preferred Equity Interests after the
Effective Date.

Section 10.2 Liens. (a) Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights
in respect of any thereof, except:

(i) Liens created under the Loan Documents and in the case of any Collateral encumbered
by a Security Document, other Liens expressly permitted on such Collateral by such Security
Document;

(ii) Permitted Liens;

(iii) any Lien on any property or asset of the MG Borrower or any Subsidiary existing
on the date hereof and set forth in Schedule 7.1.(f), provided that (A) such
Lien shall not apply to any other property or asset of the MG Borrower or any Subsidiary
(other than assets financed by the same financing source pursuant to the same financing
scheme in the ordinary course of business) and (B) such Lien shall secure only those
obligations that it secures on the date hereof and extensions, renewals and replacements
thereof so long as the principal amount of such extensions, renewals and replacements does
not exceed the principal amount of the obligations being extended, renewed or replaced (plus
any accrued but unpaid interest and redemption premium thereon);

(iv) Liens securing Indebtedness permitted by clause (a)(iii) of Section 10.1;
provided that such Liens shall not apply to any property of a Loan Party other than
Equity Interests of the entity that directly or indirectly owns the property financed by
such Indebtedness (other than Equity Interests in the Loan Parties);

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

 

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(vi) Liens on fixed or capital assets acquired, constructed or improved (including any
such assets made the subject of a Capital Lease Obligation incurred) by the MG Borrower or
any Subsidiary (other than the Florida Borrower or any of its Subsidiaries),
provided that (A) such Liens secure Indebtedness incurred to finance such
acquisition, construction or improvement and are permitted by clause (vi)(A) of Section
10.1.(a) or to extend, renew or replace such Indebtedness and are permitted by clause
(vi)(B) of Section 10.1.(a), (B) such Liens and the Indebtedness secured thereby are
incurred prior to or within 180 days after such acquisition or the completion of such
construction or improvement (provided that this clause (B) shall not apply to any
Indebtedness permitted by clause (vi)(B) of Section 10.1.(a) or any Lien securing
such Indebtedness), (C) the Indebtedness secured thereby does not exceed the lesser of the
cost of acquiring, constructing or improving such fixed or capital asset or, in the case of
Indebtedness permitted by clause (vi)(A) of Section 10.1.(a), its fair market value
at the time such security interest attaches, and in any event, the aggregate principal
amount of such Indebtedness does not exceed $5,000,000 at any time outstanding and (D) such
Liens shall not apply to any other property or assets of the MG Borrower or any Subsidiary
(except assets financed by the same financing source pursuant to the same financing scheme
in the ordinary course of business);

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

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

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

(x) Liens not otherwise permitted by this Section 10.2.(a) to the extent that
the aggregate outstanding principal amount of the obligations secured thereby does not
exceed $1,000,000 at any time outstanding; and

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

(b) No Liens on Collateral. For avoidance of a doubt, neither Holdings nor the MG
Borrower will, nor will they permit the Florida Borrower or any other Subsidiary to, create, incur,
assume, or permit to exist Indebtedness secured by, or Liens on, the Florida Property or any other
Collateral except for Permitted Encumbrances (as defined in the Security Deed encumbering such
Collateral).

 

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Section 10.3 Fundamental Changes. (a) Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to,
merge into or consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, (i) if at the time thereof and
immediately after giving effect thereto no Default or Event of Default shall have occurred and be
continuing (w) any Person (other than the Florida Borrower) may merge into the MG Borrower in a
transaction in which the MG Borrower is the surviving entity, (x) any Person (other than the MG
Borrower and the Florida Borrower) may merge into any Subsidiary in a transaction in which the
surviving entity is a Subsidiary and (if any party to such merger is a Loan Party) is a Subsidiary
that is Loan Party, (y) any Subsidiary (other than a Subsidiary that is a Loan Party) may liquidate
or dissolve if the MG Borrower determines in good faith that such liquidation or dissolution is in
the best interests of the MG Borrower and is not materially disadvantageous to the Lenders and (z)
any Subsidiary (other than any Subsidiary that is a Loan Party) may merge into another Person in a
transaction permitted by Section 10.5. in which such Person is the surviving entity,
provided that any such merger involving a Person that is not a Wholly Owned Subsidiary
immediately prior to such merger shall not be permitted unless also permitted by Sections
10.4. and 10.5.

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

(c) Holdings will not engage in any business or activity other than the ownership of Equity
Interests of the MG Borrower, and activities incidental thereto and compliance with its obligations
under the Loan Documents. Holdings will not own or acquire any assets (other than Equity Interests
of the MG Borrower, Hard Rock Hotel Holdings LLC, cash, Permitted Investments and other immaterial
assets) or incur any liabilities (other than liabilities under the Loan Documents, liabilities
permitted pursuant to Section 10.1.(b), liabilities imposed by law, including tax
liabilities, and other liabilities incidental to its existence as a public holding company and
permitted business and activities).

Section 10.4 Investments, Loans, Advances, Guarantees and Acquisitions. Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to,
purchase, hold or acquire (including pursuant to any merger with any Person that was not a
wholly-owned Subsidiary prior to such merger) any Equity Interests (but specifically excluding (x)
Holdings’ right to acquire and hold additional Equity Interests in the MG Borrower and (y)
redemptions or other repurchases by the MG Borrower or Holdings of any such Equity Interests in
accordance with the provisions of Sections 4.2.(e) and 7.4.(d) of the LLC Agreement) in or
evidences of Indebtedness or other securities (including any option, warrant or other right to
acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest in, any other
Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any
assets of any other Person constituting a business unit, except:

(a) Permitted Investments;

(b) Permitted Acquisitions;

(c) investments existing on the date hereof in any Subsidiary or joint venture and set
forth on Schedule 10.4.;

 

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

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

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

(g) investments in the form of Swap Agreements permitted by Section 10.6.;

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

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

(j) investments received in connection with the disposition of any asset permitted by
Section 10.5.;

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

(l) investments by the MG Borrower or a Subsidiary (other than the Florida Borrower or
any of its Subsidiaries) in Subsidiaries and joint ventures the primary business of which
are businesses of the type conducted by the MG Borrower and the Subsidiaries on the
Effective Date and businesses reasonably related thereto, provided that immediately
after giving effect to such investment, in the case of any investment in a
joint venture that is not a Subsidiary, (i) the MG Borrower or such Subsidiary will own
Equity Interests in such joint venture representing at least 50% of the aggregate equity
value represented by the issued and outstanding Equity Interests in such joint venture, (ii)
the MG Borrower or a Subsidiary will manage or otherwise be responsible for the day-to-day
operations of such joint venture pursuant to a customary management contract (or will have
been designated to act in such capacity upon project completion) or will have influence over
such day-to-day operations by virtue of a franchise arrangement (or will have been
designated to have such influence upon project completion) or (iii) the MG Borrower or a
Subsidiary will be the managing member or day-to-day administrative member of such joint
venture, or will have approval rights over major decisions with respect to such joint
venture;

 

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(m) other investments, loans and advances by the MG Borrower or any Subsidiary (other
than the Florida Borrower or any of its Subsidiaries) in an aggregate amount, as valued at
cost at the time each such investment, loan or advance is made and including all related
commitments for future investments, loans or advances (and the principal amount of any
Indebtedness that is assumed or otherwise incurred in connection with such investment, loan
or advance other than Guarantees permitted under Section 10.1.(a)(xiii)) and without
giving effect to any write-downs or write-offs thereof, that at the time of, and after
giving effect to, the making thereof would not exceed $150,000,000 plus (i) the Net Sale
Proceeds of asset sales by Holdings and any of its Subsidiaries that occur after the
Effective Date minus any amounts expended pursuant to Section 10.7.(ix) and (ii) the
Restricted Payment Cap Amount minus any amounts expended pursuant to Section
10.7.(viii);

(n) repurchases by either of Holdings or the MG Borrower of the Trust Preferred
Securities or other Equity Interests to the extent permitted by Section 10.7(viii);

(o) any Guarantees and/or indemnities permitted by Section 10.1.(a)(xiii);

(p) investments and contributions of promoted interests or assets of a similar nature
to the Subsidiary formed for the purpose of issuing Equity Interests to the beneficiaries of
the Executive Promoted Interest Bonus Pool (2011); and

(q) investments and contributions made, and cash flow guaranties or similar instruments
of assurance provided, in connection with obtaining or maintaining management agreements in
favor of the Management Company.

Notwithstanding the foregoing, the Florida Borrower will not purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly-owned Subsidiary prior to such merger)
any Equity Interests in or evidences of Indebtedness or other securities (including any option,
warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit, except as provided in
Sections 10.4.(a), (b), (d), (i) and (k).

 

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Section 10.5 Asset Sales. Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to, sell,
transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by it, nor
will Holdings or the MG Borrower permit any Subsidiary to issue any additional Equity Interest in
such Subsidiary (other than issuing directors’ qualifying shares and other than issuing Equity
Interests to the MG Borrower or another Subsidiary in compliance with Section 10.4.(e)(i)),
except:

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

(b) sales, transfers, leases and other dispositions to the MG Borrower or a Subsidiary,
provided that any such sales, transfers, leases or other dispositions involving a
Subsidiary that is not a Loan Party shall be made in compliance with Section 10.8.;

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

(d) sales, transfers, leases and other dispositions of property to the extent that such
property constitutes an investment permitted by clause (f), (h) or
(j) of Section 10.4. or another asset received as consideration for the
disposition of any asset permitted by this Section (in each case, other than Equity
Interests in a Subsidiary, unless all Equity Interests in such Subsidiary are sold);

(e) sale and leaseback transactions (other than with respect to the Florida Property or
any other Collateral) not prohibited by any other Section of this Article X.;

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

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

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

(i) sales, transfers and other dispositions of assets (other than the Florida Property
or any other Collateral) or any direct or indirect interest therein, provided that
promptly following the receipt of any cash proceeds from such sale, transfer or disposition,
the MG Borrower or the applicable Subsidiary will use such proceeds to (x) acquire,
maintain, develop, construct, improve, upgrade or repair assets useful in the business of
the Loan Parties, make Restricted Payments pursuant to Section 10.7.(ix) or
make investments pursuant to Section 10.4.(b), (l) or (m), in
each case within one (1) year of such receipt or (y) repay outstanding Indebtedness;

(j) sales, transfers and other dispositions of assets (other than the Florida Property
or any other Collateral) that are not permitted by any other clause of this Section,
provided that the aggregate fair market value of all assets sold, transferred or
otherwise disposed of in reliance upon this clause (j) shall not exceed $5,000,000 during
any fiscal year of the MG Borrower.

 

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Section 10.6 Swap Agreements. Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to, enter
into any Swap Agreement, except (i) Swap Agreements entered into to hedge or mitigate risks to
which the MG Borrower or any Subsidiary has actual exposure (other than those in respect of shares
of capital stock or other equity ownership interests of the MG Borrower or any Subsidiary), (ii)
Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from
fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect
to any interest-bearing liability or investment of the MG Borrower or any Subsidiary, (iii) the MG
Borrower or any Subsidiary will be entitled to issue interest rate protection pursuant to one or
more Swap Agreements if and to the extent that one or more other Wholly Owned Subsidiaries of the
MG Borrower or such Subsidiary is purchasing or already owns offsetting interest rate protection
for the same duration (or longer) and notional amount (or greater) and (iv) Holdings may enter into
hedge and warrant transactions in connection with the Convertible Notes or other Indebtedness
incurred to refinance the Convertible Notes permitted hereunder for the purpose of reducing
potential dilution from conversion of the Convertible Notes or such Indebtedness incurred to
refinance the Convertible Notes permitted hereunder.

Section 10.7 Restricted Payments. Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to, declare
or make, or authorize, directly or indirectly, any Restricted Payment, except (i) the Subsidiaries
of the MG Borrower may declare and pay dividends ratably with respect to their Equity Interests,
(ii) Holdings may declare and pay dividends with respect to its common stock payable solely in
shares of common stock, (iii) the MG Borrower may make Restricted Payments to Holdings so that
Holdings may (and Holdings may), make Restricted Payments pursuant to and in accordance with stock
option plans or other benefit plans approved by Holdings’ board of directors for management or
employees of Holdings, the MG Borrower and the Subsidiaries, (iv) the MG Borrower may make
Restricted Payments to Holdings at such times and in such amounts (A) as shall be necessary to
permit Holdings to discharge its general corporate and overhead (including franchise taxes and
directors fees) expenses incurred in the ordinary course and other permitted liabilities and (B) as
shall be necessary to pay the tax liabilities of Holdings directly attributable to (or arising as a
result of) the operations of the MG Borrower and the Subsidiaries; provided that (1) the
amount of Restricted Payments pursuant to clause (B) of this clause (iv) shall not exceed the
amount that the MG Borrower and the Subsidiaries would be required to pay in respect of federal,
State and local taxes were the MG Borrower and the Subsidiaries to pay such taxes as stand-alone
taxpayers and (2) all Restricted
Payments made to Holdings pursuant to this clause (iv) are used by Holdings for the purposes
specified herein within 10 Business Days after Holdings’ receipt thereof, (v) so long as no Default
or Event of Default shall have occurred and be continuing or would result therefrom, each of
Holdings, the MG Borrower and its Subsidiaries may declare and pay dividends in respect of
Preferred Stock and/or Trust Preferred Securities otherwise permitted hereunder, (vi) to the extent
constituting Restricted Payments, Holdings, the MG Borrower and its Subsidiaries may (A) purchase
Equity Interests in any Subsidiary or joint venture to the extent otherwise permitted by
Section 10.4. and (B) make interest payments in respect of the Convertible Notes, (vii)
Holdings, the MG Borrower and its Subsidiaries may make Restricted Payments pursuant to the
Outperformance Award Program (2011) and the Executive Promoted Interest Bonus Pool (2011), (viii)
Holdings, the MG Borrower and its Subsidiaries may make Restricted Payments not otherwise permitted
by this Section 10.7., including the purchase of the Trust Preferred Securities existing on
the

 

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Effective
Date and/or the redemption of the Convertible Notes, in an aggregate amount not to exceed the Restricted Payment Cap Amount and (ix) Holdings, the MG Borrower and its Subsidiaries
may make Restricted Payments in order to purchase the Trust Preferred Securities existing on the
Effective Date and/or in order to redeem the Convertible Notes in an aggregate amount equal to the
Net Sale Proceeds from the sale of assets of Holdings and any of its Subsidiaries (excluding Net
Sale Proceeds from the sale of (a) the Florida Property or (b) in the case of the Trust Preferred
Securities existing on the Effective Date, the Hudson Hotel); provided that a Restricted
Payment pursuant to this clause (ix) shall only be permitted if the Fixed Charge Coverage Ratio
immediately after giving effect to any Restricted Payment pursuant to this clause (ix) shall be
greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Restricted
Payment. Notwithstanding the foregoing, Holdings, the MG Borrower and its Subsidiaries may (A)
redeem Preferred Equity Interests provided that such redemption is funded through the concurrent
issuance of new Preferred Equity Interests or common stock and (B) redeem the Trust Preferred
Securities existing on the Effective Date, the Convertible Notes and Preferred Stock with the
proceeds of any refinancing thereof permitted pursuant to Sections 10.1.(a)(xv),
10.1(a) (xvi), 10.1(a) (xvii) or 10.1(b).

Section 10.8 Transactions with Affiliates. Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any of its Affiliates,
except (i) transactions at prices and on terms and conditions not less favorable to the MG Borrower
or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties or,
in the case of management and/or franchise agreements arising in the ordinary course of business,
agreements between any Subsidiary and the MG Borrower or any other Subsidiary as reasonably deemed
appropriate by the MG Borrower, (ii) transactions between or among the MG Borrower and the
Subsidiaries that are Loan Parties not involving any other Affiliate, (iii) payroll, travel and
similar advances to cover matters permitted under Section 10.4.(d), (iv) the payment of
reasonable fees to directors or managers of Holdings, the MG Borrower or any Subsidiary who are not
employees of Holdings, the MG Borrower or any Subsidiary, and compensation and employee benefit
arrangements paid to, and indemnities provided for the benefit of, directors, managers, officers or
employees of Holdings, the MG Borrower or the Subsidiaries in the ordinary course of business, (v)
any issuances of securities or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of,
employment agreements, stock options, stock ownership plans and other benefit plans approved
by Holdings’ board of directors or any committee thereof, (vi) employment and severance
arrangements entered into in the ordinary course of business between Holdings, the MG Borrower or
any Subsidiary and any employee thereof and approved by Holdings’ board of directors or any
committee thereof, (vii) intentionally omitted, (viii) any Restricted Payment permitted by
Section 10.7. or any distributions of cash or other assets from any Person to any Loan
Party or any Subsidiary in respect of Equity Interests held by such Loan Party or Subsidiary in
that Person and (ix) capital contributions and other investments permitted by Section 10.4.
by the MG Borrower to a Subsidiary or other Affiliate or by a Subsidiary to any other Subsidiary or
Affiliate, provided that a Financial Officer has determined in good faith that the terms of
such contribution or other investment are fair and reasonable to the contributing party.

 

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Section 10.9 Restrictive Agreements. Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to, directly
or indirectly, enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of Holdings, the MG Borrower or
any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets or
(b) the ability of any Wholly-Owned Subsidiary of the MG Borrower to pay dividends or other
distributions with respect to any of its Equity Interests or to repay loans or advances to the MG
Borrower or any other Loan Party or to Guarantee the Obligations, provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by (A) Applicable Law or (B) any
Loan Document, (ii) the foregoing shall not apply to restrictions and conditions existing on the
date hereof identified on Schedule 10.9. or included in any Indebtedness incurred pursuant
to Section 10.1(a)(vii) (but shall apply to any extension or renewal of, or any amendment,
modification or replacement if it results in an expansion of the scope of, any such restriction or
condition in any material respect), (iii) the foregoing shall not apply to customary restrictions
and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending
such sale, provided that such restrictions and conditions apply only to the Subsidiary or
assets that is or are to be sold and such sale is permitted hereunder, (iv) the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness
permitted by this Agreement to the extent that such Indebtedness (x) prohibits the issuer thereof
(other than a Loan Party) from issuing any Guarantee of the Obligations, (y) contains negative
pledge clauses or other restrictions or conditions applicable only to the property or assets of, or
the direct or indirect Equity Interests in, such issuer; or (z) arising under organizational
documents of the issuer of such Indebtedness or any Subsidiary of the MG Borrower that is
reasonably related to such financing, (v) clause (a) of the foregoing shall not apply to (x)
customary provisions in leases, licenses and other contracts restricting the assignment thereof or
(y) restrictions on the transfer or pledge of direct or indirect equity interests in any joint
venture or Subsidiary that is not a Wholly Owned Subsidiary and (vi) the foregoing shall not apply
to restrictions in any unsecured Indebtedness otherwise permitted hereunder so long as (x) in the
case of restrictions of the type described in clause (a), such restrictions are not more
restrictive than the restrictions set forth herein in any material respect and (y) in the case of
restrictions on Guarantees of the type described in clause (b) above, such restriction permits
Guarantees of the Obligations by any Subsidiary if the such Indebtedness is also guarantied by such
Subsidiary. 

Section 10.10 Amendment of Material Documents. Neither Holdings nor the MG Borrower will, nor will they permit any Subsidiary to, amend,
modify, waive, terminate or release (a) its certificate of incorporation, by-laws or other
organizational documents, (b) the Convertible Notes and the Trust Preferred Securities existing on
the Effective Date, other than repayment or termination of such Indebtedness, (c) any agreements
governing any joint venture of the MG Borrower or any Subsidiary as of the Effective Date which
joint venture owns any asset used in or related to the Florida Property, in each case if the effect
of such amendment, modification, waiver, termination or release is materially adverse to Holdings,
the MG Borrower, any Subsidiary or the Lenders or (d) the Delano Management Agreement, the Delano
License or any Material Contract without the prior written consent of the Agent, in each case if
the effect of such amendment, modification, waiver, termination or release is materially adverse to
Holdings, the MG Borrower, any Subsidiary or the Lenders; provided, however, that
in the case of clause (b), any amendment, modification or waiver with respect to Indebtedness that
would not violate the requirements of Section 10.1.(a)(ii), 10.1(a)(xv),
10.1(a)(xvi) or 10.1(b), if made in the context of a refinancing of such Indebtedness
permitted hereunder shall be permitted under this Section 10.10. (whether or not associated
with a refinancing). Neither Holdings nor the MG Borrower will, nor will they permit any
Subsidiary to, amend, modify, waive, terminate or release any agreements governing any joint
venture of the MG Borrower or any Subsidiary as of the Effective Date if such amendment,
modification, waiver, termination or release would have a Material Adverse Effect.

 

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Section 10.11 Financial Covenants. Neither Holdings nor the Borrowers shall permit:

(a) Minimum Fixed Charge Coverage Ratio. The ratio (determined on a Pro Forma
Basis in accordance with Section 1.3.) of (i) Consolidated EBITDA for the period of
four consecutive fiscal quarters of Holdings most recently ending to (ii) Consolidated Fixed
Charges for such period, (x) at any time on or prior to June 30, 2012, to be less than 1.05
to 1.00, (y) at any time after June 30, 2012, to be less than 1.10 to 1.00 and (z)
notwithstanding the foregoing clauses (x) and (y), in the event any unsecured Indebtedness
is incurred pursuant to Section 10.1(a).(xvii), at any time after the incurrence of
such unsecured Indebtedness, to be less than 1.20 to 1.00.

Section 10.12 Changes in Fiscal Periods. Holdings will neither (a) permit its fiscal year or the fiscal year of the MG Borrower or
any Subsidiary to end on a day other than December 31, nor (b) change its method of determining
fiscal quarters.

Section 10.13 ERISA Exemptions. Holdings and the MG Borrower shall not, and shall not permit any Subsidiary to, permit any
of its respective assets to become or be deemed to be “plan assets” within the meaning of ERISA,
the Internal Revenue Code and the respective regulations promulgated thereunder.

Section 10.14 Availability of Exceptions. For the avoidance of doubt, in determining compliance with the restrictions set forth in
this Article X with respect to any proposed financing, purchase, sale or other transaction,
the Loan Parties shall be entitled to elect and rely upon any single exception or any combination
of applicable exceptions as they deem appropriate.

 

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ARTICLE XI

Default

Section 11.1 Events of Default. Each of the following shall constitute an Event of Default, whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by operation of Applicable
Law or pursuant to any judgment or order of any Governmental Authority:

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

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

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

(d) Holdings or any Borrower shall fail to observe or perform any covenant, condition
or agreement contained in (i) Section 8.1. (with respect to keeping in effect the
existence of Holdings, the MG Borrower or the Florida Borrower), Section 8.7.,
subsection (e) of Section 9.4., Section 10.1., subsection (b) of Section
10.2., Section 10.3., Section 10.7. or Section 10.11., or (ii)
Section 8.4. (with respect to the Florida Property) or any other Section of
Article X. not referred to in clause (i) above and in the case of this clause (ii)
only, such failure shall continue unremedied for a period of 10 days after the MG Borrower
receives written notice thereof from the Agent;

(e) (i) any Loan Party shall fail to observe or perform any covenant, condition or
agreement contained in any Loan Document (other than those specified in subsections (a), (b)
or (d) of this Section), and such failure shall continue unremedied for a period of 30 days
after the MG Borrower receives written notice thereof from the Agent to the MG
Borrower and/or (ii) an Event of Default (under and as defined in any of the other Loan
Documents) shall occur;

(f) Holdings, the MG Borrower or any Subsidiary that is a Loan Party shall fail to make
any payment of principal or interest (regardless of amount) in respect of any Material
Indebtedness, beyond any applicable period of grace set forth in such Material Indebtedness;

(g) any event or condition occurs that (A) results in any Material Indebtedness
becoming due prior to its scheduled maturity or (B) constitutes a default with respect to
any Material Indebtedness and all applicable notice or cure periods have expired such that
the lender or other party thereto is entitled to accelerate such Material Indebtedness or
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(h) an involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of Holdings, the MG
Borrower, any Subsidiary that is a Loan Party or any other Material Subsidiary or its debts,
or of a substantial part of its assets, under any federal, state or foreign bankruptcy,
insolvency, receivership, relief of debtors or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar
official for Holdings, the MG Borrower, any Subsidiary that is a Loan Party or any other
Material Subsidiary or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;

(i) Holdings, the MG Borrower, any Subsidiary that is a Loan Party or any other
Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any federal, state or foreign
bankruptcy, insolvency, receivership, relief of debtors or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or petition described in subsection (h) of this Section
11.1., (iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Holdings, the MG Borrower, any Subsidiary
that is a Loan Party or any other Material Subsidiary or for a substantial part of its
assets, (iv) file an answer admitting the material allegations of a petition filed against
it in any proceeding described in subsection (h) of this Section 11.1., (v) make a
general assignment for the benefit of creditors or (vi) take any formal action for the
purpose of effecting any of the foregoing;

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

(k) one or more judgments for the payment of money in an aggregate amount in excess of
$10,000,000 shall be rendered against Holdings, the MG Borrower, or any Subsidiary or any
combination thereof (provided that in determining whether the
foregoing threshold is satisfied, there shall be excluded any portion of such judgments
that is fully covered by a solvent third party insurance company (less any applicable
deductible) and as to which the insurer has not disputed, in writing, its responsibility to
cover such judgment, order, decree or arbitration award) and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of Holdings, the MG Borrower or any Subsidiary to enforce any such
judgment;

 

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(l) any “reportable event” (as defined in Section 4043 of ERISA) shall have occurred
with respect to any Plan that results in an aggregate liability in excess of $10,000,000;
any Plan shall fail to satisfy the minimum funding standard required for any plan year or
part thereof under Section 412 of the Code or Section 302 of ERISA with a resulting
aggregate liability in excess of $10,000,000, or a waiver of such standard or extension of
any amortization is sought or granted under Section 412 of the Code or Section 302 or 304 of
ERISA; any member of the ERISA Group shall fail to pay when due an amount or amounts
aggregating in excess of $10,000,000 which it shall have become liable to pay under Title IV
of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded
Liabilities in excess of $10,000,000 shall be filed under Title IV of ERISA by any member of
the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Plan or Plans having aggregate Unfunded Liabilities in excess
of $10,000,000; or a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment obligation in excess of $10,000,000;

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

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

(o) the Guaranty shall cease to be in full force and effect (other than in accordance
with the terms of the Loan Documents); or

(p) a Change in Control shall occur.

Notwithstanding the foregoing, any events that would give rise to an Event of Default under
subsections (h), (i), (j) or (k) of this Section 11.1. will not constitute an Event of
Default with respect to a Subsidiary of the MG Borrower that is not a Loan Party (the
“Defaulting Subsidiary”), if and for so long as (1) the Defaulting Subsidiary is a special
purpose entity that does not own any assets other than a direct or indirect interest in one
Property (the “Subject Property”) and that does not have any Indebtedness or other
liabilities other than those directly related to the ownership and operation of the Subject
Property, (2) the event giving rise to the Event of Default occurs as a result of a default by the
Defaulting Subsidiary under a mortgage loan or mezzanine loan (the “Property Debt”)
financing the Subject Property, (3) the Subject Property is not Collateral for any of the
Obligations, (4) such Property Debt is non-recourse to Holdings, the MG Borrower and any other
Subsidiary (other than the Defaulting Subsidiary), (5) neither Holdings, the MG Borrower nor any
other Subsidiary (other than the Defaulting Subsidiary) has any remaining liability or obligation
with respect to the Property Debt or any other Indebtedness of the Defaulting Subsidiary other than
Customary Nonrecourse Exceptions with respect to the Property Debt, and (6) the Agent has not
determined that there is a reasonable basis for any claim to be asserted, or if a claim has been
asserted, has not determined that there is a reasonable basis for such claim, in either case,
against Holdings, the MG Borrower or any other Subsidiary (other than a claim against the
Defaulting Subsidiary) under any such Customary Nonrecourse Exceptions, under any guaranty or under
any other document related to such Property Debt or any other Indebtedness of the Defaulting
Subsidiary.

 

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Section 11.2 Remedies Upon Event of Default. Upon the occurrence of an Event of Default the following provisions shall apply:

(a) Acceleration; Termination of Facilities.

(i) Automatic. Upon the occurrence of an Event of Default specified in
Section 11.1.(h) or 11.1.(i), (A)(i) the principal of, and
all accrued interest on, the Loans and the Notes at the time outstanding, (ii) an
amount equal to the Stated Amount of all Letters of Credit outstanding as of the
date of the occurrence of such Event of Default (for deposit into the Collateral
Account pursuant to Section 11.5.) and (iii) all of the other Obligations,
including, but not limited to, the other amounts owed to the Lenders, the Issuing
Bank and the Agent under this Agreement, the Notes or any of the other Loan
Documents shall become immediately and automatically due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
expressly waived by the Borrowers and (B) all of the Commitments, the obligation of
the Lenders to make Loans and the obligation of the Issuing Bank to issue Letters of
Credit hereunder, shall all immediately and automatically terminate.

(ii) Optional. If any other Event of Default shall exist, the Agent
shall, at the written direction of the Requisite Lenders: (A) declare (1) the
principal of, and accrued interest on, the Loans and the Notes at the time
outstanding, (2) an amount equal to the Stated Amount of all Letters of Credit
outstanding as of the date of the occurrence of such other Event of Default (for
deposit into the
Collateral Account pursuant to Section 11.5.) and (3) all of the other
Obligations, including, but not limited to, the other amounts owed to the Lenders,
the Issuing Bank and the Agent under this Agreement, the Notes or any of the other
Loan Documents to be forthwith due and payable, whereupon the same shall immediately
become due and payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived by the Borrowers and (B) terminate the
Commitments, the obligation of the Lenders to make Loans hereunder and the
obligation of the Issuing Bank to issue Letters of Credit hereunder.

(b) Loan Documents. The Requisite Lenders may direct the Agent to, and the
Agent if so directed shall, exercise any and all of its rights under any and all of the
other Loan Documents.

(c) Applicable Law. The Requisite Lenders may direct the Agent to, and the
Agent if so directed shall, exercise all other rights and remedies it may have under any
Applicable Law.

 

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(d) Appointment of Receiver. To the extent permitted by Applicable Law, the
Agent and the Lenders shall be entitled to the appointment of a receiver for the assets and
properties of the MG Borrower and its Subsidiaries, without notice of any kind whatsoever
and without regard to the adequacy of any security for the Obligations or the solvency of
any party bound for their payment, to take possession of all or any portion of the business
operations of the MG Borrower and its Subsidiaries and to exercise such power as the court
shall confer upon such receiver.

Section 11.3 Remedies Upon Default. Upon the occurrence of a Default specified in Section 11.1.(h), the Commitments
shall immediately and automatically terminate.

Section 11.4 Allocation of Proceeds. While an Event of Default exists, all payments received by the Agent under any of the Loan
Documents, in respect of any principal of or interest on the Obligations or any other amounts
payable by the Borrowers hereunder or thereunder, shall be applied in the following order and
priority:

(a) payment of all amounts due the Agent in respect of fees and expenses due under
Section 13.2.;

(b) payment of all amounts due the Lenders in respect of fees and expenses due under
Section 13.2., pro rata in the amount then due each Lender;

(c) payments of interest on all Loans and Reimbursement Obligations, to be applied for
the ratable benefit of the Lenders;

(d) payment of all amounts due the Agent, the Issuing Bank and the Lenders pursuant to
Sections 12.8. and 13.9.;

(e) payments of principal of all Loans, Reimbursement Obligations and other Letter of
Credit Liabilities, to be applied for the ratable benefit of the Lenders; provided,
however, to the extent that any amounts available for distribution pursuant to this
subsection are attributable to the issued but undrawn amount of an outstanding Letter of
Credit, such amounts shall be paid to the Issuing Bank for deposit into the Collateral
Account;

(f) payment of all other Obligations and other amounts due and owing by the MG Borrower
and the other Loan Parties under any of the Loan Documents, if any, to be applied for the
ratable benefit of the Lenders;

(g) any amount remaining after application as provided above, shall be paid to the
Borrowers or whoever else may be legally entitled thereto.

Section 11.5 Collateral Account. (a) At any time that there shall exist a Defaulting Lender, within one Business Day
following the written request of the Agent, the Borrowers shall Cash Collateralize the Issuing
Bank’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to
Section 3.12.(e) and any Cash Collateral provided by such Defaulting Lender) in an amount
not less than the Minimum Collateral Amount.

 

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(b) As collateral security for the prompt payment in full when due of all Letter of Credit
Liabilities and the other Obligations, the MG Borrower hereby pledges and grants to the Agent, for
the ratable benefit of the Issuing Bank and the Lenders as provided herein, a security interest in
all of its right, title and interest in and to the Collateral Account and the balances from time to
time in the Collateral Account (including the investments and reinvestments therein provided for
below). The balances from time to time in the Collateral Account shall not constitute payment of
any Letter of Credit Liabilities until applied by the Agent as provided herein. Anything in this
Agreement to the contrary notwithstanding, funds held in the Collateral Account shall be subject to
withdrawal only as provided in this Section.

(c) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral
provided under Section 11.5.(a) or Section 3.12. in respect of Letters of Credit
(including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such
obligation) shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund
participations in respect of Letter of Credit Liabilities for which the Cash Collateral was so
provided, prior to any other application of such property as may otherwise be provided for herein.

(d) Amounts on deposit in the Collateral Account shall be invested and reinvested by the Agent
in Permitted Investments as the Agent shall determine in its sole discretion. All such investments
and reinvestments shall be held in the name of and be under the sole dominion and control of the
Agent for the ratable benefit of the Lenders. The Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Collateral
Account and shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Agent accords other funds deposited with the Agent, it
being understood that the Agent shall not have any responsibility for taking any necessary steps to
preserve rights against any parties with respect to any funds held in the Collateral Account.

(e) If a drawing pursuant to any Letter of Credit occurs on or prior to the expiration date of
such Letter of Credit, the MG Borrower and the Lenders authorize the Agent to use the monies
deposited in the Collateral Account and proceeds thereof to make payment to the beneficiary with
respect to such drawing or the payee with respect to such presentment.

(f) If an Event of Default exists, the Requisite Lenders may, in their discretion, at any time
and from time to time, instruct the Agent to liquidate any such investments and reinvestments and
apply proceeds thereof to the Obligations in accordance with Section 11.4.

(g) So long as no Default or Event of Default exists, and to the extent amounts on deposit in
or credited to the Collateral Account exceed the aggregate amount of the Letter of Credit
Liabilities then due and owing, the Agent shall, from time to time, at the request of the MG
Borrower, deliver to the MG Borrower within 10 Business Days after the Agent’s receipt of such
request from the MG Borrower, against receipt from the MG Borrower but without any recourse,
warranty or representation whatsoever, such amount of the credit balances in the Collateral Account
as exceeds the aggregate amount of the Letter of Credit Liabilities at such time.

 

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(h) The MG Borrower shall pay to the Agent from time to time such fees as the Agent normally
charges for similar services in connection with the Agent’s administration of the Collateral
Account and investments and reinvestments of funds therein.

(i) Notwithstanding the foregoing, Cash Collateral (or the appropriate portion thereof)
provided to reduce the Issuing Bank’s Fronting Exposure shall no longer be required to be held as
Cash Collateral pursuant to Section 11.5.(a) following (i) the elimination of the
applicable Fronting Exposure (including by the termination of Defaulting Lender status of the
applicable Lender), or (ii) at any time that there exists excess Cash Collateral as provided
Section 11.5.(g); provided that, subject to Section 3.12. the Person
providing Cash Collateral and the Issuing Bank may agree that Cash Collateral shall be held to
support future anticipated Fronting Exposure or other obligations; and provided,
further that to the extent that such Cash Collateral was provided by the MG Borrower, such
Cash Collateral shall remain subject to the security interest granted pursuant to the Loan
Documents.

Section 11.6 Performance by Agent. If the Loan Parties shall fail to perform any covenant, duty or agreement contained in any
of the Loan Documents, the Agent may, after notice to the Loan Parties, perform or attempt to
perform such covenant, duty or agreement on behalf of the Loan Parties after the expiration of any
cure or grace periods set forth herein. In such event, the Loan Parties shall, at the request of
the Agent, promptly pay any amount reasonably expended by the Agent in such performance or
attempted performance to the Agent, together with interest thereon at the
applicable Post-Default Rate from the date of such expenditure until paid. Notwithstanding
the foregoing, neither the Agent nor any Lender shall have any liability or responsibility
whatsoever for the performance of any obligation of the Loan Parties under this Agreement or any
other Loan Document.

Section 11.7 Rights Cumulative. The rights and remedies of the Agent, the Issuing Bank and the Lenders under this Agreement
and each of the other Loan Documents shall be cumulative and not exclusive of any rights or
remedies which any of them may otherwise have under Applicable Law. In exercising their respective
rights and remedies the Agent, the Issuing Bank and the Lenders may be selective and no failure or
delay by the Agent, the Issuing Bank or any of the Lenders in exercising any right shall operate as
a waiver of it, nor shall any single or partial exercise of any power or right preclude its other
or further exercise or the exercise of any other power or right.

 

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ARTICLE XII

The Agent

Section 12.1 Appointment; Nature of Duties. The Lenders hereby irrevocably designate and appoint DBTCA as Agent to act as specified
herein and in the other Loan Documents. Each Lender hereby irrevocably authorizes, and each holder
of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Agent to
take such action on its behalf under the provisions of this Agreement, the other Loan Documents and
any other instruments and agreements referred to herein or therein and to exercise such powers and
to perform such duties hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto.
The Agent may perform any of its respective duties hereunder by or through its officers, directors,
agents, employees or affiliates. The Agent shall not have any duties or responsibilities except
those expressly set forth in this Agreement and in the other Loan Documents. Neither the Agent nor
any of its officers, directors, agents, employees or affiliates shall be liable for any action
taken or omitted by it or them hereunder or under any other Loan Document or in connection herewith
or therewith, unless caused by its or their gross negligence or willful misconduct (as determined
by a court of competent jurisdiction in a final and non-appealable decision). The duties of the
Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this
Agreement or any other Loan Document a fiduciary relationship in respect of any Lender or the
holder of any Note; and nothing in this Agreement or in any other Loan Document, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any obligations in
respect of this Agreement or any other Loan Document except as expressly set forth herein or
therein. Notwithstanding any other provision of this Agreement or any provision of any other Loan
Document, the Arranger is named as such for recognition purposes only, and in its capacity as such
shall have no powers, duties, responsibilities or liabilities with respect to this Agreement or the
other Loan Documents or the transactions contemplated hereby and thereby; it being understood and
agreed that the Arranger shall be entitled to all indemnification and reimbursement rights in favor
of the Agent as, and to the extent, provided for under Section 12.8.
and Section 13.2. Without limitation of the foregoing, the Arranger shall not, solely
by reason of this Agreement or any other Loan Documents, have any fiduciary relationship in respect
of any Lender or any other Person.

Section 12.2 Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Lender and the holder of each Note, to
the extent it deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Holdings and its Subsidiaries in connection
with the making and the continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of Holdings and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent shall not have any duty
or responsibility, either initially or on a continuing basis, to provide any Lender or the holder
of any Note with any credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times thereafter. The Agent shall not
be responsible to any Lender or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this Agreement or any other Loan Document or
the financial condition of Holdings or any of its Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions or conditions of
this Agreement or any other Loan Document, or the financial condition of Holdings or any of its
Subsidiaries or the existence or possible existence of any Default or Event of Default.

 

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Section 12.3 Certain Rights of Agent. If the Agent requests instructions from the Requisite Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other Loan Document, the
Agent shall be entitled to refrain from such act or taking such action unless and until the Agent
shall have received instructions from the Requisite Lenders; and the Agent shall not incur
liability to any Lender by reason of so refraining. Without limiting the foregoing, neither any
Lender nor the holder of any Note shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of the Requisite Lender.

Section 12.4 The Agent in its Individual Capacity. With respect to its obligation to make Loans, or issue or participate in Letters of Credit,
under this Agreement, the Agent shall have the rights and powers specified herein for a
“Lender” and may exercise the same rights and powers as though it were not performing the
duties specified herein; and the term “Lender,” “Requisite Lenders,” or any
similar terms shall, unless the context clearly indicates otherwise, include the Agent in its
respective individual capacities. The Agent and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of banking, investment banking, trust or other business
with, or provide debt financing, equity capital or other services (including financial advisory
services) to any Loan Party or any Affiliate of any Loan Party (or any Person engaged in a similar
business with any
Loan Party or any Affiliate thereof) as if they were not performing the duties specified
herein, and may accept fees and other consideration from any Loan Party or any Affiliate of any
Loan Party for services in connection with this Agreement and otherwise without having to account
for the same to the Lenders.

Section 12.5 Reliance; Delivery of Information. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent or made by any
Person that the Agent believed to be the proper Person, and, with respect to all legal matters
pertaining to this Agreement and any other Loan Document and its duties hereunder and thereunder,
upon advice of counsel selected by the Agent. The Agent shall not be required to deliver to any
Lender originals or copies of any documents, instruments, notices, communications or other
information received by the Agent from any Loan Party, any Subsidiary, the Requisite Lenders, any
Lender or any other Person under or in connection with this Agreement or any other Loan Document
except (i) as specifically provided in this Agreement or any other Loan Document and (ii) as
specifically requested from time to time in writing by any Lender with respect to a specific
document, instrument, notice or other written communication received by and in the possession of
the Agent at the time of receipt of such request and then only in accordance with such specific
request

Section 12.6 Collateral Matters. (a) Each Lender authorizes and directs the Agent to enter into the Security Documents for
the benefit of the Lenders and the Agent. Each Lender hereby agrees, and each holder of any Note
by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any
action taken by the Requisite Lenders in accordance with the provisions of this Agreement or the
Security Documents, and the exercise by the Requisite Lenders of the powers set forth herein or
therein, together with such other powers as are reasonably incidental thereto, shall be authorized
and binding upon all of the Lenders. The Agent is hereby authorized on behalf of all of the
Lenders, without the necessity of any notice to or further consent from any Lender, from time to
time prior to an Event of Default, to take any action with respect to any Collateral or Security
Documents which may be necessary to perfect and maintain perfected the security interest in and
liens upon the Collateral granted pursuant to the Security Documents.

 

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(b) The Lenders hereby authorize the Agent, at its option and in its discretion, to release
any Lien granted to or held by the Agent upon any Collateral (i) upon termination of the
Commitments and payment and satisfaction of all of the Obligations (other than inchoate
indemnification obligations) as provided in Section 13.9., (ii) constituting property being
sold or otherwise disposed of (to Persons other than Holdings and its Subsidiaries) upon the sale
or other disposition thereof in compliance with Section 10.5. or (iii) as otherwise may be
expressly provided in the relevant Security Documents. Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent’s authority to release particular types or items of
Collateral pursuant to this Section 12.6. Upon the request of the MG Borrower under any of
the circumstances described in the foregoing clauses (i)-(iii), the Agent shall promptly take such
action as the MG Borrower may reasonably request to release such collateral and evidence such
release of record.

(c) The Agent shall have no obligation whatsoever to the Lenders or to any other Person to
assure that the Collateral exists or is owned by any Loan Party or is cared for, protected or
insured or that the Liens granted to the Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise or to continue exercising at all or in any manner or under any
duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available
to the Agent in this Section 12.6 or in any of the Security Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event related thereto, the
Agent may act in any manner it may deem appropriate, in its sole discretion, given the Agent’s own
interest in the Collateral as one of the Lenders and that the Agent shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final and non-appealable decision).

Section 12.7 Holders. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the
case may be, shall have been filed with the Agent. Any request, authority or consent of any Person
who, at the time of making such request or giving such authority or consent, is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as
the case may be, of such Note or of any Note or Notes issued in exchange therefor.

Section 12.8 Indemnification of Agent. To the extent the Agent (or any affiliate thereof) is not reimbursed and indemnified by the
Borrowers, the Lenders will reimburse and indemnify the Agent (and any affiliate thereof) in
proportion to their respective “percentage” as used in determining the Requisite Lenders
(determined as if there were no Defaulting Lenders) for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by
the Agent (or any affiliate thereof) in performing its duties hereunder or under any other Loan
Document or in any way relating to or arising out of this Agreement or any other Loan Document;
provided that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent’s (or such affiliate’s) gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and non-appealable decision).

 

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Section 12.9 Successor Agent. (a) The Agent may resign from the performance of all its respective functions and duties
hereunder and/or under the other Loan Documents at any time by giving 30 days’ prior written notice
to the Lenders and the MG Borrower. In addition, if the Person serving as
Agent is a Defaulting Lender pursuant to clause (a)(i) or (d) of the definition thereof, the
Requisite Lenders may by notice in writing to the MG Borrower and such Person remove such Person as
Agent, in which case the Agent shall be deemed to have resigned pursuant to this Section
12.9(a). Any such resignation by the Agent hereunder shall also constitute its resignation as
Issuing Bank, in which case the resigning Agent (x) shall not be required to issue any further
Letters of Credit and (y) shall maintain all of its rights as Issuing Bank with respect to any
Letters of Credit issued by it prior to the date of such resignation. Such resignation shall take
effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.

(b) Upon any such notice of resignation by the Agent or at the direction of the Requisite
Lenders, as applicable, the Requisite Lenders shall appoint a successor Agent hereunder or and
under the other Loan Documents who shall be a commercial bank or trust company reasonably
acceptable to the MG Borrower, which acceptance shall not be unreasonably withheld or delayed
(provided that the MG Borrower’s approval shall not be required if an Event of Default then
exists).

(c) If a successor Agent shall not have been so appointed within such 30 day period, the
Agent, with the consent of the MG Borrower (which consent shall not be unreasonably withheld or
delayed, provided that the MG Borrower’s consent shall not be required if an Event of Default then
exists), shall then appoint a successor Agent who shall serve as Agent hereunder and under the
other Loan Documents until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above.

(d) If no successor Agent has been appointed pursuant to clause (b) or (c) above by the 40th
day after the date such notice of resignation was given by the Agent, the Agent’s resignation shall
become effective and the Requisite Lenders shall thereafter perform all the duties of the Agent
hereunder and/or under any other Loan Document until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above.

(e) Upon a resignation of the Agent pursuant to this Section 12.9., the Agent shall
remain indemnified to the extent provided in this Agreement and the other Loan Documents and the
provisions of this Section 12 (and the analogous provisions of the other Loan Documents)
shall continue in effect for the benefit of the Agent for all of its actions and inactions while
serving as the Agent.

Section 12.10 Titled Agents. Each of the Titled Agents in each such respective capacity, assumes no responsibility or
obligation hereunder, including, without limitation, for servicing, enforcement or collection of
any of the Loans, or for any duties as an agent hereunder for the Lenders. The titles of
“Arranger” and other similar titles are solely honorific and imply no fiduciary responsibility on
the part of the Titled Agents to the Agent, the Borrowers or any Lender and the use of such titles
does not impose on the Titled Agents any duties or obligations greater than those of any other
Lender or entitle the Titled Agents to any rights other than those to which any other Lender is
entitled.

 

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ARTICLE XIII

Miscellaneous

Section 13.1 Notices. Unless otherwise provided herein, communications provided for hereunder shall be in writing
(including telegraphic, telecopier or cable communication) and mailed, telegraphed, telecopied,
cabled or delivered:

If to any Borrower or Holdings, to it at:

475 Tenth Avenue

New York, New York 10018

Attn: Richard Szymanski

Telephone: (212) 277-4188

Telecopy: (212) 277-4270

If to the Agent, to it at:

200 Crescent Court, Suite 550

Dallas, Texas 75201

Attn: Gerard Dupont

Telephone: (214) 740-7913

Telecopy: (214) 740-7910

with a copy to it at:

60 Wall Street

New York, New York 10005

Attn: George Reynolds

Telephone: (212) 250-2362

Telecopy: (212) 797-4496

If to a Lender, to it at:

To such Lender’s address or telecopy number, as applicable, set forth on its
signature page hereto or in the administrative questionnaire required by the
Agent and provided by such Lender;

or, as to any Loan Party or the Agent, at such other address as shall be designated by such party
in a written notice to the other parties hereto and, as to each Lender, at such other address as
shall be designated by such Lender in a written notice to the MG Borrower and the Agent. All such
notices and communications shall, when mailed, telegraphed, telecopied, or cabled or sent by
overnight courier, be effective when deposited in the mails, delivered to the telegraph company,
cable company or overnight courier, as the case may be, or sent by telecopier, except that notices
and communications to the Agent and the MG Borrower shall not be effective until received by the
Agent or the MG Borrower, as the case may be. Notices and other
communications to the Lenders hereunder may be delivered or furnished by electronic communications
pursuant to procedures approved by the Agent; provided that the foregoing shall not apply
to notices pursuant to Section 2 unless otherwise agreed by the Agent and the applicable
Lender. Each of the Agent, Holdings and the Borrowers 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.

 

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Section 13.2 Expenses. (a) The Borrowers hereby agree to: (i) whether or not the transactions herein
contemplated are consummated, pay all reasonable and documented out-of-pocket costs and expenses of
the Agent (including, without limitation, the reasonable fees and disbursements of White & Case LLP
and the Agent’s other counsel and consultants) in connection with the preparation, execution,
delivery and administration of this Agreement and the other Loan Documents and the documents and
instruments referred to herein and therein and any amendment, waiver or consent relating hereto or
thereto, of the Agent and its Affiliates in connection with its or their syndication efforts with
respect to this Agreement; (ii) after the occurrence and during the continuance of an Event of
Default, pay all reasonable and documented out-of-pocket costs and expenses of the Agent, the
Issuing Bank and each of the Lenders in connection with the enforcement of this Agreement and the
other Loan Documents and the documents and instruments referred to herein and therein or in
connection with any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings
(including, in each case without limitation, the reasonable and documented out-of-pocket fees and
disbursements of counsel and consultants for the Agent and, after the occurrence and during the
continuance of an Event of Default, counsel for the Agent, the Issuing Bank and each of the
Lenders; provided that, the obligation to reimburse the Lenders and the Agent for fees and
expenses of counsel in connection with the matters described in this clause (ii) above shall be
limited to (x) one law firm for the Agent and (y) one other law firm retained by the Requisite
Lenders, together with (in the case of (x) and (y), as applicable) one additional counsel in each
applicable jurisdiction); (iii) pay and hold the Agent, the Issuing Bank and each of the Lenders
harmless from and against any and all present and future stamp, excise and other similar
documentary taxes with respect to the foregoing matters and save the Agent, the Issuing Bank and
each of the Lenders harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to the Agent or such Lender) to
pay such taxes; and (iv) indemnify the Agent, the Issuing Bank and each Lender, and each of their
respective officers, directors, employees, representatives, agents, affiliates, trustees and
investment advisors (each, an “Indemnified Person”) from and hold each of them harmless
against any and all liabilities, obligations (including removal or remedial actions), losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys’ and consultants’ fees and disbursements) incurred by, imposed on or assessed
against any of them as a result of, or arising out of, or in any way related to, or by reason of,
(a) any investigation, litigation or other proceeding (whether or not the Agent, the Issuing Bank
or any Lender is a party thereto and whether or not such investigation, litigation or other
proceeding is brought by or on behalf of any Loan Party) related to the entering into and/or
performance of this

 

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Agreement or any other Loan Document or the use of any Letter of Credit or the
proceeds of any Loans hereunder or any consummation of any of the transactions contemplated herein or in any other Loan Document or
the exercise of any of their rights or remedies provided herein or in the other Loan Documents, or
(b) the actual or alleged presence of Hazardous Materials in the air, surface water or groundwater
or on the surface or subsurface of any Property at any time owned, leased or operated by Holdings
or any of its Subsidiaries, the generation, storage, transportation, handling or disposal of
Hazardous Materials by Holdings or any of its Subsidiaries at any location, whether or not owned,
leased or operated by Holdings or any of its Subsidiaries, the non-compliance by Holdings or any of
its Subsidiaries with any Environmental Law (including applicable permits thereunder), including,
without limitation, the reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding (but excluding any
losses, liabilities, claims, damages or expenses (i) to the extent incurred by reason of the gross
negligence or willful misconduct of the Indemnified Person to be indemnified (as determined by a
court of competent jurisdiction in a final and non-appealable decision), (ii) constituting amounts
in respect of Excluded Taxes, and (iii) in respect of Hazardous Materials in, upon, about or
beneath the Collateral or migrating to the Collateral to the extent that such presence or migration
of Hazardous Materials first occurs after the date upon which title to the Collateral is
transferred to Agent, its nominee, any agent or receiver appointed on behalf of Agent or any third
party transferee of the Collateral in the event of foreclosure of the Security Instrument or
conveyance of the Collateral in lieu thereof, if such presence or migration does not arise from the
acts or omissions of either Indemnitor or its respective affiliates)). To the extent that the
undertaking to indemnify, pay or hold harmless the Agent, the Issuing Bank or any Lender set forth
in the preceding sentence may be unenforceable because it is violative of any law or public policy,
the Borrowers shall make the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities which is permissible under Applicable Law.

(b) To the full extent permitted by Applicable Law, each of Holdings and the Borrowers shall
not assert, and hereby waives, any claim against any Indemnified Person, on any theory of
liability, for special, indirect, consequential or incidental damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any
Loan or the use of the proceeds thereof. No Indemnified Person shall be liable for any damages
arising from the use by unintended recipients of any information or other materials distributed by
it 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,
except to the extent the liability of such Indemnified Person results from such Indemnified
Person’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction
in a final and non-appealable decision).

Section 13.3 Setoff. Subject to Section 3.3. and in addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, to the fullest extent
permitted by law, each of the Borrowers hereby authorizes the Agent, the Issuing Bank, each Lender,
each affiliate of the Agent, the Issuing Bank or any Lender, and each Participant, at any time
while an Event of Default exists, without prior notice to the Borrowers or to any other Person, any
such notice being hereby expressly waived, but in the case of the Issuing Bank, a
Lender, an affiliate of the Issuing Bank, a Lender or a Participant subject to receipt of the
prior written consent of the Agent exercised in its sole discretion, to set off and to appropriate
and to apply any and all deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at
any time held or owing by the Agent, the Issuing Bank, such Lender, any such affiliate of the
Agent, the Issuing Bank or such Lender, or such Participant, to or for the credit or the account of
any of the Borrowers against and on account of any of the Obligations owing by any of the
Borrowers, irrespective of whether or not any or all of the Loans and all other Obligations have
been declared to be, or have otherwise become, due and payable as permitted by Section
11.2., and although such obligations shall be contingent or unmatured.

 

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Section 13.4 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN ANY SECURITY DEED, BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, EACH OF THE LOAN
PARTIES PARTY HERETO HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE
LOAN PARTIES PARTY HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER SUCH LOAN PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT IN ANY OF THE
AFOREMENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH LOAN PARTY. EACH OF
THE LOAN PARTIES PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH LOAN PARTY AT ITS ADDRESS SET FORTH IN
SECTION 13.1 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF THE LOAN
PARTIES PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER
OR UNDER ANY OTHER LOAN DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST EACH OF THE LOAN PARTIES PARTY
HERETO IN ANY OTHER JURISDICTION.

(b) EACH OF THE LOAN PARTIES PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT IN THE COURTS
REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

 

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(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 13.5 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 the Borrowers may not assign or otherwise transfer any of
their respective rights or obligations hereunder without the prior written consent of the Agent and
each Lender and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions of the immediately
following subsection (b), (ii) by way of participation in accordance with the provisions of the
immediately following subsection (d) or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of the immediately following subsection (f) (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
the immediately following subsection (d) and, to the extent expressly contemplated hereby, the
affiliates and the partners, directors, officers, employees, agents and advisors of the Agent and
the Lenders and of their respective affiliates) 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 (an “Assignee”) all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments and the 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 Commitments 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 the immediately preceding subsection (A), the
aggregate amount of the Commitments (which for this purpose includes Loans
outstanding thereunder) or, if any of the applicable Commitments 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 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 Agent and, so long as no
Default or Event of Default shall exist, the MG Borrower otherwise consents (each
such consent not to be unreasonably withheld or delayed).

 

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(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 Commitments assigned.

(iii) Required Consents. No consent shall be required for any assignment
except to the extent required by clause (i)(B) of this subsection (b) and, in addition:

(A) the consent of the MG Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default shall exist at
the effective date specified in such assignment or (y) such assignment is to a
Lender, an affiliate of a Lender or an Approved Fund;

(B) the consent of the Agent and the Issuing Bank (each such consent not to be
unreasonably withheld or delayed) shall be required for assignments in respect of a
Commitment if such assignment is to a Person that is not already a Lender with a
Commitment, an affiliate of such Lender or an Approved Fund with respect to such
Lender; and

(iv) Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Agent an Assignment and Assumption, together with a processing and
recordation fee of $3,500 for each assignment, and the assignee, if it is not a Lender,
shall deliver to the Agent an administrative questionnaire in the form customarily required
by the Agent.

(v) No Assignment to Borrowers. No such assignment shall be made to Holdings,
the MG Borrower or any of the MG Borrower’s Affiliates or Subsidiaries.

(vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.

Subject to acceptance and recording thereof by the Agent pursuant to the immediately following
subsection (c), 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 5.4. and
13.2. and the other provisions of this Agreement and the other Loan Documents as provided
in Section 13.9. with respect to facts and circumstances occurring prior to the effective
date of such assignment. Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this paragraph 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 the immediately following subsection (d).

 

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(c) Register. The Agent, acting solely for this purpose as an agent of the Borrowers,
shall maintain at the Principal 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, and the Commitments of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). The entries in the Register shall be conclusive, and the Borrowers,
the Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrowers 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 Borrowers or the Agent, sell participations to any Person (other than a natural person or
Holdings, the MG Borrower or any of the MG 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 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 Borrowers, the Agent and the Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce 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, modification or waiver of any provision of any Loan Document
described in Section 13.6.(b)(i), (b)(ii), (b)(iii), (b)(iv) or
(b)(viii) that adversely affects such Participant. Subject to the immediately following
subsection (e), the Borrowers agree that each Participant shall be entitled to the benefits of
Sections 3.13., 5.1. and 5.4. to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by Applicable Law, each Participant also shall be entitled to the benefits of Section
13.3. as though it were a Lender, provided such Participant agrees to be subject to Section
3.3. as though it were a Lender. Upon request from the Agent, a Lender shall notify the Agent
and the MG Borrower of the sale of any participation hereunder.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Sections 3.13. and 5.1. 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 MG
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 3.13. unless the MG Borrower is notified
of the participation sold to such Participant and such Participant agrees, for the benefit of the
Borrowers and the Agent, to comply with Section 3.13.(c) as though it were a Lender.

 

105

 

(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 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) No Registration. Each Lender agrees that, without the prior written consent of
the MG Borrower and the Agent, it will not make any assignment hereunder in any manner or under any
circumstances that would require registration or qualification of, or filings in respect of, any
Loan or Note under the Securities Act or any other securities laws of the United States of America
or of any other jurisdiction.

Section 13.6 Amendments. (a) Except as otherwise expressly provided in this Agreement, any consent or approval
required or permitted by this Agreement or any other Loan Document to be given by the Lenders may
be given, and any term of this Agreement or of any other Loan Document may be amended, and the
performance or observance by the MG Borrower or any other Loan Party or any Subsidiary of any terms
of this Agreement or such other Loan Document or the continuance of any Default or Event of Default
may be waived (either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Requisite Lenders (and, in the case
of an amendment to any Loan Document, the written consent of each Loan Party a party thereto).

(b) Notwithstanding the foregoing, without the prior written consent of each Lender directly
and adversely affected thereby (other than a Defaulting Lender), no amendment, waiver or consent
shall do any of the following:

(i) increase the Commitments of the Lenders or subject the Lenders to any additional
obligations; provided that without the consent of the Issuing Bank no amendment,
waiver or consent shall amend, modify or waive any provision of Section 2.2 or alter
the Issuing Bank’s rights or obligations with respect to Letters of Credit;

(ii) reduce the principal of, or interest that has accrued or the rates of interest
that will be charged on the outstanding principal amount of, any Loans or other Obligations
(except in connection with the waiver of applicability of any post-default increase in
interest rates);

(iii) reduce the amount of any Fees payable hereunder or postpone any date fixed for
payment thereof;

(iv) modify the definition of the term “Termination Date” or otherwise postpone
any date fixed for any payment of any principal of, or interest on, any Loans or any other
Obligations (including the waiver of any Default or Event of Default as a result of the
nonpayment of any such Obligations as and when due (except in connection with the waiver of
applicability of any post-default increase in interest rates));

(v) amend or otherwise modify the provisions of Section 3.2.;

 

106

 

(vi) modify the definition of the term “Requisite Lenders” or otherwise modify
in any other manner the number or percentage of the Lenders required to make any
determinations or waive any rights hereunder or to modify any provision hereof, including
without limitation, any modification of this Section 13.6. if such modification
would have such effect;

(vii) release any Guarantor from its obligations under the Guaranty;

(viii) release any of the Collateral from the Lien of the Security Documents (except as
otherwise permitted under Section 12.6.); or

(ix) amend or otherwise modify the provisions of Section 2.11.

(c) If any Lender (a “Non-Consenting Lender”) does not consent to a proposed
amendment, waiver, consent or release with respect to any Loan Document that requires the consent
of each Lender directly and adversely affected thereby and that has been approved by the Requisite
Lenders, the MG Borrower may replace such Non-Consenting Lender in accordance with Section
3.14(a).

(d) Notwithstanding anything to the contrary contained herein, Loan Modification Offers and
Permitted Amendments (as hereinafter defined) shall be permitted in accordance with this subsection
(d), regardless of the preceding provisions of this Section 13.6. The MG Borrower may make
one or more offers (each, a “Loan Modification Offer”) to all the Lenders to make one or
more Permitted Amendments (as defined below). Permitted Amendments shall become effective only
with respect to the Loans and Commitments of the Lenders that accept the applicable Loan
Modification Offer (such Lenders, the “Accepting Lenders”). The Borrowers and each
Accepting Lender shall execute and deliver to the Agent a loan modification agreement (a “Loan
Modification Agreement”) and such other documentation as the Agent shall reasonably specify to
evidence the acceptance of the Permitted Amendments and the terms and conditions thereof. In
connection with any Loan Modification Offer, the Borrowers may, at their sole option, terminate or
reduce the Commitments, and/or repay or reduce any Loans, of one or more of the Lenders that are
not Accepting Lenders. Additionally, to the extent the Borrowers have reduced the Commitments
and/or Loans of such Lenders, they may request any other financial institution (with the consent of
the Agent, such consent not to be unreasonably conditioned, delayed or withheld) to provide a
commitment to make loans on the terms set forth in such Loan Modification Offer in an amount not to
exceed the amount of the Commitments reduced pursuant to the preceding sentence. The Agent shall
promptly notify each
Lender as to the effectiveness of each Loan Modification Agreement. Each of the parties
hereto hereby agrees that, upon the effectiveness of any Loan Modification Agreement, this
Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the
existence and terms of the Permitted Amendment evidenced thereby and only with respect to the Loans
and Commitments of the Accepting Lenders (including any amendments necessary to treat the Loans and
Commitments of the Accepting Lenders as Loans and/or Commitments, it being understood that all
borrowings and repayments will be made pro rata between all Loans; provided, that to the
extent any Permitted Amendment extends the final maturity of the Commitments of the Accepting
Lenders, the Loans and related Obligations may be repaid on the Termination Date on a non-ratable
basis with the Commitments of the Accepting Lenders. “Permitted Amendments” shall be an extension
of the scheduled maturity of the applicable Loans and Commitments of the Accepting Lenders,
together with any one or more of the following: (i) a change in rate of interest (including a
change to the Applicable Margin and/or a provision establishing a minimum rate), premium, fees or
other amount with respect to the applicable Loans and/or Commitments of the Accepting Lenders (in
each case effective after the scheduled maturity of the Loans), (ii) additional fees to the
Accepting Lenders and (iii) such other amendments to this Agreement and the other Loan Documents as
shall be appropriate, in the judgment of the Agent, to give effect to the foregoing Permitted
Amendments.

 

107

 

(e) Notwithstanding anything to the contrary herein, any provision of this Agreement may be
amended by an agreement in writing entered into by the Loan Parties, the Requisite Lenders and the
Agent (and, if its rights or obligations are affected thereby, the Issuing Bank) if (A) by the
terms of such agreement the Commitment of each Lender not consenting to the amendment provided for
therein shall terminate upon the effectiveness of such amendment and (B) at the time such amendment
becomes effective, each Lender not consenting thereto receives payment in full of the principal of
and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its
account under this Agreement (notwithstanding the provisions of Section 3.2. or any other
similar provision of this Agreement that requires ratable payments to the Lenders).

(f) No amendment, waiver or consent, unless in writing and signed by the Agent, in such
capacity, in addition to the Lenders required hereinabove to take such action, shall affect the
rights or duties of the Agent under this Agreement or any of the other Loan Documents.

(g) No waiver shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon and any amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose set forth therein. Except as otherwise provided in
Section 12.5., no course of dealing or delay or omission on the part of the Agent or any
Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial
thereto. Any Event of Default occurring hereunder shall continue to exist until such time as such
Event of Default is waived in writing in accordance with the terms of this Section, notwithstanding
any attempted cure or other action by the MG Borrower, any other Loan Party or any other Person
subsequent to the occurrence of such Event of Default. Except as otherwise explicitly provided for
herein or in any other Loan Document, no notice to or demand upon the MG Borrower shall entitle the
MG Borrower to any other or further notice or demand in similar or other circumstances.

Section 13.7 Nonliability of Agent, Issuing Bank and Lenders. The relationship between the Borrowers, on the one hand, and the Lenders, the Issuing Bank
and the Agent, on the other hand, shall be solely that of borrower and lender. Neither the Agent
nor the Issuing Bank or any Lender shall have any fiduciary responsibilities to the Borrowers or
any other Loan Party and no provision in this Agreement or in any of the other Loan Documents, and
no course of dealing between or among any of the parties hereto, shall be deemed to create any
fiduciary duty owing by the Agent, the Issuing Bank or any Lender to any Lender, the MG Borrower,
any Subsidiary or any other Loan Party. Neither the Agent nor the Issuing Bank or any Lender
undertakes any responsibility to the Borrowers to review or inform the Borrowers of any matter in
connection with any phase of the Borrowers’ business or operations.

 

108

 

Section 13.8 Confidentiality. The Agent and each Lender shall assure that information about Holdings, the MG Borrower,
the other Loan Parties and the other Subsidiaries, and the Properties thereof and their operations,
affairs and financial condition, not generally disclosed to the public, which is furnished to the
Agent or any Lender pursuant to the provisions of this Agreement or any other Loan Document, is
used only for the purposes of this Agreement and the other Loan Documents and shall not be divulged
to any Person other than the Agent, the Lenders, and their respective agents who are actively and
directly participating in the evaluation, administration or enforcement of the Loan Documents and
other transactions between the Agent or such Lender, as applicable, and Holdings or the MG
Borrower, as applicable, but in any event the Agent and the Lenders may make disclosure: (a) to any
of their respective affiliates (provided they shall agree to keep such information confidential in
accordance with the terms of this Section 13.8.); (b) as reasonably requested by any
potential or actual Assignee, Participant or other transferee in connection with the contemplated
transfer of any Commitments or participations therein as permitted hereunder (provided they shall
agree to keep such information confidential in accordance with the terms of this Section); (c) as
required or requested by any Governmental Authority or representative thereof or pursuant to legal
process or in connection with any legal proceedings or as otherwise required by Applicable Law; (d)
to the Agent’s or such Lender’s independent auditors and other professional advisors (provided they
shall be notified of the confidential nature of the information); (e) following the occurrence and
during the continuance of a Default or an Event of Default, to any other Person in connection with
the exercise by the Agent or the Lenders of remedies hereunder or under any of the other Loan
Documents; (f) upon the prior consent (which consent shall not be unreasonably withheld) of
Holdings or the MG Borrower, as applicable, to any contractual counter-parties to any swap or
similar hedging agreement or to any rating agency; and (g) to the extent such information (x)
becomes publicly available other than as a result of a breach of this Section actually known to
such Lender to be such a breach or (y) becomes available to the Agent or any Lender on a
nonconfidential basis from a source other than the MG Borrower or any Affiliate. Notwithstanding
the foregoing, the Agent and each Lender may disclose any such confidential information, without
notice to the MG Borrower or any other Loan Party, to Governmental Authorities in connection with
any regulatory examination of the Agent or such Lender or in accordance with the regulatory
compliance policy of the Agent or such Lender.

Section 13.9 Termination; Survival. At such time as (a) all of the Commitments have been terminated, (b) all Letters of Credit
have terminated or expired or have been Cash Collateralized in accordance with the terms of this
Agreement, (c) none of the Lenders is obligated any longer under this Agreement to make any Loans
and (d) all Obligations (other than obligations which survive as provided in the following
sentence) have been paid and satisfied in full, this Agreement and the other Loan Documents shall
terminate. The indemnities to which the Agent and the Lenders are entitled under the provisions of
Sections 3.13., 5.1., 5.4., 12.8. and 13.2. and any other
provision of this Agreement and the other Loan Documents, and the provisions of Section
13.4., shall continue in full force and effect and shall protect the Agent and the Lenders (i)
notwithstanding any termination of this Agreement, or of the other Loan Documents, against events
arising after such termination as well as before and (ii) at all times after any such party ceases
to be a party to this Agreement with respect to all matters and events existing on or prior to the
date such party ceased to be a party to this Agreement. The Agent agrees to furnish to the MG
Borrower, upon the MG Borrower’s request and at the Borrowers’ sole cost and expense, any release,
termination, or other agreement or document evidencing the foregoing termination and the release of
the Liens created under any of the Security Documents as may be reasonably requested by the MG
Borrower.

 

109

 

Section 13.10 Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remainder of such provision or the remaining provisions
or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 13.11 Patriot Act. Each Lender subject to the Act hereby notifies Holdings and the Borrowers that pursuant to
the requirements of the Act, it is required to obtain, verify and record information that
identifies Holdings, the Borrowers and the other Loan Parties and other information that will allow
such Lender to identify Holdings, the Borrowers and the other Loan Parties in accordance with the
Act

Section 13.12 Counterparts. This Agreement and any amendments, waivers, consents or supplements may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed an original, but all of which counterparts together shall
constitute but one and the same instrument.

Section 13.13 Obligations with Respect to Loan Parties. The obligations of the MG Borrower to direct or prohibit the taking of certain actions by
the other Loan Parties as specified herein shall be absolute and not subject to any defense the MG
Borrower may have that the MG Borrower does not control such Loan Parties.

Section 13.14 Limitation of Liability. Neither the Agent nor the Issuing Bank or any Lender, nor any affiliate, officer, director,
employee, attorney, or agent of the Agent, the Issuing Bank or any Lender shall have any liability
with respect to, and each of Holdings and the Borrowers hereby waives, releases, and agrees not to
sue any of them upon, any claim for any special, indirect, incidental, or consequential damages
suffered or incurred by Holdings or the Borrowers in connection with, arising out of, or in any way
related to, this Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents. Each of Holdings and the
Borrowers hereby waives, releases, and agrees not to sue the Agent, the Issuing Bank or any Lender
or any of the Agent’s, the Issuing Bank’s or any Lender’s affiliates, officers, directors,
employees, attorneys, or agents for punitive damages in respect of any claim in connection with,
arising out of, or in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or financed hereby.

Section 13.15 Entire Agreement. This Agreement and the other Loan Documents referred to herein embody the final, entire
agreement among the parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the subject matter hereof
and thereof and may not be contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto.

 

110

 

Section 13.16 Construction. Each of the Agent, each Lender, the Borrowers and Holdings acknowledge that it has had
the benefit of legal counsel of its own choice and has been afforded an opportunity to review this
Agreement and the other Loan Documents with its legal counsel and that this Agreement and the other
Loan Documents shall be construed as if jointly drafted by the Agent, each Lender, the Borrowers
and Holdings.

Section 13.17 Nature of Borrower Obligations. Notwithstanding anything to the contrary contained elsewhere in this Agreement, it is
understood and agreed by the various parties to this Agreement that:

(a) all Obligations to repay principal of, interest on, and all other amounts with
respect to, the Loans, the Letters of Credit and all other Obligations pursuant to this
Agreement and each other Loan Document (including, without limitation, all fees,
indemnities, Taxes and other Obligations in connection therewith) shall constitute the joint
and several obligations of each Borrower;

(b) The obligations of each Borrower with respect to the Obligations are independent of
the obligations of the other Borrower with respect thereto, and a separate action or actions
may be brought and prosecuted against each Borrower, whether or not the other Borrower or
any Guarantor is joined in any such action or actions. Each
Borrower waives, to the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any payment by
either Borrower or other circumstance which operates to toll any statute of limitations as
to either Borrower shall, to the fullest extent permitted by law, operate to toll the
statute of limitations as to the other Borrower.

(c) Each Borrower authorizes the Agent, the Issuing Bank and the Lenders without notice
or demand (except as shall be required by applicable statute and cannot be waived), and
without affecting or impairing its liability hereunder, from time to time to:

(i) exercise or refrain from exercising any rights against the other Borrower
or any Guarantor or others or otherwise act or refrain from acting;

(ii) release or substitute the other Borrower, endorsers, Guarantors or other
obligors;

(iii) settle or compromise any of the Obligations of any other Loan Party, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the payment
of all or any part thereof to the payment of any liability (whether due or not) of
any Borrower to its creditors other than the Lenders;

(iv) apply any sums paid by any other Loan Party or any other Person, howsoever
realized, to any liability or liabilities of such other Loan Party or other Person
regardless of what liability or liabilities of such other Loan Party or other Person
remain unpaid; and/or

 

111

 

(v) consent to or waive any breach of, or act, omission or default under, this
Agreement or any of the other Loan Documents, or otherwise, by any other Loan Party
or any other Person.

(d) It is not necessary for the Agent, the Issuing Bank or any Lender to inquire into
the capacity or powers of any Borrower or any of its Affiliates or the officers, directors,
members, partners or agents acting or purporting to act on its behalf, and any Obligations
made or created in reliance upon the professed exercise of such powers shall constitute the
joint and several obligations of the Borrowers hereunder.

(e) No Borrower shall have any rights of contribution or subrogation with respect to
the other Borrower as a result of payments made by it hereunder, in each case unless and
until all of the Obligations have been paid in full in cash.

(f) Each Borrower waives any right to require the Agent, the Issuing Bank or the
Lenders to (i) proceed against the other Borrower or any other Person, (ii) proceed against
or exhaust any security held from any Borrower or any other Person or (iii) pursue any other
remedy in the Agent’s, the Issuing Bank’s or Lenders’ power whatsoever. Each Borrower
waives any defense based on or arising out of suretyship or
any impairment of security held from any Borrower or any other Person or on or arising
out of any defense of the other Borrower or any other Person other than payment in full in
cash of the its Obligations, including, without limitation, any defense based on or arising
out of the disability of the other Borrower or any other Person, or the unenforceability of
the Obligations or any part thereof from any cause, or the cessation from any cause of the
liability of the other Borrower, in each case other than as a result of the payment in full
in cash of the Obligations.

(g) Notwithstanding anything herein or in any other Loan Document to the contrary, each
Borrower’s joint and several liability for the Obligations shall be limited to the greater
of (i) the amount for which it is Primarily Liable and (ii) such Borrower’s Allocable Amount
(as defined in Section 13.17(h)). “Primarily Liable” for any Borrower, means
liability in amount equal to the proceeds of the Loans which were made available to such
Borrower. The “Allocable Amount” for any Borrower at any time shall be the maximum
amount that could be recovered from such Borrower at such time under the Loan Documents
without rendering such payment voidable under Section 548 of the Bankruptcy Code or under
any applicable state fraudulent transfer or conveyance act, or similar statute or common
law.

(h) If any Borrower makes a payment of any Obligations greater than that for which it
is Primarily Liable, it shall be entitled to receive contribution and indemnification
payments from, and to be reimbursed by, the other Borrower in an amount equal to the lesser
of (i) the payment in excess of the amount for which it is Primarily Liable and (ii) the
Allocable Amount which after giving effect to any Obligations of such other Borrower would
not result in such contribution claim being a fraudulent transfer.

 

112

 

(i) Nothing contained in this Section 13.17 shall limit the liability of any
Borrower under the Loan Documents to pay the Loan and all accrued interest, fees, expenses
and other Obligations related thereto, for which such Borrower is Primarily Liable.

(j) Each Borrower has requested that the Agent, the Issuing Bank and the Lenders make
this credit facility available to the Borrowers on a combined basis, in order to finance the
Loan Parties’ business most efficiently and economically. The Loan Parties’ business is a
mutual and collective enterprise, and the Borrowers believe that consolidation of their
credit facility will enhance the borrowing power of each Borrower and ease the
administration of their relationship with the Agent, the Issuing Bank and the Lenders, all
to the mutual advantage of the Borrowers. The Borrowers acknowledge and agree that the
Administrative Agent’s, the Issuing Bank’s and each Lender’s willingness to extend credit to
the Borrowers and to administer the Collateral on a combined basis, as set forth herein, is
done solely as an accommodation to the Borrowers at their request.

(k) Each Borrower hereby subordinates any claims, including any rights at law or in
equity to payment, subrogation, reimbursement, exoneration, contribution, indemnification or
set off, that it may have at any time against the other Borrower, howsoever arising, to full
and final payment in full, in cash, of all Obligations.

(l) Each Borrower hereby restates and makes the waivers made by each Guarantor in the
Guaranty. Such waivers are hereby incorporated by reference as if fully set forth herein
(and as if applicable to each Borrower) and shall be effective for all purposes under the
Loan Documents (including, without limitation, in the event that any Borrower is deemed to
be a surety or guarantor of the Obligations (by virtue of the Borrowers being co-obligors
and jointly and severally liable hereunder, by virtue of each Borrower encumbering its
interest in the Collateral for the benefit or debts of the other Borrower in connection
herewith or otherwise)).

* * *

 

113

 

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute
and deliver this Agreement as of the date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	MORGANS GROUP LLC, a Delaware limited

liability company, as MG Borrower	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Hotel Group Co., its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Richard Szymanski	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Richard Szymanski	 	 
	 

	 	 	 	Title:
	 	Chief Financial Officer and Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BEACH HOTEL ASSOCIATES
LLC, a Delaware 
limited liability company, as Florida Borrower	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Group LLC, its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Morgans Hotel Group Co., its managing member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Richard Szymanski	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Richard Szymanski	 	 
	 

	 	 	 	Title:
	 	Chief Financial Officer and Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MORGANS HOTEL GROUP CO., a Delaware
corporation, as Holdings	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Richard Szymanski	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Richard Szymanski	 	 
	 

	 	 	 	Title:
	 	Chief Financial Officer and Secretary	 	 

 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as Agent
and Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ George R. Reynolds	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	George R. Reynolds	 	 
	 

	 	 	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ James Rolison	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	James Rolison	 	 
	 

	 	 	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Deutsche Bank Securities Inc.

200 Crescent Court, Suite 550

Dallas, Texas 75201

Attn: Gerard Dupont

Telephone: 214-740-7913

Telecopier: 214-740-7910	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	with a copy to:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Deutsche Bank Securities Inc.

60 Wall Street

New York, New York 10005

Attn: George Reynolds

Telephone: 212-250-2362

Telecopier: 212-797-4496	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	OPERATIONS & LIBOR Lending Office:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Deutsche Bank Trust Company Americas

90 Hudson Street, 5th Floor

Jersey City, New Jersey 07302

Attn: Deirdre Wall

Telephone: 201-593-2170

Telecopier: 201-593-2308	 	 

 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	AAREAL CAPITAL CORPORATION, a Delaware

Corporation, as Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Christoph Donner	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Christoph Donner	 	 
	 

	 	 	 	Title:
	 	Senior Managing Director	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Alan L. Griffin	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Alan L. Griffin	 	 
	 

	 	 	 	Title:
	 	Counsel	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Aareal Capital Corporation

250 Park Avenue, Suite 820

New York, NY 10177

Attn: Daniel de Roo

Telephone: 646-465-8614

Telecopier: 917-322-0290	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	OPERATIONS & LIBOR Lending Office:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Aareal Capital Corporation

Paulinenstr. 15

65189 Wiesbaden-DE

Attn: Annette Haas

Telephone: +49.611.348.3055

Telecopier: +49.611 .348.71805	 	 

 

 

 

[Signature Page to Credit Agreement]

 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	CITIBANK, N.A., as Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Michael Chlopak	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:

Title:
	 	Michael Chlopak

Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Citibank, N.A.

388 Greenwich St, 23rd Floor

New York, NY 10013

Attn: Bryce Hong

Telephone: 212-723-6951

Telecopier: 646-688-2051	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	OPERATIONS & LIBOR Lending Office:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Citibank, N.A.

1615 Brett Road, Bldg III

New Castle, DE 19720

Attn: Loan Administration

Telephone: 302-894-6052

Telecopier: 212-994-0847	 	 

[Signature Page to Credit Agreement]

 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	MIDFIRST BANK, a federally chartered savings

association, as Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Darrin Rigler	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Darrin Rigler	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MidFirst Bank

501 NW Grand Blvd

Oklahoma City, OK 73118

Attn: Darrin Rigler

Telephone: 405-767-7608

Telecopier: 405-767-7119	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	OPERATIONS & LIBOR Lending Office:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MidFirst Bank

501 NW Grand Blvd

Oklahoma City, OK 73118

Attn: Glenda Edwards

Telephone: 405-767-7140

Telecopier: 405-767-7119	 	 

[Signature Page to Credit Agreement]

 

 

 

Schedule 1.1(A)

Loan Parties

Morgans Hotel Group Co., Guarantor

Morgans Group LLC, Borrower

Beach Hotel Associates LLC, Borrower

Morgans Hotel Group Management LLC, Guarantor

 

 

 

Schedule 2.1

Loan Commitments and Applicable Percentages

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable	 
	Lender	 	Commitment	 	 	Percentage	 
	Deutsche Bank Trust Company Americas
	 	$	30,000,000.00	 	 	 	30	%
	Citibank, N.A.
	 	$	30,000,000.00	 	 	 	30	%
	Aareal Capital Corporation, a Delaware
Corporation
	 	$	30,000,000.00	 	 	 	30	%
	MidFirst Bank, a federally chartered
savings association
	 	$	10,000,000.00	 	 	 	10	%
	 
	 	 	 	 	 	 
	Total
	 	$	100,000,000.00	 	 	 	100	%
	 
	 	 	 	 	 	 

 

 

 

Schedule 7.1(b)

Ownership Structure

Part I. Consolidated Affiliates of Morgans Group LLC

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Equity	 	Nature of	 	Status	 	3rd Party
	Name	 	Jurisdiction	 	Interest	 	Equity Interest	 	(Material/Foreign)	 	Equity Interest
	Morgans Group LLC

	 	Delaware
	 	97.1% Morgans Hotel
Group Co.
	 	Membership
	 	Material
	 	2.9% by Residual
Hotel Interest LLC
(DE)
	 
	 	 	 	 	 	 	 	 	 	 
	Morgans Holdings LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG Capital Trust I

	 	Delaware
	 	100% Morgans Group

LLC
	 	Common Securities
	 	 	 	100% Trust

Preferred Holders

(Trust Preferred

Securities)
	 
	 	 	 	 	 	 	 	 	 	 
	Morgans/Delano 

Pledgor LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Madison Bar Company 

LLC

	 	Delaware
	 	100% by

Morgans/Delano

Pledgor LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SC Morgans/Delano 

LLC

	 	Delaware
	 	100% by

Morgans/Delano

Pledgor LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SC Madison LLC

	 	Delaware
	 	100% by SC

Morgans/Delano LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SC Collins LLC

	 	Delaware
	 	100% by SC

Morgans/Delano LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Mondrian Miami 

Investment LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Beach Hotel 

Associates LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership
	 	Material	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Mondrian Miami 

Capital LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Henry Hudson Senior 

Mezz LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership
	 	Material	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Hudson Pledgor LLC

	 	Delaware
	 	100% by Henry

Hudson Senior Mezz

LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	58th Street Bar 

Company LLC

	 	Delaware
	 	100% by Hudson

Pledgor LLC
	 	Membership	 	 	 	 

 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Equity	 	Nature of	 	Status	 	3rd Party
	Name	 	Jurisdiction	 	Interest	 	Equity Interest	 	(Material/Foreign)	 	Equity Interest
	Henry Hudson 

Holdings LLC

	 	Delaware
	 	100% by Henry

Hudson Senior Mezz

LLC
	 	Membership
	 	Material	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Hudson Managing 

Member LLC

	 	Delaware
	 	100% by Henry

Hudson Senior Mezz

LLC
	 	Membership
	 	Material	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Hudson Leaseco LLC

	 	New York
	 	99.99% by Hudson
Managing Member LLC
	 	Membership
	 	Material	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	.01% Hudson
Residual Interests
Inc.
	 	Membership
	 	Material	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Hudson Residual
Interests Inc.

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Stock	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Mondrian Holdings 

LLC

	 	Delaware
	 	100% by Mondrian

Senior Mezz LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Mondrian Senior 

Mezz LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Mondrian Pledgor LLC

	 	Delaware
	 	100% by Mondrian

Senior Mezz LLC
	 	Membership
	 	 	 	100% to be acquired
by Wolverines
Lessee LLC
	 
	 	 	 	 	 	 	 	 	 	 
	Sunset Restaurant 

LLC

	 	Delaware
	 	50% by Mondrian

Pledgor LLC
	 	Membership
	 	 	 	100% to be acquired
by Wolverines
Lessee LLC
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	50% by Mondrian

Senior Mezz LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	8440 LLC

	 	California
	 	1% by Sunset

Restaurant LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	99% by Mondrian

Pledgor LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MC South Beach LLC

	 	Delaware
	 	50% by 1100 West

Properties LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	50% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Morgans Hotel Group 

Management LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership
	 	Material	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Royalton London LLC

	 	New York
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Morgans Hotel Group
U.K. Management
Limited

	 	United Kingdom
	 	100% by Royalton

London LLC
	 	Membership
	 	Foreign	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Royalton UK 

Development Limited

	 	United Kingdom
	 	100% by Royalton

London LLC (f/k/a S

London LLC)
	 	Membership
	 	Foreign	 	 

 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Equity	 	Nature of	 	Status	 	3rd Party
	Name	 	Jurisdiction	 	Interest	 	Equity Interest	 	(Material/Foreign)	 	Equity Interest
	Royalton Europe 

Holdings LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Morgans Newco 

Limited

	 	United Kingdom
	 	100% by Royalton

Europe Holdings LLC
	 	Membership
	 	Foreign	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SC Restaurant 

Company LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Shore Club 

Holdings, LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	495 Geary LLC

	 	Delaware
	 	99% by Clift

Holdings LLC
	 	Membership	 	 	 	 
	 

	 	 	 	1% by Morgans Group

LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	495 ABC License LLC

	 	Delaware
	 	100% Class A
Membership by 495
Geary LLC
	 	Membership
	 	 	 	0% Class B
Membership by SARH
	 
	 	 	 	 	 	 	 	 	 	 
	Clift Holdings LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership
	 	Material	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG 1 Court 

Investment, LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG Puerto Rico 

Management LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG PR Investment 

LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG PR Member LLC

	 	Puerto Rico
	 	100% by MHG PR

Investment LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG 150 Lafayette 

Investment LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG Mexico
Management S. de
R.L. de C.V

	 	Mexico
	 	1% by Morgans Group

LLC
	 	Membership
	 	Foreign	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	99% by MHG Mexico

LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG Mexico LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Collins Hotel 

Associates Mezz LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG South America 

LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Mondrian Scottsdale 

Mezz Holding 

Company LLC

	 	Delaware
	 	100% by Morgans

Group LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG Scottsdale 

Holdings LLC

	 	Delaware
	 	100% by Mondrian

Scottsdale Mezz

Holding Company LLC
	 	Membership	 	 	 	 

 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Equity	 	Nature of	 	Status	 	3rd Party
	Name	 	Jurisdiction	 	Interest	 	Equity Interest	 	(Material/Foreign)	 	Equity Interest
	SC Geary LLC

	 	Delaware
	 	100% by Clift

Holdings LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Royalton Pledgor LLC

	 	Delaware
	 	100% Morgans Group

LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	43RD
Restaurant LLC

	 	Delaware
	 	100% Royalton

Pledgor LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Morgans/LV 

Management LLC

	 	Delaware
	 	100%Morgans Group

LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Morgans/LV 

Investment LLC

	 	Delaware
	 	100% Morgans/LV

Management LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG St. Barths
Investment LLC

	 	Delaware
	 	100% Morgans Group

LLC
	 	Membership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MHG North State 

Street Investment 

LLC

	 	Delaware
	 	100% Morgans Group

LLC
	 	Membership	 	 	 	 

 

 

 

Part II. Unconsolidated Subsidiaries of Morgan Hotel Group Co.

	 	 	 	 	 
	Name	 	Jurisdiction	 	Equity Interest
	1100 West Holdings II, LLC

	 	Delaware
	 	50% by Mondrian Miami Investment LLC
	1100 West Holdings LLC

	 	Delaware
	 	100% by 1100 West Holdings II, LLC
	1100 West Properties LLC

	 	Delaware
	 	100% by 1100 West Holdings, LLC
	RMF Capital LLC

	 	Delaware
	 	50% by Mondrian Miami Capital LLC
	Morgans Hotel Group Europe Limited

	 	UK
	 	50% by Royalton Europe Holdings LLC
	Morgans Hotel Group London 

Limited

	 	UK
	 	100% by Morgans Hotel Group Europe Limited
	NewCo London City Limited

	 	UK
	 	100% by Morgans Hotel Group Europe Limited
	SC London LLC

	 	Delaware
	 	100% by Morgans Group LLC
	SC London Limited

	 	UK
	 	100% by SC London LLC
	Philips South Beach LLC

	 	Illinois
	 	6.7878% by Shore Club Holdings LLC
	Normandy Morgans Ames AHP LLC

	 	Delaware
	 	31% by MGH 1 Court Investment LLC
	Ames Court Street Mezz LLC

	 	Delaware
	 	100% by Normandy Morgans Ames AHP LLC
	Ames Court Street LLC

	 	Delaware
	 	100% by Ames Court Street Mezz LLC
	Ames Court Street Hotel LLC

	 	Delaware
	 	100% by Ames Court Street LLC
	Historic Ames Building Credit JV

	 	Delaware
	 	90% by Normandy Morgans Ames AHP LLC
	 

	 	 	 	10% by Historic Ames Building Credit LLC
	Historic Ames Building Mezz
LLC

	 	Delaware
	 	100% by Historic Ames Building Credit JV
	Historic Ames Building LLC

	 	Delaware
	 	100% by Historic Ames Building Mezz LLC
	Historic Ames Building Credit
LLC

	 	Delaware
	 	0.01% by Normandy Morgans Ames AHP LLC
	WC Owner LLC

	 	Delaware
	 	25% by MHG PR Member LLC
	Cape Soho Hotel LLC

	 	New York
	 	20% by MHG 150 Lafayette Investment LLC
	Sochin Realty Managers, LLC

	 	Delaware
	 	100% by Cape Soho Hotel LLC
	Sochin Downtown Realty, LLC

	 	New York
	 	99.5% by Cape Soho Hotel LLC
	 

	 	 	 	0.5% by Sochin Realty Managers, LLC
	Hard Rock Hotel Holdings LLC

	 	Delaware
	 	8% by Morgans Group LLC
	Hard Rock Hotel, Inc.

	 	Nevada
	 	100% by Hard Rock Hotel Holdings LLC
	Christopher Hotel Holdings LLC

	 	Delaware
	 	49% by MHG St. Barths Investment LLC
	Cedar Hotel Holdings LLC

	 	Delaware
	 	49% by MHG North State Street Investment

LLC
	Cedar Hotel LLC

	 	Delaware
	 	100% by Cedar Hotel Holdings LLC

 

 

 

Schedule 7.1(d)

Government Approvals

None.

 

 

 

Schedule 7.1(f)

Title to Properties; Liens

Title to Properties

	 	 	 	 	 
	Loan Party and/or Subsidiary	 	Address	 	Owned/Leased
	Morgans Group LLC

	 	475 10th Avenue

11th Floor

New York, NY 10018
	 	Leased
	 
	 	 	 	 
	Beach Hotel Associates LLC

	 	1685 Collins Avenue

Miami Beach, FL 33139
	 	Owned
	 
	 	 	 	 
	Morgans Holdings LLC

	 	237 Madison Ave

New York, NY 10016
	 	Leased
	 
	 	 	 	 
	SC Madison LLC

	 	237 Madison Ave

New York, NY 10016
	 	Leased
	 
	 	 	 	 
	SC Collins LLC

	 	1685 Collins Avenue

Miami Beach, FL 33139
	 	Leased
	 
	 	 	 	 
	Henry Hudson Holdings LLC

	 	356 West 58th Street

New York, NY 10019
	 	Owned, except for Unit
4 and Unit 10 as set
forth below
	 
	 	 	 	 
	Henry Hudson Holdings LLC

	 	356 West 58th Street

New York, NY 10019
	 	Condominium Unit no. 10
leased from owner
	 
	 	 	 	 
	Henry Hudson Holdings LLC

	 	353 West 57th Street

New York, NY 10019
	 	Condominium Unit no. 4
leased from owner
	 
	 	 	 	 
	Hudson Leaseco LLC

	 	365 West 58th Street

New York, NY 10019
	 	Leased
	 
	 	 	 	 
	58th Street Bar Company LLC

	 	365 West 58th Street

New York, NY 10019
	 	Leased
	 
	 	 	 	 
	8440 LLC

	 	8440 Sunset Boulevard

West Hollywood, CA 90069
	 	Leased
	 
	 	 	 	 
	Clift Holdings LLC

	 	495 Geary Street

San Francisco, CA 94102
	 	Leased

 

 

 

The following Liens or the Liens created under the following documents:

1. Assignment of Consolidation and Modification of Mortgage, Security Agreement, Assignment of
Rents and Fixture, dated as October 6, 2006, between Henry Hudson Holdings LLC and Wachovia Bank,
National Association.

2. Loan and Security Agreement, dated as of October 6, 2006, between Henry Hudson Senior Mezz LLC
and Wachovia Bank, National Association.

3. Ground Lease, dated October 14, 2004, by and between Geary Hotel Holdings, LLC and Clift
Holdings LLC.

4. Equipment lien against the MG Borrower described in the financing statement filed with the
Delaware Secretary of State on 5/6/2008 with an initial filing number of 20081558962 in favor of US
Express Leasing, Inc.

5. Equipment lien against the MG Borrower described in the financing statement filed with the
Delaware Secretary of State on 2/19/2009 with an initial filing number of 20090547437 in favor of
Noreast Capital Corporation.

6. Equipment lien against Holdings described in the financing statement filed with the Delaware
Secretary of State on 9/29/2008 with an initial filing number of 20083297080 in favor of Shuffle
Master Inc.

7. Equipment lien against Holdings described in the financing statement filed with the Delaware
Secretary of State on 1/22/2009 with an initial filing number of 200990220308 in favor of Shuffle
Master Inc.

8. Equipment lien against Holdings described in the financing statement filed with the Delaware
Secretary of State on 3/31/2010 with an initial filing number of 201001112428 in favor of Shuffle
Master Inc.

9. Equipment lien against Holdings described in the financing statement filed with the Delaware
Secretary of State on 1/22/2009 with an initial filing number of 20090220308 in favor of Shuffle
Master Inc.

10. Equipment lien against Management Company described in the financing statement filed with the
Delaware Secretary of State on 11/25/2008 with an initial filing number of 200883937735 in favor of
US Express Leasing, Inc.

11. Equipment lien against Management Company described in the financing statement filed with the
Delaware Secretary of State on 9/2/2009 with an initial filing number of 200992832449 in favor of
Bank of the West.

12. Equipment lien against the Florida Borrower described in the financing statement filed with the
Delaware Secretary of State on 7/8/2005 with an initial filing number of 200552100593 in favor of
Konica Minolta Business Solutions U.S.A., Inc.

 

 

 

13. All liens set forth on Schedule B of the Loan Policy of Title Insurance issued by Chicago Title
Insurance Company in Policy No. 7210709-506058, dated the date and time of the recorded
instruments.

14. Lease dated February 11, 1999 between Irving Schatz, as lessor, and Ian Schrager Hotels LLC, as
lessee, as assigned to Henry Hudson Holdings, LLC pursuant to that certain Assignment and
Assumption of Lease, dated as of February 12, 1999, as amended pursuant to that certain Amendment
of Lease, dated as of August 13, 2004.

15. Lease dated January 1, 1999 between Adrienne Schatz (a/k/a Adrienne Wechsler) and Cheryl
Hirsch, as lessor, and Henry Hudson Holdings LLC, as lessee, as amended pursuant to that certain
Amendment of Lease, dated as of September 30, 1999, as further amended pursuant to that certain
Amendment of Lease, dated as of August 13, 2004.

 

 

 

Schedule 7.1(g)

Indebtedness as of the Effective Date

A. Indebtedness evidenced by:

1. Agreement of Consolidation and Modification of Mortgage, Security Agreement, Assignment of Rents
and Fixture Filing, dated as of October 6, 2006, between Henry Hudson Holdings LLC and Wachovia
Bank, National Association.

2. Loan and Security Agreement, dated as of October 6, 2006, between Henry Hudson Senior Mezz LLC
and Wachovia Bank, National Association.

3. Ground Lease, dated October 14, 2004, by and between Geary Hotel Holdings, LLC and Clift
Holdings, LLC.

4. Indenture related to the Senior Subordinated Convertible Notes due 2014, dated as of October 17,
2007, by and among Morgans Hotel Group Co., Morgans Group LLC and The Bank of New York, as trustee.

5. Confirmation of OTC Convertible Note Hedge, dated October 11, 2007, between Morgans Hotel Group
Co. and Merrill Lynch Financial Markets, Inc.

6. Confirmation of OTC Convertible Note Hedge, dated October 11, 2007, between Morgans Hotel Group
Co. and Citibank, N.A.

7. Amended and Restated Confirmation of OTC Warrant Transaction, dated October 11, 2007, between
Morgans Hotel Group Co. and Merrill Lynch Financial Markets, Inc.

8. Amended and Restated Confirmation of OTC Warrant Transaction, dated October 11, 2007, between
Morgans Hotel Group Co. and Citibank, N.A.

9. The Trust Preferred Securities (as described under clause (a) of the related Credit Agreement
definition) and Borrower’s Junior Subordinated Note issued in connection with that certain Junior
Subordinated Indenture, dated as of August 4, 2006, between Morgans Hotel Group Co., Morgans Group
LLC and JPMorgan Chase Bank, National Association.

10. Second Amended and Restated Completion Guaranty, dated as of November 25, 2008, from Abraham
Galbut, Keith Menin, Seth Frolich and Morgans Group LLC for the benefit of Eurohypo AG, New York
Branch.

11. Amendment to and Reaffirmation of Second Amended and Restated Completion Guaranty, dated as of
April 29, 2010, from Abraham Galbut, Keith Menin, Seth Frohlich and Morgans Group LLC for the
benefit of Eurohypo AG, New York Branch.

 

 

 

12. Completion Guaranty (Mezzanine), dated as of November 25, 2008, from Abraham Galbut, Keith
Menin, Seth Frolich and Morgans Group LLC.

13. Amendment to and Reaffirmation of Completion Guaranty (Mezzanine), dated as of April 29, 2010,
from Abraham Galbut, Keith Menin, Seth Frohlich and Morgans Group LLC for the benefit of Eurohypo
AG, New York Branch

14. Agreement for Purchase of Condominium Units and related Rider, each dated as of April 25, 2008,
by and among 1100 West Properties, LLC, as seller, and Abraham Galbut, Keith Menin, Seth Frohlich
and Morgans Group LLC, jointly and severally as buyers.

15. Reaffirmation of Agreement for Purchase of Condominium Units and related Rider, dated as of
November 25, 2008, made by 1100 West Properties, LLC, Abraham Galbut, Keith Menin, Seth Frohlich
and Morgans Group LLC for the benefit of Eurohypo AG, New York Branch.

16. Amendment to Rider to Agreement for Purchase of Condominium Units, dated as of April 29, 2010,
by and among 1100 West Properties, LLC, as seller, and Abraham Galbut, Keith Menin, Seth Frohlich
and Morgans Group LLC, as buyers.

17. Indemnity Agreement, dated as of June 27, 2007, made by and among Morgans Group LLC, Craig D.
Wood, Curtis Bashaw, Keith Bashaw and Sochin Downtown Realty LLC.

18. Indemnity Agreement, dated as of July 30, 2010, made by and among Morgans Group LLC, MHG 150
Lafayette Investment LLC, Morgans Hotel Group Management LLC, Craig D. Wood and Curtis Bashaw.

B. The Indebtedness associated with the liens described in Schedule 7.1(f).

 

 

 

Schedule 7.1(h)

Material Contracts

None.

 

 

 

Schedule 7.1(i)

Litigation

None.

 

 

 

Schedule 7.1(y)

Existing Swap Agreements

1. Swap Confirmation, dated September 14, 2010, between Henry Hudson Holdings LLC and SMBC Capital
Markets, Inc., as agent for SMBC Derivative Products Limited.

2. Confirmation of OTC Convertible Note Hedge, dated October 11, 2007, between Morgans Hotel Group
Co. and Merrill Lynch Financial Markets, Inc.

3. Confirmation of OTC Convertible Note Hedge, dated October 11, 2007, between Morgans Hotel Group
Co. and Citibank, N.A.

4. Amended and Restated Confirmation of OTC Warrant Transaction, dated October 11, 2007, between
Morgans Hotel Group Co. and Merrill Lynch Financial Markets, Inc.

5. Amended and Restated Confirmation of OTC Warrant Transaction, dated October 11, 2007, between
Morgans Hotel Group Co. and Citibank, N.A.

 

 

 

Schedule 10.4

Existing Investments

	1.	 	The investments described on Schedule 7.1(b).

 

 

 

Schedule 10.9

Restrictive Agreements

	1.	 	The Trust Preferred Securities (as described under clause (a) of the relevant Credit
Agreement definition).

 

 

 

EXHIBIT A

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [the][each]1 Assignor
identified in item 1 below ([the][each, an] “Assignor”) and [the][each]2
Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and
agreed that the rights and obligations of [the Assignors][the Assignees]3 hereunder are
several and not joint.]4 Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, restated, supplemented
and/or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of
which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a
part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the
Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and
assumes from [the Assignor][the respective Assignors], subject to and in accordance with the
Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the
Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and
obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit
Agreement and any other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such outstanding rights and
obligations of [the Assignor][the respective Assignors] under the respective facilities identified
below (including without limitation any letters of credit, guarantees, and swingline loans included
in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all
claims, suits, causes of action and any other right of [the Assignor (in its capacity as a
Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person,
whether known or unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in
any way based on or related to any of the foregoing, including, but not limited to, contract
claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights
and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses
(i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”).
Each such sale and assignment is without recourse

 

	 	 	 
	1	 	For bracketed language here and elsewhere in
this form relating to the Assignor(s), if the assignment is from a single
Assignor, choose the first bracketed language. If the assignment is from
multiple Assignors, choose the second bracketed language.

	 
	2	 	For bracketed language here and elsewhere in
this form relating to the Assignee(s), if the assignment is to a single
Assignee, choose the first bracketed language. If the assignment is to
multiple Assignees, choose the second bracketed language.

	 
	3	 	Select as appropriate.

	 
	4	 	Include bracketed language if there are either
multiple Assignors or multiple Assignees.

 

 

 

Exhibit A

Page 2

to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by [the][any] Assignor.

	 	 	 

	1. Assignor[s]:
	 	 
	 

	 
	 
	 	 
	 

	 
	 
	 	 
	2. Assignee[s]:
	 	 
	 

	 
	 
	 	 
	 

	 
	 
	 	 
	 

	 	[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]
	 
	 	 
	3. Borrower(s):

	 	Morgans Group LLC (the “MG Borrower”); Beach Hotel Associates LLC (the
“Florida Borrower,” and together with the MG Borrower, the “Borrowers”)
	 
	 	 
	4. Agent:

	 	Deutsche Bank Trust Company Americas, as the agent under the Credit Agreement
	 
	 	 
	5. Credit Agreement:

	 	The $100,000,000 Credit Agreement dated as of [_____], 2011 among the
Borrowers, Morgans Hotel Group Co., the Lenders from time to time party thereto, Deutsche Bank
Trust Company Americas, as Agent, and the other agents parties thereto.
	 
	 	 
	6. Assigned Interest[s]:
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Aggregate	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Amount of	 	 	Amount of	 	 	Percentage	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Commitment/	 	 	Commitment/	 	 	Assigned of	 	 	 	 
	 	 	 	 	 	 	Facility	 	 	Loans for all	 	 	Loans	 	 	Commitment/	 	 	CUSIP	 
	Assignor[s]5	 	Assignee[s]6	 	 	Assigned7	 	 	Lenders8	 	 	Assigned	 	 	Loans9	 	 	Number	 
	 
	 	 	 	 	 	 	 	 	 	$	 	 	 	$	 	 	 	 	 	%	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	$	 	 	 	$	 	 	 	 	 	%	 	 	 	 

	 	 	 

	[7. Trade Date:

	 	                    ]10

 

	 	 	 
	5	 	List each Assignor, as appropriate.

	 
	6	 	List each Assignee, as appropriate.

	 
	7	 	Fill in the appropriate terminology for the
types of facilities under the Credit Agreement that are being assigned under
this Assignment (e.g. “Commitment,” etc.)

	 
	8	 	Amount to be adjusted by the counterparties to
take into account any payments or prepayments made between the Trade Date and
the Effective Date.

	 
	9	 	Set forth, to at least 9 decimals, as a
percentage of the Commitment/Loans of all Lenders thereunder.

	 
	10	 	To be completed if the Assignor(s) and the
Assignee(s) intend that the minimum assignment amount is to be determined as of
the Trade Date.

 

 

 

Exhibit A

Page 3

[Page break]

 

 

 

Exhibit A

Page 4

Effective
Date:                      _____, 20_____ [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE
DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

	 	 	 	 	 
	 	ASSIGNOR[S]11

[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ASSIGNEE[S]12

[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  

	 	 
	 	 	[Page Break] 	 

 

	 	 	 
	11	 	Add additional signature blocks as needed.

	 
	12	 	Add additional signature blocks as needed.

 

 

 

Exhibit A

Page 5

	 	 	 	 	 
	 	[Consented to and]13 Accepted:

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[Consented to:]14

[MORGANS GROUP LLC]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

	 	 	 
	13	 	To be added only if the consent of the Agent
is required by the terms of the Credit Agreement.

	 
	14	 	To be added only if the consent of the MG
Borrower is required by the terms of the Credit Agreement.

 

 

 

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full
power and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other
instrument or document delivered pursuant thereto (other than this Assignment and Assumption) or
any collateral thereunder, (iii) the financial condition of the Borrowers, any of their respective
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv)
the performance or observance by the Borrowers, any of their respective Subsidiaries or Affiliates
or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated hereby and to become a
Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under
Section 13.5.(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as
may be required under Section 13.5.(b)(iii) of the Credit Agreement), (iii) from and after the
Effective Date specified for this Assignment and Assumption, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect
to decisions to acquire assets of the type represented by the Assigned Interest and either it, or
the person exercising discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement,
and has received or has been accorded the opportunity to receive copies of the most recent
financial statements delivered pursuant to Section 9.1. or 9.2., as applicable, and such other
documents and information as it deems appropriate to make its own credit analysis and decision to
enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it
has, independently and without reliance upon the Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit analysis and decision
to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and
(vii) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and
executed by [the][such] Assignee; (b) agrees that (i) it will, independently and without reliance
on the Agent, [the][any] Assignor or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms
all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender; and (c) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under the Credit Agreement and
the other Loan Documents as are delegated to or otherwise conferred upon the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto.

 

 

 

Annex 1

Page 2

2. Payments. From and after the Effective Date, the Agent shall make all payments in
respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other
amounts) to [the][the relevant] Assignee whether such amounts have accrued prior to, on or after
the Effective Date specified for this Assignment and Assumption. The Assignor[s] and the
Assignee[s] shall make all appropriate adjustments in payments by the Agent for periods prior to
such Effective Date or with respect to the making of this assignment directly between themselves.

3. Effect of Assignment. Upon the delivery of a fully executed original hereof to the
Agent, as of the Effective Date, (i) [the][each] Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Assumption with respect to [the][the relevant]
Assigned Interest, have the rights and obligations of a Lender thereunder and under the other Loan
Documents and (ii) [the][each] Assignor shall, to the extent provided in this Assignment and
Assumption with respect to [the][the relevant] Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement and the other Loan Documents.

4. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. THIS ASSIGNMENT AND ASSUMPTION SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

 

 

 

EXHIBIT B

FORM OF NOTICE OF BORROWING

                    , 20__

Deutsche Bank Trust Company Americas, as Agent

c/o DB Services New Jersey, Inc.

5022 Gate Parkway, Suite 200

Jacksonville, FL 32256

Attn: Melissa Brennan

Fax 1-866-240-3622

melissa.brennan@db.com

agency.transactions@db.com

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement dated as of July [_____], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Morgans Group LLC (the “MG Borrower”), Beach Hotel Associates LLC (the
“Florida Borrower,” and together with the MG Borrower, collectively, the
“Borrowers”), Morgans Hotel Group Co., the lenders party thereto and their assignees under
Section 13.5. thereof (each, a “Lender” and collectively, the “Lenders”) and
Deutsche Bank Trust Company Americas, as Agent (the “Agent”). Capitalized terms used
herein, and not otherwise defined herein, have their respective meanings given them in the Credit
Agreement.

	 	1.	 	Pursuant to Section 2.1(b) of the Credit Agreement, the MG
Borrower hereby requests that the Lenders make Loans to the Borrowers in an
aggregate principal amount equal to $                    .

	 
	 	2.	 	MG Borrower hereby requests that such Loans be made available
on                     , 20_.

	 
	 	3.	 	MG Borrower hereby requests that the requested Loans all be of
the following Type:

	 
	 	 	 	[Check one box only]

	 	 	 	 	 	 	 

	o	 	Base Rate Loans
	 
	 	 	 	 	 	 
	o	 	LIBOR Loans, each with
an initial Interest Period for a duration
of:
	 
	 	 	 	 	 	 
	 

	 	[Check one box only]
	 	o
	 	1 month
	 

	 	 	 	o
	 	2 months
	 

	 	 	 	o
	 	3 months

	 	4.	 	MG Borrower hereby requests that the proceeds of this borrowing
of Loans be made available to the Borrowers by                     .

 

 

 

Exhibit B

Page 2

MG Borrower hereby certifies to the Agent and the Lenders that as of the date hereof and as of
the date of the making of the requested Loans and after giving effect thereto, (a) no Default or
Event of Default has occurred and is continuing or would result from the making of the requested
Loans, and (b) the representations and warranties made or deemed made by the MG Borrower and each
other Loan Party in the Loan Documents to which any of them is a party are and shall be true and
correct in all material respects, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations and warranties shall
have been true and correct in all material respects on and as of such earlier date) and except for
changes in factual circumstances not prohibited under the Loan Documents (other than a change in
factual circumstances since the Effective Date, that constitutes a material adverse change in the
business, assets, liabilities, financial condition or results of operations of Holdings and its
Subsidiaries taken as a whole). In addition, the MG Borrower certifies to the Agent and the
Lenders that all conditions to the making of the requested Loans contained in Article VI.
of the Credit Agreement will have been satisfied (or waived in accordance with the applicable
provisions of the Loan Documents) at the time such Loans are made.

If notice of the requested borrowing of Loans was previously given by telephone, this notice
is to be considered the written confirmation of such telephone notice required by Section 2.1.(b)
of the Credit Agreement.

 

 

 

Exhibit B

Page 3

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Notice of Borrowing
as of the date first written above.

	 	 	 	 	 
	 	MORGANS GROUP LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

 

EXHIBIT C

FORM OF NOTICE OF CONTINUATION

                    , 20__

Deutsche Bank Trust Company Americas, as Agent

c/o DB Services New Jersey, Inc.

5022 Gate Parkway, Suite 200

Jacksonville, FL 32256

Attn: Melissa Brennan

Fax 1-866-240-3622

melissa.brennan@db.com

agency.transactions@db.com

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement dated as of July [_____], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Morgans Group LLC (the “MG Borrower”), Beach Hotel Associates LLC (the
“Florida Borrower,” and together with the MG Borrower, collectively, the “Borrowers”),
Morgans Hotel Group Co., the lenders party thereto and their assignees under Section 13.5. thereof
(the “Lenders”) and Deutsche Bank Trust Company Americas, as Agent (the “Agent”).
Capitalized terms used herein, and not otherwise defined herein, have their respective meanings
given them in the Credit Agreement.

Pursuant to Section 2.7. of the Credit Agreement, the MG Borrower hereby requests a
Continuation of a borrowing of Loans under the Credit Agreement, and in that connection sets forth
below the information relating to such Continuation as required by such Section 2.7. of the Credit
Agreement:

	 	1.	 	The proposed date of such Continuation is                     , 20_.

	 
	 	2.	 	The aggregate principal amount of Loans subject to the
requested Continuation is $                                         and was originally borrowed
by the Borrowers on                     , 20_.

	 
	 	3.	 	The portion of such principal amount subject to such
Continuation is $                                        .

	 
	 	4.	 	The current Interest Period for each of the Loans subject to
such Continuation ends on                     , 20_.

 

 

 

Exhibit C

Page 2

	 	5.	 	The duration of the new Interest Period for each of such Loans
or portion thereof subject to such Continuation is:

	 	 	 

	[Check one box only]

	 	o 1 month
	 

	 	o 2 months
	 

	 	o 3 months

The MG Borrower hereby certifies to the Agent and the Lenders that as of the date hereof, as
of the proposed date of the requested Continuation, and after giving effect to such Continuation,
no Default or Event of Default has occurred and is continuing or would result from the requested
Continuation.

If notice of the requested Continuation was given previously by telephone, this notice is to
be considered the written confirmation of such telephone notice required by Section 2.7. of the
Credit Agreement.

 

 

 

Exhibit C

Page 3

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Notice of
Continuation as of the date first written above.

	 	 	 	 	 
	 	MORGANS GROUP LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

 

EXHIBIT D

FORM OF NOTICE OF CONVERSION

                    , 20__

Deutsche Bank Trust Company Americas, as Agent

c/o DB Services New Jersey, Inc.

5022 Gate Parkway, Suite 200

Jacksonville, FL 32256

Attn: Melissa Brennan

Fax 1-866-240-3622

melissa.brennan@db.com

agency.transactions@db.com

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement dated as of July [_____], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Morgans Group LLC (the “MG Borrower”), Beach Hotel Associates LLC (the
“Florida Borrower,” and together with the MG Borrower, collectively, the “Borrowers”),
Morgans Hotel Group Co., the financial institutions party thereto and their assignees under Section
13.5. thereof (the “Lenders”) and Deutsche Bank Trust Company Americas, as Agent (the
“Agent”). Capitalized terms used herein, and not otherwise defined herein, have their
respective meanings given them in the Credit Agreement.

Pursuant to Section 2.8. of the Credit Agreement, the MG Borrower hereby requests a Conversion
of a borrowing of Loans of one Type into Loans of another Type under the Credit Agreement, and in
that connection sets forth below the information relating to such Conversion as required by such
Section 2.8. of the Credit Agreement:

	 	1.	 	The proposed date of such Conversion is                     , 20_.

	 
	 	2.	 	The Loans to be Converted pursuant hereto are currently:

	 	 	 

	[Check one box only]

	 	o Base Rate Loans
	 

	 	o LIBOR Loans

	 	3.	 	The aggregate principal amount of Loans subject to the
requested Conversion is $                                         and was originally borrowed by
the Borrowers on                     , 20_.

	 
	 	4.	 	The portion of such principal amount subject to such Conversion
is $                    .

 

 

 

Exhibit D

Page 2

	 	5.	 	The amount of such Loans to be so Converted is to be converted
into Loans of the following Type:

[Check one box only]

	 	 	 	 	 

	 	 	o Base Rate Loans
	 
	 	 	 	 
	 	 	o LIBOR Loans, each with an initial Interest Period for a duration of:
	 
	 	 	 	 
	 

	 	[Check one box only]
	 	o 1 month
	 

	 	 	 	o 2 months
	 

	 	 	 	o 3 months

The MG Borrower hereby certifies to the Agent and the Lenders that as of the date hereof and
as of the date of the requested Conversion and after giving effect thereto, no Default or Event of
Default has occurred and is continuing or would result from the requested Conversion (provided the
certification under this clause shall not be made in connection with the Conversion of a Loan into
a Base Rate Loan).

If notice of the requested Conversion was given previously by telephone, this notice is to be
considered the written confirmation of such telephone notice required by Section 2.8 of the Credit
Agreement.

 

 

 

Exhibit D

Page 3

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Notice of Conversion
as of the date first written above.

	 	 	 	 	 
	 	MORGANS GROUP LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

 

	 	 	 	 	 

Exhibit D

Page 4

EXHIBIT A

Borrowing Base Certificate

 

 

 

EXHIBIT F

FORM OF NOTE

			
	 	 	 
	$                    
	 	                    , 20___

FOR VALUE RECEIVED, the undersigned, MORGANS GROUP LLC, a limited liability company formed
under the laws of the State of Delaware (the “MG Borrower”), and BEACH HOTEL ASSOCIATES
LLC, a limited liability company formed under the laws of the State of Delaware (the “Florida
Borrower,” and together with the MG Borrower, collectively, the “Borrowers”), jointly
and severally, hereby promise to pay to _____or its registered assigns (the
“Lender”), in care of Deutsche Bank Trust Company Americas, as Agent (the “Agent”)
at 60 Wall Street, New York, New York 10005, or at such other address as may be specified in
writing by the Agent to the Borrowers, the principal sum of _____AND _____/100 DOLLARS
($_____) (or such lesser amount as shall equal the aggregate unpaid principal amount of
Loans made by the Lender to the Borrowers under the Credit Agreement (as herein defined)), on the
dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount owing hereunder, at the rates and on the dates provided in the Credit
Agreement.

The date and amount of each Loan made by the Lender to the Borrowers, and each payment made on
account of the principal thereof, shall be recorded by the Lender on its books and, prior to any
transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation
thereof, provided that the failure of the Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrowers to make a payment when due of any amount owing under
the Credit Agreement or hereunder.

This Note is one of the Notes referred to in the Credit Agreement dated as of July [_____], 2011
(as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), by and among the MG Borrower, the Florida Borrower, Morgans Hotel Group Co., the
lenders party thereto and their assignees under Section 13.5. thereof and the Agent and is entitled
to the benefits thereof and of the other Loan Documents. This Note is secured by the Security
Documents and is entitled to the benefit of the Guaranty. As provided in the Credit Agreement, this
Note is subject to voluntary prepayment and mandatory repayment prior to the Termination Date, in
whole or in part, and Loans may be converted from one Type into another Type to the extent provided
in the Credit Agreement. Capitalized terms used herein, and not otherwise defined herein, have
their respective meanings given them in the Credit Agreement.

The Credit Agreement provides for the acceleration of the maturity of this Note upon the
occurrence of certain events upon the terms and conditions specified therein.

Except as permitted by Section 13.5. of the Credit Agreement, this Note may not be assigned by
the Lender to any Person.

State of Florida Documentary Stamp Tax in the amount required by law has been paid and
the documentary stamps obtained upon such payment have been affixed to the mortgage recorded in the State of Florida which secure this Note.

 

 

 

Exhibit F

Page 2

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

Each of the Borrowers hereby waives presentment for payment, demand, notice of demand, notice
of non payment, protest, notice of protest and all other similar notices.

State of Florida Documentary Stamp Tax in the amount required by law has been paid and
the documentary stamps obtained upon such payment have been affixed to the mortgage recorded in the State of Florida which secure this Note.

 

 

 

Exhibit F

Page 3

IN WITNESS WHEREOF, the undersigned have executed and delivered this Note under seal as of the
date first written above.

	 	 	 	 	 
	 	MORGANS GROUP LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BEACH HOTEL ASSOCIATES LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

 

Exhibit F

Page 3

SCHEDULE OF LOANS

This Note evidences Loans made under the within-described Credit Agreement to the Borrowers,
on the dates and in the principal amounts set forth below, subject to the payments and prepayments
of principal set forth below:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount	 	 	Unpaid	 	 	 	 
	Date of	 	Principal Amount of	 	 	Paid or	 	 	Principal	 	 	Notation	 
	Loan	 	Loan	 	 	Prepaid	 	 	Amount	 	 	Made By	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

 

EXHIBIT G

to

CREDIT AGREEMENT

FORM OF INTERCOMPANY NOTE

New York, New York

                     __, ____

FOR VALUE RECEIVED, the Payor hereby promises to pay on demand to the order of [_____], or
its assigns (the “Payee”), in lawful money of the United States of America in immediately
available funds, at such location in the United States of America as the Payee shall from time to
time designate, the aggregate unpaid principal amount of all loans and advances heretofore and
hereafter made by the Payee to the Payor and any other indebtedness now or hereafter owing by the
Payor to the Payee in the books and records of the Payee. The Payee is hereby authorized (but
shall not be required) to record all loans and advances made by it to the Payor (all of which shall
be evidenced by this Intercompany Note (this “Note”)), and all repayments or prepayments
thereof, in its books and records, such books and records constituting prima facie evidence of the
accuracy of the information contained therein. Capitalized terms used herein but not otherwise
defined herein shall have the meanings given such terms in the Credit Agreement (as defined below).

The Payor also promises to pay interest on the unpaid principal amount hereof in like money at
said location from the date hereof until paid at such rate per annum as shall be agreed upon from
time to time by the Payor and the Payee.

Upon any exercise of remedies pursuant to Section 11.2 of the Credit Agreement, including,
without limitation, the automatic acceleration of the Loans pursuant to Section 11.2(a)(i), the
unpaid principal amount hereof shall become immediately due and payable without presentment,
demand, protest or notice of any kind in connection with this Note.

Reference is made to the Credit Agreement, dated as of July _____, 2011 by and among Morgans
Group LLC, Beach Hotel Associates LLC, Morgans Hotel Group Co., the lenders party thereto and their
assignees under Section 13.5. thereof (the “Lenders”) and Deutsche Bank Trust Company
Americas, as Agent (the “Agent”) (as amended, restated, modified and/or supplemented from
time to time, the “Credit Agreement”) and this Note is subject to the terms thereof. The
Payor hereby acknowledges and agrees that the Agent may, pursuant to the Credit Agreement and the
other Loan Documents as in effect from time to time, exercise all rights provided therein with
respect to this Note.

The Payee agrees that any and all claims of the Payee against the Payor or any endorser of
this Note, or against any of their respective properties, shall be subordinate and subject in right
of payment to the Obligations until all of the Obligations have been performed and paid in full in
immediately available funds; provided, that the Payor may make payments to the Payee so
long as no Default or Event of Default has occurred and is continuing; and provided,
further, that all loans and advances made by a Payee pursuant to this Note shall be
received by the Payor subject to the provisions of the Loan Documents. Notwithstanding any right of
the

 

 

 

EXHIBIT G

Page 2

Payee
to ask, demand, sue for, take or receive any payment from the Payor, all rights, Liens and security interests of the Payee, whether now or hereafter arising and howsoever
existing, in any assets of the Payor (whether constituting part of the security or collateral given
to the Agent, the Issuing Bank or any Lender to secure payment of all or any part of the
Obligations or otherwise) shall be and hereby are subordinated to the rights of the Agent, the
Issuing Bank and each Lender in such assets. The Payee shall have no right to possession of any
such asset or to foreclose upon, or exercise any other remedy in respect of, any such asset,
whether by judicial action or otherwise, unless and until all of the Obligations shall have been
performed and paid in full in immediately available funds.

The Payee irrevocably authorizes, empowers and appoints the Agent as the Payee’s
attorney-in-fact (which appointment is coupled with an interest and is irrevocable) to, upon the
occurrence and during the continuance of an Event of Default, (i) demand, sue for, collect and
receive every such payment or distribution and give acquittance therefor and (ii) make and present
for and on behalf of the Payee such proofs of claim and take such other action, in the Agent’s own
name or in the name of the Payee or otherwise, as the Agent may deem necessary or advisable at the
direction of the Requisite Lenders for the enforcement of this Note. The Payee also agrees, after
the occurrence and during the continuance of an Event of Default, to execute, verify, deliver and
file any such proofs of claim in respect of any payment or distribution of any kind or character,
whether in cash, securities or other investment property, or otherwise, which shall be payable or
deliverable upon or with respect to any indebtedness of the Payor to the Payee (“Payor
Indebtedness”) reasonably requested by the Agent or as directed by the Requisite Lenders. Upon
the occurrence and during the continuance of an Event of Default, the Agent may vote such proofs of
claim in any insolvency or similar proceeding in respect of any Payor (and the Payee shall not be
entitled to withdraw such vote), receive and collect any and all dividends or other payments or
disbursements made on Payor Indebtedness in whatever form the same may be paid or issued and apply
the same on account of any of the Obligations. Except as otherwise permitted under the Credit
Agreement, should any payment, distribution, security or other investment property or instrument or
any proceeds thereof be received by the Payee upon or with respect to Payor Indebtedness owing to
the Payee after the occurrence and during the continuance of an Event of Default, the Payee shall
receive and hold the same in trust, as trustee, for the benefit of the Agent, the Issuing Bank and
each Lender, and if requested by the Agent, shall promptly deliver the same to the Agent in
precisely the form received (except for the endorsement or assignment of the Payee where necessary
or advisable), for application to any of the Obligations, due or not due, and, until so delivered,
the same shall be segregated from the other assets of the Payee and held in trust by the Payee as
the property of the Agent. If the Payee fails to make any such endorsement or assignment to the
Agent, the Agent or any of its officers, employees or representatives are hereby irrevocably
authorized to make the same. The Payee agrees that until the Obligations have been performed and
paid in full in immediately available funds the Payee will not assign or transfer, or agree to
assign or transfer, to any Person (other than in favor of the Agent pursuant to the Credit
Agreement and the other Loan Documents or otherwise) any claim the Payee has or may have against
the Payor.

The Payor and any endorser of this Note acknowledges and agrees that upon the occurrence and
during the continuance of an Event of Default, the Agent may exercise all rights of the Payee
under this Note and all payments under this Note shall be made without offset, counterclaim,
abatement, reduction, recoupment, deduction or defense of any kind.

 

 

 

EXHIBIT G

Page 3

Notwithstanding anything to the contrary contained herein, in any other Loan Document or in
any such promissory note or other instrument, this Note (i) replaces and supersedes any and all
promissory notes or other instruments which create or evidence any loans or advances made on or
before the date hereof by the Payee to the Payor and (ii) shall not be deemed replaced, superseded
or in any way modified by any promissory note or other instrument entered into on or after the date
hereof which purports to create or evidence any loan or advance by the Payee to the Payor.

The Payor hereby waives presentment, demand, protest or notice of any kind in connection with
this Note.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

	 	 	 	 	 
	 	[NAME OF PAYOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Pay to the order of

	 	 	 	 	 

	 	 	 
	 
	 	 	 	 
	[NAME OF PAYEE]	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

 

 

EXHIBIT H

FORM OF LETTER OF CREDIT REQUEST

Date:           1          

Deutsche Bank Trust Company Americas, as Agent under the Credit Agreement, dated as of July [_____],
2011 (as amended, amended and restated, modified or otherwise supplemented from time to time, the
“Credit Agreement”), by and among Morgans Group LLC (the “MG Borrower”), Beach
Hotel Associates LLC, Morgans Hotel Group Co., the agents and arrangers from time to time party
thereto and the lenders from time to time party thereto.

Deutsche Bank Trust Company Americas, as Agent

Global Loan Operations, Standby L/C

60 Wall Street, MS NYC 60-0926

New York, NY 10005-2858

Attn: Charles Ferris, Assistant Vice President

Phone 212-250-1214

Fax 212-797-0403

charles.ferris@db.com

Ladies and Gentlemen:

The MG Borrower hereby requests that [_____2 _____], as the Issuing Bank under
the Credit Agreement, issue an irrevocable [standby] [commercial] Letter of Credit for account of
the undersigned on 3 (the “Date of Issuance”) in an aggregate stated amount of US
$4 .

For purposes of this Letter of Credit Request, unless otherwise defined herein, all
capitalized terms used herein which are defined in the Credit Agreement shall have the meaning
specified therein.

The beneficiary of the Letter of Credit requested pursuant to this Letter of Credit Request
will be 5 , and such Letter of Credit will support 6 and will have a stated
expiration date of 7 .

	 	 	 
	1	 	Insert date of Letter of Credit Request.

	 
	2	 	Insert name of Issuing Bank. (Note , if the Agent is being requested to issue a
commercial Letter of Credit, please insert the name of Deutsche Bank AG, New York Branch)

	 
	3	 	Insert proposed Date of Issuance, which must be a Business Day at least five Business
Days after the date of the Letter of Credit Request.

	 
	4	 	Insert initial stated amount.

	 
	5	 	Insert full name and address of the Beneficiary.

	 
	6	 	Insert brief description of obligation to be supported by the Letter of Credit.

	 
	7	 	Insert date which cannot be later than the earlier of (a) the date which is one year
after the Date of Issuance and (b) the date which is 5 Days prior to the Termination Date.

 

 

The MG Borrower hereby certifies to the Agent, the Issuing Bank and the Lenders that as of the
date hereof and as of the Date of Issuance: (a) no Default or Event of Default has occurred and is
continuing or would exist immediately after giving effect to the Letter of Credit issuance
contemplated hereby, and (b) the representations and warranties made or deemed made by the Borrower
and each other Loan Party in the Loan Documents to which any of them is a party are true and
correct in all material respects, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations and warranties shall
have been true and correct in all material respects on and as of such earlier date) and except for
changes in factual circumstances not prohibited under the Loan Documents (other than a change in
factual circumstances since the Effective Date, that constitutes a material adverse change in the
business, assets, liabilities, financial condition or results of operations of Holdings and its
Subsidiaries taken as a whole). In addition, the MG Borrower certifies to the Agent, the Issuing
Bank and the Lenders as of the Date of Issuance that all conditions to the issuance of the
requested Letter of Credit contained in Article VI. of the Credit Agreement have been
satisfied (or waived in accordance with the applicable provisions of the Loan Documents).

The MG Borrower agrees that, if prior to the Date of Issuance any of the foregoing
certifications shall cease to be true and correct, the MG Borrower shall promptly notify the Agent
and the Issuing Bank thereof in writing (any such notice, a “Non-Compliance Notice”).
Except to the extent, if any, that prior to the Date of Issuance the MG Borrower shall deliver a
Non-Compliance Notice to the Agent and the Issuing Bank, each of the foregoing certifications shall
be deemed to be made additionally on the Date of Issuance as if made on such date.

Copies of all required documentation with respect to the supported transaction are
attached hereto.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

2

 

	 	 	 	 	 
	 	MORGANS GROUP LLC,

a Delaware limited liability company

 	 
	 	By:  	Morgans Hotel Group Co.,
 	 
	 	its Managing Member 	 
	 	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

3

 

EXHIBIT I

FORM OF COMPLIANCE CERTIFICATE

                    , 20__

Deutsche Bank Trust Company Americas, as Agent

60 Wall Street

New York, New York 10005

Each of the Lenders Party to the Credit

Agreement referred to below

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement dated as of [_____], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Morgans Group LLC (the “MG Borrower”), Beach Hotel Associates LLC (the
“Florida Borrower,” and together with the MG Borrower, collectively, the
“Borrowers”), Morgans Hotel Group Co., the lenders party thereto and their assignees under
Section 13.5. thereof (each, a “Lender” and collectively, the “Lenders”) and
Deutsche Bank Trust Company Americas, as Agent (the “Agent”). Capitalized terms used
herein, and not otherwise defined herein, have their respective meanings given them in the Credit
Agreement.

Pursuant to Section 9.3. of the Credit Agreement, the undersigned Financial Officer hereby
certifies to the Agent, the Issuing Bank and the Lenders as follows:

(1) The undersigned is the ____________________of Holdings.

(2) The undersigned has examined the books and records of Holdings and the Borrowers and the
Subsidiaries and has conducted such other examinations and investigations as are reasonably
necessary to provide this Compliance Certificate.

(3) To the best of the undersigned’s knowledge, information and belief after due inquiry, no
Default or Event of Default has occurred [if such is not the case, specify such Default or Event of
Default and its nature, when it occurred and whether it is continuing and any action being taken or
proposed to be taken by Holdings or the Borrowers with respect thereto].

 

 

 

Exhibit I

Page 2

(4) Attached hereto as Schedule 1 are reasonably detailed calculations demonstrating
compliance with the covenants contained in Section 10.11. of the Credit Agreement.

(5) No change in the application of GAAP to the financial statements of Holdings has occurred
since the later of the date of the MG Borrower’s audited financial statements referred to in
Section 7.1.(k) of the Credit Agreement and the date of the last
certification by a Financial Officer indicating such a change [if any such change has
occurred, specify the effect of such change on the financial statements accompanying such
certificate].

 

 

 

Exhibit I

Page 3

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date first above
written.

	 	 	 	 	 

	 

	 	 

	 	 

 

 

 

SCHEDULE 1

of

EXHIBIT I

[CALCULATIONS TO BE ATTACHED]

 

 

 

EXHIBIT J

FORM OF GUARANTY

THIS GUARANTY dated as of July [________], 2011, (this “Guaranty”) executed and delivered by
each of the undersigned and the other Persons from time to time party hereto pursuant to the
execution and delivery of an Accession Agreement in the form of Annex I hereto (all of the
undersigned, together with such other Persons each a “Guarantor” and collectively, the
“Guarantors”) in favor of (a) DEUTSCHE BANK TRUST COMPANY AMERICAS, in its capacity as
Agent (the “Agent”) for itself, the Issuing Bank and each of the Lenders under that certain
Credit Agreement dated as of July [_______], 2011 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), by and among Morgans Group LLC (the
“MG Borrower”), Beach Hotel Associates LLC (the “Florida Borrower”, and together
with the MG Borrower, collectively, the “Borrowers”), Morgans Hotel Group Co., the lenders
party thereto and their assignees under Section 13.5. thereof (the “Lenders”) and the Agent
and (b) the Lenders.

WHEREAS, pursuant to the Credit Agreement, the Agent, the Issuing Bank and the Lenders have
agreed to make available to the Borrowers certain financial accommodations on the terms and
conditions set forth in the Credit Agreement;

WHEREAS, each of the Borrowers and each of the Guarantors, though separate legal entities, are
mutually dependent on each other in the conduct of their respective businesses as an integrated
operation and have determined it to be in their mutual best interests to obtain financing from the
Agent and the Lenders through their collective efforts;

WHEREAS, each Guarantor acknowledges that it will receive direct and indirect benefits from
the Agent and the Lenders making such financial accommodations available to the Borrowers under the
Credit Agreement and, accordingly, each Guarantor is willing to guarantee the Borrowers’
obligations to the Agent and the Lenders on the terms and conditions contained herein; and

WHEREAS, each Guarantor’s execution and delivery of this Guaranty is a condition to the Agent
and the Lenders making, and continuing to make, such financial accommodations to the Borrowers.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each Guarantor, each Guarantor agrees as follows:

Section 1. Guaranty. Each Guarantor hereby absolutely, irrevocably and
unconditionally guaranties as primary obligor and not merely as surety, the due and punctual
payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all
of the following (collectively referred to as the “Guarantied Obligations”): (a) all
indebtedness and obligations owing by each of the Borrowers to any Lender, the Issuing Bank or the
Agent under or in connection with the Credit Agreement and any other Loan Document, including
without limitation, the repayment of all principal of the Loans and the Reimbursement
Obligations, and the payment of all interest, Fees, charges, attorneys’ fees and other amounts
payable to any Lender or the Agent thereunder or in connection therewith; (b) any and all
extensions, renewals, modifications, amendments or substitutions of the foregoing; (c) all
expenses, including, without limitation, reasonable attorneys’ fees and disbursements, that are
incurred by the Lenders, the Issuing Bank and the Agent in the enforcement of any of the foregoing
or any obligation of such Guarantor hereunder; and (d) all other Obligations.

 

 

 

EXHIBIT J

Page 2

Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a guaranty of
payment, and not of collection, and a debt of each Guarantor for its own account. Accordingly,
none of the Lenders, the Issuing Bank or the Agent shall be obligated or required before enforcing
this Guaranty against any Guarantor: (a) to pursue any right or remedy any of them may have against
either of the Borrowers, any other Guarantor or any other Person or commence any suit or other
proceeding against either of the Borrowers, any other Guarantor or any other Person in any court or
other tribunal; (b) to make any claim in a liquidation or bankruptcy of either of the Borrowers,
any other Guarantor or any other Person; or (c) to make demand of either of the Borrowers, any
other Guarantor or any other Person or to enforce or seek to enforce or realize upon any collateral
security held by the Lenders, the Issuing Bank or the Agent which may secure any of the Guarantied
Obligations.

Section 3. Guaranty Absolute. Each Guarantor guarantees that the Guarantied
Obligations will be paid strictly in accordance with the terms of the documents evidencing the
same, regardless of any Applicable Law now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Agent or the Lenders with respect thereto. The liability of
each Guarantor under this Guaranty shall be primary, absolute, irrevocable and unconditional in
accordance with its terms and shall remain in full force and effect without regard to, and shall
not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including without limitation, the following (whether or not such Guarantor
consents thereto or has notice thereof):

(a) (i) any change in the amount, interest rate or due date or other term of any of the
Guarantied Obligations, (ii) any change in the time, place or manner of payment of all or
any portion of the Guarantied Obligations, (iii) any amendment or waiver of, or consent to
the departure from or other indulgence with respect to, the Credit Agreement, any other Loan
Document, or any other document or instrument evidencing or relating to any Guarantied
Obligations, or (iv) any waiver, renewal, extension, addition, or supplement to, or deletion
from, or any other action or inaction under or in respect of, the Credit Agreement, any of
the other Loan Documents, or any other documents, instruments or agreements relating to the
Guarantied Obligations or any other instrument or agreement referred to therein or
evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;

(b) any lack of validity or enforceability of the Credit Agreement, any of the other
Loan Documents, or any other document, instrument or agreement referred to therein or
evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;

 

 

 

EXHIBIT J

Page 3

(c) any furnishing to the Agent, the Issuing Bank or the Lenders of any security for
the Guarantied Obligations, or any sale, exchange, release or surrender of, or realization
on, any collateral securing any of the Obligations;

(d) any settlement or compromise of any of the Guarantied Obligations, any security
therefor, or any liability of any other party with respect to the Guarantied Obligations, or
any subordination of the payment of the Guarantied Obligations to the payment of any other
liability of either of the Borrowers or any other Loan Party;

(e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to such Guarantor, either of the Borrowers,
any other Loan Party or any other Person, or any action taken with respect to this Guaranty
by any trustee or receiver, or by any court, in any such proceeding;

(f) any act or failure to act by either of the Borrowers, any other Loan Party or any
other Person which may adversely affect such Guarantor’s subrogation rights, if any, against
either of the Borrowers or any other Loan Party to recover payments made under this
Guaranty;

(g) any nonperfection or impairment of any security interest or other Lien on any
collateral, if any, securing in any way any of the Obligations;

(h) any application of sums paid by either of the Borrowers, any other Guarantor or any
other Person with respect to the liabilities of either of the Borrowers or any other Loan
Party to the Agent or the Lenders, regardless of what liabilities of either of the Borrowers
remain unpaid;

(i) any defect, limitation or insufficiency in the borrowing powers of either of the
Borrowers or in the exercise thereof;

(j) any defense, set-off, claim or counterclaim (other than indefeasible payment and
performance in full) which may at any time be available to or be asserted by either of the
Borrowers, any other Loan Party or any other Person against the Agent or any Lender;

(k) any change in the corporate existence, structure or ownership of either of the
Borrowers or any other Loan Party;

(l) any statement, representation or warranty made or deemed made by or on behalf of
either of the Borrowers, any Guarantor or any other Loan Party under any Loan Document, or
any amendment hereto or thereto, proves to have been incorrect or misleading in any respect;
or

(m) any other circumstance which might otherwise constitute a defense available to, or
a discharge of, a Guarantor hereunder (other than indefeasible payment and performance in
full).

 

 

 

EXHIBIT J

Page 4

Section 4. Action with Respect to Guarantied Obligations. The Lenders, the Issuing
Bank and the Agent may, at any time and from time to time, without the consent of, or notice to,
any Guarantor, and without discharging any Guarantor from its obligations hereunder, take any and
all actions described in Section 3 and may otherwise: (a) amend, modify, alter or
supplement the terms of any of the Guarantied Obligations, including, but not limited to, extending
or shortening the time of payment of any of the Guarantied Obligations or changing the interest
rate that may accrue on any of the Guarantied Obligations; (b) amend, modify, alter or supplement
the Credit Agreement or any other Loan Document; (c) sell, exchange, release or otherwise deal with
all, or any part, of any collateral securing any of the Obligations; (d) release any other Loan
Party or other Person liable in any manner for the payment or collection of the Guarantied
Obligations; (e) exercise, or refrain from exercising, any rights against either of the Borrowers,
any other Guarantor or any other Person; and (f) apply any sum, by whomsoever paid or however
realized, to the Guarantied Obligations in such order as the Lenders shall elect.

Section 5. Representations and Warranties. Each Guarantor hereby makes to the Agent,
the Issuing Bank and the Lenders all of the representations and warranties made by each of the
Borrowers with respect to or in any way relating to such Guarantor as a Subsidiary or Loan Party
under the Credit Agreement and the other Loan Documents, as if the same were set forth herein in
full.

Section 6. Covenants. Each Guarantor will comply with all covenants which any
Borrower is to cause such Guarantor to comply with as a Subsidiary or Loan Party under the terms of
the Credit Agreement or any of the other Loan Documents.

Section 7. Waiver. Each Guarantor, to the fullest extent permitted by Applicable
Law, hereby waives notice of acceptance hereof or any presentment, demand, protest or notice of any
kind, and any other act or thing, or omission or delay to do any other act or thing, which in any
manner or to any extent might vary the risk of such Guarantor or which otherwise might operate to
discharge such Guarantor from its obligations hereunder.

Section 8. Inability to Accelerate Loan. If the Agent, the Issuing Bank and/or the
Lenders are prevented under Applicable Law or otherwise from demanding or accelerating payment of
any of the Guarantied Obligations by reason of any automatic stay or otherwise, the Agent, the
Issuing Bank and/or the Lenders shall be entitled to receive from each Guarantor, upon demand
therefor, the sums which otherwise would have been due had such demand or acceleration occurred.

Section 9. Reinstatement of Guarantied Obligations. If claim is ever made on the
Agent, the Issuing Bank or any Lender for repayment or recovery of any amount or amounts received
in payment or on account of any of the Guarantied Obligations, and the Agent or such Lender repays
all or part of said amount by reason of (a) any judgment, decree or order of any court or
administrative body of competent jurisdiction, or (b) any settlement or compromise of any such
claim effected by the Agent, the Issuing Bank or such Lender with any such claimant (including each
of the Borrowers or a trustee in bankruptcy for either of the Borrowers), then and in such event
each Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding on it, notwithstanding any revocation hereof or the cancellation
of the Credit Agreement, any of the other Loan Documents, or any other instrument evidencing any
liability of either of the Borrowers, and such Guarantor shall be and remain liable to the Agent,
the Issuing Bank or such Lender for the amounts so repaid or recovered to the same extent as if
such amount had never originally been paid to the Agent, the Issuing Bank or such Lender.

 

 

 

EXHIBIT J

Page 5

Section 10. Subrogation. Upon the making by any Guarantor of any payment hereunder
for the account of either of the Borrowers, such Guarantor shall be subrogated to the rights of the
payee against the Borrowers; provided, however, that such Guarantor shall not
enforce any right or receive any payment by way of subrogation or otherwise take any action in
respect of any other claim or cause of action such Guarantor may have against either of the
Borrowers arising by reason of any payment or performance by such Guarantor pursuant to this
Guaranty, unless and until all of the Guarantied Obligations have been indefeasibly paid and
performed in full. If any amount shall be paid to such Guarantor on account of or in respect of
such subrogation rights or other claims or causes of action, such Guarantor shall hold such amount
in trust for the benefit of the Agent and the Lenders and shall forthwith pay such amount to the
Agent to be credited and applied, at the Agent’s election, against the Guarantied Obligations,
whether matured or unmatured, in accordance with the terms of the Credit Agreement or to be held by
the Agent as collateral security for any Guarantied Obligations existing.

Section 11. Payments Free and Clear. All sums payable by each Guarantor hereunder,
whether of principal, interest, Fees, expenses, premiums or otherwise, shall be paid in full,
without set off or counterclaim or any deduction or withholding whatsoever (including any Taxes),
and if any Guarantor is required by Applicable Law or by a Governmental Authority to make any such
deduction or withholding, such Guarantor shall pay to the Agent, the Issuing Bank and the Lenders
such additional amount as will result in the receipt by the Agent, the Issuing Bank and the Lenders
of the full amount payable hereunder had such deduction or withholding not occurred or been
required.

Section 12. Set-off. In addition to any rights now or hereafter granted under any of
the other Loan Documents or Applicable Law and not by way of limitation of any such rights, each
Guarantor hereby authorizes the Agent, the Issuing Bank, each Lender and any of their respective
affiliates, at any time while an Event of Default exists, without any prior notice to such
Guarantor or to any other Person, any such notice being hereby expressly waived, but in the case of
a Lender or an affiliate of a Lender subject to receipt of the prior written consent of the Agent
exercised in its sole discretion, to set off and to appropriate and to apply any and all deposits
(general or special, including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the
Agent, the Issuing Bank, such Lender, or any affiliate of the Agent, the Issuing Bank or such
Lender, to or for the credit or the account of such Guarantor against and on account of any of the
Guarantied Obligations, although such obligations shall be contingent or unmatured. Each Guarantor
agrees, to the fullest extent permitted by Applicable Law, that any Participant may exercise rights
of setoff or counterclaim and other rights with respect to its participation as fully
as if such Participant were a direct creditor of such Guarantor in the amount of such
participation.

 

 

 

EXHIBIT J

Page 6

Section 13. Subordination. Each Guarantor hereby expressly covenants and agrees for
the benefit of the Agent, the Issuing Bank and the Lenders that all obligations and liabilities of
the Borrowers or any other Loan Party to such Guarantor of whatever description, including without
limitation, all intercompany receivables of such Guarantor from the Borrowers or any other Loan
Party (collectively, the “Junior Claims”) shall be subordinate and junior in right of
payment to all Guarantied Obligations. If an Event of Default shall exist, then no Guarantor shall
accept any direct or indirect payment (in cash, property or securities, by setoff or otherwise)
from either of the Borrowers or any other Loan Party on account of or in any manner in respect of
any Junior Claim until all of the Guarantied Obligations have been indefeasibly paid in full.

Section 14. Avoidance Provisions. It is the intent of Morgans Hotel Group Management
LLC (“Management Company”), the Agent, the Issuing Bank and the Lenders that in any
Proceeding, Management Company’s maximum obligation hereunder shall equal, but not exceed, the
maximum amount which would not otherwise cause the obligations of Management Company hereunder (or
any other obligations of Management Company to the Agent, the Issuing Bank and the Lenders) to be
avoidable or unenforceable against Management Company in such Proceeding as a result of Applicable
Law, including without limitation, (a) Section 548 of the Bankruptcy Code of 1978, as amended (the
“Bankruptcy Code”) and (b) any state fraudulent transfer or fraudulent conveyance act or
statute applied in such Proceeding, whether by virtue of Section 544 of the Bankruptcy Code or
otherwise. The Applicable Laws under which the possible avoidance or unenforceability of the
obligations of Management Company hereunder (or any other obligations of Management Company to the
Agent and the Lenders) shall be determined in any such Proceeding are referred to as the
“Avoidance Provisions”. Accordingly, to the extent that the obligations of Management
Company hereunder would otherwise be subject to avoidance under the Avoidance Provisions, the
maximum Guarantied Obligations for which Management Company shall be liable hereunder shall be
reduced to that amount which, as of the time any of the Guarantied Obligations are deemed to have
been incurred under the Avoidance Provisions, would not cause the obligations of Management Company
hereunder (or any other obligations of Management Company to the Agent, the Issuing Bank and the
Lenders), to be subject to avoidance under the Avoidance Provisions. This Section is intended
solely to preserve the rights of the Agent, the Issuing Bank and the Lenders hereunder to the
maximum extent that would not cause the obligations of Management Company hereunder to be subject
to avoidance under the Avoidance Provisions, and neither Management Company nor any other Person
shall have any right or claim under this Section as against the Agent and the Lenders that would
not otherwise be available to such Person under the Avoidance Provisions.

Section 15. Information. Each Guarantor assumes all responsibility for being and
keeping itself informed of the financial condition of each of the Borrowers and the other Loan
Parties, and of all other circumstances bearing upon the risk of nonpayment of any of the
Guarantied Obligations and the nature, scope and extent of the risks that such Guarantor assumes
and incurs hereunder, and agrees that neither the Agent nor the Issuing Bank or any of the
Lenders shall have any duty whatsoever to advise any Guarantor of information regarding such
circumstances or risks.

 

 

 

EXHIBIT J

Page 7

Section 16. GOVERNING LAW; WAIVER OF JURY TRIAL.

(a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED
IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
GUARANTY, EACH OF THE GUARANTORS HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH
OF THE GUARANTORS HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL
JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH
RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT BROUGHT IN ANY OF THE AFOREMENTIONED COURTS,
THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY. EACH OF THE GUARANTORS FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH PARTY AT ITS NOTICE ADDRESS SET FORTH IN SECTION 24, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF THE GUARANTORS HEREBY IRREVOCABLY WAIVES ANY
OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT THAT SERVICE
OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST EACH OF THE PARTIES PARTY HERETO IN ANY OTHER
JURISDICTION.

(b) EACH OF THE GUARANTORS HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

 

 

 

EXHIBIT J

Page 8

(c) EACH OF THE GUARANTORS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 17. Loan Accounts. The Agent, the Issuing Bank and each Lender may maintain
books and accounts setting forth the amounts of principal, interest and other sums paid and payable
with respect to the Guarantied Obligations, and in the case of any dispute relating to any of the
outstanding amount, payment or receipt of any of the Guarantied Obligations or otherwise, the
entries in such books and accounts shall be deemed conclusive evidence of the amounts and other
matters set forth herein, absent manifest error. The failure of the Agent, the Issuing Bank or any
Lender to maintain such books and accounts shall not in any way relieve or discharge any Guarantor
of any of its obligations hereunder.

Section 18. Waiver of Remedies. No delay or failure on the part of the Agent, the
Issuing Bank or any Lender in the exercise of any right or remedy it may have against any Guarantor
hereunder or otherwise shall operate as a waiver thereof, and no single or partial exercise by the
Agent, the Issuing Bank or any Lender of any such right or remedy shall preclude any other or
further exercise thereof or the exercise of any other such right or remedy.

Section 19. Termination. This Guaranty shall remain in full force and effect until
indefeasible payment in full of the Guarantied Obligations and the termination or cancellation of
the Credit Agreement in accordance with its terms.

Section 20. Successors and Assigns. Each reference herein to the Agent, the Issuing
Bank or the Lenders shall be deemed to include such Person’s respective successors and assigns
(including, but not limited to, any holder of the Guarantied Obligations) in whose favor the
provisions of this Guaranty also shall inure, and each reference herein to each Guarantor shall be
deemed to include such Guarantor’s successors and assigns, upon whom this Guaranty also shall be
binding. The Lenders may, in accordance with the applicable provisions of the Credit Agreement,
assign, transfer or sell any Guarantied Obligation, or grant or sell participations in any
Guarantied Obligations, to any Person without the consent of, or notice to, any Guarantor and
without releasing, discharging or modifying any Guarantor’s obligations hereunder. Subject to
Section 13.8. of the Credit Agreement, each Guarantor hereby consents to the delivery by the Agent
or any Lender to any Assignee or Participant (or any prospective Assignee or Participant) of any
financial or other information regarding either of the Borrowers or any Guarantor. No Guarantor
may assign or transfer its rights or obligations hereunder to any Person without the prior written
consent of all Lenders and any such assignment or other transfer to which all of the Lenders have
not so consented shall be null and void.

Section 21. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF THE GUARANTORS
HEREUNDER SHALL BE JOINT AND SEVERAL, AND ACCORDINGLY, EACH GUARANTOR CONFIRMS THAT IT IS LIABLE
FOR THE FULL
AMOUNT OF THE “GUARANTIED OBLIGATIONS” AND ALL OF THE OBLIGATIONS AND LIABILITIES OF
EACH OF THE OTHER GUARANTORS HEREUNDER.

 

 

 

EXHIBIT J

Page 9

Section 22. Amendments. This Guaranty may not be amended except in writing signed by
the Requisite Lenders (or all of the Lenders if required under the terms of the Credit Agreement),
the Agent and each Guarantor.

Section 23. Payments. All payments to be made by any Guarantor pursuant to this
Guaranty shall be made in Dollars, in immediately available funds to the Agent at the Principal
Office, not later than 2:00 p.m. on the date of demand therefor.

Section 24. Notices. All notices, requests and other communications hereunder shall
be in writing and shall be made by personal delivery, telecopy or certified or registered mail,
return receipt requested, (a) to each Guarantor at its address set forth below its signature
hereto, (b) to the Agent, the Issuing Bank or any Lender at its respective address for notices
provided for in the Section 13.1 of the Credit Agreement, or (c) as to each such party at such
other address as such party shall designate in a written notice to the other parties. Each such
notice, request or other communication shall be effective in the manner set forth in Section 13.1
of the Credit Agreement.

Section 25. Severability. In case any provision of this Guaranty shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

Section 26. Headings. Section headings used in this Guaranty are for convenience
only and shall not affect the construction of this Guaranty.

Section 27. Limitation of Liability. Neither the Agent, the Issuing Bank nor any
Lender, nor any affiliate, officer, director, employee, attorney, or agent of the Agent, the
Issuing Bank or any Lender, shall have any liability with respect to, and each Guarantor hereby
waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by a Guarantor in connection with,
arising out of, or in any way related to, this Guaranty or any of the other Loan Documents, or any
of the transactions contemplated by this Guaranty, the Credit Agreement or any of the other Loan
Documents. Each Guarantor hereby waives, releases, and agrees not to sue the Agent, the Issuing
Bank or any Lender or any of the Agent’s, the Issuing Bank’s or any Lender’s affiliates, officers,
directors, employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Guaranty, the Credit Agreement or
any of the other Loan Documents, or any of the transactions contemplated by Credit Agreement or
financed thereby.

 

 

 

EXHIBIT J

Page 10

Section 29. Definitions. (a) For the purposes of this Guaranty:

“Proceeding” means any of the following: (i) a voluntary or involuntary case
concerning any Guarantor shall be commenced under the Bankruptcy Code of 1978, as amended; (ii) a
custodian (as defined in such Bankruptcy Code or any other applicable bankruptcy laws) is
appointed for, or takes charge of, all or any substantial part of the property of any
Guarantor; (iii) any other proceeding under any Applicable Law, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition for adjustment of debts, whether
now or hereafter in effect, is commenced relating to any Guarantor; (iv) any Guarantor is
adjudicated insolvent or bankrupt; (v) any order of relief or other order approving any such case
or proceeding is entered by a court of competent jurisdiction; (vi) any Guarantor makes a general
assignment for the benefit of creditors; (vii) any Guarantor shall fail to pay, or shall state that
it is unable to pay, or shall be unable to pay, its debts generally as they become due; (viii) any
Guarantor shall call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts; (ix) any Guarantor shall by any act or failure to act indicate its consent
to, approval of or acquiescence in any of the foregoing; or (x) any corporate action shall be taken
by any Guarantor for the purpose of effecting any of the foregoing.

(b) Terms not otherwise defined herein are used herein with the respective meanings given them
in the Credit Agreement.

[Signature on Next Page]

 

 

 

EXHIBIT J

Page 11

IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this Guaranty as of the
date and year first written above.

	 	 	 	 	 	 	 
	 	 	MORGANS HOTEL GROUP CO.	 	 
	 
	 	 	 	 	 	 
	 	 	MORGANS HOTEL GROUP MANAGEMENT LLC,	 	 
	 
	 	 	 	 	 	 
	 

	 	 	By: 	Morgans Hotel Group Co.,	 	 
	 

	 	 	 	its Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 
	 

	 	 	 

Name:
	 	 
	 

	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 
	 	 	c/o Morgans Group LLC	 	 
	 	 	475 Tenth Avenue	 	 
	 	 	New York, New York 10018	 	 
	 	 	Attention: Richard Szymanski	 	 
	 	 	Telecopy Number: (212) 277-4270	 	 
	 	 	Telephone Number: (212) 277-4188	 	 

 

 

 

ANNEX I

of

EXHIBIT J

FORM OF ACCESSION AGREEMENT

THIS ACCESSION AGREEMENT dated as of _____, 20____, executed and delivered by

 _____, a
 _____ 
formed under the laws of the State of
 _____ 
(the “New
Guarantor”), in favor of (a) DEUTSCHE BANK TRUST COMPANY AMERICAS, in its capacity as Agent
(the “Agent”) for itself, the Issuing Bank and each of the Lenders under that certain
Credit Agreement dated as of [_______], 2011 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), by and among Morgans Group LLC (the
“MG Borrower”), Beach Hotel Associates LLC (the “Florida Borrower”, and together
with the MG Borrower, collectively, the “Borrowers”), Morgans Hotel Group Co., the lenders
party thereto and their assignees under Section 13.5. thereof (the “Lenders”) and the
Agent, and (b) the Lenders.

WHEREAS, pursuant to the Credit Agreement, the Agent and the Lenders have agreed to make
available to the Borrowers certain financial accommodations on the terms and conditions set forth
in the Credit Agreement;

WHEREAS, the Borrowers, the New Guarantor, and the existing Guarantors, though separate legal
entities, are mutually dependent on each other in the conduct of their respective businesses as an
integrated operation and have determined it to be in their mutual best interests to obtain
financing from the Agent and the Lenders through their collective efforts;

WHEREAS, the New Guarantor acknowledges that it will receive direct and indirect benefits from
the Agent, the Issuing Bank and the Lenders making such financial accommodations available to the
Borrowers under the Credit Agreement and, accordingly, the New Guarantor is willing to guarantee
the Borrowers’ obligations to the Agent and the Lenders on the terms and conditions contained
herein; and

WHEREAS, the New Guarantor’s execution and delivery of this Agreement is a condition to the
Agent, the Issuing Bank and the Lenders continuing to make such financial accommodations to the
Borrowers.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the New Guarantor, the New Guarantor agrees as follows:

 

 

 

Exhibit J

Section 1. Accession to Guaranty. The New Guarantor hereby agrees that it is a
“Guarantor” under that certain Guaranty dated as of July [_______], 2011 (as amended,
supplemented, restated or otherwise modified from time to time, the “Guaranty”), made by
each Subsidiary and other Affiliate of the Borrowers party thereto in favor of the Agent, the
Issuing Bank and the Lenders and assumes all obligations of a “Guarantor” thereunder and
agrees to be bound thereby, all as if the New Guarantor had been an original signatory to the
Guaranty. Without limiting the generality of the foregoing, the New Guarantor hereby:

(a) irrevocably and unconditionally guarantees the due and punctual payment and
performance when due, whether at stated maturity, by acceleration or otherwise, of all
Guarantied Obligations (as defined in the Guaranty);

(b) makes to the Agent, the Issuing Bank and the Lenders as of the date hereof each of
the representations and warranties contained in Section 5 of the Guaranty and agrees to be
bound by each of the covenants contained in Section 6 of the Guaranty; and

(c) consents and agrees to each provision set forth in the Guaranty.

SECTION 2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED,
AND TO BE FULLY PERFORMED, IN SUCH STATE.

Section 3. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have their respective defined meanings given them in the Credit Agreement.

[Signatures on Next Page]

 

 

 

Exhibit J

IN WITNESS WHEREOF, the New Guarantor has caused this Accession Agreement to be duly executed
and delivered under seal by its duly authorized officers as of the date first written above.

	 	 	 	 	 	 	 
	 	 	[NEW GUARANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 
	 	 	c/o Morgans Group LLC	 	 
	 	 	475 Tenth Avenue	 	 
	 	 	New York, New York 10018	 	 
	 	 	Attention: Richard Szymanski	 	 
	 	 	Telecopy Number: (212) 277-4270	 	 
	 	 	Telephone Number: (212) 277-4188	 	 

Accepted:

DEUTSCHE BANK TRUST COMPANY

AMERICAS, as Agent

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

 

 

EXHIBIT K

FORM OF SECURITY DEED

Prepared by:

Leila Rachlin, Esq.

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036

1111779-2180

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS

AND FIXTURE FILING

from

BEACH HOTEL ASSOCIATES LLC

to

DEUTSCHE BANK TRUST COMPANY AMERICAS

(As Agent for the benefit of the Lenders, the Issuing Bank and for its own account,

pursuant to the Credit Agreement described herein)

dated as of July [__], 2011

Property: The Delano Hotel, Miami-Dade County, State of Florida

NOTE TO RECORDER: This Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture
Filing secures an aggregate obligation of $100,000,000.00. Florida documentary stamp taxes in the
amount of $350,000 ($0.35 per $100 of indebtedness) and intangible taxes in the amount of $200,000
($2 per $1,000 of indebtedness) are being paid in connection with the recording of this Security
Instrument

 

 

 

Exhibit K

Page i

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I Defined Terms
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II Grant and Conveyance
	 	 	7	 
	 
	 	 	 	 
	Section 2.1 Grant and Conveyance
	 	 	7	 
	Section 2.2 Intentionally Omitted
	 	 	7	 
	Section 2.3 Revolving Loan Account; Future Advances
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III Covenants, Warranties and Representations
	 	 	8	 
	 
	 	 	 	 
	Section 3.1 Title to Collateral and Priority of this Instrument
	 	 	8	 
	Section 3.2 Hazardous Materials
	 	 	8	 
	Section 3.3 Separate Tract
	 	 	9	 
	Section 3.4 Leases
	 	 	9	 
	Section 3.5 Use
	 	 	10	 
	Section 3.6 Alterations or Waste
	 	 	10	 
	Section 3.7 Compliance with Legal Requirements
	 	 	10	 
	Section 3.8 [Intentionally Omitted]
	 	 	10	 
	Section 3.9 Prior Security Instrument Status
	 	 	10	 
	Section 3.10 Payment of Impositions
	 	 	11	 
	Section 3.11 Repair
	 	 	11	 
	Section 3.12 Insurance
	 	 	11	 
	Section 3.13 Restoration Following Casualty
	 	 	14	 
	Section 3.14 Hold Harmless
	 	 	14	 
	Section 3.15 [Intentionally Omitted]
	 	 	14	 
	Section 3.16 No Conflicts, Etc.
	 	 	14	 
	Section 3.17 Licenses and Permits
	 	 	14	 
	 
	 	 	 	 
	ARTICLE IV Condemnation
	 	 	14	 
	 
	 	 	 	 
	Section 4.1 Condemnation
	 	 	14	 
	 
	 	 	 	 
	ARTICLE V Events of Default
	 	 	15	 
	 
	 	 	 	 
	Section 5.1 Credit Agreement
	 	 	15	 
	Section 5.2 Foreclosure of Other Liens
	 	 	15	 
	Section 5.3 Disposition of Collateral and Beneficial Interest in Grantor
	 	 	15	 
	Section 5.4 Further Encumbrances
	 	 	15	 
	Section 5.5 Event of Default under any other Loan Document
	 	 	15	 

 

 

 

Table
of Contents

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VI Remedies
	 	 	17	 
	 
	 	 	 	 
	Section 6.1 Remedies
	 	 	17	 
	Section 6.2 Separate Sales
	 	 	20	 
	Section 6.3 Remedies Cumulative, Concurrent and Non-Exclusive
	 	 	20	 
	Section 6.4 No Conditions Precedent to Exercise of Remedies
	 	 	21	 
	Section 6.5 Release of and Resort to Collateral
	 	 	21	 
	Section 6.6 Waiver of Appraisement, Valuation, etc.
	 	 	21	 
	Section 6.7 Discontinuance of Proceedings
	 	 	22	 
	Section 6.8 Application of Proceeds
	 	 	22	 
	Section 6.9 Leases
	 	 	22	 
	Section 6.10 Purchase by Agent or Lenders
	 	 	22	 
	Section 6.11 Grantor as Tenant Holding Over
	 	 	22	 
	Section 6.12 Suits to Protect the Collateral
	 	 	22	 
	Section 6.13 Proofs of Claim
	 	 	23	 
	Section 6.14 Occupancy After Foreclosure
	 	 	23	 
	Section 6.15 Waiver of Grantor’s Rights
	 	 	23	 
	 
	 	 	 	 
	ARTICLE VII Security Agreement
	 	 	24	 
	 
	 	 	 	 
	Section 7.1 Security Interest
	 	 	24	 
	Section 7.2 Financing Statements
	 	 	24	 
	Section 7.3 Uniform Commercial Code Remedies
	 	 	24	 
	Section 7.4 Foreclosure of Security Interest
	 	 	24	 
	Section 7.5 No Obligation of Secured Party
	 	 	24	 
	Section 7.6 Information for Fixture Filing
	 	 	25	 
	 
	 	 	 	 
	ARTICLE VIII Assignment of Leases and Rents
	 	 	25	 
	 
	 	 	 	 
	Section 8.1 Assignment
	 	 	25	 
	Section 8.2 Intentionally Omitted
	 	 	26	 
	Section 8.3 Limited License
	 	 	26	 
	Section 8.4 Grantor’s Indemnities
	 	 	26	 
	Section 8.5 Appointment of Attorney-in-Fact
	 	 	26	 
	Section 8.6 Exculpation of Agent
	 	 	27	 
	Section 8.7 [Intentionally Omitted]
	 	 	27	 
	 
	 	 	 	 
	ARTICLE IX Miscellaneous
	 	 	27	 
	 
	 	 	 	 
	Section 9.1 Performance at Grantor’s Expense
	 	 	27	 
	Section 9.2 Survival of Obligations
	 	 	28	 
	Section 9.3 Recording and Filing
	 	 	28	 
	Section 9.4 Notices
	 	 	28	 
	Section 9.5 No Waiver
	 	 	28	 
	Section 9.6 Agent’s Right to Perform the Obligations
	 	 	29	 

 

ii

 

Table
of Contents

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 9.7 Covenants Running with the Land
	 	 	30	 
	Section 9.8 Successors and Assigns
	 	 	30	 
	Section 9.9 Severability
	 	 	30	 
	Section 9.10 Modification
	 	 	30	 
	Section 9.11 Assignment
	 	 	30	 
	Section 9.12 [Intentionally Omitted]
	 	 	30	 
	Section 9.13 Counterparts
	 	 	30	 
	Section 9.14 APPLICABLE LAW
	 	 	30	 
	Section 9.15 Subrogation
	 	 	31	 
	Section 9.16 Headings
	 	 	31	 
	Section 9.17 Conflict
	 	 	31	 
	Section 9.18 CONSENT TO JURISDICTION AND SERVICE OF
PROCESS; WAIVER OF JURY TRIAL
	 	 	31	 
	Section 9.19 Limitation on Interest
	 	 	32	 
	Section 9.20 Further Assurances
	 	 	33	 
	Section 9.21 Future Advances
	 	 	33	 

EXHIBITS

	 	 	 	 	 
	Exhibit A
	 	—	 	Legal Description
	Exhibit B
	 	—	 	Description of Permitted Encumbrances

 

iii

 

Exhibit K

Page 1

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF

LEASES AND RENTS AND FIXTURE FILING

THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING (this
“Security Instrument”) is made and delivered as of
July [______], 2011 by BEACH HOTEL
ASSOCIATES LLC, a Delaware limited liability company (“Grantor”), having a mailing address
of c/o Morgans Group LLC, 475 Tenth Avenue, New York, New York 10018, to DEUTSCHE BANK TRUST
COMPANY AMERICAS, in its capacity as Agent (together with its successors and assigns,
“Agent” or “Mortgagee”) for itself, the Issuing Bank and for each of the Lenders
from time to time party to that certain Credit Agreement (as hereinafter defined), Agent having as
its address for personal delivery 60 Wall Street, New York, NY 10005.

WHEREAS, pursuant to that certain Credit Agreement, dated as of July
[_______], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Grantor, Morgans Group LLC (the “MG Borrower” and together with Grantor,
collectively, “Borrowers”), Morgans Hotel Group Co., the lenders from time to time party
thereto as “Lenders”, Agent, and the other parties thereto, Lenders and Agent have agreed
to make available to Borrowers certain financial accommodations in an aggregate principal amount
not to exceed $100,000,000.00 on the terms and conditions set forth in the Credit Agreement;

WHEREAS, to evidence the financial accommodations available directly to Borrowers under the
Credit Agreement, Borrowers have executed and delivered Notes, as of even date herewith, in favor
of the Lenders as payees in an aggregate maximum principal amount equal to $100,000,000.00
(including any subsequent renewals, amendments or substitutions, referred to herein collectively,
as the “Note”); and

WHEREAS, Grantor’s execution and delivery of this Security Instrument to secure, among other
things, its obligations under the Note and the Credit Agreement, is a condition to Agent and
Lenders making, and continuing to make, such financial accommodations to Borrowers.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Grantor, Grantor and Agent agree as follows:

ARTICLE I

Defined Terms

Terms not otherwise defined herein have the respective meanings given them in the Credit
Agreement. Terms defined in the Uniform Commercial Code as in effect in the State of New York have
the respective meanings given such terms therein. In addition, as used in this Security
Instrument, the following terms shall have the following meanings:

 

 

 

Exhibit K

Page 2

“Assignment of Leases and Rents” means the Assignment of Leases and Rents of even date
herewith from Grantor as assignor thereunder to Mortgagee as assignee thereunder, covering the
Leases and Rents, and given as an absolute assignment as an additional source of repayment of the
Obligations.

“Boucher Brothers Agreement” means that certain Agreement, dated as of July 1, 2004,
between Grantor and Boucher Brothers Management, Inc., a Florida corporation, as amended, restated,
extended, supplemented or otherwise modified from time to time.

“Collateral” means the Property, Improvements, Fixtures, and Personalty together with:

(a) all rights, privileges, tenements, hereditaments, royalties, minerals, oil and gas rights,
rights-of-way, zoning rights, development rights, air rights, easements, appendages and
appurtenances in anywise appertaining thereto, and all right, title and interest, if any, of
Grantor, in and to any streets, ways, alleys, strips or gores of land adjoining the Property or any
part thereof; and

(b) all betterments, improvements, additions, alterations, appurtenances, substitutions,
replacements and revisions thereof and thereto, and all reversions and remainders therein; and

(c) all of Grantor’s right, title and interest in and to any awards, remunerations,
reimbursements, settlements or compensation heretofore made or hereafter to be made by any
Governmental Authority pertaining to the Property, Improvements, Fixtures or Personalty including,
but not limited to, those for any vacation of, or change of grade in, any streets affecting the
Property or the Improvements and those for municipal utility district or other utility costs
incurred or deposits made in connection with the Property; and

(d) all of Grantor’s right, title and interest in and to any proceeds of insurance required or
maintained pursuant to the terms of Section 3.12 hereof; and

(e) all of Grantor’s right, title and interest in, to and under any management or leasing
agreement with respect to the Property and Improvements, including without limitation, (a) all
rights of Grantor to damages arising out of, or for, breach or default in respect thereof and (b)
all rights of Grantor to perform and exercise all rights and remedies thereunder; and

(f) subject to the provisions of Section 8.3 hereof, all of the Leases and Rents; and

(g) any and all other security and collateral, of any nature whatsoever, now or hereafter
given for the repayment or the performance and discharge of the Obligations.

 

 

 

Exhibit K

Page 3

As used in this Security Instrument, the term “Collateral” shall be expressly defined
as meaning all or, where the context permits or requires, any portion of the above, and all or,
where the context permits or requires, any interest therein; provided that the term “Collateral”
shall not include any Excluded Property but if and when any property shall cease to be Excluded
Property, such property shall be deemed at all times from and after the date hereof to constitute
Collateral.

“Credit Agreement” has the meaning given that term in the recitals above.

“Excluded Property” has the meaning set forth in the Security Agreement.

“Event of Default” means any failure, happening or occurrence described in Article
V hereinbelow.

“Fixtures” means fixtures now or hereafter located on the Property and shall in any
event include all materials, supplies, Equipment, apparatus and other items now owned or hereafter
acquired by Grantor and now or hereafter attached to, installed in or used in connection with any
of the Improvements or the Property, including, but not limited to, any and all building and
construction materials and supplies, furniture, furnishings, apparatus, machinery, equipment,
motors, elevators, escalators, fittings, radiators, ranges, refrigerators, awnings, shades,
screens, blinds, carpeting, office equipment and other furnishings, and all plumbing, heating,
lighting, cooking, laundry, ventilating, refrigerating, incinerating, air conditioning and
sprinkler equipment, telephone systems, televisions and televisions systems, computer systems, and
appurtenances thereto, together with all accessions, replacements, betterments and substitutions
for any of the foregoing and the proceeds thereof (but excluding in every event fixtures belonging
to Tenants which do not become property of the Grantor upon expiration or earlier termination of
the applicable Lease).

“Food and Beverage Lessee/Operators” shall mean SC Collins LLC, a Delaware limited
liability company.

“Impositions” means (i) all real estate and personal property taxes, charges,
assessments, excises and levies and any interest, costs or penalties with respect thereto, general
and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever, which at any time prior to or after the execution hereof may be assessed, levied or
imposed upon the Collateral or the ownership, use, occupancy or enjoyment thereof, or any portion
thereof; (ii) any charges, fees, license payments or other sums payable for any easement, license
or agreement maintained for the benefit of the Collateral; and (iii) water, gas, sewer,
electricity, telephone and other utility charges and fees related to the Collateral.

“Improvements” means any and all structures, buildings, improvements, additions,
alterations, betterments or appurtenances to the Property, whether now existing or at any time
hereafter situated, placed or constructed upon the Property, or any part thereof.

 

 

 

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Page 4

“Leases” means any and all leases, subleases, licenses, concessions, rental agreements
or other agreements (written or oral, now or hereafter in effect) which grant rights to use, enjoy
and/or occupy all or any part of the Collateral or which grant a possessory interest in and to, or
the right to use, all or any part of the Collateral, together with all security and other deposits
made in connection therewith and all guaranties thereof, together with and all extensions,
renewals, supplements, modifications or replacements of any of the foregoing.

“Legal Requirements” means (i) any and all judicial decisions, statutes, rulings,
rules, regulations, permits, certificates or ordinances of any Governmental Authority in any way
applicable to Grantor or MG Borrower, or applicable to, affecting or impacting in any way the
Collateral, including, without limiting the generality of the foregoing, the ownership, use,
occupancy, possession, operation, maintenance, alteration, repair or reconstruction thereof; (ii)
any and all covenants, conditions and restrictions contained in any deed or other form of
conveyance or in any other instrument of any nature that relate in any way or are applicable to the
Collateral or the ownership, use or occupancy thereof; and (iii) Grantor’s or MG Borrower’s
presently or subsequently effective bylaws and articles of incorporation, partnership agreement,
partnership certificate, joint venture agreement, articles of organization, operating agreement,
trust agreement or other form of business association agreement.

“Obligations” has the meaning ascribed to such term in the Credit Agreement.

“Permitted Encumbrances”: The “Permitted Liens” (as defined in the Credit
Agreement), which include those items listed on Exhibit B attached hereto and incorporated
herein by this reference.

“Personalty” means all of the Grantor’s right, title and interest in, to and under all
of the personal property of the Grantor, now owned or hereafter acquired, located on, attached to
or used in or about the Improvements and Property, including without limitation, all of the
following:

(a) all machinery, equipment, systems, fittings, apparatus, appliances, furniture,
furnishings, tools, fixtures, Inventory (as hereinafter defined) and articles of personal property
and accessions thereof and renewals, replacements thereof and substitutions therefore (including,
but not limited to, all plumbing, lighting and elevator fixtures, office furniture, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, minors, bookcases, tables, rugs, carpeting, drapes,
draperies, curtains, shades, Venetian blinds, wall coverings, screens, paintings, hangings,
pictures, divans, couches, luggage carts, luggage racks, stools, sofas, chinaware, flatware,
linens, pillows, blankets, glassware, foodcarts, cookware, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, liquor and other drink dispensers,
icemakers, radios, television sets, intercom and paging equipment, electric and electronic
equipment, dictating equipment, telephone systems, computerized accounting systems, engineering
equipment, vehicles, medical equipment, potted plants, heating, lighting and plumbing fixtures,
fire prevention and extinguishing apparatus, theft

 

 

 

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Page 5

prevention equipment, cooling and
air-conditioning systems, elevators, escalators, fittings, plants,
apparatus, stoves, ranges, refrigerators, laundry machines, tools, machinery, engines, dynamos, motors, boilers,
incinerators, switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning, waxing
and polishing equipment, call systems, brackets, signs, bulbs, bells, ash and fuel conveyors,
cabinets, lockers, shelving, spotlighting equipment, dishwashers, garbage disposals, washers and
dryers), other customary hotel equipment and other property of every kind and nature whatsoever
owned by Grantor, or in which Grantor has or shall have an interest, now or hereafter located upon,
or in, and used in connection with the Property or the Improvements, or appurtenant thereto, and
all building equipment, materials and supplies of any nature whatsoever owned by Grantor, or in
which Grantor has or shall have an interest, now or hereafter located upon, or in, and used in
connection with the Property or the Improvements or appurtenant thereto, (hereinafter, all of the
foregoing items described in this Paragraph (a) are collectively called the “Equipment”),
all of which, and any replacements, modifications, alterations and additions thereto, to the extent
permitted by applicable law, shall be deemed to constitute fixtures and are part of the real estate
and security for the performance of Grantor’s obligations.

(b) all inventory as defined in the Uniform Commercial Code applicable in the State of New
York, including, without limitation, provisions in storerooms, refrigerators, pantries and
kitchens, beverages in wine cellars and bars, other merchandise for sale, fuel, mechanical
supplies, stationery and other supplies and similar items (the “Inventory”);

(c) all other goods now or hereafter relating to the Property and Improvements;

(d) all accessions to any of the foregoing, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto;

(e) all accounts now or hereafter arising from or by virtue of any transactions related to the
Property or the Improvements, including without limitation, (i) all rights to payment of any
monetary obligation, whether or not earned by performance, (x) for property that has been or is to
be sold, leased, licensed, assigned or otherwise disposed of or (y) for services rendered or to be
rendered, (ii) all rents, fees, charges or other payments for the use or occupancy of all or any
portion of the Improvements or any of the other Collateral, and (iii) all rights to payment of any
interest or finance charges payable to Grantor;

(f) to the extent permitted to be assigned by the terms thereof or by Applicable Law, all
licenses, permits, rights, orders, variances, franchises or authorizations of or from any
governmental authority or agency now or hereafter relating to the Property or Improvements;

(g) all general intangibles, including without limitation, all payment intangibles and all
rights of Grantor under any contract, trademarks, tradenames, service marks and symbols now or
hereafter used in connection with the Property or the Improvements, and all names and all rights to
carry on business under such names, and all rights as a developer or
declarant relating to the Property or Improvements), now or hereafter relating to the Property
or the Improvements;

 

 

 

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Page 6

(h) all chattel paper, instruments, investment property, letter-of-credit rights, money,
documents, supporting obligations and deposit accounts now or hereafter arising from or by virtue
of any transactions related to the Property or the Improvements;

(i) all insurance policies of any kind maintained in effect by the Grantor or of which the
Grantor is the beneficiary, now existing or hereafter acquired relating to the Property and
Improvements, under which any of the property referred to in any of the preceding clauses above is
insured, including without limitation, any proceeds payable to the Grantor pursuant to such
policies and any unearned premiums thereon; and

(j) all cash and non-cash proceeds of any of the foregoing, which in any event, shall include,
but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Mortgagee or Lenders from time to time with respect to any of the Collateral, (ii)
any and all payments (in any form whatsoever) made or due and payable to Grantor from time to time
in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under color of
governmental authority) and (iii) any and all other amounts from time to time paid or payable under
or in connection with any of the Collateral.

“Proceeds” means all proceeds (including proceeds of proceeds) of any of the
Collateral including all: (i) rights, benefits, distributions, premiums, profits, dividends,
interest, cash, Instruments, contract rights, Inventory, Equipment, Deposit Accounts, and other
property from time to time received, receivable, or otherwise distributed in respect of or in
exchange for, or as a replacement of or a substitution for, any of the Collateral, or proceeds
thereof; (ii) “proceeds,” as such term is defined in Section 9-102(a)(64) of the UCC; (iii)
proceeds of any insurance, indemnity, warranty, or guaranty (including guaranties of delivery)
payable from time to time with respect to any of the Collateral, or proceeds thereof; and (iv)
payments (in any form whatsoever) made or due and payable to a Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral, or proceeds thereof.

“Property” means the real estate or interest therein described in Exhibit A
attached hereto and incorporated herein by this reference, together with all of the easements,
rights, privileges, tenements, hereditaments and appurtenances now or hereafter thereunto belonging
or in any way appertaining thereto, and all of the estate, right, title, interest, claim and demand
whatsoever of Grantor therein or thereto, either at law or in equity, in possession or in
expectancy, now or hereafter acquired.

 

 

 

Exhibit K

Page 7

“Rents” means all receivables, revenues, rentals, credit card receipts, receipts and
all payments received which relate to the rental, lease, franchise and use of space at the Property
and/or Improvements or which relate to the Food and Beverage Lessee/Operators (it
being acknowledged by Lender that the security interest granted hereunder in receivables,
revenues, rentals, credit card receipts, receipts and all payments received which relate to the
Food and Beverage Lessee/Operators shall not attach to interests of third-party joint venture
partners of Grantor which are not affiliates of MG Borrower and/or Grantor) and rental and use of
guest rooms or meeting rooms or banquet rooms or recreational facilities or bars, beverage or food
sales, vending machines, mini-bars, room service, telephone, video and television systems,
electronic mail, internet connections, guest laundry, bars, the provision or sale of other goods
and services, and all other payments received from guests or visitors of the Property and/or
Improvements, and other items of revenue, receipts or income, all cash or security deposits, lease
termination payments, advance rentals and payments of similar nature and guarantees or other
security held by, or issued in favor of, Grantor in connection therewith to the extent of Grantor’s
rights or interest therein and all remainders, reversions and other rights and estates appurtenant
thereto, and all base, fixed, percentage or additional rents, and other rents, oil and gas or other
mineral royalties, and bonuses, issues, profits and rebates and refunds or other payments made by
any Governmental Authority from or relating to the Property, the Improvements, the Fixtures or the
Equipment plus all rents, common area charges and other payments now existing or hereafter
arising, whether paid or accruing before or after the filing by or against Grantor of any petition
for relief under the Bankruptcy Code and all proceeds from the sale or other disposition of the
Leases and the right to receive and apply the Rents.

“Tenant” means the tenant or lessee under any Lease.

ARTICLE II

Grant and Conveyance

Section 2.1 Grant and Conveyance. For and in consideration of the sum of ONE DOLLAR ($1.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby
GRANT, BARGAIN, SELL, CONVEY, ASSIGN, MORTGAGE, TRANSFER, PLEDGE and SET OVER unto Mortgagee and
the Mortgagee’s successors and/or assigns, the Collateral, subject, however, to the Permitted
Encumbrances, TO HAVE AND TO HOLD the Collateral and all parts, rights, members and appurtenances
thereof, IN FEE SIMPLE forever, as security for the full and timely payment and performance of the
Obligations, for the benefit of Mortgagee and its successors and/or assigns. Grantor warrants and
covenants that Grantor is lawfully seized and possessed of the Collateral as aforesaid, and has
good right to convey the same subject only to the Permitted Encumbrances, and that Grantor does
warrant and shall forever defend the title thereto against the claims of all Persons whomsoever,
subject as to the Permitted Encumbrances.

Section 2.2 Intentionally Omitted.

 

 

 

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Section 2.3 Revolving Loan Account; Future Advances. This Security Instrument secures a “revolving loan account”, and payment of any amounts
outstanding under the Note or the Credit Agreement from time to time shall not cancel or release
this Security Instrument, and re-advances shall be secured to the same extent as original
obligations hereunder. This Security Instrument shall secure such future advances as may be made
by Mortgagee, at its option and for any purpose, within twenty (20) years from the date of this
Security Instrument, whether made directly to Grantor or made to MG Borrower. All such future
advances shall be included within the “Obligations,” shall be secured to the same extent as
if made on the date of the execution of this Security Instrument, and shall take priority from the
time this Security Instrument is filed for record as provided by law. The total amount of
indebtedness secured by this Security Instrument may decrease or increase from time to time, but
the total unpaid balance so secured at any one time shall not exceed the maximum principal amount
of $200,000,000, plus interest and any disbursements made for the payment of taxes, levies
or insurance on the Property, with interest on those disbursements, plus any increase in
the principal balance as the result of negative amortization or deferred interest. Without the
prior written consent of Mortgagee, which Mortgagee may grant or withhold in its sole discretion,
Grantor shall not file for record any notice limiting the maximum principal amount that may be
secured by this Security Instrument to a sum less than the maximum principal amount set forth in
this paragraph.

ARTICLE III

Covenants, Warranties and Representations

Grantor hereby unconditionally covenants, warrants and represents to Agent and Lenders as
follows (which covenants, warranties and representations have been and will be relied upon by Agent
and Lenders in advancing funds to Borrowers under the Loan Documents):

Section 3.1 Title to Collateral and Priority of this Instrument. Grantor has good, marketable and indefeasible fee simple title to the Property and
Improvements, and good and marketable title to the Fixtures and Personalty, free and clear of any
Liens options (except as set forth in the Leases), leases (other than the Leases), covenants and
other rights, titles, interests or estates of any nature whatsoever except the Permitted
Encumbrances. Except to the extent any of the following constitutes Excluded Property, this
Security Instrument (a) constitutes a valid and enforceable first priority mortgage lien against
the Property, Improvements and Fixtures; (b) creates valid and enforceable first priority security
interest in and to the Personalty and, to the extent that the terms Leases and Rents include items
covered by the Uniform Commercial Code as adopted in the State of New York, in the Leases and
Rents; and (c) constitutes a valid and enforceable first priority assignment of the Leases and
Rents not covered by such Uniform Commercial Code, all in accordance with the terms hereof.

Section 3.2 Hazardous Materials. Except as could not reasonably be expected to result in a Material Adverse Effect, the
Collateral has not been used to treat, store or dispose of any Hazardous Materials in violation of
Environmental Laws, and, no such Hazardous Materials (including without limitation, any materials
containing asbestos), are located on, in or under the Collateral or used or emitted in connection
therewith in violation of Environmental Laws, except as disclosed in writing in any environmental
assessment reports delivered to Agent and upon which Agent and Lenders are entitled to rely.
Grantor has obtained and shall maintain all licenses, permits and approvals required with respect
to Hazardous Materials, and is in full compliance with all of the terms, conditions and
requirements of such licenses, permits and approvals, in each case, except as could not reasonably
be expected to result in a Material Adverse Effect. No portion of the Property is a wetland.
Grantor shall promptly notify Agent of any (a) material change in the nature or extent of any
Hazardous Materials, maintained on, in or under the Collateral or used or emitted in connection
therewith and (b) change in wetlands located on the Property.

 

 

 

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Section 3.3 Separate Tract. The Property is not a part of a larger tract of land owned by Grantor or any of its
Affiliates and is not otherwise included under any unity of title or similar covenant with other
lands not encumbered by this Security Instrument

Section 3.4 Leases. (a) Grantor has good title to the Leases and Rents and all requisite right, power and
authority to assign the Leases (other than the Boucher Brothers Agreement) and Rents, and no other
Person has any right, title or interest therein (other than the lessee’s interest therein held by a
Tenant thereunder).

(b) Grantor has duly and punctually performed all of the material terms, covenants, conditions
and warranties of the Leases on Grantor’s part to be performed, except for any nonperformance which
could not reasonably be expected to result in a Material Adverse Effect.

(c) Except for transactions which have been terminated, Grantor has not previously sold,
assigned, transferred, encumbered, mortgaged or pledged the Leases or the Rents, whether now due or
hereafter to become due.

(d) There are no options to purchase all or any portion of the Collateral contained in any
Lease. There are no options to renew by any Tenant except as stated in the Leases. Grantor shall
furnish to Agent, promptly upon Agent’s request, true and complete copies of all Leases, and all
extensions, supplements, modifications and amendments thereof.

(e) Grantor shall observe, perform and discharge all of its material obligations, covenants
and warranties under the Leases, and Grantor shall give prompt notice to Agent of any failure on
the part of Grantor to observe, perform or discharge any of the same.

(f) So long as the Obligations remain unpaid and undischarged, and unless Agent otherwise
consents in writing, the fee and the leasehold estates in and to the Collateral shall not merge,
but shall always remain separate and distinct, notwithstanding the union of such estates (without
implying Agent’s consent to such union) either in Grantor, Agent or in any Tenant or in any third
party by purchase or otherwise.

 

 

 

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Page 10

(g) From time to time upon Agent’s written request, Grantor shall furnish to Agent a current
rent roll and the affidavit of an officer of Grantor, certifying as to certain matters with respect
to the Leases and Rents, in form and substance reasonably satisfactory to Agent.

(h) From time to time upon the written request of Agent, but no more often than annually,
Grantor shall cause to be furnished to Agent the estoppel certificate of each Tenant, in form and
substance reasonably acceptable to Agent.

Section 3.5 Use. Grantor shall use the Collateral for commercial purposes only. Grantor shall not use,
maintain, operate or occupy, or allow the use, maintenance, operation or occupancy of, the
Collateral in any manner or for any purpose which (a) except as could not reasonably be expected to
result in a Material Adverse Effect, violate any Legal Requirement, or (b) makes void, voidable or
cancelable, or increases the premium of, any insurance then in force with respect thereto.

Section 3.6 Alterations or Waste. Grantor shall not commit or permit any physical waste of the Collateral, and shall not,
without the prior written consent of Agent, which consent shall not be unreasonably withheld,
conditioned or delayed, make or permit to be made any alteration (excluding any external
structures) to the Collateral in excess of $5,000,000 per calendar year, except for (i) tenant
improvement work under a Lease approved by Agent, (ii) alterations necessary to protect the safety
of tenants or patrons of other users of the Property and the value of the Property, (iii) all
alterations necessary to comply with Section 3.11 and (iv) the replacement of FF&E to the
extent being of a routine and recurring nature and performed in the ordinary course of business of
Grantor.

Section 3.7 Compliance with Legal Requirements. Except as could not reasonably be expected to result in a Material Adverse Effect, Grantor
shall promptly and faithfully comply with, conform to and obey all present and future Legal
Requirements including, without limitation, the Americans with Disabilities Act of
1990, as amended (42 USC § 12101, et seq.), the Federal Architectural Barriers Act, as amended
(42 USC § 4151, et seq.), the Fair Housing Amendments Act of 1988, as amended (42 USC § 3601, et
seq.) and The Rehabilitation Act of 1973, as amended (29 USC § 794), whether or not same shall
necessitate structural changes in, improvements to, or interfere with the use or enjoyment of the
Collateral.

Section 3.8 [Intentionally Omitted].

Section 3.9 Prior Security Instrument Status. Grantor shall protect the first priority status of the Lien of this Security Instrument and
shall not place, or permit to be placed, except for Permitted Encumbrances, otherwise convey,
mortgage, hypothecate or encumber the Collateral with, any other Lien, regardless of whether same
is allegedly or expressly inferior to the title created by this Security Instrument, except in
favor of Mortgagee. If any such Lien is asserted against the Collateral, Grantor shall promptly,
and at its sole cost and expense, (a) give Agent written notice thereof within 5 days from Grantor
obtaining knowledge of such Lien and (b) take such action so as to cause the same to be released,
bonded or stayed to Agent’s reasonable satisfaction, or so long as the property subject to the lien
of this Security Instrument is not impaired, contest the same in accordance with the provisions of
the Credit Agreement. Such notice shall specify who is asserting such Lien and shall detail the
origin and nature of the underlying facts giving rise to such asserted Lien.

 

 

 

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Page 11

Section 3.10 Payment of Impositions.

(a) Payment of Impositions. Grantor shall duly pay and discharge, or cause to be paid
and discharged, the Impositions as provided in Section 8.5 of the Credit Agreement.

(b) Change in Law. If after the date hereof any change in Applicable Law governing
the taxation of deeds of trust, mortgages or security agreements, or assignments of leases or debts
secured thereby or the manner of collecting such taxes shall occur, and Agent reasonably determines
that such change, adoption would adversely affect Agent’s, the Issuing Bank’s or the Lenders’
rights or benefits under the Loan Agreement, Grantor shall promptly pay any tax resulting from such
adoption, change or making on or before the due date thereof.

Section 3.11 Repair. Grantor shall protect and preserve the Collateral and maintain all Collateral in good
repair, working order and condition, ordinary wear and tear and casualty events excepted.

Section 3.12 Insurance.

(a) Types of Insurance. Grantor shall procure for, deliver to, and maintain for the
benefit of Agent, or cause the Tenant(s) to procure for, deliver to and maintain for the benefit of
Agent, during the term of this Security Instrument original paid up insurance policies or certified
copies of paid up insurance policies (or, if there is blanket coverage, Agent shall require an
underlier policy with the Collateral identified and specifically allocated amounts shown) in such
amounts, form and substance as are required under Section 8.4 of the Credit Agreement.

(b) Insurance Companies, Form of Policies. All insurance policies maintained pursuant
to this Section shall be in form and substance satisfactory to Agent, provided that all
policies of liability coverage shall require not less than 30 days’ prior written notice to Agent
of any cancellation, termination, expiration or change in coverage. Without limiting the
discretion of Agent with respect to required endorsements to insurance policies, all such policies
for loss of or damage to the Collateral shall contain a standard mortgagee clause (without
contribution) naming Agent as mortgagee with loss proceeds payable to 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 insured; (ii) the occupation or use of the Collateral for
purposes more hazardous than permitted by the terms of any such policy; (iii) any foreclosure or
other action by Agent under the Loan Documents; or (iv) any change in title to or ownership of the
Collateral or any portion thereof, such proceeds to be held for application as provided in the Loan
Documents.

 

 

 

Exhibit K

Page 12

(c) Proof of Insurance. Within one (1) Business Day of the expiration or renewal date
of each policy maintained pursuant to this Section, Grantor shall deliver to Agent evidence
reasonably satisfactory to Agent that such policy has been renewed and that any such premiums
related to such policy have been timely paid (which premiums may be financed pursuant to a payment
or financing plan provided by the insurance carrier providing such insurance). In the event of
foreclosure of this Security Instrument or any other transfer of title to the Collateral in
extinguishment of the Obligations, all right, title, and interest of Grantor in and to all
insurance policies then in force with respect to the Collateral shall pass to the purchaser or
Agent.

(d) Grantor’s Statement of Insurance Carried. If at any time requested by Agent,
Grantor shall furnish to Agent copies of certificates evidencing the amounts of insurance
maintained in compliance with this Section 3.12, of the risks covered by such insurance, and of the
insurance company or companies which carry such insurance.

(e) Payment of Proceeds to Agent. While an Event of Default exists, Agent is hereby
authorized and empowered, at its option, to adjust or compromise any loss under any insurance
policies maintained pursuant to this Section and to collect and receive the proceeds from any such
policy or policies. In addition, Grantor hereby authorizes and directs each insurance company to
make payment for all losses involving casualty insurance proceeds (other
than business interruption insurance proceeds) in excess of $5,000,000 (a “Major
Casualty”) directly to Agent. If any insurance company fails to disburse directly and solely
to Agent in accordance with the requirements of the immediately preceding sentences, but disburses
instead either solely to Grantor or to Grantor and Agent jointly, Grantor agrees immediately to
endorse and transfer such proceeds to Agent. Upon the failure of Grantor to endorse and transfer
such proceeds as aforesaid, Agent may execute such endorsements or transfers for and in the name of
Grantor, and Grantor hereby irrevocably appoints Agent as Grantor’s agent and attorney-in-fact to
do so, such appointment being coupled with an interest and being irrevocable.

 

 

 

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Page 13

(f) Application of Proceeds. After deducting from said insurance proceeds all of its
actual, out-of-pocket expenses incurred in the collection and administration of such sums,
including reasonable attorneys’ fees actually incurred, Agent shall apply the net proceeds of any
Major Casualty or any part thereof:

(i) upon the written request of Grantor (which request shall set forth in reasonably
sufficient detail that each of the following conditions have been satisfied), towards the
restoration of the Collateral, provided that the following conditions (the
“Restoration Conditions”) are met to the reasonable satisfaction of Agent:

(a) in Agent’s reasonable judgment, the Collateral can, with diligent
restoration, be returned to a condition at least equal to the condition thereof that
existed prior to the casualty within 60 days prior to the Maturity Date;
provided however that this condition shall not apply in the event that (i) a
new Appraisal of the Property in its then current condition is delivered pursuant to
Section 4.2(c) of the Credit Agreement, (ii) a forward looking calculation of the
Adjusted Net Operating Income of the Property for the immediately succeeding four
(4) fiscal quarters, on a Pro Forma Basis taking into account the then current
condition of the Property, is mutually agreed upon by Grantor and Agent, (iii) MG
Borrower shall have delivered a Borrowing Base Certificate to Agent which Borrowing
Base Certificate shall be calculated using the information determined pursuant to
the immediately preceding clauses (i) and (ii) and (iv) based on the Borrowing Base
calculated in the Borrowing Base Certificate delivered pursuant to the immediately
preceding clause (iii), Borrowers is in compliance with Section 2.6(b) of the Credit
Agreement.

(b) no Event of Default exists;

(c) all necessary Governmental Approvals can be obtained to allow the
rebuilding and reoccupancy of the Collateral;

(d) there are sufficient sums available (through net proceeds and contributions
by Grantor), for restoration or repair; and

(e) the amount of such proceeds (other than business interruption insurance
proceeds) is not greater than $100,000,000; or

(ii) if the Restoration Conditions are not satisfied within 90 days following a Major
Casualty, to the payment of the Obligations, whether or not due and as provided in Section
11.4 of the Credit Agreement or for any other purposes or objects for which Agent is
expressly entitled to advance or apply funds under the Loan Documents;

all without affecting the Lien of this Security Instrument, and any balance of such moneys then
remaining shall be paid to Grantor or whomever may be legally entitled thereto. Agent and Lenders
shall not be held responsible for any failure to collect any insurance proceeds due under the terms
of any policy regardless of the cause of such failure.

Section 3.13 Restoration Following Casualty. If any act or occurrence of any kind or nature, ordinary or extraordinary, foreseen or
unforeseen (including any casualty for which insurance was not obtained or obtainable), shall
result in damage to, or loss or destruction of, the Collateral in an amount in excess of $500,000,
Grantor shall give notice thereof to Agent promptly and, at Grantor’s sole cost and expense and
regardless of whether the insurance proceeds (if any) shall be sufficient for the purpose, Grantor
shall commence and continue diligently to completion to restore, repair, replace and rebuild the
Collateral in accordance with all Legal Requirements as nearly as possible to its value, condition
and character immediately prior to such damage, loss or destruction.

 

 

 

Exhibit K

Page 14

Section 3.14 Hold Harmless. Grantor shall defend, at its own cost and expense, and hold Agent and Lenders harmless from
any action, proceeding or claim affecting the Collateral or the Loan Documents, and all costs and
expenses incurred by Agent and/or Lenders in protecting its interests hereunder in such an event
(including all court costs and attorneys’ fees) shall be borne by Grantor and secured hereby,
except to the extent the same are caused by the gross negligence or willful misconduct of Agent or
any Lender, as applicable.

Section 3.15 [Intentionally Omitted].

Section 3.16 No Conflicts, Etc. The execution, delivery and performance of this Security Instrument and the other Security
Documents encumbering or relating to any of the Collateral, in accordance with their respective
terms do not and will not, by the passage of time, the giving of notice, or both: (a) require any
Governmental Approval or violate any Applicable Law relating to Grantor or any of the Collateral;
(b) conflict with, result in a breach of or constitute a default under the organizational documents
of Grantor, or any indenture, agreement or other instrument to which Grantor is a party or by which
it or any of the Collateral may be bound; or (c) except as
provided herein or therein, result in or require the creation or imposition of any Lien upon
or with respect to any of the Collateral.

Section 3.17 Licenses and Permits. Grantor currently holds and will continue to hold (i) all certificates of occupancy,
licenses, registrations, permits, consents, franchises and approvals of any Governmental Authority
or any other Person, the absence of which could reasonably be expected to result in a material
adverse effect on the ownership, occupancy or operation of the Property and Improvements, taken as
a whole, and (ii) the right to use the name “Delano” pursuant to the Delano Management Agreement in
connection with the operation of the Property and Improvements. As of the date hereof, all such
certificates of occupancy, licenses, registrations, permits, consents, franchises and approvals are
current and in full force and effect.

ARTICLE IV

Condemnation

Section 4.1 Condemnation.

(a) Taking. If all or any portion of the Collateral is taken by condemnation or
eminent domain powers of any Governmental Authority (or any transfer by private sale in lieu
thereof), either temporarily or permanently, then, if any Event of Default then exists or the award
and other proceeds payable in connection therewith exceeds $5,000,000 (a “Major Taking”), then such
amount shall be paid to Agent and applied to payment of the Obligations after deducting any costs
(including reasonable attorneys’ fees) incurred by Agent in connection therewith, or otherwise
applied as provided in Section 11.4 of the Credit Agreement.

 

 

 

Exhibit K

Page 15

(b) Participation in Proceedings. Grantor shall promptly notify Agent of any actual
or threatened initiation of any condemnation or eminent domain proceeding as to any part of the
Collateral and, upon Agent’s request, shall promptly deliver to Agent copies of any and all papers
served or received in connection with such proceedings. Agent shall have the right, at its option,
to participate in such proceedings at the sole cost and expense of Grantor (including without
limitation the Agent’s attorneys’ fees). Grantor shall execute such documents and take such other
steps as required to permit such participation.

(c) Right to Settle Claims. Agent is hereby authorized, at any time that an Event of
Default shall have occurred and be continuing, to adjust, compromise and collect any condemnation
or eminent domain award or settle a claim for damages and to apply the same to the Obligations in
accordance with the applicable provisions of the Loan Documents.

(d) Use of Proceeds. Grantor hereby assigns to Agent for the benefit of Lenders any
proceeds or awards which may become due by reason of any condemnation or
other taking for public use of the whole or any part of the Collateral or any rights
appurtenant thereto, and Agent is authorized, at its option, to collect and receive all such
compensation, awards or damages in respect of a Major Taking or otherwise when any Event of Default
exists and to give proper receipts and acquittances therefor without any obligation to question the
amount of any such compensation, awards or damages. The proceeds of any such condemnation award or
proceeds or any part thereof, to the extent not applied pursuant to Section 4.1(a), shall
be applied:

(i) if the Restoration Conditions in Section 3.12(f) are satisfied, towards
restoration of the Collateral; or

(ii) if the Restoration Conditions are not satisfied, to the payment of the
Obligations, whether or not due and as provided in Section 11.4 of the Credit Agreement, or
for any other purposes or objects for which Agent is expressly entitled to advance or apply
funds under the Loan Documents.

(e) Further Assignment. Grantor agrees to execute such further assignments of any
compensation, awards, damages, claims, rights of action and proceeds as Agent may reasonably
require to effect the terms of this Security Instrument. If, prior to the receipt by Agent of such
award or proceeds, the Collateral shall have been bid on foreclosure of this Security Instrument,
Agent shall have the right to receive such award or proceeds to the extent of any unpaid
Obligations following such sale, with legal interest thereon, whether or not a deficiency judgment
on this Security Instrument, the Obligations or the other Loan Documents shall have been sought or
recovered, and to the extent of attorneys’ fees, costs and disbursements incurred by Agent in
connection with the collection of such award or proceeds. If Grantor fails to assign such
compensation, awards, damages, claims, rights of action, and proceeds as aforesaid, Agent may
execute such endorsements or transfers for and in the name of Grantor and Grantor hereby appoints
Agent as Grantor’s agent and attorney-in-fact so to do, such appointment being coupled with an
interest and being irrevocable.

 

 

 

Exhibit K

Page 16

ARTICLE V

Events of Default

The term “Event of Default,” as used herein, shall mean the occurrence or happening,
at any time and from time to time, of any one or more of the following (and Grantor shall be
entitled to no notice of default other than as provided for below):

Section 5.1 Credit Agreement. The occurrence of an Event of Default under and as defined in the Credit Agreement.

Section 5.2 Foreclosure of Other Liens. If the holder of any Lien on any of the Collateral or any Lien secured by a pledge of a
direct or indirect ownership interest in Grantor institutes foreclosure proceedings for the
enforcement of its Lien, unless, as to mechanics’ or materialmen’s Lien, (i) such Lien is released
from or cannot be enforced against the Collateral (by bonding the same off or otherwise) within 10
days after such foreclosure proceedings are instituted and (ii) the filing of such mechanic’s or
materialmen’s Lien or other action taken by the lienor in connection therewith is not otherwise an
Event of Default hereunder or under the Credit Agreement.

Section 5.3 Disposition of Collateral and Beneficial Interest in Grantor. Except as expressly permitted under the Credit Agreement or any other Loan
Document, the
occurrence of any sale, lease, exchange, assignment, conveyance, transfer or other disposition of
all or any part of the Collateral, or any part thereof or any interest therein, or the conveyance,
assignment, transfer or other disposition of all or any part of a direct beneficial ownership
interest in Grantor.

Section 5.4 Further Encumbrances. Except as permitted under the Credit Agreement or any other Loan Document, and except for
the Permitted Encumbrances, Grantor creates, places or permits to be created or placed, or through
any act or failure to act, acquiesces in the placing of, or allows to remain, any Lien on all or
any part of the Collateral (regardless of whether such Lien is expressly subordinate to the lien of
this Security Instrument or any other Security Document) or if Grantor violates the provisions of
Section 3.19.

Section 5.5 Event of Default under any other Loan Document. If an Event of Default shall occur under and as defined in any other Loan Document
purported to create a Lien on any of the Collateral.

 

 

 

Exhibit K

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ARTICLE VI

Remedies

Section 6.1 Remedies. If an Event of Default exists, Agent may, and at the direction of the Requisite Lenders
shall, exercise any or all of the following rights, remedies and recourses:

(a) Termination of License. (i) Terminate the License granted to Grantor in
Section 8.3 hereof and exercise the rights, powers and privileges of landlord under
the Leases, and then and thereafter, with or without taking possession of the Collateral, in
Grantor’s own name or in the name of Agent, demand, collect, receive, sue for, attach and
levy on the Rents (including demand for Rents collected for the period in which the demand
occurs) and give proper receipts, releases and acquittances therefor.

(ii) Deliver a written demand to any Tenant for payment of Rents, which demand
shall be sufficient evidence of each such Tenant’s obligation and authority to make
all future payments of Rents to Agent without the necessity for further consent by
the Grantor. Grantor, for itself and its agents, covenants and agrees not to
countermand any such written demand to Tenants for payment of Rents.

(b) Entry on Collateral. (i) Demand that Grantor, and upon such demand
Grantor shall, forthwith surrender to Agent the actual possession of the Collateral, and to
the extent not prohibited by Applicable Law, enter and take possession of all of the
Collateral without the appointment of a receiver, or an application therefor, and exclude
Grantor and its agents and employees wholly therefrom, and have joint access with Grantor to
the books, papers and accounts of Grantor.

(ii) If Grantor shall for any reason fail to surrender or deliver the
Collateral or any part thereof after such demand by Agent, Agent may seek a judgment
or decree conferring upon Agent the right to immediate possession or requiring
Grantor to deliver immediate possession of the Collateral to Agent, and Grantor
hereby specifically covenants and agrees that Grantor shall not oppose, contest or
otherwise hinder or delay Agent in any action or proceeding by Agent to obtain such
judgment or decree. Grantor shall pay to Agent, upon demand, all expenses of
obtaining such judgment or decree, including reasonable compensation to Agent, its
attorneys and agents, and all such expenses and compensation shall, until paid,
become part of the Obligations and shall be secured by this Security Instrument.

(iii) Upon every such entering on or taking of possession, Agent may hold,
store, use, operate, manage and control the Collateral and conduct the business
thereof, and, from time to time, (A) make all necessary and proper maintenance,
repairs, renewals, replacements, additions, betterments and improvements thereto and
thereon and purchase or otherwise acquire additional fixtures, personalty and other
property, (B) insure or keep the Collateral insured, (C) manage and operate the
Collateral and exercise all the rights and powers of Grantor to the same extent as
Grantor could in its own name or otherwise act with respect to the same, and (D)
enter into any and all agreements with respect to the exercise by others of any of
the powers herein granted to Agent, all as Agent from time to time may determine to
be in its best interest. Anything in this Security Instrument to the contrary
notwithstanding, neither Agent nor any Lender shall be obligated to discharge or
perform the duties of the landlord to any Tenant or incur any liability as the
result of any exercise by Agent of its rights under this Security Instrument, and
Agent shall be liable to account only for the Rents actually received by Agent.

 

 

 

Exhibit K

Page 18

(iv) Make, modify, enforce, cancel or accept surrender of any Lease, remove and
evict any Tenant, increase or decrease Rents under any Lease, appear in and defend
any action or proceeding purporting to affect the Collateral, and perform and
discharge each and every obligation, covenant and agreement of Grantor contained in
any Lease, whether or not Agent takes possession of the Collateral.

(v) Neither the entering upon and taking possession of the Collateral, nor the
collection of any Rents and the application thereof as aforesaid, shall cure or
waive any Event of Default theretofore or thereafter occurring, or affect any notice
of an Event of Default hereunder or invalidate any act done pursuant to any such
notice. Neither Agent nor any Lender shall be liable to Grantor, anyone claiming
under or through Grantor, or anyone having an interest in the Collateral by reason
of anything done or left undone by Agent hereunder. Nothing contained in this
subsection (b) shall require Agent to incur any expense or do any act. If the Rents
are not sufficient to meet the costs of taking control of and managing the
Collateral and/or collecting the Rents, any funds expended by Agent or Lenders for
such purposes shall become Obligations of Grantor to Agent or Lenders, as the case
may be, secured by this Security Instrument. Such amounts, together with interest
at the Post-Default Rate, and attorneys’ fees, if applicable, shall be immediately
due and payable. Notwithstanding Agent’s continuance in possession or receipt and
application of Rents, Agent shall be entitled to exercise every right provided for
in this Security Instrument or by Applicable Law upon or after the occurrence of an
Event of Default. Any of the actions referred to in this subsection (b) may be
taken by Agent at such time as Agent is so entitled, without regard to the adequacy
of any security for the Obligations hereby secured.

(c) Foreclosure and Sale. If the Obligations have been accelerated pursuant to
the Credit Agreement, institute an action to foreclose this Security Instrument, or take
such other action as may be allowed at law or in equity, for the enforcement hereof and
realization on the Collateral or any other security which is herein or elsewhere in the Loan
Documents provided for the Collateral or any part thereof at one or more sales before the
door of the courthouse of the county in which the Property or any part of the Property is
situated, or such other place as is required or permitted by Applicable Law, without notice
except as required or set forth herein or otherwise required by Applicable Law, to the
highest bidder for cash, or to proceed to final judgment and execution thereon, in order to
pay the Obligations, and all expenses of sale and of all proceedings in connection
therewith, including reasonable attorneys’ fees, all costs of suit, interest at the
Post-Default Rate as provided in the Credit Agreement on any judgment obtained by Agent from
and after the date of any sale of the Collateral (which may be sold in one parcel or in such
parcels, manner or order as Agent shall elect) until actual payment is made of the full
amount due Agent and Lenders, without further stay, any law, usage or custom to the contrary
notwithstanding. In the event of any sale pursuant to any order
in any judicial proceedings or otherwise, the Collateral may be sold as an entirety or
in separate parcels and in such manner or order as Agent in its sole discretion may elect,
and if Agent so elects, Agent may sell the Personalty covered by this Security Instrument at
one or more separate sales in any manner permitted by the Uniform Commercial Code as adopted
in the State of New York, and one or more exercises of the powers herein granted shall not
extinguish nor exhaust such powers, until the entire Collateral is sold or the Obligations
are paid in full. If the Obligations are now or hereafter further secured by any chattel
mortgages, pledges, contracts of guaranty, assignments of lease or other security
instruments, Agent may at its option exhaust the remedies granted under any of said security
instruments, either concurrently or independently, and in such order as Agent may determine.

 

 

 

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Immediately upon the first insertion of any advertisement or notice of any such sale, there
shall be and become due and owing from the Grantor all reasonable expenses incident to said
advertisement or notice, all court costs and all reasonable expenses incident to any foreclosure
proceedings brought under this Security Instrument, including reasonable attorneys’ fees. No party
shall be required to receive only the aggregate indebtedness then secured hereby with the interest
thereon to the date of payment unless the same shall be accompanied by a tender of the said
expenses, costs and commissions.

Agent, may, in addition to and not in abrogation of the rights covered under the immediately
preceding subparagraph, or elsewhere in this Article VI, either with or without entry or
taking possession as herein provided or otherwise, proceed by a suit or suits in law or in equity
or by any other appropriate proceeding or remedy (i) to enforce payment of the Obligations or the
performance of any term, covenant, condition or agreement of this Security Instrument or any other
right and (ii) to pursue any other remedy available to it, all as Agent at its sole discretion
shall elect.

(d) Receiver. Agent, to the extent permitted by Applicable Law, upon
application to a court of competent jurisdiction, shall be entitled as a matter of strict
right, without notice and without regard to the adequacy or value of any security for the
Obligations or the solvency of any party bound for its payment, to the appointment of a
receiver to take possession of and to operate the Collateral and to collect and apply the
incomes, rents, issues, profits and revenues thereof. The receiver shall have all of the
rights and powers permitted under the laws of the State of Florida. Grantor shall pay to
Agent upon demand all expenses, including receiver’s fees, attorneys’ fees, costs and
agent’s compensation, incurred pursuant to the provisions of this subsection, and any such
amounts paid by Agent shall be added to the Obligations and shall be secured by this
Security Instrument.

 

 

 

Exhibit K

Page 20

(e) Performance by Agent. At Agent’s option and without any obligation to do
so, pay, perform or observe any term, covenant or condition of this Security Instrument not
paid, performed or observed by Grantor, and all payments made or costs or expenses incurred
by Agent in connection therewith shall be secured hereby and shall
be, without demand, immediately repaid by Grantor to Agent with interest thereon at the
Post-Default Rate. Agent shall be the sole judge of the necessity for any such actions and
of the amounts to be paid Agent is hereby empowered to enter and to authorize others to
enter upon the Collateral or any part thereof for the purpose of performing or observing any
such defaulted term, covenant or condition without thereby becoming liable to Grantor or any
person in possession holding under Grantor.

(f) Relief From Automatic Stay. If Grantor is the subject of any insolvency,
bankruptcy, receivership, dissolution, reorganization, or similar proceeding, federal or
state, voluntary or involuntary, under any present or future Applicable Law, Agent shall be
entitled to relief from the automatic stay as to the enforcement of its remedies under the
Loan Documents against the Collateral, including specifically, but not limited to, the stay
imposed by 11 U.S.C. Section 362, as amended, and Grantor hereby consents to the immediate
lifting of any such automatic stay and will not contest any motion by Agent to lift such
stay.

(g) Other. Exercise any and all other rights, remedies and recourses granted
under this Security Instrument (including, without limitation, those set forth in
Articles VII, VIII and IX hereinbelow) or now or hereafter existing
in equity, at law, by virtue of statute or otherwise.

Section 6.2 Separate Sales. With respect to sales hereunder, the Collateral may be sold in one or more parcels and in
such manner and order as Agent, in its sole discretion, may elect, it being expressly understood
and agreed that the right of sale arising out of any Event of Default shall not be exhausted by any
one or more sales.

Section 6.3 Remedies Cumulative, Concurrent and Non-Exclusive. Agent and Lenders shall have all rights, remedies and recourses granted in this Security
Instrument and available under Applicable Law (including specifically those granted by the Uniform
Commercial Code in effect and applicable to the Collateral or any portion thereof), and if such
Event of Default also constitutes an Event of Default under the Credit Agreement, all rights,
remedies and recourses granted in the Loan Documents and available under Applicable Law. All such
rights and remedies (a) shall be cumulative and concurrent, to the fullest extent permitted by
Applicable Law, (b) may be pursued separately, successively or concurrently against Grantor, MG
Borrower or any other Loan Party or any other Person, or against any of the Collateral (as defined
in the Credit Agreement), or against any one or more of them, at the sole discretion of Agent, all
to the fullest extent permitted by Applicable Law, (c) may be exercised as often as occasion
therefor shall arise, it being agreed by Grantor that the exercise or failure to exercise any of
same shall in no event be construed as a waiver or release thereof or of any other right, remedy or
recourse, and (d) are intended to be, and shall be, nonexclusive.

 

 

 

Exhibit K

Page 21

Section 6.4 No Conditions Precedent to Exercise of Remedies. Neither Grantor, MG Borrower, any other Loan Party or any other Person obligated for
payment of all or any part of, or fulfillment of all or any of, the Obligations, shall be relieved
of such obligation by reason of (a) the failure of Agent or any Lender to comply with any request
of Grantor, MG Borrower, any Loan Party or any other Person so obligated, to foreclose this
Security Instrument or to enforce any provisions of the other Loan Documents, (b) the release,
regardless of consideration, of any of the Collateral (as defined in the Credit Agreement) or the
addition of any other property to such Collateral, (c) any agreement or stipulation between any
subsequent owner of any of such Collateral and Agent extending, renewing, rearranging or in any
other way modifying the terms of the Loan Documents without first having obtained the consent of,
given notice to or paid any consideration to Grantor, MG Borrower, such other Loan Party or such
other Person, and in such event, Grantor, MG Borrower, all such other Loan Parties and all such
other Persons shall continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged, in writing, by Agent,
or (d) by any other act or occurrence, save and except the complete payment and the complete
fulfillment of all of the Obligations.

Section 6.5 Release of and Resort to Collateral. Agent may release, regardless of consideration, any part of the Collateral without, as to
the remainder of the Collateral, in any way impairing, affecting, subordinating or releasing any of
the Liens created or evidenced by any of the Loan Documents or their position as a first and prior
Lien in and to the Collateral (as defined in the Credit Agreement). For payment of the
Obligations, Agent may resort to any security therefor held by Agent in such order and manner as
Agent may elect.

Section 6.6 Waiver of Appraisement, Valuation, etc. Grantor agrees, to the full extent permitted by Applicable Law, that neither Grantor nor
anyone claiming through or under Grantor will set up, claim or seek to take advantage of any
moratorium, reinstatement, forbearance, appraisement, valuation, stay, extension, homestead,
exemption or redemption laws now or hereafter in force in order to prevent or hinder the
enforcement or foreclosure of this Security Instrument or the absolute sale of the Collateral, the
delivery of possession thereof immediately after such sale to the purchaser at such sale, or the
exercise of any other right or remedy hereunder. Grantor, for itself and all who may at any time
claim through or under it, hereby waives to the full extent that it may lawfully so do, the benefit
of all such Applicable Laws, and any and all right to have assets subject to the Lien of this
Security Instrument marshaled upon any foreclosure or sale under the power herein granted or a sale
in inverse order of alienation.

 

 

 

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Page 22

Section 6.7 Discontinuance of Proceedings. In case Agent shall have proceeded to enforce any right, power or remedy under this
Security Instrument by foreclosure, entry or otherwise, and such proceeding shall have been
withdrawn, discontinued or abandoned for any reason, or shall have been determined adversely to
Agent, then in every such case (a) Grantor and Agent shall be restored to their former positions
and rights, (b) all rights, powers and remedies of Agent shall continue as if no such proceeding
had been taken, (c) each and every Event of Default declared or occurring prior or subsequent to
such withdrawal, discontinuance or abandonment shall be and shall be deemed to be a continuing
Event of Default and (d) neither this Security Instrument, nor the Obligations, nor any other Loan
Document, shall be or shall be deemed to have been reinstated or otherwise affected by such
withdrawal, discontinuance or abandonment. Grantor hereby expressly waives the benefit of any
Applicable Law now provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the provisions of this Section.

Section 6.8 Application of Proceeds. The proceeds of any sale of, and the Rents and other amounts generated by the holding,
leasing, operation or other use of, the Collateral (including, without limitation, the Leases)
shall be applied by Agent (or the receiver, if one is appointed) as provided in Section 11.4 of the
Credit Agreement.

Section 6.9 Leases. Agent, at its option, is authorized to foreclose this Security Instrument subject to the
rights of any Tenants of the Collateral under any Leases, and the failure to make any Tenants
parties to any such foreclosure proceedings and to foreclose their rights shall not be, nor be
asserted to be by Grantor, a defense to any proceedings instituted by Agent to collect the
Obligations.

Section 6.10 Purchase by Agent or Lenders. Upon any foreclosure sale or sales of all or any portion of the Collateral under the power
of sale herein granted Agent may bid for and purchase the Collateral and shall be entitled to apply
all or any part of the Obligations as a credit to the purchase price.

Section 6.11 Grantor as Tenant Holding Over. In the event of any such foreclosure sale or sales under the power herein granted, Grantor
shall be deemed a tenant holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of law applicable to
tenants holding over.

Section 6.12 Suits to Protect the Collateral. Agent shall have the power to institute and maintain such suits and proceedings as it may
deem expedient (a) to prevent any impairment of the Collateral by any acts which may be unlawful or
constitute an Event of Default under this Security Instrument, (b) to preserve or protect its
interest in the Collateral and in the Leases and Rents arising therefrom, and (c) to restrain the
enforcement of or compliance with any legislation or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such
enactment rule or order would impair the security hereunder or be prejudicial to the interest of
Agent. In such event, Grantor shall, at the request of the Agent, promptly pay any amount
reasonably expended by the Agent in such performance or attempted performance to the Agent,
together with interest thereon at the applicable Post-Default Rate from the date of such
expenditure until paid.

 

 

 

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Page 23

Section 6.13 Proofs of Claim. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting Grantor, its creditors or its property,
Agent, to the extent permitted by Applicable Law, shall be entitled to file such proofs of claim
and other documents as may be necessary or advisable in order to have the claims of Agent allowed
in such proceedings for the entire amount of the Obligations at the date of the institution of such
proceedings and for any additional amount of the Obligations after such date.

Section 6.14 Occupancy After Foreclosure. The purchaser at any foreclosure sale pursuant to Section 6.1(c) shall become the
legal owner of the Collateral or the portion thereof foreclosed. All occupants (except those which
have previously executed a prior written agreement with purchaser) of the Collateral or any part
thereof shall become tenants at sufferance of the purchaser at the foreclosure sale and shall
deliver possession thereof immediately to the purchaser upon demand, subject to the rights, if any,
of Tenants.

Section 6.15 Waiver of Grantor’s Rights. BY EXECUTION OF THIS SECURITY INSTRUMENT, GRANTOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF
AGENT AND LENDERS TO ACCELERATE THE INDEBTEDNESS SECURED BY THIS SECURITY INSTRUMENT UPON AN EVENT
OF DEFAULT WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE OTHER THAN SUCH NOTICE (IF ANY) AS
IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF THIS SECURITY INSTRUMENT; (B) TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WAIVES ANY AND ALL RIGHTS WHICH GRANTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES OF AMERICA (INCLUDING, WITHOUT LIMITATION, THE FIFTH AND
FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES,
OR BY REASON OF ANY OTHER APPLICABLE LAW, (1) TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY AGENT OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO AGENT, EXCEPT
SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF THIS SECURITY
INSTRUMENT AND (2) CONCERNING THE APPLICATION, RIGHTS OR BENEFITS OF ANY STATUTE OF LIMITATION OR
ANY MORATORIUM, REINSTATEMENT, MARSHALING, FORBEARANCE, APPRAISEMENT, VALUATION, STAY, EXTENSION,
HOMESTEAD, EXEMPTION OR REDEMPTION LAWS; (C) ACKNOWLEDGES THAT GRANTOR HAS READ THIS SECURITY
INSTRUMENT AND ANY AND ALL QUESTIONS OF GRANTOR REGARDING THE LEGAL EFFECT OF THIS SECURITY
INSTRUMENT AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO GRANTOR, AND GRANTOR HAS CONSULTED WITH
COUNSEL OF GRANTOR’S CHOICE PRIOR TO EXECUTING THIS SECURITY INSTRUMENT; AND (D) ACKNOWLEDGES THAT
ALL WAIVERS OF THE AFORESAID RIGHTS OF GRANTOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND
WILLINGLY BY GRANTOR AS PART OF A BARGAINED FOR LOAN TRANSACTION AND THAT THIS SECURITY INSTRUMENT
IS VALID AND ENFORCEABLE BY AGENT AGAINST GRANTOR IN ACCORDANCE WITH ALL THE TERMS AND CONDITIONS
HEREOF.

 

 

 

Exhibit K

Page 24

ARTICLE VII

Security Agreement

Section 7.1 Security Interest. This Security Instrument shall also constitute and serve as a security agreement on
personal property within the meaning of under the Uniform Commercial Code as enacted in New York
with respect to the Personalty, Fixtures, Leases and Rents. To this end, Grantor has GRANTED,
BARGAINED, CONVEYED, ASSIGNED, TRANSFERRED and SET OVER, and by these presents, does GRANT,
BARGAIN, CONVEY, ASSIGN, TRANSFER and SET OVER, to Agent for the benefit of the Lenders a security
interest in all of Grantor’s right, title and interest in, to, under and with respect to the
Personalty, Fixtures, Leases and Rents now owned or hereafter owned or acquired, in each case, to
the extent not constituting Excluded Property, to secure the full and timely payment, performance
and discharge of the Obligations. It is the intent of Grantor, Agent and Lenders that this
Security Instrument encumber all Leases and Rents, in each case, to the extent not constituting
Excluded Property, that all items contained in the definition of “Leases” and
“Rents” which are included within Article 9 of the Uniform Commercial Code as adopted in
New York be covered by the security interest granted in this Article VII and that all items
contained in the definition of “Leases” and “Rents” which are excluded from Article
9 of the Uniform Commercial Code as adopted in New York be covered by the provisions of Article
II and Article VIII hereof.

Section 7.2 Financing Statements. Grantor hereby authorizes Agent to file such Financing Statements and such further
assurances as Agent may, from time to time, reasonably consider necessary to create, perfect and
preserve Agent’s security interest herein granted, and Agent may cause such statements and
assurances to be recorded and filed, at such times and places as may be required or permitted by
law, to so create, perfect and preserve such security interest.

Section 7.3 Uniform Commercial Code Remedies. Agent shall have all the rights and remedies with respect to the Personalty, Fixtures,
Leases and Rents afforded to a “secured party” by the Uniform Commercial Code as adopted in New
York as to property within the scope thereof, in addition to, and not in limitation of, the other
rights and remedies afforded by the Loan Documents.

Section 7.4 Foreclosure of Security Interest. If an Event of Default exists, Agent may elect, in addition to exercising any and all other
rights and remedies set forth in Article VI or referred to in Section 7.3 or
Article VII hereof, to proceed in the manner set forth in Article 9 of the Uniform
Commercial Code as adopted in New York, relating to the procedure to be followed when a Security
Agreement covers both real and personal property.

Section 7.5 No Obligation of Secured Party. The assignment and security interest herein granted shall not be deemed or construed to
constitute Agent or any Lender as a trustee or mortgagee in possession of the Collateral, to
obligate Agent or any Lender to lease the Collateral or attempt to do same, or to take any action,
incur any expense or perform or discharge any obligation, duty or liability whatsoever under any of
the Leases or otherwise.

 

 

 

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Page 25

Section 7.6 Information for Fixture Filing. This Security Instrument is also being filed as a fixture filing with respect to the
portions of the Collateral that are or are to become fixtures relating to the Property or
Improvements. Grantor’s exact legal name, type of legal entity and jurisdiction of formation are
as set forth in the first paragraph of this Security Deed. Grantor’s organizational identification
number is 2345191. Grantor hereby represents to Agent and Lenders that, during the past five years
prior to the date hereof, Grantor has not changed its name or merged with or otherwise combined its
business with any Person; provided, however, Grantor has converted from a limited
partnership. Without giving Agent at least 30-days’ prior written notice and to the extent such
action is not otherwise prohibited by any of the Loan Documents, Grantor shall not (a) change its
name; (b) reorganize or otherwise become formed under the laws of another jurisdiction or (c)
become bound by a security agreement (other than a Loan Document) of another Person under Section
9-203(d) of the Uniform Commercial Code as in effect in any applicable jurisdiction. The
information contained in this Section is provided in connection with the requirements of the
Uniform Commercial Code so that this Security Instrument shall
serve as a financing statement. The name of Grantor shall be the “Debtor” and the
name of the Agent shall be the “Secured Party,” and a statement indicating the collateral
covered hereby is set forth in the definition of “Collateral” above.

ARTICLE VIII

Assignment of Leases and Rents

Section 8.1 Assignment. For and in consideration of ONE DOLLAR ($1.00), and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and in order to secure the full and
timely payment of the Obligations and the full and timely performance and discharge of the
Obligations, Grantor has GRANTED, BARGAINED, SOLD, CONVEYED, ASSIGNED, TRANSFERRED, SET OVER and
DELIVERED, and by these presents does hereby GRANT, BARGAIN, SELL, CONVEY, ASSIGN, TRANSFER, SET
OVER and DELIVER absolutely unto Agent for the benefit of the Lenders the Leases (whether now
existing or entered into after the date hereof) and the Rents, subject only to the hereinafter
described License, TO HAVE AND TO HOLD the Leases and the Rents unto Agent, its successors and
assigns, for the benefit of the Lenders forever, and Grantor does hereby bind itself, its
successors and assigns to WARRANT and FOREVER DEFEND the title to the Leases and the Rents unto
Agent against every Person whomsoever lawfully claiming or to claim the same or any part thereof,
in each case, other than the Boucher Brothers Agreement, but only to the extent, and for so long
as, Grantor’s right to assign the Boucher Brothers Agreement is prohibited pursuant to the terms
thereof or such prohibition is rendered unenforceable or otherwise deemed ineffective by the
Uniform Commercial Code or any other Applicable Law. If an Event of Default exists, Agent shall
have the right power and privilege (but shall be under no duty) to demand possession of the Rents,
which demand shall, to the fullest extent permitted by Applicable Law, be sufficient action by
Agent to entitle Agent to immediate and direct payment of the Rents (including delivery to Agent of
Rents collected for the period in which the demand occurs and for any subsequent period), for
application as provided herein, all without the necessity of any further action by Agent including,
without limitation, any action to obtain possession of the Improvements or the Property. Grantor
hereby authorizes and directs the Tenants under the Leases to pay Rents to Agent upon written
demand by Agent accompanied by a notice from the Agent of the occurrence of an Event of Default,
without further consent of Grantor, without any obligation on the part of any Tenant to determine
whether an Event of Default has in fact occurred and regardless of whether Agent has taken
possession of any portion of the Property, and the Tenants may rely upon any written statement
delivered by Agent to the Tenants. Any such payment to Agent shall constitute payment to Grantor
under the Leases, and Grantor hereby appoints Agent as Grantor’s lawful attorney-in-fact for
giving, and Agent is hereby empowered to give, acquittances to any Tenants for such payments to
Agent after a default.

 

 

 

Exhibit K

Page 26

Section 8.2 Intentionally Omitted.

Section 8.3 Limited License. Provided that there exists no Event of Default, Grantor shall have the right under
a limited license granted hereby, and Agent hereby grants to Grantor a limited license (the
“License”), to collect, all of the Rents arising from or out of the Leases, or any renewals
or extensions thereof, or from or out of the Collateral or any part thereof.

Section 8.4 Grantor’s Indemnities. Grantor hereby agrees to indemnify and hold Agent and Lenders free and harmless from and
against any and all liability, loss, cost, damage or expense which Agent and/or Lenders may incur
under or by reason of this assignment, or for any action taken by the Agent hereunder, or by reason
or in defense of any and all claims and demands whatsoever which may be asserted against Agent
and/or Lenders arising out of the Leases (except to the extent caused by the gross negligence or
willful misconduct of Agent or any Lender), including specifically, but without limitation, any
claim by any Tenant of credit for Rents paid to and received by Grantor, but not delivered to
Agent, for any period under any Lease more than 1 month in advance of the due date thereof. If
Agent or any Lender incurs any such liability, loss, cost, damage or expense, the amount thereof,
including reasonable attorneys’ fees, with interest thereon at the Post-Default Rate, shall be
payable by Grantor to Agent immediately, without demand, and shall be secured hereby and by all
other Loan Documents.

Section 8.5 Appointment of Attorney-in-Fact. Grantor hereby further constitutes and appoints Agent the true and lawful attorney-in-fact
of the Grantor, and in the name, place and stead of said Grantor, to subject and subordinate at any
time and from time to time any Lease or any part thereof to the lien and security interest of the
Security Instrument or any other mortgage, security deed, deed of trust or security agreement on or
to any ground lease of the Collateral, or to request or require such subordination, where such
reservation, option or authority was reserved to the Grantor under any such Lease, or in any case
where the Grantor otherwise would have the right, power or privilege so to do. The foregoing
appointment is irrevocable and continuing and coupled with an interest, and such rights, powers and
privileges shall be exclusive in Agent and its successors and assigns so long as any part of the
Obligations secured hereby remains unpaid and undischarged. Grantor hereby warrants that Grantor
has not at any time prior to the date hereof exercised any such rights, and Grantor hereby
covenants not to exercise any such right, to subordinate any such Lease to the lien of this
Security Instrument or to any other security deed, mortgage, deed of trust or security agreement or
to any ground lease.

 

 

 

Exhibit K

Page 27

Section 8.6 Exculpation of Agent. The acceptance by Agent of this assignment of the Leases and Rents, with all of the rights,
powers, privileges and authority created hereby shall not, prior to entry upon and
taking possession of the Collateral by Agent, be deemed or construed to constitute Agent a
“mortgagee in possession”, nor thereafter or at any time or in any event obligate the Agent to
appear in or defend any action or proceeding relating to the Leases, the Rents or the Collateral or
to take any action hereunder or to expend any money or incur any expenses or perform or discharge
any obligation, duty or liability under any Lease or to assume any obligation or responsibility for
any security deposits or other deposits delivered to Grantor by any Tenant and not assigned and
delivered to Agent, nor shall Agent be liable in any way for any injury or damage to persons or
property sustained by any person or persons, firm or corporation in or about the Collateral.

Section 8.7 [Intentionally Omitted].

ARTICLE IX

Miscellaneous

Section 9.1 Performance at Grantor’s Expense. Grantor shall pay to Agent and Lenders immediately upon demand all costs and expenses
incurred by Agent and Lenders in connection herewith as provided in Section 13.2 of the Credit
Agreement, and the same shall be secured hereby. For all purposes of this Security Instrument,
Agent’s reasonable and documented costs and expenses shall include, without limitation, all
appraisal and re-appraisal fees (in each case, subject to the limitations provided in Section 13.2
of the Credit Agreement as well as the other applicable limitations set forth in the Credit
Agreement in respect of appraisals), reasonable and documented out-of-pocket legal fees (including,
without limitation, fees for trial, appeal or other proceedings), accounting fees, environmental
consultant fees (if any), auditor fees, and the cost to Agent of any documentary taxes, recording
fees, brokerage fees, title search fees, title insurance premiums and title surveys (including any
such title related fees and premiums incurred in connection with title updates). In addition,
Grantor recognizes and agrees that formal written appraisals of the Collateral by a licensed
independent appraiser may be required by federal regulatory reporting requirements on an annual or
specialized basis, which shall be at Grantor’s expense.

 

 

 

Exhibit K

Page 28

Section 9.2 Survival of Obligations. Each and all of the Obligations shall survive the execution and delivery of the Loan
Documents, and the consummation of the transactions contemplated thereby, and shall continue in
full force and effect until the Obligations shall have been paid and performed in full as provided
in Section 13.9 of the Credit Agreement; provided however, that nothing contained
in this Section shall limit the obligations of Grantor as set forth in Section 3.14 and
8.4 herein.

Section 9.3 Recording and Filing. Grantor shall cause the Loan Documents and all amendments and supplements thereto and
substitutions therefor to be recorded, filed, re-recorded and refiled in such manner and in such
places as Agent shall reasonably request and shall pay all such recording, filing, re-recording and
refiling taxes, fees and other charges.

Section 9.4 Notices. All notices or other communications required or permitted to be given pursuant to this
Security Instrument shall be made and delivered as provided in Section 13.1 of the Credit
Agreement.

Section 9.5 No Waiver. Any failure by Agent or Lenders to insist, or any election by Agent or Lenders not to
insist, upon strict performance by Grantor of any of the terms, provisions or conditions of this
Security Instrument shall not be deemed to be a waiver of same or of any other term, provision or
condition hereof, and Agent and Lenders shall have the right at any time or times thereafter to
insist upon strict performance by Grantor of any and all such terms, provisions and conditions. No
delay or omission by Agent or Lenders to exercise any right, power or remedy accruing upon any
breach or Event of Default shall exhaust or impair any such right, power or remedy or shall be
construed to be a waiver of any such breach or Event of Default, or acquiescence therein, and every
right, power and remedy given by this Security Instrument to Agent or Lenders may be exercised from
time to time and as often as may be deemed expedient by Agent or Lenders. No consent or waiver,
expressed or implied, by Agent or Lenders to or of any breach or Event of Default by Grantor in the
performance of the Obligations of Grantor or to any other Event of Default shall be deemed or
construed to be a consent or waiver to or of any other breach or Event of Default in the
performance of the same or any other Obligations of Grantor. Failure on the part of Agent to
complain of any act or failure to act or to declare an Event of Default, irrespective of how long
such failure continues, shall not constitute a waiver of rights hereunder or impair any rights,
powers, or remedies of Agent or Lenders hereunder.

No act or omission by Agent or Lenders shall release, discharge, modify, change or otherwise
affect the liability of Grantor under this Security Instrument or any of the other Loan Documents
to which it is a party or in respect of any Obligations of Grantor or the liability of any
subsequent purchaser of the Collateral or any part thereof, or any maker, cosigner, endorser,
surety or guarantor, or preclude Agent or Lenders from exercising any right, power or privilege
herein granted or intended to be granted in the event of any Event of Default then made or by any
subsequent Event of Default, or alter the Lien of this Security Instrument. Without limiting the
generality of the foregoing, Agent and Lenders may:

(a) grant forbearance or an extension of time for the payment of all or any portion of
the Obligations;

 

 

 

Exhibit K

Page 29

(b) take other or additional security for the payment of the Obligations;

(c) waive or fail to exercise any right granted hereunder or in the Credit Agreement or
the other Loan Documents;

(d) change any of the terms, covenants, conditions or agreements of the Credit
Agreement, this Security Instrument, or the other Loan Documents;

(e) consent to the filing of any map, plat or replat affecting the Collateral;

(f) consent to the granting of any easement or other right affecting the Collateral;

(g) make or consent to any agreement subordinating the security interest or lien
hereof; or

(h) take or omit to take any action whatsoever with respect to the Credit Agreement,
this Security Instrument, the Collateral or any document or instrument evidencing, securing
or in any way relating to the Obligations;

all without releasing, discharging, modifying, changing or affecting any such liability, or
precluding Agent or Lenders from exercising any such right, power or privilege, or affecting the
Lien of this Security Instrument. In the event of the sale or transfer by operation of law or
otherwise of all or any part of the Collateral, Agent, without notice, is hereby authorized and
empowered to deal with any such vendee or transferee with reference to the Collateral or the
Obligations, or with reference to any of the terms, covenants, conditions or agreements hereof, as
fully and to the same extent as it might deal with the original parties hereto and without in any
way releasing or discharging any liabilities, Obligations or undertakings.

Section 9.6 Agent’s Right to Perform the Obligations. If Grantor shall fail, refuse or neglect to make any payment or perform any act required by
the Loan Documents after the expiration of relevant notice and cure periods, then at any time
thereafter, and without notice to or demand upon Grantor and without waiving or releasing any other
right, remedy or recourse Agent may have because of same, Agent may (but shall not be obligated to)
make such payment or perform such act for the account of and at the expense of Grantor, and shall
have the right to enter the Property and Improvements for such purpose and to take all such action
thereon and with respect to the Collateral as it may deem necessary or appropriate. If Agent shall
elect to pay any Imposition or other sums due with reference to the Collateral, Agent may do so in
reliance on any bill, statement or assessment procured from the appropriate Governmental Authority
or other issuer thereof without inquiring into the accuracy or validity thereof. Similarly, in
making any payments to protect the security intended to be created by the Loan Documents, Agent
shall not be bound to inquire into the validity of any apparent or threatened adverse title, lien,
encumbrance, claim or charge before making an advance for the purpose of preventing or removing the
same. Grantor shall indemnify Agent and Lenders for all losses, expenses, damages, claims and
causes of action, including reasonable attorneys’ fees, incurred or accruing by reason of any acts
performed by
Agent pursuant to the provisions of this Section or by reason of any other provision in the
Loan Documents. All sums paid by Agent or Lenders pursuant to this Section, and all other sums
expended by Agent or Lenders to which they shall be entitled to be indemnified, together with
interest thereon at the Post-Default Rate from the date of such payment or expenditure, shall
constitute additions to the Obligations, shall be secured by the Liens created by the Loan
Documents and shall be paid by Grantor to Agent upon demand.

 

 

 

Exhibit K

Page 30

Section 9.7 Covenants Running with the Land. All Obligations contained in the Loan Documents are intended by the parties to be, and
shall be construed as, covenants running with the Property.

Section 9.8 Successors and Assigns. Subject to Section 13.5 of the Credit Agreement, all of the terms of this Security
Instrument shall apply to, be binding upon and inure to the benefit of the parties thereto, their
successors, assigns, heirs and legal representatives, and all other Persons claiming by, through or
under them.

Section 9.9 Severability. This Security Instrument is intended to be performed in accordance with, and only to the
extent permitted by, all applicable Legal Requirements. If any provision of this Security
Instrument or the application thereof to any Person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, then neither the remainder of the instrument in which such
provision is contained nor the application of such provision to other Persons or circumstances nor
the other instruments referred to hereinabove shall be affected thereby, but rather, shall be
enforced to the greatest extent permitted by Applicable Law.

Section 9.10 Modification. This Security Instrument may not be amended, revised, waived, discharged, released or
terminated orally, but only by a written instrument or instruments as provided in Section 13.6 of
the Credit Agreement.

Section 9.11 Assignment. This Security Instrument is assignable by Agent and any assignment hereof by Agent shall
operate to vest in the assignee all rights and powers herein conferred upon and granted to Agent.

Section 9.12 [Intentionally Omitted].

Section 9.13 Counterparts. This Security Instrument may be executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute but one instrument.

Section 9.14 APPLICABLE LAW. THE PROVISIONS OF THIS SECURITY INSTRUMENT REGARDING THE CREATION, PERFECTION AND
ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS HEREIN GRANTED SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA. ALL OTHER PROVISIONS OF THIS
SECURITY INSTRUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

 

 

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Page 31

Section 9.15 Subrogation. If any or all of the proceeds of the Obligations have been used to extinguish, extend or
renew any obligations heretofore existing against the Collateral, then, to the extent of such funds
so used, the obligations secured hereby shall be subrogated to all of the rights, claims, liens,
titles and interests heretofore existing against the Collateral to secure the indebtedness so
extinguished, extended or renewed, and the former rights, claims, liens, titles and interests, if
any, are not waived, but rather, are continued in full force and effect in favor of Agent and are
merged with the lien or security title and interest created herein as cumulative security for the
repayment and the satisfaction of the Obligations.

Section 9.16 Headings. Titles and captions of Articles, Sections, subsections and clauses in this Security
Instrument are for convenience only, and neither limit nor amplify the provisions of this Security
Instrument.

Section 9.17 Conflict. Notwithstanding anything herein to the contrary, in the event of a conflict between this
Security Instrument and the Credit Agreement, the Credit Agreement shall govern.

Section 9.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL. (a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY LEGAL
ACTION OR PROCEEDING WITH
RESPECT TO THIS SECURITY INSTRUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH
ARE LOCATED IN THE COUNTY OF NEW YORK, OR THE COURTS OF THE STATE OF FLORIDA AND, BY EXECUTION AND
DELIVERY OF THIS SECURITY INSTRUMENT, THE GRANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GRANTOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS
LACK JURISDICTION OVER THE GRANTOR, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS SECURITY INSTRUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY
SUCH COURT LACKS JURISDICTION OVER THE GRANTOR. THE GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE GRANTOR AT ITS
ADDRESS FOR NOTICES PURSUANT TO SECTION 9.4 HEREOF, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. THE GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED
HEREUNDER THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE MORTGAGEE, OR ANY LENDER, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GRANTOR IN ANY OTHER
JURISDICTION.

 

 

 

Exhibit K

Page 32

(b) THE GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS SECURITY INSTRUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

(c) GRANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE OBLIGATIONS, THE CREDIT AGREEMENT, THE NOTE OR THIS SECURITY
INSTRUMENT OR
ANY ACTS OR OMISSIONS OF AGENT, LENDERS, THEIR OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.

Section 9.19 Limitation on Interest. It is the intent of the Grantor and the Mortgagee in the execution of this Security Instrument
and all other instruments evidencing or securing the Obligations to contract in strict compliance
with applicable usury laws. In furtherance thereof, the Mortgagee and the Grantor stipulate and
agree that none of the terms and provisions contained in this Security Instrument shall ever be
construed to create a contract for the use, forbearance or retention of money requiring payment of
interest at a rate in excess of the maximum interest rate permitted to be charged by relevant law.
If this Security Instrument or any other instrument evidencing or securing the Obligations violates
any applicable usury law, then the interest rate payable in respect of the Loans or the
Post-Default Rate, as applicable, shall be the highest rate permissible by law.

 

 

 

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Page 33

Section 9.20 Further Assurances. The Grantor shall, upon the request of the Mortgagee and at the expense of the Grantor: (a)
promptly correct any defect, error or omission which may be discovered in this Security Instrument
or any UCC financing statements filed in connection herewith; (b) promptly execute, acknowledge,
deliver and record or file such further instruments (including, without limitation, further
mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation
statements and assignments of rents or leases) and promptly do such further acts as may be
necessary, desirable or proper to carry out more effectively the purposes of this Security
Instrument and to subject to the Liens and security interests hereof any property intended by the
terms hereof to be encumbered hereby, including, but not limited to, any renewals, additions,
substitutions, replacements or appurtenances to the Collateral; and (c) promptly execute,
acknowledge, deliver, procure and record or file any document or instrument (including specifically
any financing statement) deemed advisable by the Mortgagee to protect, continue or perfect the
Liens or the security interests hereunder against the rights or interests of third Persons.

Section 9.21 Future Advances. This Security Instrument is given to secure the Obligations under, or in respect of, the Loan
Documents and shall secure not only obligations with respect to presently existing indebtedness
under the foregoing documents and agreements but also any and all other indebtedness which may
hereafter be owing to the Lenders and/or the Mortgagee under the Loan Documents, however incurred,
whether interest, discount or otherwise, and whether the same shall be deferred, accrued or
capitalized, including future advances and re-advances, pursuant to the Credit Agreement or the
other Loan Documents, whether such advances are obligatory or to be made at the option of the
Lenders and/or the Agent, or otherwise, to the same extent as if such future advances were made on
the date of the execution of this Security
Instrument. The Lien of this Security Instrument shall be valid as to all indebtedness
secured hereby, including future advances, from the time of its filing for record in the recorder’s
office of the county in which the Collateral is located. This Security Instrument is intended to
and shall be valid and have priority over all subsequent Liens and encumbrances, including
statutory Liens, excepting solely taxes and assessments levied on the real estate, to the extent of
the maximum amount secured hereby, and Permitted Encumbrances related thereto. Although this
Security Instrument is given to secure all future advances made by the Mortgagee and/or the Lender
to or for the benefit of the MG Borrower, the Grantor and/or the Collateral, whether obligatory or
optional, the Grantor and the Mortgagee hereby acknowledge and agree that the Mortgagee and the
Lenders are obligated by the terms of the Loan Documents to make certain future advances, including
advances of a revolving nature, subject to the fulfillment of the relevant conditions set forth in
the Loan Documents.

[Remainder of Page Intentionally Left Blank]

 

 

 

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Page 34

IN WITNESS WHEREOF, Grantor has executed this Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Filing under seal, as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	GRANTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	BEACH HOTEL ASSOCIATES LLC,

     a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 	 	By: Morgans Group LLC,

     a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 	 	Its: Sole Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 
	 	 	c/o Morgans Group, LLC	 	 
	 	 	475 Tenth Avenue	 	 
	 	 	New York, New York 10018	 	 
	 	 	Attention: Richard Szymanski	 	 
	 	 	Telecopy Number: (212) 277-4270	 	 
	 	 	Telephone Number: (212) 277-4188	 	 

[Acknowledgement on Next Page]

 

 

 

Exhibit K

Page 35

	 	 	 	 	 	 	 
	STATE OF
 _________

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS:
	COUNTRY OF
 ______

	 	 	)	 	 	 

The foregoing instrument was acknowledged before me this
 _____ 
day of
 _____, 2011 by

 _____ 
as
 _____ 
of Morgans Group LLC, a Delaware limited liability
company, the sole member of BEACH HOTEL ASSOCIATES, LLC, a Delaware limited liability company, on
behalf of the company. He/she/they personally appeared before me and is/are personally known to me
or produced
 _____ 
as identification and did not take an oath.

	 	 	 	 	 
	 

	 	 	 	Notary:
                                        

	 

	 	[NOTARIAL SEAL]
	 	Print Name:
	 

	 	 	 	NOTARY PUBLIC, STATE OF                    
	 

	 	 	 	My commission expires                    

 

 

 

EXHIBIT A

of

EXHIBIT K

LEGAL DESCRIPTION

Lots 9, 10, 11 and 12, in Block 29 of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, a subdivision
of Miami-Dade County, Florida, according to the Plat thereof duly recorded upon the Public records
of Miami-Dade County, Florida in Plat Book 2, page 77 thereof;

Also that tract of land shown on plat of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, according
to the Plat thereof recorded in Plat Book 2, page 77, Public Records of Miami-Dade County, Florida,
described as follows:

Begin at the Southeast corner of Lot 9 in Block 29 as shown on plat of FISHER’S FIRST
SUBDIVISION OF ALTON BEACH, according to the Plat thereof recorded in Plat Book 2, page 77, Public
Records of Miami-Dade County, Florida; thence run in a Northerly direction along the Easterly line
of said Block 29 of the aforesaid plat and the Northerly extension thereof a distance of 136.897
feet, more or less, to the point of intersection of the center line of 17th Street; thence run
Easterly along the center line of 17th Street; extended, a distance of 204.17 feet, more or less to
the point of intersection of said center line of 17th Street extended Easterly to the Erosion
Control Line of the Atlantic Ocean said Line recorded in Plat Book 105, page 62, Public Records of
Miami-Dade County, Florida, thence run Southerly along the said Erosion Control Line, a distance of
137.465 feet to the intersection of the extension Easterly of the Southerly Line of referenced Lot
9, thence run Westerly along the Easterly extension of Lot 9, a distance of 200.96 feet, more of
less, to the Point of Beginning.

Less and except, however, that certain portion of such land as was appropriated and taken by
the City of Miami Beach, Florida, in that certain eminent domain or condemnation proceeding a final
judgment for which was recorded in Deed Book 3106, page 96, which covers that portion of the
premises lying northerly of the northerly line of said Block 29 extended easterly to the Erosion
Control Line recorded in Plat Book 105, page 62 of the Public Records of Miami-Dade County,
Florida.

 

 

 

EXHIBIT K

EXHIBIT B

to

SECURITY INSTRUMENT

(DESCRIPTION OF PERMITTED ENCUMBRANCES)

Those items recorded in the records of Miami-Dade County, Florida, as set forth in Schedule B,
Section 2, of that certain Commitment for Title Insurance issued by Chicago Title Insurance
Company, Commitment No. 3508183, as endorsed and marked in connection with the making of the Loan
referenced in the foregoing security instrument.

 

 

 

EXHIBIT L

FORM OF ASSIGNMENT OF LEASES AND RENTS

Prepared by:

Leila Rachlin, Esq.

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036

1111779-2180

ASSIGNMENT OF LEASES AND RENTS

from

BEACH HOTEL ASSOCIATES LLC

to

DEUTSCHE BANK TRUST COMPANY AMERICAS

(As Agent for the benefit of the Lenders and the Issuing Bank, and for its own account, pursuant to

the Credit Agreement herein described)

dated as of July [     ], 2011

Property: The Delano Hotel, Miami-Dade County, State of Florida

 

 

 

Exhibit L

Page 2

ASSIGNMENT OF LEASES AND RENTS

THIS ASSIGNMENT OF LEASES AND RENTS (this “Assignment”) made as of                     , 2011
from BEACH HOTEL ASSOCIATES LLC, a Delaware limited liability company (“Assignor”), having
a mailing address of c/o Morgans Group LLC, 475 Tenth Avenue, New York, New York 10018, to DEUTSCHE
BANK TRUST COMPANY AMERICAS, in its capacity as Agent (together with its successors and assigns,
“Agent” or “Assignee”), for itself, the Issuing Bank and for each of the Lenders
from time to time party to that certain Credit Agreement (as hereinafter defined), Agent having as
its address for personal delivery 60 Wall Street, New York, New York 10005.

WHEREAS, pursuant to that certain Credit Agreement dated as of [                    ], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Assignor, Morgans Group LLC (the “MG Borrower”), the lenders from time to time
party thereto as “Lenders” and Agent, Lenders and Agent have agreed to make available to
Assignor and the MG Borrower certain financial accommodations in an aggregate principal amount not
to exceed $100,000,000 on the terms and conditions set forth in the Credit Agreement;

WHEREAS, to induce Lenders and Agent to make, and to continue to make, such financial
accommodations to Assignor and the MG Borrower under the Credit Agreement, Assignor desires to
absolutely assign to Assignee, for its individual benefit and the benefit of the Lenders, all Rents
and income from the Property and to assign to Assignee, for its individual benefit and the benefit
of the Lenders, all present and future Leases with respect to all or any portion of the Property,
to secure, among other things, Assignor’s and the MG Borrower’s obligations under the Credit
Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Assignor, Assignor agrees as follows:

ARTICLE I

Defined Terms

Terms not otherwise defined herein have the respective meanings given them in the Credit
Agreement. Terms defined in the Uniform Commercial Code as in effect in the State of New York have
the respective meanings given such terms therein. In addition, as used in this Assignment, the
following terms shall have the following meanings:

“Boucher Brothers Agreement” means that certain Agreement, dated as of July 1, 2004,
between Assignor and Boucher Brothers Management, Inc., a Florida corporation, as amended,
restated, extended, supplemented or otherwise modified from time to time.

 

 

 

Exhibit L

Page 3

“Event of Default” means the occurrence of an “Event of Default” as defined in
the Credit Agreement, or as defined in the Security Instrument.

“Food and Beverage Lessee/Operators” shall mean SC Collins LLC, a Delaware limited
liability company.

“Improvements” means any and all structures, buildings, improvements, additions,
alterations, betterments or appurtenances to the Property, whether now existing or at any time
hereafter situated, placed or constructed upon the Property, or any part thereof.

“Leases” means any and all leases, subleases, licenses, concessions, rental agreements
or other agreements (written or oral, now or hereafter in effect) which grant rights to use, enjoy
and/or occupy all or any part of the Collateral or which grant a possessory interest in and to, or
the right to use, all or any part of the Collateral, together with all security and other deposits
made in connection therewith and all guaranties thereof, together with and all extensions,
renewals, supplements, modifications or replacements of any of the foregoing.

“Obligations” has the meaning ascribed to such term in the Credit Agreement.

“Premises” means the Property and Improvements, collectively.

“Property” means the real estate or interest therein described in Exhibit A
attached hereto and incorporated herein by this reference, together with all of the easements,
rights, privileges, tenements, hereditaments and appurtenances now or hereafter thereunto belonging
or in any way appertaining thereto, and all of the estate, right, title, interest, claim and demand
whatsoever of Assignor therein or thereto, either at law or in equity, in possession or in
expectancy, now or hereafter acquired.

“Rents” means all receivables, revenues, rentals, credit card receipts, receipts and
all payments received which relate to the rental, lease, franchise and use of space at the Property
and/or Improvements or which relate to the Food and Beverage Lessee/Operators (it being
acknowledged by Lender that the security interest granted hereunder in receivables, revenues,
rentals, credit card receipts, receipts and all payments received which relate to the Food and
Beverage Lessee/Operators shall not attach to interests of third-party joint venture partners of
Grantor which are not affiliates of Borrower and/or Grantor) and rental and use of guest rooms or
meeting rooms or banquet rooms or recreational facilities or bars, beverage or food sales, vending
machines, mini-bars, room service, telephone, video and television systems, electronic mail,
internet connections, guest laundry, bars, the provision or sale of other goods and services, and
all other payments received from guests or visitors of the Property and/or Improvements, and other
items of revenue, receipts or income, all cash or security deposits, lease termination payments,
advance rentals and payments of similar nature and guarantees or other security held by, or issued
in favor of, Grantor in connection therewith to the extent of Grantor’s rights or interest therein
and all remainders, reversions and other rights and estates appurtenant thereto, and all base,
fixed, percentage or additional rents, and other rents, oil and gas or other mineral royalties, and
bonuses, issues, profits and rebates and refunds or other payments made by any
Governmental Authority from or relating to the Property, the Improvements, the Fixtures (as
defined in the Security Instrument) or the Equipment (as defined in the Security Instrument)
plus all rents, common area charges and other payments now existing or hereafter arising,
whether paid or accruing before or after the filing by or against Grantor of any petition for
relief under the Bankruptcy Code and all proceeds from the sale or other disposition of the Leases
and the right to receive and apply the Rents.

 

 

 

Exhibit L

Page 4

“Security Instrument” means that certain Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Filing of even date herewith from Assignor as grantor thereunder in
favor of Agent as beneficiary thereunder, covering the Property and other related collateral more
particularly described therein, and given as security for the repayment of the Obligations.

“Tenant” means the tenant or lessee under any Lease.

ARTICLE II

Grant and Conveyance

Assignor does hereby unconditionally, absolutely and presently bargain, sell, assign and set
over unto Assignee, for its individual benefit and the benefit of the Lenders, all right, title and
interest of Assignor in and to any and all existing or future Lease, together with the immediate
and continuing right to collect and receive all the Rents (other than the Boucher Brothers
Agreement, but only to the extent, and for so long as, Assignor’s right to assign the Boucher
Brothers Agreement is prohibited pursuant to the terms thereof or such prohibition is rendered
unenforceable or otherwise deemed ineffective by the Uniform Commercial Code or any other
Applicable Law).

TO HAVE AND TO HOLD THE SAME UNTO ASSIGNEE as provided herein.

This Assignment is intended to be an absolute assignment from Assignor to Assignee and not
merely the passing of a security interest; provided, however, that Assignee hereby
grants to Assignor a revocable license to collect, except as hereinafter provided, the Rents and to
enforce the Leases, so long as no Event of Default exists. If an Event of Default occurs, however,
such license shall be revoked upon the written election of Assignee and Assignee shall not be
required to take any further action whatsoever, including, without limitation, instituting legal
proceedings of any kind, to terminate Assignor’s license to collect Rents or enforce any of the
other provisions or remedies contained in the Assignment.

 

 

 

Exhibit L

Page 5

ARTICLE III

Representations, Warranties, and Covenants

Section 3.1 Assignee as Creditor. Notwithstanding the license granted in Article
II above, Assignor agrees that upon the occurrence and during the continuance of an Event of
Default Assignee, and not Assignor, shall be deemed to be the creditor of each Tenant in respect
of assignments for the benefit of creditors in bankruptcy, reorganization, insolvency,
dissolution, or receivership proceedings affecting such Tenant (without obligation on the part of
Assignee, however, to file or make timely filings of claims in such proceedings or otherwise to
pursue creditor’s rights therein), with an option to Assignee to apply any money received by
Assignee as such creditor in reduction of the Obligations.

Section 3.2 Rights and Remedies. Assignor agrees that while an Event of Default
exists, the license reserved herein by Assignor shall, upon the written election of Assignee, be
revoked, cease and terminate so long as an Event of Default is continuing and Assignee is hereby
authorized, at its option, to enter and take possession of the Premises, or any part thereof, and
to perform all acts necessary for the operations and maintenance of the Premises in the same manner
and to the same extent that Assignor might so act. It is the intention of the parties that
Assignee’s right to collect the Rents due and owing may be exercised without electing to exercise
Assignee’s right to enter, take over and assume the management, operation and maintenance of the
Premises. In furtherance thereof and not by way of limitation, Assignee is empowered, but shall be
under no obligation while an Event of Default exists, to collect the Rents, to enforce payment
thereof and the performance of any and all other terms and provisions of the Leases, to exercise
all the rights and privileges of Assignor thereunder, including the right to fix or modify Rents,
to bring or defend any suits in connection with the possession of the Premises or any part thereof
in its own name or Assignor’s name, to relet the Premises or any part thereof and to collect the
Rents under any new Lease. Assignee shall from time to time apply the net amount of income after
payment of all proper costs and charges, including loss or damage referred to in Section
3.6 below, and attorneys’ fees, to the Obligations as provided in Section 11.4. of the Credit
Agreement. Such entry and taking possession of the Premises, or any part thereof, may be made by
actual entry and possession, or by written notice served personally upon or sent by registered or
certified mail to the last owner of the Premises appearing on the records of Assignee, as Assignee
may elect, and no further authorization shall be required. Assignee shall only be accountable for
money actually received by it pursuant to this Assignment. Notwithstanding any action taken by
Assignee pursuant to this Section or otherwise in this Assignment, neither the assignment made
pursuant hereto or any such action shall constitute Assignee as a “mortgagee in possession.” While
an Event of Default exists, Assignee shall have all rights and remedies provided hereunder, as well
as at law or in equity, none of which shall be exclusive remedies, but on a cumulative basis.

Section 3.3 Intentionally Omitted.

Section 3.4 Consent to Payment of Rents. Assignor irrevocably consents that the
Tenants, upon demand and notice from Assignee of the occurrence of an Event of Default, shall pay
the Rents to Assignee, without liability of the Tenants for the determination of the actual
existence of any such Event of Default. Assignor hereby irrevocably authorizes and directs the
Tenants, upon receipt of any notice from Assignee of an Event of Default, to pay to the Assignee
the Rents due and to become due under the Leases. Assignor agrees that the Tenants shall have the
right to rely upon any such notices of Assignee and that the Tenants shall pay such Rents to
Assignee, without any obligation and without any right to inquire as to whether such Event of
Default actually exists, notwithstanding any claim of Assignor to the contrary. Assignor shall
have no claim against any Tenant for any Rents paid by any Tenant to Assignee. If an Event of
Default shall cease to exist, Assignor may request that Assignee (and upon any such request
Assignee shall) give written notice thereof to Tenants and thereafter, until further notice from
Assignee, Tenants shall pay the Rents to Assignor.

 

 

 

Exhibit L

Page 6

Section 3.5 Right to Further Assignment. Assignee shall have the right to assign
Assignor’s right, title, and interest in the Leases (other than the Boucher Brothers Agreement) to
any subsequent holder of the Security Instrument and to any Person acquiring title to the Premises
through foreclosure or otherwise. The receipt by Assignee of any Rents pursuant to this Assignment
after the institution of foreclosure proceedings under the Security Instrument shall not cure any
default nor affect such proceedings or any sale pursuant thereto. After Assignor shall have been
barred and foreclosed of all right, title and interest in the Premises, no assignee of Assignor’s
interest in the Leases shall be liable to account to Assignor for the Rents thereafter accruing.

Section 3.6 Indemnity. Nothing herein contained shall be construed to bind Assignee
or Lenders to the performance of any of the terms and provisions contained in any of the Leases, or
otherwise to impose any obligation on Assignee or Lenders, including, without limitation, any
liability under the covenant of quiet enjoyment contained in any of the Leases in the event that
any Tenant shall have been joined as party defendant in any action to foreclose the Security
Instrument and shall have been barred and foreclosed thereby of all right, title, interest and
equity of redemption in the Premises. Prior to actual entry and taking possession of the Premises
by Assignee, this Assignment shall not operate to place responsibility for the control, care,
management, or repair of the Premises upon Assignee or Lenders or for the carrying out of any of
the terms and provisions of any Lease.

Section 3.7 Covenants Regarding Leases. Assignor covenants it will not, without the
prior written consent of Assignee obtained in each instance:

(a) take any action with respect to any Lease which would impair the security of
Assignee under this Assignment or the Security Instrument; or

(b) except as permitted under the Credit Agreement, sell, assign, transfer, mortgage,
pledge or otherwise dispose of or encumber, whether by operation of Applicable Law or
otherwise, any Lease or any rentals under any Lease or any current or future Rents.

Section 3.9 Further Assurances. Assignor agrees to execute and deliver to Assignee,
and hereby irrevocably appoints Assignee and its successors and assigns as its agent and
attorney-in-fact to execute and deliver during the term of this Assignment, such further
instruments as Assignee may deem necessary to make this Assignment and any further assignment
effective.

Section 3.10 Cancellation Proceeds. If any Lease permits cancellation thereof on
payment of consideration and said privilege of cancellation is exercised, the payments made
or to be made by reason thereof are hereby assigned to Assignee to be applied to the
Obligations in accordance with the applicable terms of the Loan Documents or to be held in trust by
Assignee as further security, without interest, for the Obligations.

 

 

 

Exhibit L

Page 7

Section 3.11 Notice of Default. Assignor will give prompt notice to Assignee of any
notice of default received from any Tenant with respect to any Lease and furnish Assignee with
complete copies of any said notice. If requested by Assignee, Assignor will enforce the Leases and
all remedies available to Assignor against the Tenants in case of default under any Lease by a
Tenant.

Section 3.12 Continued Interest. Notwithstanding any variation of the terms of any
Loan Document, including any increase or decrease in the principal amount of the Obligations or in
the rate of interest payable under the Obligations or any extension of time for payment thereunder
or any release of part or parts of the Premises, the Leases and the Rents hereby assigned shall
continue as additional security in accordance with the terms of this Assignment.

Section 3.13 Additional Security. Without prejudice to any of its rights under this
Assignment, Assignee may (a) take security in addition to the security already given Assignee for
the payment of the Obligations, (b) release such other security, (c) release any party primarily or
secondarily liable on the Obligations, (d) grant or make extensions, renewals, modifications, or
indulgences with respect to the Loan Documents and replacements thereof, which replacements of the
Loan Documents may be on the same or on terms different from the present terms of the Loan
Documents, and (e) apply any other security theretofore held by it to the satisfaction of the
Obligations.

ARTICLE IV

Miscellaneous

Section 4.1 Headings. The Article, Section and Subsection entitlements hereof are
inserted for convenience of reference only and shall in no way alter, modify or define, or be used
in construing, the text of such Articles, Section or Subsection.

Section 4.2 Notice to Parties. All notices or other communications required or
permitted to be given pursuant to this Assignment shall be made and delivered as provided in
Section 13.1. of the Credit Agreement.

Section 4.3 Successors and Assigns. Subject to Section 13.5. of the Credit
Agreement, all of the terms of this Assignment shall apply to, be binding upon and inure to the
benefit of the parties thereto, their successors, assigns, heirs and legal representatives, and all
other Persons claiming by, through or under them.

Section 4.4 Number and Gender. Whenever the singular or plural number, masculine or
feminine or neuter gender is used herein, it shall equally include the other.

 

 

 

Exhibit L

Page 8

Section 4.5 Modification. This Assignment may only be amended, revised, waived, or
otherwise modified by a written instrument or instruments as provided in Section 13.6 of the Credit
Agreement.

SECTION 4.6 APPLICABLE LAW. THE PROVISIONS OF THIS ASSIGNMENT REGARDING THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS HEREIN GRANTED SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA. ALL
OTHER PROVISIONS OF THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

Section 4.7 Severability. This Assignment is intended to be performed in accordance
with, and only to the extent permitted by, all applicable legal requirements. If any provision of
any of this Assignment or the application thereof to any person or circumstance shall, for any
reason and to any extent, be invalid or unenforceable, then neither the remainder of the instrument
in which such provision is contained nor the application of such provision to other persons or
circumstances nor the other instruments referred to hereinabove shall be affected thereby, but
rather, shall be enforced to the greatest extent permitted by law.

Section 4.8 Time is of the Essence. Time is of the essence with respect to each and
every covenant, agreement and obligation of Assignor under this Assignment.

Section 4.9 Counterparts. This Assignment may be executed in any number of
counterparts, each of which shall be an original, but all of which together shall constitute but
one instrument.

Section 4.10 Conflict. Notwithstanding anything contained herein to the contrary, in
the event of a conflict between the terms of this Assignment and the Credit Agreement, the terms of
the Credit Agreement shall govern.

Section 4.11  Florida Statutes. The assignment of rents contained in this Assignment
is intended to and does constitute an assignment of rents as contemplated in Florida Statutes
Section 697.07.

[Signatures on Next Page]

 

 

 

Exhibit L

Page 9

IN WITNESS WHEREOF this Assignment of Leases and Rents has been duly executed by Assignor
under seal on the day and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	ASSIGNOR:
	 
	 	 	 	 	 	 	 	 
	 	 	BEACH HOTEL ASSOCIATES LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Morgans Group LLC,	 	 
	 	 	 	 	its Sole Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Morgans Hotel Group Co.,	 	 
	 

	 	 	 	 	 	its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 

(Acknowledgement on Next Page)

 

 

 

	 	 	 	 	 	 	 
	STATE OF                                         

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS:
	COUNTRY OF                                         

	 	 	)	 	 	 

The foregoing instrument was acknowledged before me this       day of                     , 2011 by
                                         as                                         
 of Morgans Group LLC, a Delaware limited liability
company, the sole member of BEACH HOTEL ASSOCIATES, LLC, a Delaware limited liability company, on
behalf of the company. He/she/they personally appeared before me and is/are personally known to me
or produced                                          as identification and did not take an oath.

	 	 	 	 	 
	 

	 	Notary:
	 	 
	[NOTARIAL SEAL]

	 	Print Name:	 	 
	 

	 	NOTARY PUBLIC, STATE OF	 	 
	 

	 	My commission expires	 	 

 

 

 

EXHIBIT A

of

EXHIBIT L

THE PROPERTY

Lots 9, 10, 11 and 12, in Block 29 of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, a subdivision
of Miami-Dade County, Florida, according to the Plat thereof duly recorded upon the Public records
of Miami-Dade County, Florida in Plat Book 2, page 77 thereof;

Also that tract of land shown on plat of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, according
to the Plat thereof recorded in Plat Book 2, page 77, Public Records of Miami-Dade County, Florida,
described as follows:

Begin at the Southeast corner of Lot 9 in Block 29 as shown on plat of FISHER’S FIRST
SUBDIVISION OF ALTON BEACH, according to the Plat thereof recorded in Plat Book 2, page 77, Public
Records of Miami-Dade County, Florida; thence run in a Northerly direction along the Easterly line
of said Block 29 of the aforesaid plat and the Northerly extension thereof a distance of 136.897
feet, more or less, to the point of intersection of the center line of 17th Street; thence run
Easterly along the center line of 17th Street; extended, a distance of 204.17 feet, more or less to
the point of intersection of said center line of 17th Street extended Easterly to the Erosion
Control Line of the Atlantic Ocean said Line recorded in Plat Book 105, page 62, Public Records of
Miami-Dade County, Florida, thence run Southerly along the said Erosion Control Line, a distance of
137.465 feet to the intersection of the extension Easterly of the Southerly Line of referenced Lot
9, thence run Westerly along the Easterly extension of Lot 9, a distance of 200.96 feet, more of
less, to the Point of Beginning.

Less and except, however, that certain portion of such land as was appropriated and taken by
the City of Miami Beach, Florida, in that certain eminent domain or condemnation proceeding a final
judgment for which was recorded in Deed Book 3106, page 96, which covers that portion of the
premises lying northerly of the northerly line of said Block 29 extended easterly to the Erosion
Control Line recorded in Plat Book 105, page 62 of the Public Records of Miami-Dade County,
Florida.

 

 

 

EXHIBIT M

FORM OF ENVIRONMENTAL INDEMNITY AGREEMENT

ENVIRONMENTAL INDEMNITY AGREEMENT

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”) is made as
of July [_________],
2011, by Morgans Group LLC, a Delaware limited liability company (“MG Borrower”) and by
Beach Hotel Associates LLC, a Delaware limited liability company (“Florida Borrower”), each
having an address at c/o Morgans Group LLC, 475 Tenth Avenue, New York, New York 10018 (MG Borrower
and Florida Borrower together, “Indemnitor”) to (a) DEUTSCHE BANK TRUST COMPANY AMERICAS,
in its capacity as Agent (together with its successors and assigns, “Agent”) for itself,
the Issuing Bank and for each of the Lenders from time to time party to that certain Credit
Agreement (as hereinafter defined), and (b) the LENDERS, individually and collectively (with Agent,
collectively, “Indemnitees”).

WHEREAS, pursuant to that certain Credit Agreement dated as of July [_], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among MG Borrower, Florida Borrower, Morgans Hotel Group Co., the lenders from time to time
party thereto as “Lenders” and Agent, Lenders, the Issuing Bank and Agent have agreed to
make available to Indemnitor certain financial accommodations in an aggregate principal amount not
to exceed $100,000,000 on the terms and conditions set forth in the Credit Agreement;

WHEREAS, to induce Lenders, the Issuing Bank and Agent to make, and to continue to make, such
financial accommodations to Indemnitor under the Credit Agreement, Indemnitor desires to execute
this Agreement in favor of Indemnitees.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Indemnitor, Indemnitor agrees as follows:

Section 1. Definitions. All capitalized terms used in this Agreement not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit Agreement. For
purposes hereof, the following terms shall have the following meanings:

“Collateral” has the meaning given that term in the Security Instrument.

“Environmental Damages” means all claims, judgments, damages (including, without
limitation, punitive damages), losses, penalties, fines, liabilities (including strict liability),
Liens, costs and expenses, of whatever kind or nature, contingent or otherwise, matured or
unmatured, foreseeable or unforeseeable, including, without limitation, attorneys’ fees and
disbursements and consultants’ fees, which are incurred at any time as a result of the existence of
any Hazardous Materials in, upon, about or beneath the Collateral or

 

 

 

EXHIBIT M
Page 2

migrating
to or from the Collateral, or the existence of a violation of Environmental Requirements pertaining to the
Collateral, and regardless of whether or not the existence of such Hazardous Materials or the
violation of such Environmental Requirements arose prior to the present ownership or operation
of the Collateral or as a result of the acts or omissions of Indemnitor or any parties related
to Indemnitor, including, without limitation:

(i) claims, judgments, damages, losses, penalties, fines, liabilities, Liens, costs and
expenses of any investigation or defense of any claim, suit or administrative proceeding or
investigation or any directive of any governmental or quasi-governmental agency, department,
commission, board, bureau or instrumentality, whether or not such is ultimately defeated, and of
any settlement or judgment;

(ii) damages for personal injury, or injury to property or natural resources occurring in,
upon, about or off of the Collateral, foreseeable or unforeseeable, including, without limitation,
lost profits, consequential damages, the cost of demolition and rebuilding of any improvements on
real property, interest and penalties;

(iii) diminution in the value of the Collateral, and damages for the loss of or restriction on
the use of or adverse impact on the marketing of the Collateral or any portion thereof;

(iv) any loss resulting from a loss of priority of the Security Instrument due to the
imposition of a Lien against the Collateral; and

(v) reasonable fees incurred for the services of attorneys, consultants, engineers,
contractors, experts, laboratories and all other costs incurred in connection with the
investigation, clean up or remediation of Hazardous Materials or any violation of Environmental
Requirements including, but not limited to, the preparation of any feasibility studies or reports
or the performance of any cleanup, remediation, removal, abatement, containment, closure,
restoration or monitoring work required by any federal, state or local governmental agency or
political subdivision, or reasonably necessary to make full economic use of the Collateral; and

(vi) liability to any Person to indemnify such Person for costs expended in connection with
the items referenced in this definition.

“Environmental Requirements” means all Applicable Laws, orders, approvals, plans,
authorizations, guidelines, concessions, franchises and similar items (whether now existing or
hereafter enacted or promulgated), of all governmental or quasi-governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the United States, states, municipalities and
political subdivisions of any of them and all applicable judicial and administrative and regulatory
decrees, judgments and orders relating to the protection of human health or the environment,
including without limitation:

(i) all requirements, including, but not limited to, those pertaining to reporting, licensing,
permitting, investigation, remediation and removal of emissions, discharges, releases or threatened
releases of Hazardous Materials, chemical substances, pollutants, contaminants or hazardous or
toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the air,
surface water, groundwater or land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials, pollutants, contaminants or hazardous or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature; and

 

 

 

EXHIBIT M
Page 3

(ii) all requirements pertaining to the protection of the health and safety of employees or
the public in connection with exposure to Hazardous Materials.

“Hazardous Materials” has the meaning given such term in the Credit Agreement and in
any event includes, without limitation, any substance:

(i) the presence of which requires notification, investigation or remediation under any
Environmental Requirement; or

(ii) which is or becomes defined as “hazardous”, “toxic”, “noxious”, “waste”, “substance”,
“material”, “pollutant” or “contaminant” or requires remediation under any present or future
Environmental Requirement or amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), Federal Clean Air Act (42
U.S.C. Section 7401 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 5101 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), and the Safe Drinking Water Act (42 U.S.C. Section
300(f) et seq.); or

(iii) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United States, any state of the
United States, or municipality or any political subdivision of any of them; or

(iv) the presence of which on the Collateral causes or threatens to cause a nuisance upon the
Collateral or to adjacent properties or poses or threatens to pose a hazard to the Collateral or to
the health or safety of Persons on or about the Collateral; or

(v) which contains (a) asbestos; (b) gasoline, diesel fuel or other petroleum hydrocarbons or
volatile organic compounds, or (c) polychlorinated biphenyls (PCBs) or urea formaldehyde foam
insulation; or

(vi) which contains or emits radioactive particles, waves or material, including radon gas.

“Hazardous Materials Claims”, means, to the best of Indemnitor’s knowledge, (a) no
enforcement, cleanup, removal or other governmental or regulatory actions have, at any time, been
instituted, contemplated or threatened against the Collateral, or against Indemnitor with respect
to the Collateral, pursuant to any Environmental Requirements; (b) no violation or non-compliance
with Environmental Requirements has occurred with respect to the Collateral at any time; and (c) no
claims have, at any time, been made or threatened by any third party against the
Collateral or against Indemnitor with respect to the Collateral, relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials.

 

 

 

EXHIBIT 
Page 4

“Improvements” has the meaning given such term in the Security Instrument.

“Indemnitees” or “Indemnitee” has the meaning as set forth in the introductory
paragraph of this Agreement, and refers to Agent, the Issuing Bank and all Lenders, their
respective successors and assigns.

“Property” means the real estate or interest therein described in Exhibit A
attached hereto and incorporated herein by this reference, and all rights, titles and interests
appurtenant thereto.

“Security Instrument” means that certain Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Filing of even date herewith from Florida Borrower as grantor
thereunder in favor of Agent as beneficiary thereunder, covering the Collateral and other related
collateral more particularly described therein, and given as security for the repayment of the
Obligations.

Section 2. Intentionally Omitted.

Section 3. Audit. Promptly, upon the written request of Agent, if an Event of
Default exists and Agent has a reasonable good faith belief that violations of the covenants herein
or in the other Loan Documents regarding environmental matters or of Environmental Requirements has
occurred or is reasonably likely to occur, Indemnitor shall provide Agent, at Indemnitor’s expense,
with an environmental site assessment or environmental audit report prepared by an environmental
engineering firm reasonably acceptable to Agent, to assess the presence or absence of any Hazardous
Material and the potential costs in connection with abatement, cleanup or removal of any Hazardous
Material found on, under, at or within the Collateral in violation of the Loan Documents and
Indemnitor shall cooperate in the conduct of such environmental audit.

Section 4. Intentionally Omitted.

Section 5. Remediation Activity. Without Agent’s prior written consent, Indemnitor
shall not take any remedial action in response to the presence of any Hazardous Materials on, under
or about the Collateral, nor enter into any settlement agreement, consent decree, or other
compromise in respect to any Hazardous Materials Claims, which remedial action, settlement, consent
or compromise would reasonably be expected to materially impair the value of Indemnitees’ security
hereunder; provided, however, that Agent’s prior consent shall not be necessary in
the event that the presence of any Hazardous Material on, under, or about the Collateral either
poses an immediate threat to the health, safety or welfare of any individual or is of such a nature
that an immediate remedial response is necessary and it is not possible to obtain such consent
before taking such action, provided that in such event Indemnitor shall notify Agent as
soon as practicable of any action so taken. Agent agrees not to unreasonably withhold its consent,
and such consent shall in any event be given where such consent is required hereunder,
if either (i) a particular remedial action is ordered or requested by a court or governmental
agency of competent jurisdiction, or (ii) Indemnitor establishes to the reasonable satisfaction of
Agent that there is no reasonable alternative to such remedial action which would result in less
impairment of Indemnitees’ security hereunder.

 

 

 

EXHIBIT M
Page 5

Section 6. Participation. Following the occurrence and during the continuance of an
Event of Default, Agent shall have the right to join and participate in, as a party if it so
elects, any legal proceedings or actions initiated by any Person in connection with any Hazardous
Materials Claims and, in such case, to have its and Lenders’ reasonable attorneys’ fees and costs
incurred in connection therewith paid by Indemnitor.

Section 7. Indemnification. Not in limitation of any other obligations of Indemnitor
to indemnify Indemnitees contained in any of the other Loan Documents, Indemnitor hereby
unconditionally and irrevocably indemnifies and agrees to reimburse, defend, pay and hold harmless
Indemnitees and their respective directors, officers, shareholders, employees, successors, assigns,
agents, contractors, subcontractors, experts, licensees, affiliates, lessees, trustees and
invitees, from and against any and all Environmental Damages arising from the presence of Hazardous
Materials in, upon, about or beneath the Collateral or migrating to or from the Collateral, or
arising in any manner whatsoever out of the violation of any Environmental Requirements pertaining
to the Collateral and the activities thereon, or the breach of any warranty or covenant or the
inaccuracy of any representation of Indemnitor contained herein or in any of the other Loan
Documents pertaining to Hazardous Materials or other environmental matters, including, without
limitation, the covenants contained in Section 3.2 of the Security Instrument; provided,
however, that notwithstanding the foregoing, Indemnitor shall have no liability hereunder
to any Indemnitee with respect to any Environmental Damages suffered by any Indemnitee arising from
(a) the gross negligence or willful misconduct of such Indemnitee or (b) Hazardous Materials in,
upon, about or beneath the Collateral or migrating to the Collateral to the extent that such
presence or migration of Hazardous Materials first occurs after the date upon which title to the
Collateral is transferred to Agent, its nominee, any agent or receiver appointed on behalf of Agent
or any third party transferee of the Collateral in the event of foreclosure of the Security
Instrument or conveyance of the Collateral in lieu thereof, if such presence or migration does not
arise from the acts or omissions of either Indemnitor or its respective affiliates. The
obligations of Indemnitor under this Section shall include, but not be limited to, the burden and
expense of defending all claims, suits and administrative proceedings or investigations or any
directives of any governmental or quasi-governmental agency, department, commission, board, bureau
or instrumentality even if such claims, suits or proceedings are groundless, false or fraudulent
and conducting all negotiations of any description, and paying and discharging, when and as the
same become due, any and all judgments, penalties or other sums due against any Indemnitee.

 

 

 

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Page 6

Section 8. Termination; Survival. Upon satisfaction of the conditions for the
termination of the Credit Agreement as provided in Section 13.9 of the Credit Agreement, this
Agreement shall terminate. Notwithstanding any termination of this Agreement, the obligations of
Indemnitor under Section 7 of this Agreement shall survive (i) the repayment of all Obligations and
other sums due under the Credit Agreement and other Loan Documents; (ii) the
release of the Collateral or any portion thereof from the lien of the Security Instrument;
(iii) the reconveyance or foreclosure of the Collateral under the Security Instrument
(notwithstanding that all or a portion of the obligations secured by the Security Instrument shall
have been discharged thereby); (iv) the acquisition of the Collateral by any Indemnitee or any
nominee or agent thereof; and/or (v) the transfer of all or any of any Indemnitee’s rights in and
to the Obligations and/or the Collateral; and shall continue to be the personal liability,
obligation and indemnification of Indemnitor, binding upon Indemnitor, forever.

Section 9. No Impairment of Liability. The liability of Indemnitor under Section 7
of this Agreement shall in no way be limited or impaired by (i) any extensions of time for
performance required by any of the Loan Documents, (ii) any sale, assignment, or foreclosure of the
Obligations or Security Instrument or any sale or transfer of all or part of the Collateral, (iii)
any exculpatory provision contained in any of the Loan Documents limiting recourse to the
Collateral or to any other security, or limiting Indemnitees’ rights to a deficiency judgment
against Indemnitor, (iv) the accuracy or inaccuracy of the representations and warranties made
under any of the Loan Documents, (v) the release of Indemnitor or any other Person from performance
or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan
Documents by operation of Applicable Law, Indemnitee’s voluntary act, or otherwise, (vi) the
release or substitution in whole or in part of any security for the Obligations or Loan Documents,
or (vii) Agent’s failure to record or file any Loan Document (or Agent’s improper recording or
filing of any such Loan Documents) or to otherwise perfect, protect, secure or insure any Lien
given as security for the Obligations; and, in any such case, whether with or without notice to
Indemnitor and with or without consideration.

Section 10. No Effect. The obligations of Indemnitor hereunder (i) shall not be
affected by any investigation by or on behalf of Agent or Lenders or by any information which Agent
or Lenders may have obtained with respect to the matters indemnified against by the Indemnitor
hereunder and (ii) are separate and distinct from its obligations under the other Loan Documents.

Section 11. Inconsistent Provisions. The provisions of this Agreement shall govern
and control over any inconsistent provision of any other Loan Document, including, without
limitation, any exculpatory or non-recourse provisions contained in any of the Loan Documents, it
being expressly understood and agreed that any exculpatory or non-recourse provisions contained in
any Loan Document shall not apply to the obligations of Indemnitor under this Agreement.

Section 12. Counsel. Indemnitor agrees to pay to Indemnitee expenses incurred in
connection with this Agreement in accordance with Section 13.2 of the Credit Agreement.

Section 13. Indemnitor’s Waivers. Indemnitor waives any right or claim of right to
cause a marshaling of Indemnitor’s assets or to cause Indemnitees to proceed against any of the
security for the Obligations before proceeding under this Agreement against the Indemnitor.
Indemnitor expressly waives and relinquishes all rights and remedies accorded by Applicable Law to
indemnitors or

 

 

 

EXHIBIT M
Page 7

guarantors,
except any rights of subrogation which Indemnitor may have, provided that the indemnity provided for hereunder shall neither be contingent upon
the existence of any such rights of subrogation nor subject to any claims or defenses whatsoever
which may be asserted in connection with the enforcement or attempted enforcement of such
subrogation rights including, without limitation, any claim that such subrogation rights were
abrogated by any acts of Indemnitees. Indemnitor hereby agrees to postpone the exercise of any and
all rights of subrogation to the rights of Agent, the Issuing Bank or Lenders against the
Indemnitor hereunder and any rights of subrogation to any collateral securing the Obligations until
the Obligations shall have been paid in full in accordance with Section 13.9 of the Credit
Agreement.

Section 14. Notice of Claims and Inquiries. Indemnitor shall promptly notify Agent
upon receipt of any written inquiry, notice, claim, charge, cause of action or demand or upon
receipt of any verbal inquiry, notice, claim, charge, cause of action or demand of any governmental
authority or quasi governmental authority or any other type of verbal inquiry, notice, claim,
charge, cause of action or demand pertaining to Hazardous Materials Claims that could reasonably be
expected to result in Default under the Credit Agreement, including, without limitation, any notice
of inspection, abatement or noncompliance, stating the nature and basis of such inquiry or
notification. Indemnitor shall promptly deliver to Agent any and all documentation or records as
Agent may reasonably request in connection with such notice or inquiry, and shall keep Agent
advised of any subsequent material developments.

Section 15. Indemnitor Participation. If any action shall be brought against any
Indemnitee, then after Agent notifies Indemnitor thereof, Indemnitor shall be entitled to
participate therein, and to assume the defense thereof at the expense of Indemnitor with counsel
reasonably satisfactory to such Indemnitee to settle and compromise any such claim or action;
provided, however, that such Indemnitee may elect to be represented by separate
counsel, at Indemnitee’s expense, and in any event no settlement or compromise of any claim or
action shall be effected without the consent of such Indemnitee, which consent shall not be
conditioned, withheld or delayed if the settlement or compromise does not impose any liability on
Indemnitee or any other party indemnified hereunder and shall not otherwise be unreasonably
conditioned, withheld or delayed.

Section 16. No Discharge. No dissolution, liquidation, insolvency, bankruptcy or
other matter with respect to Indemnitor shall affect this Agreement or any of Indemnitor’s
obligations hereunder.

Section 17. Severability. This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all Applicable Law. If any provision of any of this
Agreement or the application thereof to any Person or circumstance shall, for any reason and to any
extent, be invalid or unenforceable, then neither the remainder of the instrument in which such
provision is contained nor the application of such provision to other persons or circumstances nor
the other instruments referred to hereinabove shall be affected thereby, but rather, shall be
enforced to the greatest extent permitted by Applicable Law.

 

 

 

EXHIBIT M
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Section 18. Notice to Parties. Unless otherwise provided herein, communications
provided for hereunder shall be in writing and shall be given in accordance with the applicable
provisions of the Credit Agreement.

SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

Section 20. Headings. The Section and Subsection entitlements hereof are inserted
for convenience of reference only and shall in no way alter, modify or define, or be used in
construing, the text of such Sections or Subsections.

Section 21. Modification. This Agreement may only be amended, revised, waived or
otherwise modified by a written instrument or instruments as provided in Section 13.6. of the
Credit Agreement.

Section 22. Successors and Assigns. The covenants, agreements and obligations of
Indemnitor hereunder shall be binding upon Indemnitor and its respective legal representatives,
successors and assigns, and the rights, remedies and benefits of Indemnitees hereunder shall inure
to the benefit of Indemnitees and their respective legal representatives, successors and assigns.
There are no parties who or which are intended to be a third party beneficiary of any benefit
conferred under this Agreement, except for the legal representatives, successors and assigns of
Indemnitees.

Section 23. Loan Document. This Agreement shall constitute a Loan Document.

Section 24. Joint and Several Liability. The obligations and agreements of
Indemnitor hereunder are joint and several.

Section 25. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together shall constitute but
one instrument.

[Signatures on Next Page]

 

 

 

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IN WITNESS WHEREOF, this Environmental Indemnity Agreement has been duly executed and
delivered by Indemnitor under seal as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	INDEMNITOR:	 	 
	 
	 	 	 	 	 	 
	 	 	MORGANS GROUP LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	BEACH HOTEL ASSOCIATES LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

 

 

EXHIBIT A

to

EXHIBIT M

THE PROPERTY

Lots 9, 10, 11 and 12, in Block 29 of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, a subdivision
of Miami-Dade County, Florida, according to the Plat thereof duly recorded upon the Public records
of Miami-Dade County, Florida in Plat Book 2, page 77 thereof;

Also that tract of land shown on plat of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, according
to the Plat thereof recorded in Plat Book 2, page 77, Public Records of Miami-Dade County, Florida,
described as follows:

Begin at the Southeast corner of Lot 9 in Block 29 as shown on plat of FISHER’S FIRST
SUBDIVISION OF ALTON BEACH, according to the Plat thereof recorded in Plat Book 2, page 77, Public
Records of Miami-Dade County, Florida; thence run in a Northerly direction along the Easterly line
of said Block 29 of the aforesaid plat and the Northerly extension thereof a distance of 136.897
feet, more or less, to the point of intersection of the center line of 17th Street; thence run
Easterly along the center line of 17th Street; extended, a distance of 204.17 feet, more or less to
the point of intersection of said center line of 17th Street extended Easterly to the Erosion
Control Line of the Atlantic Ocean said Line recorded in Plat Book 105, page 62, Public Records of
Miami-Dade County, Florida, thence run Southerly along the said Erosion Control Line, a distance of
137.465 feet to the intersection of the extension Easterly of the Southerly Line of referenced Lot
9, thence run Westerly along the Easterly extension of Lot 9, a distance of 200.96 feet, more of
less, to the Point of Beginning.

Less and except, however, that certain portion of such land as was appropriated and taken by
the City of Miami Beach, Florida, in that certain eminent domain or condemnation proceeding a final
judgment for which was recorded in Deed Book 3106, page 96, which covers that portion of the
premises lying northerly of the northerly line of said Block 29 extended easterly to the Erosion
Control Line recorded in Plat Book 105, page 62 of the Public Records of Miami-Dade County,
Florida.

 

 

 

EXHIBIT O

FORM OF ASSIGNMENT OF MANAGEMENT AGREEMENT

AND SUBORDINATION OF MANAGEMENT FEES

THIS ASSIGNMENT OF MANAGEMENT AGREEMENT AND SUBORDINATION OF MANAGEMENT FEES (this
“Assignment”) is made as of July [_______], 2011, by BEACH HOTEL ASSOCIATES LLC, a Delaware
limited liability company (“Grantor”), having a mailing address of c/o Morgans Group LLC,
475 Tenth Avenue, New York, New York 10018, and MORGANS HOTEL GROUP MANAGEMENT LLC (“Manager”),
having an address of 475 Tenth Avenue, New York, New York 10018, in favor of DEUTSCHE BANK TRUST
COMPANY AMERICAS, in its capacity as Agent (together with its successors and assigns,
“Agent” or “Beneficiary”) for itself, the Issuing Bank and each of the Lenders from
time to time party to that certain Credit Agreement (as hereinafter defined), Agent having as its
address at 60 Wall Street, New York, New York 10005.

WHEREAS, pursuant to that certain Credit Agreement dated as of
July [_______], 2011 as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Morgans Group LLC (the “MG Borrower”), Grantor, the lenders from time to time
party thereto (“Lenders”) and Agent, Lenders have agreed to make available to Grantor and
the MG Borrower certain financial accommodations in an aggregate principal amount not to exceed
$100,000,000 on the terms and conditions set forth in the Credit Agreement;

WHEREAS, pursuant to that certain Hotel Management Agreement, dated as of June 23, 2011 (as
amended, restated, supplemented or otherwise modified from time to time, the “Management
Agreement”), by and between Grantor and Manager, Grantor has employed Manager to operate and
manage the Property; and

WHEREAS, to induce Lenders to make, and to continue to make, such financial accommodations to
Grantor under the Credit Agreement, Grantor desires to assign to Agent, for its benefit and the
benefit of the Issuing Bank and Lenders, all of its right, title and interest in, to and under the
Management Agreement on the terms hereof to secure, among other things, Grantor’s obligations under
the Credit Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Grantor, Grantor agrees as follows:

Section 1. Definitions. Terms not otherwise defined herein have the respective
meanings given them in the Credit Agreement. Terms defined in the Uniform Commercial Code as in
effect in the State of New York have the respective meanings given such terms therein. In
addition, as used in this Assignment, the following terms shall have the following meanings:

“Assignment of Leases and Rents” has the meaning given such term in the Security
Instrument.

“Collateral” has the meaning given such term in the Security Instrument.

 

 

 

EXHIBIT O
Page 2

“Event of Default” means the occurrence of an “Event of Default” as defined in
the Credit Agreement, or as defined in the Security Instrument.

“Management Agreement” has the meaning given such term in the recitals above.

“Management Fees” means any and all fees payable by Grantor to Manager pursuant to the
terms of the Management Agreement.

“Manager” has the meaning given such term in the recitals above.

“Property” means the real estate or interest therein described in Exhibit A
attached hereto and incorporated herein by this reference, and all rights, titles and interests
appurtenant thereto.

“Security Instrument” means that certain Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Filing of even date herewith from Grantor, as grantor thereunder, to
Agent, as beneficiary thereunder, covering the Property and other related collateral more
particularly described therein, and given as security for the repayment of the Obligations.

Section 2. Assignment of Management Agreement. As security for the payment and
performance of the Obligations, Grantor hereby assigns to Agent, for its benefit and the benefit of
the Issuing Bank and Lenders, and grants to Agent, for its benefit and the benefit of the Issuing
Bank and Lenders, a security interest in all of Grantor’s right, title and interest in, to and
under the Management Agreement, including without limitation, (a) all rights of Grantor to damages
arising out of, or for, breach or default in respect thereof and (b) all rights of Grantor to
perform and exercise all rights and remedies thereunder.

Section 3. Subordination of Management Fees. The Management Fees and all rights and
privileges of Manager to the Management Fees are hereby and shall at all times continue to be
subject and unconditionally subordinate in all respects to the Lien and payment of the Security
Instrument, the Obligations and the Loan Documents and to any renewals, extensions, modifications,
assignments, replacements, or consolidations thereof and the rights, privileges, and powers of
Agent and Lenders thereunder.

Section 4. Termination. At such time as the Credit Agreement has terminated in
accordance with its terms and the Security Instrument is fully released or assigned of record, this
Assignment shall terminate.

Section 5. Estoppel. Manager represents and warrants, as of the date hereof, that
(a) the Management Agreement is in full force and effect and has not been modified, amended or
assigned with respect to the Property, (b) neither Manager nor Grantor is in default under any of
the terms, covenants or provisions of the Management Agreement with respect to the Property and
Manager knows of no event which constitutes, or with the passage of time or the giving of notice or
both would constitute, an event of default under the Management Agreement with respect to the
Property, (c) neither Manager nor Grantor has commenced any action or given or
received any notice for the purpose of terminating the Management Agreement with respect to
the Property, (d) the Management Fees have been paid in full with respect to the Property for the
period ending June 30, 2011 and (e) a true, correct and complete copy of the Management Agreement
is attached hereto as Exhibit A.

 

 

 

EXHIBIT O
Page 3

Section 6. Grantor’s Covenants. Grantor hereby covenants with Agent that during the
term of this Assignment: (a) except as expressly permitted by the Credit Agreement, Grantor shall
not terminate or amend any of the terms or provisions of the Management Agreement; and (b) Grantor
shall, in the manner provided for in this Assignment, give notice to Agent of any notice or
information that Grantor receives which indicates that Grantor is in default of the requirements of
Section 8.2 of the Credit Agreement as they relate to the Management Agreement, that Manager is
terminating the Management Agreement or that Manager is otherwise discontinuing its management of
the Property. In accordance with Section 10.10 of the Credit Agreement, Grantor may terminate the
Management Agreement pursuant to the terms contained therein provided that (i) Grantor
enters into a replacement management agreement with a property manager acceptable to Agent, in
Agent’s reasonable discretion; and (ii) such replacement property manager executes an assignment
and subordination agreement in the form of this Assignment or other form acceptable to Agent.

Section 7. Agreement by Grantor and Manager. Grantor and Manager hereby agree (a)
that while a Trigger Event exists, all Receipts shall be applied in accordance with Section 3.4 of
the Credit Agreement and (b) that while an Event of Default exists, at the option of Agent
exercised by written notice to Grantor and Manager: (i) Manager shall not collect or be entitled to
any Management Fee and/or (ii) Agent may exercise its rights under this Assignment and, in
connection with the exercise of remedies pursuant to Section 11.2(a) of the Credit Agreement, may
immediately terminate the Management Agreement and require Manager to transfer its responsibility
for the management of the Property to a management company selected by Agent in Agent’s sole and
absolute discretion.

Section 8. Consent and Agreement by Manager. Manager hereby acknowledges and
consents to this Assignment and agrees that Manager will act in conformity with the provisions of
this Assignment and the rights of Agent and Lenders hereunder or otherwise related to the
Management Agreement. If the responsibility for the management of the Property is transferred from
Manager in accordance with the provisions hereof, Manager shall, and hereby agrees to, fully
cooperate in transferring its responsibility to a new management company and effectuate such
transfer no later than 30 days from the date the Management Agreement is terminated. Further,
Manager hereby agrees (a) not to contest or impede the exercise by Agent and Lenders of any right
they have under or in connection with this Assignment and (b) that Manager shall give at least 30
days prior written notice to Agent of its intention to terminate the Management Agreement or
otherwise discontinue its management of the Property.

Section 9. Agent’s Agreement. So long as no Event of Default exists, any sums due to
Grantor under the Management Agreement may be paid directly to Grantor.

 

 

 

EXHIBIT O
Page 4

Section 10. Agent and Lenders Not Obligated. Notwithstanding any other provision of
this Assignment to the contrary, Grantor and Manager expressly acknowledge and agree that Grantor
and Manager shall continue to observe and perform all of the conditions and obligations contained
in the Management Agreement to be observed and performed by them, and that neither this Assignment,
nor any action taken pursuant hereto, shall cause Agent or Lenders to be under any obligation or
liability in any respect whatsoever to any party to any Management Agreement or to any other Person
for the observance or performance of any of the representations, warranties, conditions, covenants,
agreements or terms therein contained.

Section 11. Intentionally Omitted.

Section 12. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS ASSIGNMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS ASSIGNMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS ASSIGNMENT, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. EACH OF THE PARTIES HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY
LEGAL ACTION PROCEEDING WITH RESPECT TO THIS ASSIGNMENT BROUGHT IN ANY OF THE AFOREMENTIONED
COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY. EACH OF THE PARTIES HERETO
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN SECTION 13 BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER THAT SERVICE OF PROCESS WAS IN ANY WAY
INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT, ANY LENDER OR THE
HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST MANAGER IN ANY OTHER JURISDICTION.

 

 

 

EXHIBIT O
Page 5

(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS ASSIGNMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND
HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS ASSIGNMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

Section 13. Notice to Parties. Notices, requests and other communications required or
permitted hereunder shall be in writing and shall be made by personal delivery, telecopy or
certified or registered mail, return receipt requested, if to: (i) Manager, at the addresses and in
the manner set forth for any Borrower in Section 13.1 of the Credit Agreement and (ii) Grantor or
Agent, at the addresses and in the manner set forth in Section 13.1 of the Credit Agreement.

Section 14. Amendment. This Assignment, and any provisions hereof, may only be
amended, supplemented, waived, or otherwise modified by an agreement in writing signed by the party
against whom enforcement thereof is sought.

Section 15. Successors and Assigns. Subject to Section 13.5. of the Credit
Agreement, all of the terms of this Assignment shall apply to, be binding upon and inure to the
benefit of the parties thereto, their successors, assigns, heirs and legal representatives, and all
other Persons claiming by, through or under them.

Section 16. Severability. This Assignment is intended to be performed in accordance
with, and only to the extent permitted by, all applicable legal requirements. If any provision of
any of this Assignment or the application thereof to any person or circumstance shall, for any
reason and to any extent, be invalid or unenforceable, then neither the remainder of the instrument
in which such provision is contained nor the application of such provision to other persons or
circumstances nor the other instruments referred to hereinabove shall be affected thereby, but
rather, shall be enforced to the greatest extent permitted by Applicable Law.

Section 17. Headings. The Section and Subsection entitlements hereof are inserted
for convenience of reference only and shall in no way alter, modify or define, or be used in
construing, the text of such Section or Subsection.

 

 

 

EXHIBIT O
Page 6

Section 18. Counterparts. This Assignment may be executed in any number of
counterparts, each of which shall be an original, but all of which together shall constitute but
one
instrument. The failure of any party hereto to execute this Assignment, or any counterpart
hereof, shall not relieve the other signatories from their obligations hereunder.

Section 19. Number and Gender. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and the singular form
of nouns and pronouns shall include the plural and vice versa.

[Signatures on Next Page]

 

 

 

EXHIBIT O
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IN WITNESS WHEREOF the undersigned have executed this Assignment of Management Agreement and
Subordination of Management Fees as of the date and year first written above.

	 	 	 	 	 	 	 
	 	 	GRANTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	BEACH HOTEL ASSOCIATES LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	MANAGER:	 	 
	 
	 	 	 	 	 	 
	 	 	MORGANS HOTEL GROUP MANAGEMENT LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Acknowledged:	 	 
	 
	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY 
AMERICAS, as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

 

 

EXHIBIT O
Page 8

EXHIBIT A

MANAGEMENT AGREEMENT

 

 

 

EXHIBIT P

FORM OF PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (this “Agreement”) dated as of
July [_______], 2011 executed and
delivered by MORGANS GROUP LLC (the “Pledgor”) in favor of DEUTSCHE BANK TRUST COMPANY AMERICAS, as
Agent (the “Pledgee”) for itself, the Issuing Bank and each of the Lenders identified
below.

WHEREAS, pursuant to that certain Credit Agreement, dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among the Pledgor, Beach Hotel Associates LLC (the “Florida Borrower”), Morgans Hotel
Group Co., the lenders from time to time party thereto as “Lenders” and the Pledgee, the
Lenders, the Issuing Bank and the Pledgee have agreed to make available to the Pledgor and the
Florida Borrower certain financial accommodations on the terms and conditions contained in the
Credit Agreement;

WHEREAS, the Florida Borrower and the Pledgor, though separate legal entities, are mutually
dependent on each other in the conduct of their respective businesses and have determined it to be
in their mutual best interests to obtain financing from the Lenders and the Pledgee through their
collective efforts;

WHEREAS, the Pledgor acknowledges that it will receive direct and indirect benefits from the
Lenders and the Pledgee making such financial accommodations available to the Borrower and the
Florida Borrower under the Credit Agreement; and

WHEREAS, it is a condition precedent to the extension of such financial accommodations under
the Credit Agreement that the Pledgor executes and delivers this Agreement, among other things, to
grant to the Pledgee for the benefit of the Lenders and the Issuing Bank a security interest in the
Collateral as security for the Secured Obligations.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the
parties, the parties agree as follows:

Section 1. Definitions. Terms not otherwise defined herein are used herein with the
respective meanings given them in the Credit Agreement. Terms defined in the Uniform Commercial
Code as in effect in the State of New York shall have the respective definitions as so defined. In
addition, as used in this Agreement:

“Bankruptcy Code” means United States Bankruptcy Code (11 U.S.C. Section 101
et seq.), as in effect from time to time, and any successor statute thereto.

“Issuer” means with respect to an Equity Interest, the Person who issued such Equity
Interest and shall include each of the Persons identified as an Issuer on Schedule 1 attached
hereto (or any addendum or supplement thereto), and any successors thereto, whether by merger or
otherwise.

 

 

 

Exhibit P

Page 2

“Proceeds” means all proceeds (including proceeds of proceeds) of any of the
Collateral including all: (a) rights, benefits, distributions, premiums, profits, dividends,
interest, cash, instruments, documents of title, accounts, contract rights, inventory, equipment,
general intangibles, payment intangibles, deposit accounts, chattel paper, and other property from
time to time received, receivable, or otherwise distributed in respect of or in exchange for, or as
a replacement of or a substitution for, any of the Collateral, or proceeds thereof (including any
cash, Equity Interests, or other instruments issued after any recapitalization, readjustment,
reclassification, merger or consolidation with respect to the Issuers and any security
entitlements, as defined in Section 8-102(a)(17) of the UCC, with respect thereto); (b)
“proceeds,” as such term is defined in Section 9-102(a)(64) of the UCC; (c) proceeds of any
insurance, indemnity, warranty, or guaranty (including guaranties of delivery) payable from time to
time with respect to any of the Collateral, or proceeds thereof; and (d) payments (in any form
whatsoever) made or due and payable to the Pledgor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral, or proceeds thereof.

“Secured Obligations” means, the Obligations (as defined in the Credit Agreement).

“UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.

Section 2. Pledge. As security for the prompt performance and payment in full of the
Secured Obligations, the Pledgor hereby pledges to the Pledgee for the benefit of itself, the
Issuing Bank and each of the Lenders a security interest in, all of the Pledgor’s right, title and
interest in, to and under the following, whether now existing or hereafter from time to time
acquired (collectively, the “Collateral”):

(a) all Equity Interests now or hereafter owned, acquired or held by the Pledgor in the
Florida Borrower, including without limitation, the Equity Interests described in Schedule 1
attached hereto;

(b) all payments due or to become due to the Pledgor in respect of any of the
foregoing;

(c) all of the Pledgor’s claims, rights, powers, privileges, authority, puts, calls,
options, security interests, liens and remedies, if any, in respect of any of the foregoing;

(d) all of the Pledgor’s rights to exercise and enforce any and every right, power,
remedy, authority, option and privilege of the Pledgor relating to any of the foregoing
including, without limitation, any power to (i) terminate, cancel or modify any agreement,
(ii) execute any instruments and to take any and all other action on behalf of and in the
name of the Pledgor in respect of any of the foregoing and the applicable Issuer thereof,
(iii) exercise voting rights or make determinations, (iv) exercise any election (including,
but not limited to, election of remedies), (v) exercise any “put”, right
of first offer or first refusal, or other option, (vi) exercise any right of redemption
or repurchase, (vii) give or receive any notice, consent, amendment, waiver or approval,
(viii) demand, receive, enforce, collect or receipt for any of the foregoing, (ix) enforce
or execute any checks, or other instruments or orders, and (x) file any claims and to take
any action in connection with any of the foregoing;

 

 

 

Exhibit P

Page 3

(e) all certificates and instruments representing or evidencing any of the foregoing;

(f) all other rights, titles, interests, powers, privileges and preferences pertaining
to any of the foregoing; and

(g) all Proceeds of any of the foregoing.

Section 3. Representations and Warranties. The Pledgor hereby represents and
warrants to the Pledgee, the Issuing Bank and the Lenders as follows:

(a) Title and Liens. The Pledgor is, and will at all times continue to be, the
legal and beneficial owner of the Collateral of the Pledgor. None of the Collateral is
subject to any adverse claim (as defined in the UCC) or other Lien other than Permitted
Liens. No Person has control of any of the Collateral other than the Pledgee.

(b) Authorization. The Pledgor has the right and power, and has taken all
necessary action to authorize it, to execute, deliver and perform this Agreement in
accordance with its terms. The execution, delivery and performance of this Agreement in
accordance with its terms, including the granting of the security interest hereunder, do not
and will not, by the passage of time, the giving of notice, or both: (i) require any
governmental approval (other than those that have been obtained) or violate any Applicable
Law relating to the Pledgor; (ii) violate, result in a breach of or constitute a default
under the organizational documents of the Pledgor, or any indenture, agreement or other
instrument to which the Pledgor is a party or by which it or any of the Collateral of the
Pledgor or its other property may be bound; or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any of the Collateral of the Pledgor or the
Pledgor’s other property whether now owned or hereafter acquired.

(c) Validity and Perfection of Security Interest. This Agreement is effective
to create in favor of the Pledgee, for the benefit of itself, the Issuing Bank and the
Lenders, a legal, valid and enforceable security interest in the Collateral. Such security
interest will be perfected (i) with respect to any such Collateral that is a “security” (as
such term is defined in the UCC) and is evidenced by a certificate, when such Collateral is
delivered to the Pledgee with duly executed stock powers with respect thereto, (ii) with
respect to any such Collateral that is a “security” (as such term is defined in the UCC) but
is not evidenced by a certificate, when the UCC financing statement in appropriate form is
filed in the appropriate filing office in the jurisdiction of organization of the Pledgor or
when control is established by the Pledgee over such interests in accordance with the
provision of Section 8-106 of the UCC, or any successor provision, and (iii)
with respect to any such Collateral that is not a “security” (as such term is defined in the
UCC), when the UCC financing statement in the appropriate form is filed in the appropriate
filing office in the jurisdiction of organization of the Pledgor. Except as set forth in
this subsection, no action is necessary to perfect the security interest granted by the
Pledgor under this Agreement.

 

 

 

Exhibit P

Page 4

(d) Pledged Equity Interests. The information set forth on Schedule 1 hereto
with respect to the Collateral of the Pledgor is true and correct.

(e) Name, Organization, Etc. The Pledgor’s exact legal name, type of legal
entity, jurisdiction of formation, organizational identification number and location of its
chief executive office are as set forth on Schedule 1 and such Schedule also lists all
jurisdictions of incorporation, legal names and locations of Pledgor’s chief executive
office for the five years preceding the date hereof.

(f) Authorization of Equity Interest. All Equity Interests which constitute
Collateral are duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights of any Person.

(g) Interests in Partnerships and LLCs. None of the Collateral consisting of
an interest in a partnership or in a limited liability company (i) is dealt in or traded on
a securities exchange or in securities markets, (ii) by its terms expressly provides that it
is a security governed by Article 8 of the UCC, (iii) is an investment company
security, (iv) otherwise constitutes a security or (v) constitutes a financial asset.

Section 4. Covenants. The Pledgor hereby unconditionally covenants and agrees as follows:

(a) No Liens; No Sale of Collateral. The Pledgor will not create, assume,
incur or permit or suffer to exist any adverse claim or other Lien on any of the Collateral
other than Permitted Liens and shall not enter into any document, instrument or agreement
(other than this Agreement or the other Loan Documents) which prohibits or purports to
prohibit the creation or assumption of any Lien on any of the Collateral. The Pledgor will
not sell, lease, lend, assign, transfer or otherwise dispose of all or any portion of the
Collateral (or any interest therein).

(b) Change of Name, Etc. Without giving the Pledgee at least 30-days’ prior
written notice and to the extent such action is not otherwise prohibited by any of the Loan
Documents, the Pledgor shall not: (i) change its name; (ii) reorganize or otherwise become
formed under the laws of another jurisdiction or (iii) become bound by a security agreement
of another Person under Section 9-203(d) of the UCC.

(c) Defense of Title. The Pledgor will warrant and defend its title to and
ownership of the Collateral of the Pledgor, at its sole cost and expense, against the claims
of all Persons.

 

 

 

Exhibit P

Page 5

(d) Delivery of Certificates, Etc. If the Pledgor shall receive any
certificate (including, without limitation, any certificate representing a stock and/or
liquidating dividends, other distributions in property, return of capital or other
distributions made on or in respect of the Collateral, whether resulting from a subdivision,
combination or reclassification of outstanding Equity Interests or received in exchange for
Collateral or any part thereof or as a result of any merger, consolidation, acquisition or
other exchange of assets or on the liquidation, whether voluntary or involuntary, or
otherwise), instrument, option or rights in respect of any Collateral, whether in addition
to, in substitution of, as a conversion of, or in exchange for, any Collateral, or otherwise
in respect thereof, the Pledgor shall hold the same in trust for the Pledgee, the Issuing
Bank and the Lenders and promptly deliver such certificate or instrument to the Pledgee in
the exact form received, duly indorsed by the Pledgor to the Pledgee, if required, together
with an undated stock power covering such certificate (or other appropriate instrument of
transfer) duly executed in blank by the Pledgor and with, if the Pledgee so requests,
signature guaranteed, to be held by the Pledgee, subject to the terms of this Agreement, as
Collateral.

(e) Uncertificated Securities. With respect to any Collateral that constitutes
a security and is not represented or evidence by a certificate or instrument, the Pledgor
shall cause the Issuer thereof either (i) to register the Pledgee as the registered owner of
such security or (ii) to agree in writing with the Pledgee and the Pledgor that such Issuer
will comply with the instructions with respect to such security originated by the Pledgee
without further consent of the Pledgor.

(g) Additional Shares. The Pledgor shall not permit any Issuer to issue any
additional Equity Interests unless such Equity Interests are pledged hereunder as provided
herein. Further, the Pledgor shall not permit any Issuer to amend or modify its articles or
certificate of incorporation, articles of organization, certificate of limited partnership,
by-laws, operating agreement, partnership agreement or other comparable organizational
instrument in a manner which would adversely affect the voting, liquidation, preference or
other similar rights of any holder of the Equity Interests pledged hereunder.

(h) Issuer Acknowledgment. The Pledgor shall, upon the Pledgee’s request
therefor, cause each Issuer of Collateral pledged by the Pledgor and which Issuer is not a
Pledgor itself, to execute and deliver to the Pledgee an Acknowledgment and Consent
substantially in the form of Schedule 2 attached hereto.

Section 5. Voting Rights; Dividends, etc.

(a) So long as no Event of Default exists:

(i) the Pledgor shall be entitled to exercise any and all voting and/or
consensual rights and powers accruing to an owner of the Collateral or any part
thereof for any purpose not inconsistent with the terms and conditions of any of
the Loan Documents or any agreement giving rise to or otherwise relating to any
of the Secured Obligations; and

 

 

 

Exhibit P

Page 6

(ii) the Pledgor shall be entitled to retain and use any and all cash dividends
or interest paid on the Collateral in the normal course of the applicable Issuer’s
business, but any and all stock and/or liquidating dividends, other distributions in
property, return of capital or other distributions made on or in respect of the
Collateral, whether resulting from a subdivision, combination or reclassification of
outstanding Equity Interests or received in exchange for Collateral or any part
thereof or as a result of any merger, consolidation, acquisition or other exchange
of assets or on the liquidation, whether voluntary or involuntary, or otherwise,
shall be and become part of the Collateral and, if received by the Pledgor, shall
forthwith be delivered to the Pledgee.

The Pledgee agrees to execute and deliver to the Pledgor, or cause to be executed and
delivered to the Pledgor, as appropriate, at the sole cost and expense of the Pledgor, all such
proxies, powers of attorney, dividend orders and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the voting and/or consensual rights and
powers which the Pledgor is entitled to exercise pursuant to clause (i) above and/or to receive the
dividends which the Pledgor is authorized to retain pursuant to clause (ii) above.

(b) If an Event of Default exists, all rights of the Pledgor to exercise the voting
and/or consensual rights and powers which the Pledgor is entitled to exercise pursuant to
subsection (a)(i) above and/or to receive the dividends and distributions which the Pledgor
is authorized to receive and retain pursuant to subsection (a)(ii) above shall cease, and
all such rights thereupon shall become immediately vested in the Pledgee, which shall have
the sole and exclusive right and authority to exercise such voting and/or consensual rights
and powers which the Pledgor shall otherwise be entitled to exercise pursuant to subsection
(a)(i) above and/or to receive and retain the dividends and distributions which the Pledgor
shall otherwise be authorized to retain pursuant to subsection (a)(ii) above. Any and all
money and other property paid over to or received by the Pledgee pursuant to the provisions
of this subsection (b) shall be retained by the Pledgee as additional Collateral hereunder
and shall be applied in accordance with the provisions of Section 8. If the Pledgor
shall receive any dividends, distributions or other property which it is not entitled to
receive under this Section, the Pledgor shall hold the same in trust for the Pledgee, the
Issuing Bank and the Lenders, without commingling the same with other funds or property of
or held by the Pledgor, and shall promptly deliver the same to the Pledgee, in the identical
form received, together with any necessary endorsements.

 

 

 

Exhibit P

Page 7

Section 6. Remedies.

In addition to any right or remedy that the Pledgee, the Issuing Bank or any Lender may have
under the other Loan Documents or otherwise under Applicable Law, if an
Event of Default shall exist, the Pledgee may exercise any and all the rights and remedies of
a secured party under the UCC and may otherwise sell, assign, transfer, endorse and deliver the
whole or, from time to time, any part of the Collateral at a public or private sale or on any
securities exchange, for cash, upon credit or for other property, for immediate or future delivery,
and for such price or prices and on such terms as the Pledgee in its discretion shall deem
appropriate. With respect to any Collateral held or maintained with a securities intermediary, the
Pledgee shall be entitled to notify such securities intermediary that such securities intermediary
should follow the entitlement orders of the Pledgee and that such securities intermediary should no
longer follow entitlement orders of the Pledgor, without further consent of the Pledgee. To the
extent permitted by Applicable Law, the Pledgee shall have the right (in its sole and absolute
discretion) to register any Equity Interests which are part of the Collateral in its own name as
pledgee or the name of its nominee (as Pledgee or as sub-agent), endorsed or assigned in blank or
in favor of the Pledgee. The Pledgee shall be authorized at any sale (if it deems it advisable to
do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree
that they are purchasing the Collateral for their own account in compliance with the Securities Act
and any other Applicable Law and upon consummation of any such sale the Pledgee shall have the
right to assign, transfer, endorse and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each purchaser at any sale of Collateral shall take and hold the property sold
absolutely free from any claim or right on the part of the Pledgor, and the Pledgor hereby waives
(to the fullest extent permitted by Applicable Law) all rights of redemption, stay and/or appraisal
which the Pledgor now has or may at any time in the future have under any Applicable Law now
existing or hereafter enacted. The Pledgor agrees that, to the extent notice of sale shall be
required by Applicable Law, at least 10 days’ prior written notice to the Pledgor of the time and
place of any public sale or the time after which any private sale is to be made shall constitute
reasonable notification. Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Pledgee may fix and shall state in the notice or
publication (if any) of such sale. At any such sale, the Collateral, or portion thereof to be
sold, may be sold in one lot as an entirety or in separate parcels, as the Pledgee may determine in
its sole and absolute discretion. The Pledgee shall not be obligated to make any sale of the
Collateral if it shall determine not to do so regardless of the fact that notice of sale of the
Collateral may have been given. The Pledgee may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the time and place to
which the same was so adjourned. In case the sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the Pledgee until the sale
price is paid by the purchaser or purchasers thereof, but neither the Pledgee nor the Issuing Bank
or any Lender shall incur any liability to the Pledgor in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public sale made pursuant to this Agreement,
the Pledgee, any Lender and any other holder of any of the Secured Obligations, to the extent
permitted by Applicable Law, may bid for or purchase, free from any right of redemption, stay
and/or appraisal on the part of the Pledgor (all said rights being also hereby waived and released
to the extent permitted by Applicable Law), any part of or all the Collateral offered for sale.
For purposes hereof, a written agreement to purchase all or any part of the Collateral shall be
treated as a

 

 

 

Exhibit P

Page 8

sale
thereof; the Pledgee shall be free to carry out such sale pursuant to such agreement and the Pledgor shall not be entitled to the return of any
Collateral subject thereto, notwithstanding the fact that after the Pledgee shall have entered into
such an agreement, all Events of Default may have been remedied or the Secured Obligations may have
been paid in full as herein provided. The Pledgor hereby waives any right to require any
marshaling of assets and any similar right. In addition to exercising the power of sale herein
conferred upon it, the Pledgee shall also have the option to proceed by suit or suits at law or in
equity to foreclose this Agreement and sell the Collateral or any portion thereof pursuant to
judgment or decree of a court or courts having competent jurisdiction. The rights and remedies of
the Pledgee, the Issuing Bank and the Lenders under this Agreement are cumulative and not exclusive
of any rights or remedies which any of them otherwise have.

Section 7. Setoff. In addition to any rights now or hereafter granted under
Applicable Law and not by way of limitation of any such rights, the Pledgee, the Issuing Bank and
each Lender is hereby authorized by the Pledgor, at any time or from time to time during the
continuance of an Event of Default, without prior notice to the Pledgor or to any other Person, any
such notice being hereby expressly waived, but in the case of a Lender subject to receipt of the
prior written consent of the Pledgee exercised in its sole discretion, to set off and to
appropriate and to apply any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by the Pledgee, the Issuing Bank, such Lender or any
affiliate of the Pledgee, the Issuing Bank or such Lender, to or for the credit or the account of
the Pledgor against and on account of any of the Secured Obligations, irrespective of whether or
not any or all of the Secured Obligations have been declared to be, or have otherwise become, due
and payable, and although such obligations shall be contingent or unmatured.

Section 8. Application of Proceeds of Sale and Cash. The proceeds of any sale of the
whole or any part of the Collateral, together with any other moneys held by the Pledgee under the
provisions of this Agreement, shall be applied in accordance with Section 11.4 of the
Credit Agreement. The Pledgor shall remain liable and will pay, on demand, any deficiency
remaining in respect of the Secured Obligations.

Section 9. Pledgee Appointed Attorney in Fact. The Pledgor hereby constitutes and
appoints the Pledgee as the attorney-in-fact of the Pledgor with full power of substitution either
in the Pledgee’s name or in the name of the Pledgor to do any of the following: (a) to perform any
obligation of the Pledgor hereunder in the Pledgor’s name or otherwise; (b) to ask for, demand, sue
for, collect, receive, receipt and give acquittance for any and all moneys due or to become due
under and by virtue of any Collateral; (c) to prepare, execute, file, record or deliver notices,
assignments, financing statements, continuation statements, applications for registration or like
papers to perfect, preserve or release the Pledgee’s security interest in the Collateral; (d) to
issue entitlement orders, instructions and other orders to any securities intermediary in
connection with any of the Collateral held by or maintained with such securities intermediary; (e)
to verify facts concerning the Collateral in the Pledgor’s name, its own name or a fictitious name;
(f) to endorse checks, drafts, orders and other instruments for the payment of money payable to the
Pledgor, representing any interest or dividend or other distribution payable in respect of the
Collateral or any part thereof or on account thereof and to give full discharge

 

 

 

Exhibit P

Page 9

for the same; (g) to exercise all rights, powers and remedies which the Pledgor would have, but
for this Agreement, with respect to any of the Collateral; and (h) to carry out the provisions of
this Agreement and to take any action and execute any instrument which the Pledgee may deem
necessary or advisable to accomplish the purposes hereof, and to do all acts and things and execute
all documents in the name of the Pledgor or otherwise, deemed by the Pledgee as necessary, proper
and convenient in connection with the preservation, perfection or enforcement of its rights
hereunder; provided, that the Pledgee shall only exercise its rights under clauses (a), (b), (d),
(e), (g) and (h) while an Event of Default exists. Nothing herein contained shall be construed as
requiring or obligating the Pledgee, the Issuing Bank or any Lender to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment received by it, or to present or
file any claim or notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered thereby, and no
action taken by the Pledgee or omitted to be taken with respect to the Collateral or any part
thereof shall give rise to any defense, counterclaim or offset in favor of the Pledgor or to any
claim or action against the Pledgee. The power of attorney granted herein is irrevocable and
coupled with an interest.

Section 10. Pledgee’s Duty of Care. Other than the exercise of reasonable care to
ensure the safe custody of the Collateral while being held by the Pledgee hereunder, the Pledgee
shall have no duty or liability to preserve rights pertaining thereto, it being understood and
agreed that the Pledgor shall be responsible for preservation of all rights of the Pledgor in the
Collateral. The Pledgee shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Pledgee accords its own property, it being understood that
the Pledgee shall not have responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral,
whether or not the Pledgee has or is deemed to have knowledge of such matters or (b) taking any
necessary steps to preserve rights against any parties with respect to any Collateral.

Section 11. Reimbursement of Pledgee. The Pledgor agrees to pay to the Pledgee
expenses incurred in connection with this Agreement in accordance with Section 13.2 of the Credit
Agreement.

Section 12. Indemnification. The Pledgor agrees to pay, indemnify, and hold the
Pledgee, the Issuing Bank, each Lender and each of their respective predecessor, affiliate,
subsidiaries, successors and assigns, together with their past, present and future officers,
directors, agents, attorneys, financial advisors, representatives, partners, joint ventures,
affiliates and the successor and assigns of any and all of them (each, an “Indemnified
Person”) harmless from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (“Indemnified Amounts”) brought against or incurred by an Indemnified Person, in
any manner arising out of or, directly or indirectly, related in any way to or connected with this
Agreement, including without limitation, the exercise by the Pledgee, the Issuing Bank or any
Lender of any of its rights and remedies under this Agreement or any other action taken by the
Pledgee, the Issuing Bank or any Lender pursuant to the terms of this Agreement; provided, however,
the
Pledgor shall have no obligation hereunder to any Indemnified Person with respect to
Indemnified Amounts to the extent arising from the gross negligence or willful misconduct of such
Indemnified Party, as determined by a court of competent jurisdiction in a final, non-appealable
judgment.

 

 

 

Exhibit P

Page 10

Section 13. Further Assurances. At any time and from time to time, at the request of
the Pledgee, and at the sole expense of Pledgor, Pledgor shall promptly and duly execute and
deliver, and have recorded, such further instruments and documents and take such further action as
the Pledgee may reasonably request for the purpose of obtaining or preserving the full benefits of
this Agreement and of the rights and powers herein granted, including the filing of any financing
or continuation statement under the UCC (or other similar laws) in effect in any jurisdiction with
respect to the security interests created hereby.

Section 14. Securities Act. In view of the position of the Pledgor in relation to
the Collateral, or because of other current or future circumstances, a question may arise under the
Securities Act, or any similar Applicable Law hereafter enacted analogous in purpose or effect (the
Securities Act and any such similar Applicable Law as from time to time in effect being called the
“Federal Securities Laws”) with respect to any disposition of the Collateral permitted
hereunder. The Pledgor understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Pledgee if the Pledgee were to attempt to dispose of
all or any part of the Collateral in accordance with the terms hereof, and might also limit the
extent to which or the manner in which any subsequent transferee of any Collateral could dispose of
the same. Similarly, there may be other legal restrictions or limitations affecting the Pledgee in
any attempt to dispose of all or part of the Collateral in accordance with the terms hereof under
applicable Blue Sky or other state securities laws or similar Applicable Law analogous in purpose
or effect. The Pledgor recognizes that in light of the foregoing restrictions and limitations the
Pledgee may, with respect to any sale of the Collateral, limit the purchasers to those who will
agree, among other things, to acquire such Collateral for their own account, for investment, and
not with a view to the distribution or resale thereof. The Pledgor acknowledges and agrees that in
light of the foregoing restrictions and limitations, the Pledgee, in its sole and absolute
discretion, may, in accordance with Applicable Law, (a) proceed to make such a sale whether or not
a registration statement for the purpose of registering such Collateral or part thereof shall have
been filed under the Federal Securities Laws and (b) approach and negotiate with a single potential
purchaser to effect such sale. The Pledgor acknowledges and agrees that any such sale might result
in prices and other terms less favorable to the seller than if such sale were a public sale without
such restrictions. In the event of any such sale, the Pledgee shall incur no responsibility or
liability for selling all or any part of the Collateral in accordance with the terms hereof at a
price that the Pledgee, in its sole and absolute discretion, may in good faith deem reasonable
under the circumstances, notwithstanding the possibility that a substantially higher price might
have been realized if the sale were deferred until after registration as aforesaid or if more than
a single purchaser were approached. The provisions of this Section will apply notwithstanding the
existence of public or private market upon which the quotations or sales prices may exceed
substantially the price at which the Pledgee sells.

 

 

 

Exhibit P

Page 11

Section 15. Continuing Security Interest. This Agreement shall create a continuing
security interest in the Collateral and shall remain in full force and effect until it terminates
in accordance with its terms.

Section 16. Security Interest Absolute. All rights of the Pledgee hereunder, the
grant of a security interest in the Collateral and all obligations of the Pledgor hereunder, shall
be absolute and unconditional irrespective of (a) any lack of validity or enforceability of any
Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement
or instrument relating to any of the foregoing, (b) any change in the time, manner or place of the
payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or any consent to any departure from any Loan Document, or any other agreement or
instrument relating to any of the foregoing, (c) any exchange, release or nonperfection of any
other collateral, or any release or amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Secured Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Pledgor in respect of the
Secured Obligations or in respect of this Agreement (other than the indefeasible payment in full of
all the Secured Obligations).

Section 17. No Waiver. Neither the failure on the part of the Pledgee, the Issuing
Bank or any Lender to exercise, nor the delay on the part of the Pledgee, the Issuing Bank or any
Lender in exercising any right, power or remedy hereunder, nor any course of dealing between the
Pledgee, the Issuing Bank or any Lender, on the one hand, and the Pledgor, on the other hand, shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or
remedy hereunder preclude any other or the further exercise thereof or the exercise of any other
right, power or remedy.

Section 18. Notices. Notices, requests and other communications required or
permitted hereunder shall be in writing and shall be made by personal delivery, telecopy or
certified or registered mail, return receipt requested, to the addresses and in the manner set
forth in Section 13.1 of the Credit Agreement.

Section 19. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

Section 20. Amendments. No amendment or waiver of any provision of this Agreement
nor consent to any departure by the Pledgor herefrom shall in any event be effective unless the
same shall be in writing and signed by the parties hereto, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.

 

 

 

Exhibit P

Page 12

Section 21. Binding Agreement; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and permitted assigns,
except that the Pledgor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral or any part thereof and any such assignment by the Pledgor shall
be null and void absent the prior written consent of the Pledgee.

Section 22. Termination. Upon indefeasible payment in full of all of the Secured
Obligations and termination of the Credit Agreement in accordance with its terms, this Agreement
shall terminate. Upon termination of this Agreement in accordance with its terms, the Pledgee
agrees to take such actions as the Pledgor may reasonably request, and at the sole cost and expense
of the Pledgor, to evidence the termination of this Agreement.

Section 23. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under Applicable Law, but if any
provision of this Agreement shall be prohibited by or invalid under Applicable Law, such provisions
shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Agreement.

Section 24. Headings. Section headings used herein are for convenience only and are
not to affect the construction of or be taken into consideration in interpreting this Agreement.

Section 25. Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by telecopy), each of
which when so executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Signature pages may be detached from multiple counterparts
and attached to a single counterpart so that all signature pages are attached to the same document.
Delivery of an executed counterpart by telecopy shall be effective as delivery of a manually
executed counterpart.

[Signatures on Next Page]

 

 

 

Exhibit P

Page 13

IN WITNESS WHEREOF, the Pledgor has executed and delivered this Pledge Agreement under seal as
of this the date first written above.

	 	 	 	 	 	 	 
	 	 	PLEDGOR:	 	 
	 
	 	 	 	 	 	 
	 	 	MORGANS GROUP LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Agreed to, accepted and acknowledged as of the	 	 
	 	 	date first written above.	 	 
	 
	 	 	 	 	 	 
	 	 	PLEDGEE:	 	 
	 
	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

 

 

SCHEDULE 1

to

PLEDGE AGREEMENT

of

EXHIBIT P

Pledged Equity Interests:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Jurisdiction	 	Class of	 	Certificate	 	 
	 	 	 	 	of Formation	 	Equity	 	Number (if	 	Percentage of
	Pledgor	 	Issuer	 	of Issuer	 	Interest	 	any)	 	Ownership
	Morgans Group LLC

	 	Beach Hotel

Associates LLC
	 	Delaware
	 	Membership Interests
	 	N/A
	 	 	100	%

Pledgor Information:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Location of Chief
	 	 	Jurisdiction of	 	Organizational ID	 	Executive
	Pledgor	 	Formation	 	No.	 	Office
	Morgans Group LLC

	 	Delaware
	 	 	4049027	 	 	475 Tenth Avenue

New York, New York
10018

 

 

 

SCHEDULE 2

to

PLEDGE AGREEMENT

of

EXHIBIT P

FORM OF ACKNOWLEDGEMENT AND CONSENT

The undersigned hereby acknowledges receipt of a copy of the Pledge Agreement dated as of
[_______], 2011 (the “Pledge Agreement”), made by Morgans Group LLC in favor of Deutsche
Bank Trust Company Americas, as Agent. Terms not otherwise defined herein have the respective
meanings given them in the Pledge Agreement.

The undersigned agrees for the benefit of the Pledgee, the Issuing Bank and the Lenders as
follows:

(a) The undersigned will be bound by, and comply with, the terms of the Pledge
Agreement applicable to the undersigned, including without limitation, Sections
4(e), 4(g) and 15.

(b) The undersigned will notify the Pledgee in writing promptly of the occurrence of
any of the events described in Section 4(d) of the Pledge Agreement.

[(c) The undersigned will not permit any of the Equity Interests issued by it (i) to be
dealt in or traded on a securities exchange or in securities markets; or (ii) to provide by
its terms that it is a security governed by Article 8 of the UCC.]1

IN WITNESS WHEREOF, the undersigned has executed and delivered this Acknowledgement and
Consent under seal as of this the date first written above.

	 	 	 	 	 	 	 
	 	 	[ISSUER]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

	 	 	 
	1	 	Include only if the Issuer is a partnership or limited
liability company.

 

 

 

EXHIBIT Q

FORM OF SECURITY AGREEMENT

THIS SECURITY AGREEMENT is dated as of July [_____], 2011 from Beach Hotel Associates LLC, a
Delaware limited liability company (“Grantor”) to Deutsche Bank Trust Company Americas, in
its capacity as Agent for itself, the Issuing Bank and for each of the Lenders from time to time
party to that certain Credit Agreement (as hereinafter defined) (the “Secured Party”).

WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Morgans Group LLC (the “Borrower”), Grantor, Morgans Hotel Group Co., the lenders
from time to time party thereto as “Lenders” and the Secured Party, the Lenders, the
Issuing Bank and the Secured Party have agreed to make available to the Borrower and the Grantor
certain financial accommodations on the terms and conditions contained in the Credit Agreement;

WHEREAS, the Borrower and Grantor, though separate legal entities, are mutually dependent on
each other in the conduct of their respective businesses and have determined it to be in their
mutual best interests to obtain financing from the Lenders, the Issuing Bank and the Secured Party
through their collective efforts;

WHEREAS, Grantor acknowledges that it will receive direct and indirect benefits from the
Lenders, the Issuing Bank and the Secured Party making such financial accommodations available to
the Borrower and Grantor under the Credit Agreement; and

WHEREAS, it is a condition precedent to the extension of such financial accommodations under
the Credit Agreement that Grantor executes and delivers this Agreement, among other things, to
grant to the Secured Party for the benefit of itself, the Issuing Bank and each of the Lenders a
security interest in the Collateral as security for the Secured Obligations.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the
parties, the parties agree as follows:

Section 1. Definitions. (a) The following terms shall have the following meanings:

“Additional Pledged Collateral” means any Pledged Collateral acquired by Grantor after
the date hereof and in which a security interest is granted pursuant to Section 2,
including, to the extent a security interest is granted therein pursuant to such Section 2,
(i) all additional Indebtedness from time to time owed to Grantor by any obligor on the Pledged
Debt Instruments and the Instruments evidencing such Indebtedness and (ii) all interest, cash,
Instruments and other property or Proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any of the foregoing.

 

 

 

Exhibit Q

Page 2

“Agreement” means this Security Agreement.

“Bankruptcy Code” means United States Bankruptcy Code (11 U.S.C. Section 101 et seq.),
as in effect from time to time, and any successor statute thereto.

“Credit Agreement” has the meaning given that term in the recitals of this Agreement.

“Collateral” means all of Grantor’s right, title and interest to and under all of the
following property, whether now owned or hereafter acquired by Grantor or in which Grantor now has
or at any time in the future may acquire any right, title or interest, and whether now existing or
hereafter arising:

(i) all Deposit Accounts;

(ii) all Equipment, including, without limitation, all machinery, equipment, systems,
fittings, apparatus, appliances, furniture, furnishings, tools, fixtures, Inventory (as hereinafter
defined) and articles of personal property and accessions thereof and renewals, replacements
thereof and substitutions therefore (including, but not limited to, all plumbing, lighting and
elevator fixtures, office furniture, beds, bureaus, chiffonniers, chests, chairs, desks, lamps,
mirrors, bookcases, tables, rugs, carpeting, drapes, draperies, curtains, shades Venetian blinds,
wall coverings, screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage
racks, stools, sofas, chinaware, flatware, linens, pillows, blankets, glassware, foodcarts,
cookware, dry cleaning facilities, dining room wagons, keys or other entry systems, bars, bar
fixtures, liquor and other drink dispensers, icemakers, radios, television sets, intercom and
paging equipment, electric and electronic equipment, dictating equipment, telephone systems,
computerized accounting systems, engineering equipment, vehicles, medical equipment, potted plants,
heating, lighting and plumbing fixtures, fire prevention and extinguishing apparatus, theft
prevention equipment, cooling and air-conditioning systems, elevators, escalators, fittings,
plants, apparatus, stoves, ranges, refrigerators, laundry machines, tools, machinery, engines,
dynamos, motors, boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning
systems, floor cleaning, waxing and polishing equipment, call systems, brackets, signs, bulbs,
bells, ash and fuel, conveyors, cabinets lockers, shelving, spotlighting equipment, dishwashers,
garbage disposals, washers and dryers) and other customary hotel equipment;

(iii) all Fixtures;

(iv) all Instruments;

(v) all Inventory, including, without limitation, provisions in storerooms, refrigerators,
pantries and kitchens, beverages in wine cellars and bars, other merchandise for sale, fuel,
mechanical supplies, stationery and other supplies and similar items;

(vi) all Investment Property;

(vii) all Intellectual Property;

 

 

 

Exhibit Q

Page 3

(viii) all General Intangibles, Permits, liquor and other governmental licenses and other
licenses;

(ix) all Documents;

(x) all Accounts;

(xi) all Chattel Paper;

(xii) all Commercial Tort Claims identified on Schedule 6
hereto, as such schedule may be supplemented from time to time;

(xiii) all Letter-of-Credit Rights;

(xiv) all books and records pertaining to any property described in
this definition;

(xv) all Supporting Obligations pertaining to any property described
in this definition;

(xvi) all property of Grantor held by the Secured Party, including
all property of every description, in the possession or custody of or in
transit to the Secured Party for any purpose, including safekeeping, collection
or pledge, for the account of Grantor or as to which Grantor may have any right
or power;

(xvii) all other Goods and personal property of Grantor, whether tangible or
intangible and wherever located;

(xviii) all Contracts, Contract Rights, agreements, guaranties, indemnities and
other assurances, written and oral, insurance policies, permits, licenses,
trade names, warranties on personal or real property, soil test reports,
certificates of occupancy, termite bonds, payment and performance bonds,
judgments, premium rebates or adjustments, unearned commissions and fees,
proceeds of insurance policies (subject to the terms of the Security
Instrument), construction contracts, deposits, prepayments, unpaid rents,
credits in favor of Grantor, financing commitments from others, condemnation
proceeds, sales or payment proceeds (subject to the terms of the Security
Instrument), surveys, causes of action, chooses in action and all other
intangibles of every nature, in connection with and to the extent the same
affect or are related to, the Florida Property (all of which are collectively
referred to hereinafter as the “Contract Documents”) and all of
Grantor’s rights and privileges, if any, to modify, terminate or waive
performance of any Contract Documents; and

(xix) to the extent not otherwise included, all Proceeds.

 

 

 

Exhibit Q

Page 4

The term “Collateral” shall not include any Excluded Property but if and when any
property shall cease to be Excluded Property, such property shall be deemed at all times from and
after the date hereof to constitute Collateral.

“Copyright Licenses” means any written agreement naming Grantor as licensor or
licensee granting any right under any material Copyright, including the grant of any right to copy,
publicly perform, create derivative works, manufacture, distribute, exploit or sell materials
derived from any material Copyright.

“Copyright Security Agreement” means a Copyright Security Agreement executed by
Grantor in favor of the Secured Party for the benefit of the Issuing Bank and the Lenders in
substantially the form of Annex 1 hereto, pursuant to which Grantor has further evidenced
its grant to the Secured Party, for the benefit of the Issuing Bank and the Lenders, of a security
interest in all its respective Copyrights.

“Copyrights” means (a) all copyrights arising under the laws of the United States of
America, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof and all applications
in connection therewith, including all registrations, recordings and applications in the United
States Copyright Office or in any foreign counterparts thereof, and (b) the right to obtain all
renewals thereof.

“Deposit Account Control Agreement” means a letter agreement, in form and substance
reasonably satisfactory to the Secured Party, executed by Grantor, the Secured Party and the
financial institution at which Grantor maintains a Deposit Account.

“Excluded Property” means, collectively, (i) any permit, lease, license, contract,
instrument or other agreement held by Grantor that prohibits or requires the consent of any Person
other than the Borrower or any Affiliate as a condition to the creation by Grantor of a Lien
thereon, or any permit, lease, license contract or other agreement held by Grantor to the extent
that any Applicable Law prohibits the creation of a Lien thereon, but only, in each case, to the
extent, and for so long as, such prohibition or consent requirement is not terminated or rendered
unenforceable or otherwise deemed ineffective by the UCC or any other Applicable Law, (ii) any
“intent to use” Trademark applications for which a statement of use has not been filed (but only
until such statement is filed) and (iii) Equipment owned by Grantor that is subject to a purchase
money Lien or a capital lease to the extent permitted under the Credit Agreement if the contract
or other agreement in which such Lien is granted (or in the documentation providing for such
Capital Lease) prohibits or requires the consent of any Person other than the Borrower or any
Affiliate as a condition to the creation of any other Lien on such Equipment; provided, however, in
each case, “Excluded Property” shall not include any Proceeds, substitutions or replacements of
Excluded Property (unless such Proceeds, substitutions or replacements would otherwise constitute
Excluded Property).

 

 

 

Exhibit Q

Page 5

“Intellectual Property” means, collectively, all rights, priorities and privileges of
Grantor relating to intellectual property, whether arising under United States of America,
multinational or foreign laws or otherwise, including Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks, Trademark Licenses, service marks, trade secrets and Internet domain
names, and all rights to sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.

“Material Intellectual Property” means Intellectual Property owned by or licensed to a
Grantor and material to the conduct of the business of the Borrower and its Subsidiaries taken as a
whole.

“Patent Security Agreement” means a Patent Security Agreement executed by Grantor in
favor of the Secured Party for the benefit of the Issuing Bank and the Lenders, in substantially
the form of Annex 1 hereto, pursuant to which Grantor has confirmed its grant to the
Secured Party, for the benefit of the Issuing Bank and the Lenders, a security interest in all its
respective Patents.

“Patents” means (a) all letters patent of the United States of America, any other
country or any political subdivision thereof and all reissues and extensions thereof, (b) all
applications for letters patent of the United States of America or any other country and all
divisionals, continuations and continuations-in-part thereof, and (c) all rights to obtain any
reissues, continuations or continuations-in-part of the foregoing.

“Patent License” means all agreements, whether written or oral, providing for the
grant by or to Grantor of any right to manufacture, have manufactured, use, import, sell or offer
for sale any invention covered in whole or in part by a Patent.

“Pledged Collateral” means, collectively, Pledged Debt Instruments, any other
Investment Property of Grantor, all chattel paper, certificates or other Instruments representing
any of the foregoing and all Security Entitlements of Grantor in respect of any of the foregoing.
Pledged Collateral may be Instruments or Investment Property.

“Pledged Debt Instruments” means all right, title and interest of Grantor in
Instruments evidencing any Indebtedness owed to Grantor, including all Indebtedness described on
Schedule 1, issued by the obligors named therein.

“Proceeds” means all proceeds (including proceeds of proceeds) of any of the
Collateral including all: (i) rights, benefits, distributions, premiums, profits, dividends,
interest, cash, Instruments, contract rights, Inventory, Equipment, Deposit Accounts, and other
property from time to time received, receivable, or otherwise distributed in respect of or in
exchange for, or as a replacement of or a substitution for, any of the Collateral, or proceeds
thereof; (ii) “proceeds,” as such term is defined in Section 9-102(a)(64) of the UCC; (iii)
proceeds of any insurance, indemnity, warranty, or guaranty (including guaranties of delivery)
payable from time to time with respect to any of the Collateral, or proceeds thereof; and (iv)
payments (in any form whatsoever) made or due and payable to a Grantor from time to time in
connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral, or proceeds thereof.

 

 

 

Exhibit Q

Page 6

“Secured Obligations” means the Obligations (as defined in the Credit Agreement).

“Securities Act” means the Securities Act of 1933, as amended.

“Trademark License” means any agreement, whether written or oral, providing for the
grant by or to Grantor of any right to use any Trademark.

“Trademark Security Agreement” means a Trademark Security Agreement executed by
Grantor in favor of the Secured Party for the benefit of the Issuing Bank and the Lenders, in
substantially the form of Annex 1 hereto, pursuant to which Grantor has confirmed its grant
to the Secured Party for the benefit of the Issuing Bank and the Lenders, of a security interest in
all its respective Trademarks.

“Trademarks” means (a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos and other source or
business identifiers, and, in each case, all goodwill associated therewith, whether now existing or
hereafter adopted or acquired, all registrations and recordings thereof and all applications in
connection therewith, in each case whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States of America, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law rights related
thereto, and (b) the right to obtain all renewals thereof.

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of
New York; provided, however, to the extent that, by reason of mandatory provisions of law, any of
the attachment, perfection, or priority of, or remedies with respect to, the Secured Party’s
security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction solely for purposes of the provisions
hereof relating to such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.

(b) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
have the respective meanings given them in the Credit Agreement.

 

 

 

Exhibit Q

Page 7

(c) Terms used herein without definition that are defined in the UCC have the respective
meanings given them in the UCC and if defined in more than one article of the UCC, such terms shall
have the meaning defined in Article 9 of the UCC, including the following terms (which are
capitalized herein):

“Account”, “Certificated Security”, “Chattel Paper”, “Commercial Tort Claim”, “Commodities
Intermediary”, “Commodity Account”, “Contract”, “Contract Right”, “Control Account”,
“Deposit Account”, “Document”, “Equipment”, “Financial Asset”,
“Fixtures”, “General Intangible”, “Goods”, “Instruments”, “Inventory”, “Investment
Property”, “Letter-of-Credit Right”, “Permits”, “Securities Account”, “Securities
Intermediary”, “Security”, “Security Entitlement”, “Supporting Obligation”, and
“Uncertificated Security”.

(d) In this Agreement, in the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including” and the words “to” and “until” each mean
“to but excluding” and the word “through” means “to and including.” The terms “herein,” “hereof,”
“hereto” and “hereunder” and similar terms refer to this Agreement as a whole and not to any
particular Article, Section, subsection or clause in this Agreement. Unless otherwise noted,
references herein to an Annex, Schedule, Section, subsection or clause refer to the appropriate
Annex or Schedule to, or Section, subsection or clause in this Agreement. The meanings given to
terms defined herein shall be equally applicable to both the singular and plural forms of such
terms. Any reference in this Agreement to a Loan Document shall include all appendices, exhibits
and schedules thereto, and, unless specifically stated otherwise all amendments, restatements,
supplements or other modifications thereto, and as the same may be in effect at any time such
reference becomes operative. The term “including” means “including without limitation” except when
used in the computation of time periods. The terms “Lender,” “Issuing Bank,” and
“Secured Party” include their respective successors and permitted assigns. Notwithstanding
anything to the contrary set forth herein, the representations, warranties and covenants set forth
in this Agreement shall not apply to Excluded Property.

Section 2. Grant of Security Interests in Collateral. Grantor, as security for the
full, prompt and complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations, hereby grants, collaterally assigns,
mortgages, pledges and hypothecates to the Secured Party for the benefit of itself, the Issuing
Bank and each of the Lenders, and grants to the Secured Party for the benefit of itself, the
Issuing Bank and each of the Lenders a lien on and security interest in, all of Grantor’s right,
title and interest in, to and under the Collateral.

Section 3. Grantors Remains Obligated. Notwithstanding any other provision of this
Agreement to the contrary, (a) Grantor shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each and every contract or
other agreement included as part of the Collateral, all in accordance with the terms of each such
contract and agreement, (b) neither the Secured Party nor the Issuing Bank or any Lender shall have
any obligation or liability under any contract or other agreement included as part of the
Collateral by reason of or arising out of this Agreement or the receipt by the Secured Party, the
Issuing Bank or any Lender of any payment relating thereto, (c) the exercise by the Secured Party
of any rights under this Agreement or otherwise in respect of the Collateral shall not release
Grantor from its obligations under any contract or other agreement included as part of the
Collateral and (d) neither the Secured Party nor the Issuing Bank or any Lender shall be obligated
to take any of the following actions with respect to any contract or other agreement included as
part of the Collateral: (i) perform any obligation of Grantor, (ii) make any payment, (iii) make
any inquiry as to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party, (iv) present or file any claim or (v) take any
action to enforce any performance or to collect the payment of any amounts that may have been
assigned to it or to which it may be entitled at any time or times.

 

 

 

Exhibit Q

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Section 4. Representations and Warranties. Grantor represents and warrants to the
Secured Party, the Issuing Bank and the Lenders as follows:

(a) Title and Liens. Grantor is, and will at all times continue to be, the
legal and beneficial owner of the Collateral. None of the Collateral is subject to any
adverse claim (as defined in the UCC) or other Lien other than Permitted Liens or other
Liens permitted under the Loan Documents.

(b) Authorization. Grantor has the right and power, and has taken all
necessary action to authorize it, to execute, deliver and perform this Agreement in
accordance with its terms. The execution, delivery and performance of this Agreement in
accordance with its terms, including the granting of the security interest hereunder, do not
and will not, by the passage of time, the giving of notice, or both: (i) violate any
applicable law relating to Grantor; (ii) require and consent or approval of, or
authorization, order or other action by, any governmental authority or other Person (other
than those that have been obtained), (iii) violate, result in a breach of or constitute a
default under the organizational documents of Grantor, or any indenture, agreement or other
instrument to which Grantor is a party or by which it or any of the Collateral of Grantor or
its other property may be bound; or (iv) result in or require the creation or imposition of
any Lien upon or with respect to any of the Collateral of Grantor or Grantor’s other
property whether now owned or hereafter acquired.

(c) Validity and Perfection of Security Interest. This Agreement is effective
to create in favor of the Secured Party, for the benefit of itself, the Issuing Bank and the
Lenders, a legal, valid and enforceable security interest in the Collateral to the extent
required hereunder, including all Intellectual Property. Such security interest will be
perfected upon (i) in the case of all Collateral in which a security interest may be
perfected by the filing of a financing statement under the UCC (other than any Commercial
Tort Claims not disclosed on Schedule 6 hereto), the completion of the filings and other
actions specified on Schedule 2 (which, in the case of all filings and other
documents referred to on such Schedule, have been delivered to the Secured Party in
completed and duly executed form), (ii) the delivery to the Secured Party of all Collateral
consisting of Instruments and Certificated Securities, in each case properly endorsed for
transfer to the Secured Party or in blank, (iii) the execution of Deposit Account Control
Agreements with respect to all Deposit Accounts to the extent required hereunder, and (iv)
in the case of Intellectual Property, the taking of the actions described in the immediately
following subsection (g). Each such security interest that may be perfected by the taking
of the actions described in this Section 4(c) shall be prior to all other Liens on
the Collateral except for Permitted Liens having priority over the Secured Party’s Lien by
operation of Applicable Law.

 

 

 

Exhibit Q

Page 9

(d) Jurisdiction of Formation, Locations, Etc. Grantor’s jurisdiction of
organization, exact legal name, organizational identification number, if any, and the
location of Grantor’s chief executive office or sole place of business, in each case as of
the date hereof, is specified on Schedule 3 and such Schedule also lists all
jurisdictions of incorporation, legal names and locations of Grantor’s chief executive
office or sole place of business for the five years preceding the date hereof.

(e) [Intentionally Omitted.]

(f) Pledged Collateral. All Pledged Collateral and, if applicable, any
Additional Pledged Collateral, consisting of Certificated Securities or Instruments has been
delivered to the Secured Party in accordance with Section 5(g) or Section
5(h).

(g) Intellectual Property. Schedule 4 lists all Material Intellectual
Property of Grantor as of date hereof, separately identifying that owned by Grantor, that licensed
to Grantor and that licensed by Grantor as licensor. The Material Intellectual Property set forth
on such Schedule constitutes all of the Material Intellectual Property necessary to conduct
Grantor’s business as conducted on the date hereof or on the date of the delivery of any update to
such Schedule pursuant to Section 5(i) as conducted on the date of such update. All
Material Intellectual Property is valid, subsisting, enforceable, unexpired and in full force and
in effect. The use of Material Intellectual Property, or of embodiments thereof, does not
infringe, misappropriate, dilute or violate in any material respect the intellectual property
rights of any other Person. Grantor has taken all steps reasonably required to protect Grantor’s
rights in trade secrets constituting Intellectual Property developed by or for Grantor. This
Agreement is effective to create a valid and continuing Lien on such material Intellectual Property
and, upon the filing of the Copyright Security Agreement with the United States Copyright Office,
the filing of the Patent Security Agreement and the Trademark Security Agreement with the United
States Patent and Trademark Office, and the filing of appropriate financing statements in the
jurisdictions listed on Schedule 2 hereto, all action necessary or desirable to protect and
perfect the Secured Party’s Lien in and on Grantor’s material Intellectual Property under the UCC
or the laws of the United States will have been taken.

(h) Deposit Accounts. Schedule 5 sets forth all Deposit Accounts maintained
by Grantor on the date hereof or on the date of the delivery of any update to such Schedule
pursuant to Section 5(f), which sets forth such information separately for Grantor.

 

 

 

Exhibit Q

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Section 5. Covenants. Grantor hereby unconditionally covenants and agrees as
follows:

(a) No Liens, Sale, Etc. Grantor shall (i) except for the security interests
created by this Agreement, not create or suffer to exist any Lien upon or with respect to
any Collateral, except Permitted Liens and other Liens permitted under the Loan Documents,
(ii) not sell, transfer or assign (by operation of law or otherwise) any Collateral except
as expressly permitted under the Credit Agreement, (iii) not enter into
any agreement or undertaking restricting the right or ability of Grantor or the Secured
Party to sell, assign or transfer, or grant any Lien in, any Collateral except as expressly
permitted under the Credit Agreement and (iv) promptly notify the Secured Party of its entry
into any agreement or assumption of undertaking that materially adversely restricts the
ability to sell, assign or transfer, or grant any Lien in, any Collateral.

(b) Maintenance of Perfection. Grantor shall maintain the security interests
created by this Agreement as perfected security interests having at least the priorities
described in Section 4(c) and shall defend such security interests and the
applicable priorities of such security interests against the claims and demands of all
Persons.

(c) Statements of Collateral. Grantor shall furnish to the Secured Party from
time to time statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Secured Party may reasonably
request, all in reasonable detail and in form and substance reasonably satisfactory to the
Secured Party.

(d) Further Assurances. At any time and from time to time, at the request of
the Secured Party, and at the sole expense of Grantor, Grantor shall promptly and duly
execute and deliver, and have recorded, such further instruments and documents and take such
further action as the Secured Party may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers herein granted,
including the filing of any financing or continuation statement under the UCC (or other
similar laws) in effect in any jurisdiction with respect to the security interests created
hereby.

(e) Changes in Locations, Name, Etc. Unless Grantor shall have given the
Secured Party at least 30 days’ prior written notice (or such shorter time as shall be
acceptable to the Secured Party) and shall have delivered to the Secured Party all
additional financing statements and other documents reasonably requested by the Secured
Party to maintain the validity, perfection and priority of the security interests provided
for herein, Grantor shall not do any of the following:

(i) change its jurisdiction of organization or its location, in each case from
that referred to in Section 4(d); or

(ii) change its legal name or organizational identification number, if any, or
corporation, limited liability company or other organizational structure to such an
extent that any financing statement filed in connection with this Agreement would
become misleading.

 

 

 

Exhibit Q

Page 11

(f) Deposit Accounts and Control Agreements. Grantor shall deliver to the
Secured Party as often as the Secured Party may reasonably request, a listing of all of the
Deposit Accounts as of such date. To the extent requested by the Secured Party, Grantor
shall obtain an authenticated Deposit Account Control Agreement, from each bank
holding a Deposit Account. Grantor shall obtain authenticated control agreements from
each issuer of Uncertificated Securities, (if requested by the Secured Party), Securities
Intermediary, or commodities Intermediary issuing or holding any Financial Assets or
Commodities to or for Grantor. Notwithstanding anything to the contrary set forth herein, so
long as no Event of Default shall have occurred and be continuing, Secured Party shall not
deliver a notice of control under any Deposit Account Control Agreement to the extent such
Deposit Account Control Agreement requires the delivery of such notice.

(g) Pledged Collateral. Grantor shall deliver to the Secured Party, all
certificates and Instruments representing or evidencing any Pledged Collateral (including
Additional Pledged Collateral, but excluding any Instrument that is excluded from the
delivery requirements of Section 5(h)), whether now existing or hereafter acquired,
in suitable form for transfer by delivery or, as applicable, accompanied by Grantor’s
endorsement, where necessary, or duly executed instruments of transfer or assignment in
blank, all in form and substance reasonably satisfactory to the Secured Party. While an
Event of Default exists, the Secured Party shall have the right, at any time in its
discretion and without notice to Grantor, (A) to transfer to or to register in its name or
in the name of its nominees any Pledged Collateral and (B) to exchange any certificate or
instrument representing or evidencing any Pledged Collateral for certificates or instruments
of smaller or larger denominations. Except as permitted by the Credit Agreement, Grantor
shall not grant “control” (within the meaning of such term under Article 9-106 of the UCC)
over any Investment Property to any Person other than the Secured Party.

(h) Delivery of Instruments. If any amount in excess of $1,000,000 payable
under or in connection with any Collateral owned by Grantor shall be or become evidenced by
an Instrument, Grantor shall promptly deliver such Instrument to the Secured Party, duly
indorsed in a manner reasonably satisfactory to the Secured Party, or, if consented to by
the Secured Party, shall mark all such Instruments with the following legend: “This writing
and the obligations evidenced or secured hereby are subject to the security interest of
Deutsche Bank Trust Company Americas, as Secured Party, and any purchase or other transfer
of this interest is a violation of the rights of Deutsche Bank Trust Company Americas.”

(i) Intellectual Property Generally. (i) With respect to Intellectual
Property owned by such Grantor, such Grantor (either itself or through licensees) shall,
except as could not reasonably be expected to result in a Material Adverse Effect, (i)
continue to use each Trademark material to Grantor’s business in order to maintain such
Trademark in full force and effect with respect to each class of goods for which such
Trademark is currently used, free from any claim of abandonment for non-use, (ii) maintain
consistent with past practice the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of registration and all
other notices and legends required by Applicable Law, (iv) not adopt or use any mark that is
confusingly similar to or a colorable imitation of such Trademark unless the Secured Party
shall obtain a perfected security interest in such mark pursuant to this Agreement and (v)
not (and use commercially reasonable efforts to not permit any

 

 

 

Exhibit Q

Page 12

licensee
or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark (or any
goodwill associated therewith) may become destroyed, invalidated, impaired or harmed in any
way. Grantor (either itself or through licensees) shall not do any act, or omit to do any
act, whereby any Patent owned by such Grantor that is material to Grantor’s business may
become forfeited, abandoned or dedicated to the public. Grantor (either itself or through
licensees) (x) shall not (and shall not permit any licensee or sublicensee thereof to) do
any act or omit to do any act whereby any portion of any Copyright that is material to
Grantor’s business may become invalidated or otherwise impaired and (y) shall not (either
itself or through licensees) do any act whereby any portion of any Copyright that is
material to Grantor’s business may fall into the public domain. Grantor (either itself or
through licensees) shall not do any act, or omit to do any act, whereby any trade secret may
become publicly available or otherwise unprotectable. Grantor (either itself or through
licensees) shall not do any act that knowingly uses any Intellectual Property to infringe,
misappropriate, or violate the intellectual property rights of any other Person.

(ii) Protection of Intellectual Property. Grantor shall take all
reasonable actions necessary or reasonably requested by the Secured Party, including
in any proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency and any Internet domain name
registrar, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of any Copyright, Trademark, Patent
or Internet domain name owned by such Grantor, the absence of which could reasonably
be expected to result in a Material Adverse Effect, including filing of applications
for renewal, affidavits of use, affidavits of incontestability and opposition and
interference and cancellation proceedings.

(iii) Additional Intellectual Property Documents. At the request of
the Secured Party, Grantor shall execute and deliver, with respect to registered
Intellectual Property owned by it, in form and substance reasonably acceptable to
the Secured Party and suitable for (i) filing in the United States Copyright Office,
a Copyright Security Agreement, (ii) filing in the United States Patent and
Trademark Office, Patent Security Agreement and (iii) filing in the United States
Patent and Trademark Office, a Trademark Security Agreement. Upon request of the
Secured Party, Grantor shall execute and deliver in form and substance reasonably
acceptable to the Secured Party and suitable for recording with the appropriate
Internet domain name registrar, a duly executed form of assignment for all Internet
domain names of Grantor (together with appropriate supporting documentation as may
be requested by the Secured Party).

(iv) Intellectual Property Schedule. Grantor shall deliver to the
Secured Party as often as the Secured Party may reasonably request an update to
Schedule 5.

 

 

 

Exhibit Q

Page 13

Section 6. Remedial Provisions.

(a) General Remedies. While an Event of Default exists, the Secured Party may
exercise, in addition to all other rights and remedies granted to it in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the UCC or any other Applicable Law. Without limiting
the generality of the foregoing, the Secured Party, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived by Grantor), may in such circumstances forthwith
collect, receive, appropriate and realize upon any Collateral, and may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver any Collateral (or
contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker’s board or office of the Secured Party, the Issuing Bank or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any credit risk. The
Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted
by the UCC and other Applicable Law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption of Grantor, which
right or equity is hereby waived and released by Grantor. Grantor further agrees, at the Secured
Party’s request, to assemble the Collateral and make it available to the Secured Party at places
that the Secured Party shall reasonably select, whether at Grantor’s premises or elsewhere. To the
extent permitted by Applicable Law, Grantor waives all claims, damages and demands it may acquire
against the Secured Party, the Issuing Bank or any Lender arising out of the exercise by the
Secured Party of any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.

(b) Pledged Collateral. Subject to the limitations set forth in Section 6(a)
and while an Event of Default exists, upon notice by the Secured Party to the relevant Grantor, (i)
the Secured Party shall have the right to receive any Proceeds of the Pledged Collateral and make
application thereof to the Secured Obligations in the order provided in Section 6(h) and
(ii) the Secured Party or its nominee may exercise any voting, consent, corporate and other right
pertaining to the Pledged Collateral as if the Secured Party were the absolute owner thereof, all
without liability except to account for property actually received by it; provided,
however, that the Secured Party shall have no duty to Grantor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or delay in so doing. In
order to permit the Secured Party to exercise the voting and other consensual rights that it is
entitled to exercise pursuant hereto and to receive all distributions that it is entitled to
receive hereunder, (i) Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to the Secured Party all such orders and instruments as the Secured Party may from time
to time request and (ii) without limiting the immediately preceding clause (i), Grantor hereby
grants to the Secured Party an irrevocable proxy to exercise all rights, powers, privileges and
remedies to which a holder of the Pledged Collateral would be entitled, which proxy shall be
effective, automatically and without the necessity of any action (including any transfer of any
Pledged Collateral on the record books of the issuer thereof) by any other Person (including the
issuer of such Pledged Collateral or any officer or agent thereof) while an Event of Default
exists. Grantor hereby
expressly authorizes and irrevocably instructs each issuer of any Pledged Collateral pledged
hereunder by Grantor to (x) comply with any instruction received by it from the Secured Party in
writing that states that an Event of Default exists and is otherwise in accordance with the terms
of this Agreement, without any other or further instructions from Grantor, and Grantor agrees that
such issuer shall be fully protected in so complying and (y) pay any payment with respect to the
Pledged Collateral directly to the Secured Party.

 

 

 

Exhibit Q

Page 14

(c) Writ of Possession; Receiver. Grantor hereby acknowledges that the Secured
Obligations arose out of a commercial transaction, and agrees that while an Event of Default exists
the Secured Party shall have the right to an immediate writ of possession with respect to the
Collateral without notice of a hearing or the requirement of posting a bond. The Secured Party
shall have the right to the appointment of a receiver for the properties and assets of Grantor, and
Grantor hereby consents to such rights and such appointment and hereby waives any objection Grantor
may have thereto or the right to have a bond or other security posted by the Secured Party.

(d) Remedies Cumulative. Each right, power, and remedy of the Secured Party as
provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law
or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power, or remedy provided for in this Agreement or in the other Loan
Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by the Secured Party, of any one or more of such rights,
powers, or remedies shall not preclude the simultaneous or later exercise by the Secured Party of
any or all such other rights, powers, or remedies.

(e) Marshaling. The Secured Party shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for, or other assurances
of payment of, the Secured Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order. To the fullest extent that it lawfully may,
Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral
which might cause delay in or impede the enforcement of the Secured party’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to the fullest extent
that it lawfully may, Grantor hereby irrevocably waives the benefits of all such laws.

(f) Proceeds to be Turned Over To Secured Party. Except as otherwise expressly
provided in the Credit Agreement, all Proceeds received by the Secured Party hereunder in cash or
cash equivalents shall be held by the Secured Party in as cash collateral for the Secured
Obligations. All Proceeds while held by the Secured Party as such cash collateral (or by Grantor
in trust for the Secured Party) shall continue to be held as collateral security for the Secured
Obligations and shall not constitute payment thereof until applied as provided in the Credit
Agreement.

 

 

 

Exhibit Q

Page 15

(g) Intellectual Property License. Grantor hereby grants to the Secured Party,
subject to the terms of the Delano Management Agreement or any other applicable license agreement,
a license or other right while an Event of Default exists to use, without liability for royalties
or any other charge, Grantor’s labels, Patents, Copyrights, rights of use of any name, trade
secrets, and all other Intellectual Property, whether owned by Grantor or with respect to which
Grantor has rights under license, sublicense, or other agreements, as it pertains to collateral, in
preparing for sale, advertising for sale and selling any Collateral, and Grantor’s rights under all
licenses and all franchise agreements shall insure to the benefit of the Secured Party.

(h) Application of Proceeds. The proceeds of any sale of the whole or any part of the
Collateral, together with any other moneys held by the Secured Party under the provisions of this
Agreement, shall be applied in accordance with Section 11.4 of the Credit Agreement. Grantor shall
remain liable and will pay, on demand, any deficiency remaining in respect of the Secured
Obligations.

Section 7. Secured Party Appointed Attorney-in-Fact. Grantor hereby constitutes and
appoints the Secured Party as the attorney-in-fact of Grantor with full power of substitution
either in the Secured Party’s name or in the name of Grantor to do any of the following: (a) to
perform any obligation of Grantor hereunder in Grantor’s name or otherwise; (b) to ask for, demand,
sue for, collect, receive, receipt and give acquittance for any and all moneys due or to become due
under and by virtue of any Collateral; (c) to prepare, execute, file, record or deliver notices,
assignments, financing statements, continuation statements, applications for registration or like
papers to perfect, preserve or release the Secured Party’s security interest in the Collateral; (d)
to issue entitlement orders, instructions and other orders to any bank in connection with any of
the Collateral held by or maintained with such bank; (e) to verify facts concerning the Collateral
in such Grantor’s name, its own name or a fictitious name; (f) to endorse checks, drafts, orders
and other instruments for the payment of money payable to such Grantor, representing any payment in
respect of the Collateral or any part thereof or on account thereof and to give full discharge for
the same; (g) to exercise all rights, powers and remedies which Grantor would have, but for this
Agreement, with respect to any of the Collateral; and (h) to carry out the provisions of this
Agreement and to take any action and execute any instrument which the Secured Party may deem
necessary or advisable to accomplish the purposes hereof, and to do all acts and things and execute
all documents in the name of Grantor or otherwise, deemed by the Secured Party as necessary, proper
and convenient in connection with the preservation, perfection or enforcement of its rights
hereunder; provided, that the Pledgee shall only exercise its rights under clauses (a),
(b), (d), (e) and (g) while an Event of Default exists. Nothing herein contained shall be
construed as requiring or obligating the Secured Party, the Issuing Bank or any Lender to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment received by it, or
to present or file any claim or notice, or to take any action with respect to the Collateral or any
part thereof or the moneys due or to become due in respect thereof or any property covered thereby,
and no action taken by the Secured Party or omitted to be taken with respect to the Collateral or
any part thereof shall give rise to any defense, counterclaim or offset in favor of Grantor or to
any claim or action against the Secured Party. The power of attorney granted herein is irrevocable
and coupled with an interest.

 

 

 

Exhibit Q

Page 16

Section 8. Secured Party Duties. The powers conferred on the Secured Party hereunder
are solely to protect the Secured Party’s interest in the Collateral, for the benefit of itself,
the Issuing Bank and the Lenders, and shall not impose any duty upon the Secured Party to exercise
any such powers. Except for the safe custody of any Collateral in its actual possession and the
accounting for moneys actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral. The Secured Party shall be deemed to have
exercise reasonable care in the custody and preservation of any Collateral in its actual possession
if the Secured Party accords such Collateral treatment substantially equal to that which the
Secured Party accords its own property.

Section 9. Authorization of Financing Statements. Grantor authorizes the Secured
Party, and its counsel and other representatives, at any time and from time to time, to file or
record financing statements, amendments to financing statements, and other filing or recording
documents or instruments with respect to the Collateral in such form and in such offices as the
Secured Party reasonably determines appropriate to perfect the security interests of the Secured
Party under this Agreement. Grantor agrees that such financing statements and amendments may
describe the Collateral covered thereby as “all personal property of the debtor” or words of
similar effect. Grantor hereby also authorizes the Secured Party, and its counsel and other
representatives, at any time and from time to time, to file continuation statements with respect to
previously filed financing statements. A photographic or other reproduction of this Agreement
shall be sufficient as a financing statement or other filing or recording document or instrument
for filing or recording in any jurisdiction. Grantor acknowledges that it is not authorized to
file any financing statement or amendment or termination statement with respect to any financing
statement filed in connection with this Agreement without the prior written consent of the Secured
Party, subject to Grantor’s rights under Section 9-509(d)(2) of the UCC.

Section 10. Amendments. No amendment or waiver of any provision of this Agreement
nor consent to any departure by Grantor herefrom shall in any event be effective unless the same
shall be in writing and signed by the parties hereto, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given;
provided, however, that Schedules to this Agreement may be supplemented through
Security Agreement Supplements executed by Grantor and accepted by the Secured Party.

Section 11. Notices. Notices, requests and other communications required or
permitted hereunder shall be in writing and shall be made by personal delivery, telecopy or
certified or registered mail, return receipt requested, to the addresses and in the manner set
forth in Section 13.1 of the Credit Agreement:

Section 12. No Waiver. Neither the failure on the part of the Secured Party, the
Issuing Bank or any Lender to exercise, nor the delay on the part of the Secured Party, the Issuing
Bank or any Lender in exercising any right, power or remedy hereunder, nor any course of dealing
between the Secured Party, the Issuing Bank or any Lender, on the one hand, and Grantor, on the
other hand, shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power, or remedy hereunder preclude any other or the further
exercise thereof or the exercise of any other right, power or remedy.

 

 

 

Exhibit Q

Page 17

Section 13. Binding Agreement; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and permitted assigns,
except that Grantor shall not be permitted to assign this Agreement or any interest herein and any
such assignment by Grantor shall be null and void absent the prior written consent of the Secured
Party.

Section 14. Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by telecopy), each of
which when so executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Signature pages may be detached from multiple counterparts
and attached to a single counterpart so that all signature pages are attached to the same document.
Delivery of an executed counterpart by telecopy shall be effective as delivery of a manually
executed counterpart.

Section 15. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable law, such provisions
shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Agreement.

Section 16. Headings. Section headings used herein are for convenience only and are
not to affect the construction of or be taken into consideration in interpreting this Agreement.

SECTION 17. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

Section 18. Expenses. Grantor agrees to pay to the Secured Party expenses incurred
in connection with this Agreement in accordance with Section 13.2 of the Credit Agreement.

Section 19. Indemnification. Grantor agrees to pay, indemnify, and hold the Secured
Party, the Issuing Bank, each Lender and each of their respective predecessor, affiliate,
subsidiaries, successors and assigns, together with their past, present and future officers,
directors, agents, attorneys, financial advisors, representatives, partners, joint ventures,
affiliates and the successor and assigns of any and all of them (each, an “Indemnified
Person”) harmless from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (“Indemnified Amounts”) brought against or incurred by an Indemnified Person, in
any manner arising out of or, directly or indirectly, related in any way to or connected with this
Agreement, including without limitation, the exercise by the Secured Party, the Issuing Bank or any
Lender of any of its rights and remedies under this Agreement or any other action taken by the
Secured Party, the Issuing Bank or any Lender pursuant to the terms of this Agreement; provided,
however, Grantor shall have no obligation hereunder to any Indemnified Person with respect to
Indemnified Amounts to the extent arising from the gross negligence or willful misconduct of such
Indemnified Party, as determined by a court of competent jurisdiction in a final, non-appealable
judgment.

 

 

 

Exhibit Q

Page 18

Section 20. Continuing Security Interest. This Agreement shall create a continuing
security interest in the Collateral and shall remain in full force and effect until it terminates
in accordance with its terms.

Section 21. Reinstatement. Grantor further agrees that, if any payment made by any
Loan Party or other Person and applied to the Obligations is at any time annulled, avoided, set
aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to
be refunded or repaid, or the proceeds of Collateral are required to be returned by the Secured
Party to such Loan Party, its estate, trustee, receiver or any other party, including Grantor,
under any bankruptcy law or other applicable law, then, to the extent of such payment or repayment,
any Lien or other Collateral securing such liability shall be and remain in full force and effect,
as fully as if such payment had never been made or, if prior thereto the Lien granted hereby or
other Collateral securing such liability hereunder shall have been released or terminated by virtue
of such cancellation or surrender, such Lien or other Collateral shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair
or otherwise affect any Lien or other Collateral securing the obligations of Grantor in respect of
the amount of such payment.

Section 22. Security Interest Absolute. All rights of the Secured Party hereunder,
the grant of a security interest in the Collateral and all obligations of Grantor hereunder, shall
be absolute and unconditional irrespective of (a) any lack of validity or enforceability of any
Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement
or instrument relating to any of the foregoing, (b) any change in the time, manner or place of the
payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or any consent to any departure from any Loan Document, or any other agreement or
instrument relating to any of the foregoing, (c) any exchange, release or nonperfection of any
other collateral, or any release or amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Secured Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, Grantor in respect of the Secured
Obligations or in respect of this Agreement (other than the indefeasible payment in full of all the
Secured Obligations).

[Signatures on Next Page]

 

 

 

Exhibit Q

Page 19

IN WITNESS WHEREOF, Grantor has executed and delivered this Security Agreement under seal as
of this the date first written above.

	 	 	 	 	 
	 	GRANTOR:

BEACH HOTEL ASSOCIATES LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	Agreed to, accepted and acknowledged

as of the date first written above.

SECURED PARTY:

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

 

SCHEDULE 1

to

SECURITY AGREEMENT

of

EXHIBIT Q

PLEDGED DEBT INSTRUMENTS

[TO BE COMPLETED BY GRANTOR]

 

 

 

SCHEDULE 2

to

SECURITY AGREEMENT

of

EXHIBIT Q

NECESSARY FILINGS

Filings of UCC Financing statements with the Secretary of State of Delaware.

 

 

 

SCHEDULE 3

to

SECURITY AGREEMENT

of

EXHIBIT Q

JURISDICTIONS OF ORGANIZATION, NAMES,

ORGANIZATIONAL ID NUMBERS, LOCATIONS, ETC.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Location of
	 	 	 	 	 	 	Organizational	 	Chief Executive
	Name	 	Jurisdiction	 	Federal Tax ID	 	ID	 	Office
	Beach Hotel
Associates LLC

	 	Delaware
	 	20-1487269
	 	DE 2345191
	 	1685 Collins Avenue
Miami Beach, FL
33139
USA

 

 

 

SCHEDULE 4

to

SECURITY AGREEMENT

of

EXHIBIT Q

INTELLECTUAL PROPERTY

TRADEMARKS

None.

REGISTERED COPYRIGHTS

None.

PATENTS

None.

 

 

 

SCHEDULE 5

to

SECURITY AGREEMENT

of

EXHIBIT Q

DEPOSIT ACCOUNTS

	 	 	 	 	 	 	 
	Financial Institution(s)	 	 	 	 	 
	where Accounts Maintained	 	Name of Account	 	Account Numbers	 
	JPMorgan Chase
	 	Development Account	 	 	114-742642	 
	Mellon United Bank
	 	Operating/Disbursement account	 	 	0101006021	 
	Mellon United Bank
	 	Payroll Account	 	 	0101002327	 
	Mellon United Bank
	 	Travel Agent Account	 	 	0101006039	 
	Mellon United Bank
	 	Payroll	 	 	0101020980	 
	Mellon United Bank
	 	Operating	 	 	0101020998	 
	Wachovia
	 	Cash Collateral Account	 	 	2000035272034	 

 

 

 

SCHEDULE 6

to

SECURITY AGREEMENT

of

EXHIBIT Q

Commercial Tort Claims

None.

 

 

 

ANNEX 1

to

SECURITY AGREEMENT

of

EXHIBIT Q

ANNEX 1 TO SECURITY AGREEMENT

FORM OF SHORT FORM INTELLECTUAL PROPERTY SECURITY AGREEMENT

THIS [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT is dated as of _____, 20_____
(this “Agreement”) from _____, a _____(the “Grantor”) in favor
of Deutsche Bank Trust Company Americas, as Agent (the “Secured Party”).

WHEREAS, Morgans Group LLC (the “MG Borrower”), Beach Hotel Associates LLC (the
“Florida Borrower,” and together with the MG Borrower, collectively, the
“Borrowers”), Morgans Hotel Group Co., the financial institutions from time to time party
thereto as “Lenders” and the Secured Party, entered into that certain Credit Agreement
dated as of July _____, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”);

WHEREAS, the Lenders and the Secured Party have agreed to make available to Borrowers certain
financial accommodations on the terms and conditions contained in the Credit Agreement;

WHEREAS, the Borrowers, though separate legal entities, are mutually dependent on each other
in the conduct of their respective businesses and have determined it to be in their mutual best
interests to obtain financing from the Lenders and the Secured Party through their collective
efforts;

WHEREAS, Grantor acknowledges that it will receive direct and indirect benefits from the
Lenders and the Secured Party making such financial accommodations available to the Borrower under
the Credit Agreement; and

WHEREAS, it is a condition precedent to the extension of such financial accommodations under
the Credit Agreement that the Grantor execute and deliver this Agreement, among other things, to
grant to the Secured Party for the benefit of the Issuing Bank and the Lenders a security interest
in the Collateral as security for the Secured Obligations.

WHEREAS, Grantor is party to a Security Agreement [dated of even date herewith in] favor of
the Secured Party (the “Security Agreement”) pursuant to which the Grantor is required to
execute and deliver this [Copyright] [Patent] [Trademark] Security Agreement;

 

 

 

ANNEX 1

to

SECURITY AGREEMENT

of

EXHIBIT Q

Page 2

NOW, THEREFORE, in consideration of the above premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by the Grantor, the
Grantor hereby agrees as follows:

Section 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Security Agreement and used herein have the respective meanings given them in the Security
Agreement.

Section 2. Grants of Security Interests in Collateral. Grantor, as collateral
security for the full, prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Secured Obligations of Grantor, hereby mortgages,
pledges and hypothecates to the Secured Party for the benefit of the Issuing Bank and the Lenders,
and grants to the Secured Party for the benefit of the Issuing Bank and the Lenders a lien on and
security interest in, all of its right, title and interest in, to and under the following
Collateral (the “[Copyright] [Patent] [Trademark] Collateral”):

Include following for Copyright Collateral

(a) all of its Copyrights and Copyright Licenses to which it is a party, including,
without limitation, those referred to on Schedule I hereto;

(b) all extensions of the foregoing; and

(c) all Proceeds of the foregoing, including, without limitation, any claim by Grantor
against third parties for past, present or future infringement of any Copyright or Copyright
licensed under any Copyright License.

Include following for Patent Collateral

(a) all of its Patents and Patent Licenses to which it is a party, including, without
limitation, those referred to on Schedule I hereto;

(b) all reissues, continuations or continuations-in-part of the foregoing; and

(c) all Proceeds of the foregoing, including, without limitation, any claim by Grantor
against third parties for past, present or future infringement of any Patent or any Patent
licensed under any Patent License.

Include following for Trademark Collateral

(a) all of its Trademarks and Trademark Licenses to which it is a party, including,
without limitation, those referred to on Schedule I hereto;

(b) all goodwill of the business connected with the use of, and symbolized by, each
Trademark; and

 

 

 

ANNEX 1

to

SECURITY AGREEMENT

of

EXHIBIT Q

Page 3

(c) all Proceeds of the foregoing, including, without limitation, any claim by Grantor
against third parties for past, present, future (i) infringement or dilution of any
Trademark or Trademark licensed under any Trademark License or (ii) injury to the goodwill
associated with any Trademark or any Trademark licensed under any Trademark License.

Section 3. Security Agreement. The security interest granted pursuant to this
Agreement is granted in conjunction with the security interest granted to the Secured Party
pursuant to the Security Agreement and Grantor hereby acknowledges and affirms that the rights and
remedies of the Secured Party with respect to the security interest in the [Copyright] [Patent]
[Trademark] Collateral made and granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if fully set forth
herein.

[Signatures on Following Page]

 

 

 

ANNEX 1

to

SECURITY AGREEMENT

of

EXHIBIT Q

Page 4

IN WITNESS WHEREOF, Grantor has caused this [Copyright] [Patent] [Trademark] Security
Agreement to be executed and delivered by its duly authorized offer as of the date first set forth
above.

	 	 	 	 	 
	 	[GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Agreed and accepted as of the date first written above:

	 	 	 	 
	DEUTSCHE BANK TRUST COMPANY AMERICAS, as Agent

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 

 

 

 

SCHEDULE I

to

[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

of

EXHIBIT Q

[COPYRIGHT] [PATENT] [TRADEMARK] REGISTRATIONS

(INCLUDE ONLY U.S. REGISTERED INTELLECTUAL PROPERTY)

Include following for Copyright Collateral

REGISTERED COPYRIGHTS (Include Copyright Registration Number and Date):

1.

2.

COPYRIGHT APPLICATIONS:

1.

2.

COPYRIGHT LICENSES:

1.

2.

Include following for Patent Collateral

REGISTERED PATENTS:

1.

2.

PATENT APPLICATIONS:

1.

2.

PATENT LICENSES:

1.

2.

 

 

 

SCHEDULE I

to

[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

of

EXHIBIT Q

Page 2

Include following for Trademark Collateral

REGISTERED TRADEMARKS:

1.

2.

TRADEMARK APPLICATIONS:

1.

2.

TRADEMARK LICENSES:

1.

2.

 

 

 

EXHIBIT R

FORM OF BORROWING BASE CERTIFICATE

Reference
is made to that certain Credit Agreement dated as of July [___], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Morgans Group LLC, Beach Hotel Associates LLC, Morgans Hotel Group Co., the lenders party
thereto and their assignees under Section 13.5. thereof (each, a “Lender” and collectively,
the “Lenders”) and Deutsche Bank Trust Company Americas, as Agent (the “Agent”).
Capitalized terms used herein, and not otherwise defined herein, have their respective meanings
given them in the Credit Agreement.

Pursuant to Section 9.3.(b) of the Credit Agreement, the undersigned hereby certifies to the
Agent, the Issuing Bank and the Lenders that:

1. Schedule 1 attached hereto sets forth the calculations required to establish the Borrowing
Base as of _____, 20__.

2. The aggregate principal amount of all outstanding Loans, together with the aggregate amount
of all Letter of Credit Liabilities, as of the date hereof is $_____ and such amount
does not exceed the Borrowing Base of $_____ or the aggregate amount of the Commitments
of all Lenders.

 

 

 

Exhibit R

Page 2

IN WITNESS WHEREOF, the undersigned has signed this Borrowing Base Certificate on and as of
_____, _____.

	 	 	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	Chief Financial Officer 	 

 

 

 

SCHEDULE 1

of

EXHIBIT R

[SPREADSHEET TO BE PROVIDED]

 

 

 

EXHIBIT
S

FORM OF INCREMENTAL COMMITMENT AGREEMENT

[Name(s) of Lender(s)]

[Date]

Morgans Group LLC

475 Tenth Avenue

New York, New York 10018

Attn: Richard Szymanski

Telephone:   (212) 277-4188

Telecopy:     (212) 277-4270

Re: Incremental Commitments

Ladies and Gentlemen:

Reference is hereby made to the Credit Agreement, dated as of July [_], 2011, by and among Morgans
Group LLC (the “MG Borrower”), Beach Hotel Associates LLC (the “Florida Borrower,”
and together with the MG Borrower, collectively, the “Borrowers”), Morgans Hotel Group Co.
(“Holdings”), the lenders from time to time party thereto (the “Lenders”) and
Deutsche Bank Trust Company Americas, as Agent (the “Agent”) (as amended, restated,
modified or supplemented from time to time, the “Credit Agreement”). Unless otherwise
defined herein, capitalized terms used herein shall have the respective meanings set forth in the
Credit Agreement. Each lender (each an “Incremental Lender”) party to this letter
agreement (this “Agreement”) hereby severally agrees to provide the Incremental Commitment
set forth opposite its name on Annex I attached hereto (for each such Incremental Lender,
its “Incremental Commitment”). Each Incremental Commitment provided pursuant to this
Agreement shall be subject to all of the terms and conditions set forth in the Credit Agreement,
including, without limitation, Section 2.12 thereof.

Each Incremental Lender, Holdings, the Borrowers and the Agent acknowledge and agree that the
Incremental Commitments provided pursuant to this Agreement shall constitute Incremental
Commitments and, upon the Agreement Effective Date (as hereinafter defined), the Incremental
Commitment of each Incremental Lender shall become, or in the case of an existing Lender, shall be
added to (and thereafter become a part of), the Commitment of such Incremental Lender. Each
Incremental Lender, the Borrowers and the Agent further agree that, with respect to the Incremental
Commitment provided by each Incremental Lender pursuant to this Agreement, such Incremental Lender
shall receive from the Borrowers such upfront fees and/or other fees, if any, as may be separately
agreed to in writing with the Borrowers and acknowledged by the Agent, all of which fees shall be
due and payable to such Incremental Lender on the terms and conditions set forth in each such
separate agreement.

 

 

 

Exhibit S

Page 2

Furthermore, each of the parties to this Agreement hereby agrees to the terms and conditions set
forth on Annex I hereto in respect of each Incremental Commitment provided pursuant to this
Agreement.

Each Incremental Lender party to this Agreement, to the extent not already a party to the Credit
Agreement as a Lender thereunder, (i) confirms that it is an Eligible Assignee, (ii) confirms that
it has received a copy of the Credit Agreement and the other Loan Documents, together with copies
of the financial statements referred to therein and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into this Agreement and to
become a Lender under the Credit Agreement, (iii) agrees that it will, independently and without
reliance upon the Agent or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement and the other Loan Documents, (iv) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto, (v) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the Credit Agreement and
the other Loan Documents are required to be performed by it as a Lender, and (vi) in the case of
each Incremental Lender that is a Foreign Lender, attaches the forms referred to in Section 3.13(c)
of the Credit Agreement.

Upon the date of (i) the execution of a counterpart of this Agreement by each Incremental Lender,
the Borrowers, Holdings and each other Loan Party and the Agent, (ii) the
delivery to the Agent, Holdings and the Borrowers of a fully executed counterpart (including by way
of facsimile or other electronic transmission) hereof, (iii) the payment of any fees then due and
payable in connection herewith and (iv) the satisfaction of any other conditions precedent set
forth in Section 4 of Annex I hereto (such date, the “Agreement Effective Date”),
each Incremental Lender party hereto (i) shall be obligated to make the Loans provided to be made
by it as provided in this Agreement, and participate in Letters of Credit issued on the terms, and
subject to the conditions, set forth in the Credit Agreement and in this Agreement and (ii) to the
extent provided in this Agreement, shall have the rights and obligations of a Lender thereunder and
under the other applicable Loan Documents.

Each of the Borrowers acknowledges and agrees that (i) it shall be liable for all Obligations with
respect to the Incremental Commitments provided hereby as provided in the Credit Agreement
including, without limitation, all Loans made pursuant thereto, and (ii) all such Obligations
(including all such Loans) shall be entitled to the benefits of the respective Security Documents
and the Guarantee in accordance with the requirements of the Credit Agreement.

Each of the Borrowers acknowledges and agrees that, on the Incremental Commitment Date, (i) the
representations and warranties made or deemed made by each Loan Party in the Loan Documents to
which any of them is a party, shall be true and correct in all material respects on the Incremental
Commitment Date with the same force and effect as if made on and as of such date except to the
extent that such representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and correct in all material
respects on and as of such earlier date) and except for changes in factual circumstances not
prohibited under the Loan Documents (other than a change in factual circumstances since the
Effective Date, that constitutes a material adverse change in the business, assets, liabilities,
financial condition or results of operations of Holdings and its
Subsidiaries taken as a whole), and (ii) no Default or Event of Default exists or would exist after
giving effect to the Incremental Commitment contemplated hereby.

 

 

 

Exhibit S

Page 3

Holdings and each Guarantor acknowledge and agree that all Obligations with respect to the
Incremental Commitments provided hereby and all Loans made pursuant thereto shall (i) be fully
guaranteed pursuant to the Guarantee as, and to the extent, provided therein and in the Credit
Agreement and (ii) be entitled to the benefits of the Loan Documents as, and to the extent,
provided therein and in the Credit Agreement.

Attached hereto as Annex II are true and correct copies of such officers’ certificates,
board of director (or equivalent governing body) resolutions and evidence of good standing (to the
extent available under Applicable Law) of the Loan Parties required to be delivered pursuant to
clause (iv) of the definition of “Incremental Commitment Requirements” appearing in Section 1.01 of
the Credit Agreement.

Attached hereto as Annex III is a true and correct copy of a certificate executed by an
authorized officer of the MG Borrower required to be delivered pursuant to clause (v) of the
definition of “Incremental Commitment Requirements” appearing in Section 1.01 of the Credit
Agreement.

You may accept this Agreement by signing the enclosed copies in the space provided below, and
returning one copy of same to us before the close of business on _____, 20_. If you do
not so accept this Agreement by such time, our Incremental Commitments set forth in this Agreement
shall be deemed canceled.

After the execution and delivery to the Agent of a fully executed copy of this Agreement (including
by way of counterparts and by facsimile or other electronic transmission) by the parties hereto,
this Agreement may only be changed, modified or varied by written instrument in accordance with the
requirements for the modification of Loan Documents pursuant to Section 13.6 of the Credit
Agreement.

In the event of any conflict between the terms of this Agreement and those of the Credit Agreement,
the terms of the Credit Agreement shall control.

* * *

 

 

 

Exhibit S

Page 4

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

	 	 	 	 	 
	 	Very truly yours,

[NAME OF EACH INCREMENTAL LENDER]

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title 	 

	 	 	 	 	 
	 	Agreed and Accepted

this [_____] day of [_____, 201_]:

MORGANS GROUP LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BEACH HOTEL ASSOCIATES LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

 

Exhibit S

Page 5

Each Guarantor acknowledges and agrees to each the foregoing provisions of this Incremental
Commitment Agreement and to the incurrence of the Loans to be made pursuant thereto.

	 	 	 	 
	[EACH GUARANTOR], as a Guarantor

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 

 

 

 

ANNEX I

TERMS AND CONDITIONS FOR INCREMENTAL COMMITMENT AGREEMENT

Dated as of _____________, ____

	1.	 	Name of the Borrowers: Morgans Group LLC and Beach Hotel Associates LLC

	 
	2.	 	Incremental Commitment amounts (as of the Agreement Effective Date):

	 	 	 
	Names of Incremental Lenders	 	Amount of Incremental Commitment
	 
	 	 
	Total:1

	 	 

	3.	 	Applicable Margins to be applicable to all Loans2

	 
	4.	 	Other Conditions Precedent:3

 

	 	 	 
	1	 	The aggregate amount of Incremental
Commitments must be at least $5,000,000 (or such lesser amount that is
acceptable to the Agent). The aggregate amount of all Incremental Commitments
permitted to be provided pursuant to Section 2.12 of the Credit
Agreement shall not exceed in the aggregate $10,000,000.

	 
	2	 	Insert the Applicable Margins that shall
apply to the Loans to be made pursuant to the Incremental Commitments being
provided hereunder, provided if the Applicable Margins with respect to
the Loans to be incurred pursuant to an Incremental Commitment shall be higher
in any respect than those applicable to any other Loans, the Applicable Margins
for the other Loans and extension of credit under the Credit Agreement shall be
automatically increased as and to the extent needed to eliminate any
deficiencies in accordance with the definition of “Applicable Margin” in the
Credit Agreement.

	 
	3	 	Insert any additional conditions precedent
which may be required to be satisfied prior to the Agreement Effective Date.

 

 

 

ANNEX
II

[True and correct copies of such officers’ certificates, board of director (or equivalent governing
body) resolutions and evidence of good standing (to the extent available under Applicable Law) of
the Loan Parties required to be delivered pursuant to clause (iv) of the definition of “Incremental
Commitment Requirements” appearing in Section 1.01 of the Credit Agreement.]

 

 

 

ANNEX
III

[True and correct copy of a certificate executed by an authorized officer of the MG Borrower
required to be delivered pursuant to clause (v) of the definition of “Incremental Commitment
Requirements” appearing in Section 1.01 of the Credit Agreement]

 

 

 

FORM OF CLOSING CERTIFICATES

CERTIFICATE CONCERNING LEASES AND RENT ROLL

THIS CERTIFICATE CONCERNING LEASES AND RENT ROLL (this “Certificate”) is made by Beach
Hotel Associates LLC, a Delaware limited liability company (“Owner”), in connection with
that certain Credit Agreement dated as of July [_____], 2011 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), by and among Owner, Morgans
Group LLC, Morgans Hotel Group Co., the lenders party thereto and their assignees under Section
13.5 thereof (“Lenders”) and Deutsche Bank Trust Company Americas, as Agent
(“Agent”).

To induce Agent and Lenders to make, and to continue to make, available to Owner certain financial
accommodations on the terms and conditions set forth in the Credit Agreement, Owner hereby
certifies to Agent and Lenders that:

(a) As of the date of this Certificate, there are no occupancy rights (written or oral), leases or
other tenancies affecting any part of the real property described on Exhibit A attached
hereto (the “Property”) except those leases (the “Leases”) described on Exhibit
B attached hereto and rights of hotel guests. Owner further certifies that: (i) the Leases are
in full force and effect, with no known uncured defaults existing under any of the Leases except as
set forth on Exhibit B; (ii) there are no options to extend any of the Leases except as set
forth on Exhibit B; (iii) none of the Leases provide any tenant with an option or a right
of first refusal to rent any additional space or to purchase or acquire any additional interest in
the Property or in any part thereof except as set forth on Exhibit B; and (iv) Exhibit
C is a true, correct and complete copy of the rent roll for the Property; and

(b) Agent and Lenders may rely on this Certificate in making, and continuing to make, available to
Owner the financial accommodations pursuant to the Credit Agreement.

[Signature Appears on Following Page]

 

 

 

Exhibit T

Page 2

Dated as of _____, 20_____

	 	 	 	 	 	 	 

	 	 	OWNER:	 	 
	 
	 	 	 	 	 	 
	 	 	BEACH HOTEL ASSOCIATES LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 
	Morgans Group LLC, its sole member	 	 
	 
	 	 	 	 	 	 
	 

	 	 	By: 	Morgans Hotel Group Co.,
its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 
	 

	 	 	 

Name:
	 	 
	 

	 	 	Title:	 	 

 

 

 

EXHIBIT A

LEGAL DESCRIPTION

Lots 9, 10, 11 and 12, in Block 29 of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, a subdivision
of Miami-Dade County, Florida, according to the Plat thereof duly recorded upon the Public records
of Miami-Dade County, Florida in Plat Book 2, page 77 thereof;

Also that tract of land shown on plat of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, according
to the Plat thereof recorded in Plat Book 2, page 77, Public Records of Miami-Dade County, Florida,
described as follows:

Begin at the Southeast corner of Lot 9 in Block 29 as shown on plat of FISHER’S FIRST
SUBDIVISION OF ALTON BEACH, according to the Plat thereof recorded in Plat Book 2, page 77, Public
Records of Miami-Dade County, Florida; thence run in a Northerly direction along the Easterly line
of said Block 29 of the aforesaid plat and the Northerly extension thereof a distance of 136.897
feet, more or less, to the point of intersection of the center line of 17th Street; thence run
Easterly along the center line of 17th Street; extended, a distance of 204.17 feet, more or less to
the point of intersection of said center line of 17th Street extended Easterly to the Erosion
Control Line of the Atlantic Ocean said Line recorded in Plat Book 105, page 62, Public Records of
Miami-Dade County, Florida, thence run Southerly along the said Erosion Control Line, a distance of
137.465 feet to the intersection of the extension Easterly of the Southerly Line of referenced Lot
9, thence run Westerly along the Easterly extension of Lot 9, a distance of 200.96 feet, more or
less, to the Point of Beginning.

Less and except, however, that certain portion of such land as was appropriated and taken by
the City of Miami Beach, Florida, in that certain eminent domain or condemnation proceeding a final
judgment for which was recorded in Deed Book 3106, page 96, which covers that portion of the
premises lying northerly of the northerly line of said Block 29 extended easterly to the Erosion
Control Line recorded in Plat Book 105, page 62 of the Public Records of Miami-Dade County,
Florida.

 

 

 

EXHIBIT B

	1.	 	Agreement of Lease, dated as of June 30, 2005, by and between Beach Hotel Associates LLC, as
landlord and Base USA, Inc., as tenant.

	2.	 	Lease, dated as of January 1, 2000, by and between Beach Hotel Associates LLC, as landlord
and SC Collins LLC, as tenant, as amended by the First Amendment to Lease, dated as of July
[_____], 2011, by and between Beach Hotel Associates LLC, as landlord and SC Collins LLC, as
tenant.

 

 

 

EXHIBIT C

RENT ROLL

 

 

 

CLOSING CERTIFICATION

Date: ____________, 20___

Reference is made to that certain Credit Agreement dated as of [_____], 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Beach Hotel Associates LLC, a Delaware limited liability company (“Owner”),
Morgans Group LLC (“MG Borrower”), Morgans Hotel Group Co., the lenders party thereto and
their assignees under Section 13.5 thereof (“Lenders”) and Deutsche Bank Trust Company
Americas, as Agent (“Agent”). Capitalized terms used herein but not otherwise defined
shall have the meaning given such terms in the Credit Agreement. This certification is being
delivered pursuant to Section 6.1(a) of the Credit Agreement.

Each of Owner and Borrower hereby certifies, represents and warrants to Agent, Issuing Bank and
Lenders that the following statements are true and accurate as of the date hereof:

1. No Default or Event of Default has occurred and is continuing.

2. The representations and warranties made or deemed made by Owner and each other Loan Party in the
Loan Documents to which any of them is a party are true and correct in all material respects except
to the extent such representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and correct in all material
respects on and as of such earlier date).

3. Attached hereto as Schedule 1 are reasonably detailed calculations demonstrating
compliance with the covenants contained in Section 10.11. of the Credit Agreement.

The certifications contained herein shall survive the closing of the Credit Agreement and the
extension of financial accommodations thereunder. Agent, Issuing Bank and Lenders shall be
entitled to act in reliance upon the certifications herein contained without further inquiry of any
kind and notwithstanding anything to the contrary contained in any other agreements or document.

[Remainder of page intentionally left blank; signature page follows.]

 

6

 

IN WITNESS WHEREOF, Owner and Borrower have executed this Closing Certification as of the date
first above written.

	 	 	 	 	 	 	 

	 	 	BEACH HOTEL ASSOCIATES LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	Morgans Group LLC, its sole member	 	 
	 
	 	 	 	 	 	 
	 

	 	 	By: 	Morgans Hotel Group Co.,
its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 
	 

	 	 	 

Name:
	 	 
	 

	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	MORGANS GROUP LLC, a Delaware 
limited liability
company	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	 	Name:	 	 
	 

	 	 	Title:	 	 

 

7

 

SCHEDULE 1

of

CLOSING CERTIFICATION

[CALCULATIONS TO BE ATTACHED]Exhibit 10.5

Exhibit 10.5

Execution Version

Prepared by:

Leila Rachlin, Esq.

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036

1111779-2180

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS

AND FIXTURE FILING

from

BEACH HOTEL ASSOCIATES LLC

to

DEUTSCHE BANK TRUST COMPANY AMERICAS

(As Agent for the benefit of the Lenders, the Issuing Bank and for its own account,

pursuant to the Credit Agreement described herein)

dated as of July 28, 2011

Property: The Delano Hotel, Miami-Dade County, State of Florida

NOTE TO RECORDER: This Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture
Filing secures an aggregate obligation of $100,000,000.00. Florida documentary stamp taxes in the
amount of $350,000 ($0.35 per $100 of indebtedness) and intangible taxes in the amount of $200,000
($2 per $1,000 of indebtedness) are being paid in connection with the recording of this Security
Instrument

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I Defined Terms
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II Grant and Conveyance
	 	 	7	 
	 
	 	 	 	 
	Section 2.1 Grant and Conveyance
	 	 	7	 
	Section 2.2 Intentionally Omitted
	 	 	7	 
	Section 2.3 Revolving Loan Account; Future Advances
	 	 	7	 
	 
	 	 	 	 
	ARTICLE III Covenants, Warranties and Representations
	 	 	8	 
	 
	 	 	 	 
	Section 3.1 Title to Collateral and Priority of this Instrument
	 	 	8	 
	Section 3.2 Hazardous Materials
	 	 	8	 
	Section 3.3 Separate Tract
	 	 	8	 
	Section 3.4 Leases
	 	 	9	 
	Section 3.5 Use
	 	 	9	 
	Section 3.6 Alterations or Waste
	 	 	10	 
	Section 3.7 Compliance with Legal Requirements
	 	 	10	 
	Section 3.8 [Intentionally Omitted]
	 	 	10	 
	Section 3.9 Prior Security Instrument Status
	 	 	10	 
	Section 3.10 Payment of Impositions
	 	 	10	 
	Section 3.11 Repair
	 	 	10	 
	Section 3.12 Insurance
	 	 	11	 
	Section 3.13 Restoration Following Casualty
	 	 	13	 
	Section 3.14 Hold Harmless
	 	 	13	 
	Section 3.15 [Intentionally Omitted]
	 	 	13	 
	Section 3.16 No Conflicts, Etc.
	 	 	13	 
	Section 3.17 Licenses and Permits
	 	 	13	 
	 
	 	 	 	 
	ARTICLE IV Condemnation
	 	 	14	 
	 
	 	 	 	 
	Section 4.1 Condemnation
	 	 	14	 
	 
	 	 	 	 
	ARTICLE V Events of Default
	 	 	15	 
	 
	 	 	 	 
	Section 5.1 Credit Agreement
	 	 	15	 
	Section 5.2 Foreclosure of Other Liens
	 	 	15	 
	Section 5.3 Disposition of Collateral and Beneficial Interest in Grantor
	 	 	15	 
	Section 5.4 Further Encumbrances
	 	 	15	 
	Section 5.5 Event of Default under any other Loan Document
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VI Remedies
	 	 	16	 
	 
	 	 	 	 
	Section 6.1 Remedies
	 	 	16	 
	Section 6.2 Separate Sales
	 	 	19	 

 

i

 

Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 6.3 Remedies Cumulative, Concurrent and Non-Exclusive
	 	 	19	 
	Section 6.4 No Conditions Precedent to Exercise of Remedies
	 	 	20	 
	Section 6.5 Release of and Resort to Collateral
	 	 	20	 
	Section 6.6 Waiver of Appraisement, Valuation, etc.
	 	 	20	 
	Section 6.7 Discontinuance of Proceedings
	 	 	20	 
	Section 6.8 Application of Proceeds
	 	 	21	 
	Section 6.9 Leases
	 	 	21	 
	Section 6.10 Purchase by Agent or Lenders
	 	 	21	 
	Section 6.11 Grantor as Tenant Holding Over
	 	 	21	 
	Section 6.12 Suits to Protect the Collateral
	 	 	21	 
	Section 6.13 Proofs of Claim
	 	 	21	 
	Section 6.14 Occupancy After Foreclosure
	 	 	21	 
	Section 6.15 Waiver of Grantor’s Rights
	 	 	23	 
	 
	 	 	 	 
	ARTICLE VII Security Agreement
	 	 	23	 
	 
	 	 	 	 
	Section 7.1 Security Interest
	 	 	23	 
	Section 7.2 Financing Statements
	 	 	24	 
	Section 7.3 Uniform Commercial Code Remedies
	 	 	24	 
	Section 7.4 Foreclosure of Security Interest
	 	 	24	 
	Section 7.5 No Obligation of Secured Party
	 	 	24	 
	Section 7.6 Information for Fixture Filing
	 	 	24	 
	 
	 	 	 	 
	ARTICLE VIII Assignment of Leases and Rents
	 	 	25	 
	 
	 	 	 	 
	Section 8.1 Assignment
	 	 	25	 
	Section 8.2 Intentionally Omitted
	 	 	25	 
	Section 8.3 Limited License
	 	 	25	 
	Section 8.4 Grantor’s Indemnities
	 	 	25	 
	Section 8.5 Appointment of Attorney-in-Fact
	 	 	25	 
	Section 8.6 Exculpation of Agent
	 	 	25	 
	Section 8.7 [Intentionally Omitted]
	 	 	25	 
	 
	 	 	 	 
	ARTICLE IX Miscellaneous
	 	 	26	 
	 
	 	 		 
	Section 9.1 Performance at Grantor’s Expense
	 	 	26	 
	Section 9.2 Survival of Obligations
	 	 	26	 
	Section 9.3 Recording and Filing
	 	 	26	 
	Section 9.4 Notices
	 	 	26	 
	Section 9.5 No Waiver
	 	 	26	 
	Section 9.6 Agent’s Right to Perform the Obligations
	 	 	28	 
	Section 9.7 Covenants Running with the Land
	 	 	28	 
	Section 9.8 Successors and Assigns
	 	 	28	 

 

ii

 

Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 9.9 Severability
	 	 	28	 
	Section 9.10 Modification
	 	 	29	 
	Section 9.11 Assignment
	 	 	29	 
	Section 9.12 [Intentionally Omitted]
	 	 	29	 
	Section 9.13 Counterparts
	 	 	29	 
	Section 9.14 APPLICABLE LAW
	 	 	29	 
	Section 9.15 Subrogation
	 	 	29	 
	Section 9.16 Headings
	 	 	29	 
	Section 9.17 Conflict
	 	 	29	 
	Section 9.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL
	 	 	30	 
	Section 9.19 Limitation on Interest
	 	 	31	 
	Section 9.20 Further Assurances
	 	 	31	 
	Section 9.21 Future Advances
	 	 	31	 

	 	 	 	 	 
	EXHIBITS	 	 	 	 
	 
	 	 	 	 
	Exhibit A
	 	—	 	Legal Description
	Exhibit B
	 	—	 	Description of Permitted Encumbrances

 

iii

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF

LEASES AND RENTS AND FIXTURE FILING

THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING (this
“Security Instrument”) is made and delivered as of July 28, 2011 by BEACH HOTEL ASSOCIATES
LLC, a Delaware limited liability company (“Grantor”), having a mailing address of c/o
Morgans Group LLC, 475 Tenth Avenue, New York, New York 10018, to DEUTSCHE BANK TRUST COMPANY
AMERICAS, in its capacity as Agent (together with its successors and assigns, “Agent” or
“Mortgagee”) for itself, the Issuing Bank and for each of the Lenders from time to time
party to that certain Credit Agreement (as hereinafter defined), Agent having as its address for
personal delivery 60 Wall Street, New York, NY 10005.

WHEREAS, pursuant to that certain Credit Agreement, dated as of July 28, 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among Grantor, Morgans Group LLC (the “MG Borrower” and together with Grantor,
collectively, “Borrowers”), Morgans Hotel Group Co., the lenders from time to time party
thereto as “Lenders”, Agent, and the other parties thereto, Lenders and Agent have agreed
to make available to Borrowers certain financial accommodations in an aggregate principal amount
not to exceed $100,000,000.00 on the terms and conditions set forth in the Credit Agreement;

WHEREAS, to evidence the financial accommodations available directly to Borrowers under the
Credit Agreement, Borrowers have executed and delivered Notes, as of even date herewith, in favor
of the Lenders as payees in an aggregate maximum principal amount equal to $100,000,000.00
(including any subsequent renewals, amendments or substitutions, referred to herein collectively,
as the “Note”); and

WHEREAS, Grantor’s execution and delivery of this Security Instrument to secure, among other
things, its obligations under the Note and the Credit Agreement, is a condition to Agent and
Lenders making, and continuing to make, such financial accommodations to Borrowers.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Grantor, Grantor and Agent agree as follows:

ARTICLE I

Defined Terms

Terms not otherwise defined herein have the respective meanings given them in the Credit
Agreement. Terms defined in the Uniform Commercial Code as in effect in the State of New York have
the respective meanings given such terms therein. In addition, as used in this Security
Instrument, the following terms shall have the following meanings:

“Assignment of Leases and Rents” means the Assignment of Leases and Rents of even date
herewith from Grantor as assignor thereunder to Mortgagee as assignee thereunder,
covering the Leases and Rents, and given as an absolute assignment as an additional source of
repayment of the Obligations.

 

 

 

“Boucher Brothers Agreement” means that certain Agreement, dated as of July 1, 2004,
between Grantor and Boucher Brothers Management, Inc., a Florida corporation, as amended, restated,
extended, supplemented or otherwise modified from time to time.

“Collateral” means the Property, Improvements, Fixtures, and Personalty together with:

(a) all rights, privileges, tenements, hereditaments, royalties, minerals, oil and gas rights,
rights-of-way, zoning rights, development rights, air rights, easements, appendages and
appurtenances in anywise appertaining thereto, and all right, title and interest, if any, of
Grantor, in and to any streets, ways, alleys, strips or gores of land adjoining the Property or any
part thereof; and

(b) all betterments, improvements, additions, alterations, appurtenances, substitutions,
replacements and revisions thereof and thereto, and all reversions and remainders therein; and

(c) all of Grantor’s right, title and interest in and to any awards, remunerations,
reimbursements, settlements or compensation heretofore made or hereafter to be made by any
Governmental Authority pertaining to the Property, Improvements, Fixtures or Personalty including,
but not limited to, those for any vacation of, or change of grade in, any streets affecting the
Property or the Improvements and those for municipal utility district or other utility costs
incurred or deposits made in connection with the Property; and

(d) all of Grantor’s right, title and interest in and to any proceeds of insurance required or
maintained pursuant to the terms of Section 3.12 hereof; and

(e) all of Grantor’s right, title and interest in, to and under any management or leasing
agreement with respect to the Property and Improvements, including without limitation, (a) all
rights of Grantor to damages arising out of, or for, breach or default in respect thereof and (b)
all rights of Grantor to perform and exercise all rights and remedies thereunder; and

(f) subject to the provisions of Section 8.3 hereof, all of the Leases and Rents; and

(g) any and all other security and collateral, of any nature whatsoever, now or hereafter
given for the repayment or the performance and discharge of the Obligations.

As used in this Security Instrument, the term “Collateral” shall be expressly defined
as meaning all or, where the context permits or requires, any portion of the above, and all or,
where the context permits or requires, any interest therein; provided that the term “Collateral”
shall not include any Excluded Property but if and when any property shall cease to be Excluded
Property, such property shall be deemed at all times from and after the date hereof to constitute
Collateral.

 

-2-

 

“Credit Agreement” has the meaning given that term in the recitals above.

“Excluded Property” has the meaning set forth in the Security Agreement.

“Event of Default” means any failure, happening or occurrence described in Article
V hereinbelow.

“Fixtures” means fixtures now or hereafter located on the Property and shall in any
event include all materials, supplies, Equipment, apparatus and other items now owned or hereafter
acquired by Grantor and now or hereafter attached to, installed in or used in connection with any
of the Improvements or the Property, including, but not limited to, any and all building and
construction materials and supplies, furniture, furnishings, apparatus, machinery, equipment,
motors, elevators, escalators, fittings, radiators, ranges, refrigerators, awnings, shades,
screens, blinds, carpeting, office equipment and other furnishings, and all plumbing, heating,
lighting, cooking, laundry, ventilating, refrigerating, incinerating, air conditioning and
sprinkler equipment, telephone systems, televisions and televisions systems, computer systems, and
appurtenances thereto, together with all accessions, replacements, betterments and substitutions
for any of the foregoing and the proceeds thereof (but excluding in every event fixtures belonging
to Tenants which do not become property of the Grantor upon expiration or earlier termination of
the applicable Lease).

“Food and Beverage Lessee/Operators” shall mean SC Collins LLC, a Delaware limited
liability company.

“Impositions” means (i) all real estate and personal property taxes, charges,
assessments, excises and levies and any interest, costs or penalties with respect thereto, general
and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever, which at any time prior to or after the execution hereof may be assessed, levied or
imposed upon the Collateral or the ownership, use, occupancy or enjoyment thereof, or any portion
thereof; (ii) any charges, fees, license payments or other sums payable for any easement, license
or agreement maintained for the benefit of the Collateral; and (iii) water, gas, sewer,
electricity, telephone and other utility charges and fees related to the Collateral.

“Improvements” means any and all structures, buildings, improvements, additions,
alterations, betterments or appurtenances to the Property, whether now existing or at any time
hereafter situated, placed or constructed upon the Property, or any part thereof.

“Leases” means any and all leases, subleases, licenses, concessions, rental agreements
or other agreements (written or oral, now or hereafter in effect) which grant rights to use, enjoy
and/or occupy all or any part of the Collateral or which grant a possessory interest in and to, or
the right to use, all or any part of the Collateral, together with all security and other deposits
made in connection therewith and all guaranties thereof, together with and all extensions,
renewals, supplements, modifications or replacements of any of the foregoing.

 

-3-

 

“Legal Requirements” means (i) any and all judicial decisions, statutes, rulings,
rules, regulations, permits, certificates or ordinances of any Governmental Authority in any way
applicable to Grantor or MG Borrower, or applicable to, affecting or impacting in any way the
Collateral, including, without limiting the generality of the foregoing, the ownership, use,
occupancy, possession, operation, maintenance, alteration, repair or reconstruction thereof;
(ii) any and all covenants, conditions and restrictions contained in any deed or other form of
conveyance or in any other instrument of any nature that relate in any way or are applicable to the
Collateral or the ownership, use or occupancy thereof; and (iii) Grantor’s or MG Borrower’s
presently or subsequently effective bylaws and articles of incorporation, partnership agreement,
partnership certificate, joint venture agreement, articles of organization, operating agreement,
trust agreement or other form of business association agreement.

“Obligations” has the meaning ascribed to such term in the Credit Agreement.

“Permitted Encumbrances”: The “Permitted Liens” (as defined in the Credit
Agreement), which include those items listed on Exhibit B attached hereto and incorporated
herein by this reference.

“Personalty” means all of the Grantor’s right, title and interest in, to and under all
of the personal property of the Grantor, now owned or hereafter acquired, located on, attached to
or used in or about the Improvements and Property, including without limitation, all of the
following:

(a) all machinery, equipment, systems, fittings, apparatus, appliances, furniture,
furnishings, tools, fixtures, Inventory (as hereinafter defined) and articles of personal property
and accessions thereof and renewals, replacements thereof and substitutions therefore (including,
but not limited to, all plumbing, lighting and elevator fixtures, office furniture, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, minors, bookcases, tables, rugs, carpeting, drapes,
draperies, curtains, shades, Venetian blinds, wall coverings, screens, paintings, hangings,
pictures, divans, couches, luggage carts, luggage racks, stools, sofas, chinaware, flatware,
linens, pillows, blankets, glassware, foodcarts, cookware, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, liquor and other drink dispensers,
icemakers, radios, television sets, intercom and paging equipment, electric and electronic
equipment, dictating equipment, telephone systems, computerized accounting systems, engineering
equipment, vehicles, medical equipment, potted plants, heating, lighting and plumbing fixtures,
fire prevention and extinguishing apparatus, theft prevention equipment, cooling and
air-conditioning systems, elevators, escalators, fittings, plants, apparatus, stoves, ranges,
refrigerators, laundry machines, tools, machinery, engines, dynamos, motors, boilers, incinerators,
switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning, waxing and polishing
equipment, call systems, brackets, signs, bulbs, bells, ash and fuel conveyors, cabinets, lockers,
shelving, spotlighting equipment, dishwashers, garbage disposals, washers and dryers), other
customary hotel equipment and other property of every kind and nature whatsoever owned by Grantor,
or in which Grantor has or shall have an interest, now or hereafter located upon, or in, and used
in connection with the Property or the Improvements, or appurtenant thereto, and all building
equipment, materials and supplies of any nature whatsoever owned by Grantor, or in which Grantor
has or shall have an interest, now or hereafter located upon, or in, and used in connection with
the Property or the Improvements or appurtenant thereto, (hereinafter, all of the foregoing items
described in this Paragraph (a) are collectively called the “Equipment”), all of which, and
any replacements, modifications, alterations and additions thereto, to the extent permitted by
applicable law, shall be deemed to
constitute fixtures and are part of the real estate and security for the performance of
Grantor’s obligations.

 

-4-

 

(b) all inventory as defined in the Uniform Commercial Code applicable in the State of New
York, including, without limitation, provisions in storerooms, refrigerators, pantries and
kitchens, beverages in wine cellars and bars, other merchandise for sale, fuel, mechanical
supplies, stationery and other supplies and similar items (the “Inventory”);

(c) all other goods now or hereafter relating to the Property and Improvements;

(d) all accessions to any of the foregoing, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto;

(e) all accounts now or hereafter arising from or by virtue of any transactions related to the
Property or the Improvements, including without limitation, (i) all rights to payment of any
monetary obligation, whether or not earned by performance, (x) for property that has been or is to
be sold, leased, licensed, assigned or otherwise disposed of or (y) for services rendered or to be
rendered, (ii) all rents, fees, charges or other payments for the use or occupancy of all or any
portion of the Improvements or any of the other Collateral, and (iii) all rights to payment of any
interest or finance charges payable to Grantor;

(f) to the extent permitted to be assigned by the terms thereof or by Applicable Law, all
licenses, permits, rights, orders, variances, franchises or authorizations of or from any
governmental authority or agency now or hereafter relating to the Property or Improvements;

(g) all general intangibles, including without limitation, all payment intangibles and all
rights of Grantor under any contract, trademarks, tradenames, service marks and symbols now or
hereafter used in connection with the Property or the Improvements, and all names and all rights to
carry on business under such names, and all rights as a developer or declarant relating to the
Property or Improvements), now or hereafter relating to the Property or the Improvements;

(h) all chattel paper, instruments, investment property, letter-of-credit rights, money,
documents, supporting obligations and deposit accounts now or hereafter arising from or by virtue
of any transactions related to the Property or the Improvements;

(i) all insurance policies of any kind maintained in effect by the Grantor or of which the
Grantor is the beneficiary, now existing or hereafter acquired relating to the Property and
Improvements, under which any of the property referred to in any of the preceding clauses above is
insured, including without limitation, any proceeds payable to the Grantor pursuant to such
policies and any unearned premiums thereon; and

(j) all cash and non-cash proceeds of any of the foregoing, which in any event, shall include,
but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Mortgagee or Lenders from time to time with respect to any of the Collateral, (ii)
any and all payments (in any form whatsoever) made or due and payable
to Grantor from time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any
person acting under color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.

 

-5-

 

“Proceeds” means all proceeds (including proceeds of proceeds) of any of the
Collateral including all: (i) rights, benefits, distributions, premiums, profits, dividends,
interest, cash, Instruments, contract rights, Inventory, Equipment, Deposit Accounts, and other
property from time to time received, receivable, or otherwise distributed in respect of or in
exchange for, or as a replacement of or a substitution for, any of the Collateral, or proceeds
thereof; (ii) “proceeds,” as such term is defined in Section 9-102(a)(64) of the UCC; (iii)
proceeds of any insurance, indemnity, warranty, or guaranty (including guaranties of delivery)
payable from time to time with respect to any of the Collateral, or proceeds thereof; and (iv)
payments (in any form whatsoever) made or due and payable to a Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral, or proceeds thereof.

“Property” means the real estate or interest therein described in Exhibit A
attached hereto and incorporated herein by this reference, together with all of the easements,
rights, privileges, tenements, hereditaments and appurtenances now or hereafter thereunto belonging
or in any way appertaining thereto, and all of the estate, right, title, interest, claim and demand
whatsoever of Grantor therein or thereto, either at law or in equity, in possession or in
expectancy, now or hereafter acquired.

“Rents” means all receivables, revenues, rentals, credit card receipts, receipts and
all payments received which relate to the rental, lease, franchise and use of space at the Property
and/or Improvements or which relate to the Food and Beverage Lessee/Operators (it being
acknowledged by Lender that the security interest granted hereunder in receivables, revenues,
rentals, credit card receipts, receipts and all payments received which relate to the Food and
Beverage Lessee/Operators shall not attach to interests of third-party joint venture partners of
Grantor which are not affiliates of MG Borrower and/or Grantor) and rental and use of guest rooms
or meeting rooms or banquet rooms or recreational facilities or bars, beverage or food sales,
vending machines, mini-bars, room service, telephone, video and television systems, electronic
mail, internet connections, guest laundry, bars, the provision or sale of other goods and services,
and all other payments received from guests or visitors of the Property and/or Improvements, and
other items of revenue, receipts or income, all cash or security deposits, lease termination
payments, advance rentals and payments of similar nature and guarantees or other security held by,
or issued in favor of, Grantor in connection therewith to the extent of Grantor’s rights or
interest therein and all remainders, reversions and other rights and estates appurtenant thereto,
and all base, fixed, percentage or additional rents, and other rents, oil and gas or other mineral
royalties, and bonuses, issues, profits and rebates and refunds or other payments made by any
Governmental Authority from or relating to the Property, the Improvements, the Fixtures or the
Equipment plus all rents, common area charges and other payments now existing or hereafter
arising, whether paid or accruing before or after the filing by or against Grantor of any petition
for relief under the Bankruptcy Code and all proceeds from the sale or other disposition of the
Leases and the right to receive and apply the Rents.

“Tenant” means the tenant or lessee under any Lease.

 

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ARTICLE II

Grant and Conveyance

Section 2.1 Grant and Conveyance. For and in consideration of the sum of ONE DOLLAR
($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor does hereby GRANT, BARGAIN, SELL, CONVEY, ASSIGN, MORTGAGE, TRANSFER, PLEDGE
and SET OVER unto Mortgagee and the Mortgagee’s successors and/or assigns, the Collateral, subject,
however, to the Permitted Encumbrances, TO HAVE AND TO HOLD the Collateral and all parts, rights,
members and appurtenances thereof, IN FEE SIMPLE forever, as security for the full and timely
payment and performance of the Obligations, for the benefit of Mortgagee and its successors and/or
assigns. Grantor warrants and covenants that Grantor is lawfully seized and possessed of the
Collateral as aforesaid, and has good right to convey the same subject only to the Permitted
Encumbrances, and that Grantor does warrant and shall forever defend the title thereto against the
claims of all Persons whomsoever, subject as to the Permitted Encumbrances.

Section 2.2 Intentionally Omitted.

Section 2.3 Revolving Loan Account; Future Advances. This Security Instrument
secures a “revolving loan account”, and payment of any amounts outstanding under the Note or the
Credit Agreement from time to time shall not cancel or release this Security Instrument, and
re-advances shall be secured to the same extent as original obligations hereunder. This Security
Instrument shall secure such future advances as may be made by Mortgagee, at its option and for any
purpose, within twenty (20) years from the date of this Security Instrument, whether made directly
to Grantor or made to MG Borrower. All such future advances shall be included within the
“Obligations,” shall be secured to the same extent as if made on the date of the execution
of this Security Instrument, and shall take priority from the time this Security Instrument is
filed for record as provided by law. The total amount of indebtedness secured by this Security
Instrument may decrease or increase from time to time, but the total unpaid balance so secured at
any one time shall not exceed the maximum principal amount of $200,000,000, plus interest
and any disbursements made for the payment of taxes, levies or insurance on the Property, with
interest on those disbursements, plus any increase in the principal balance as the result
of negative amortization or deferred interest. Without the prior written consent of Mortgagee,
which Mortgagee may grant or withhold in its sole discretion, Grantor shall not file for record any
notice limiting the maximum principal amount that may be secured by this Security Instrument to a
sum less than the maximum principal amount set forth in this paragraph.

 

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ARTICLE III

Covenants, Warranties and Representations

Grantor hereby unconditionally covenants, warrants and represents to Agent and Lenders as
follows (which covenants, warranties and representations have been and will be relied upon by Agent
and Lenders in advancing funds to Borrowers under the Loan Documents):

Section 3.1 Title to Collateral and Priority of this Instrument. Grantor has good,
marketable and indefeasible fee simple title to the Property and Improvements, and good and
marketable title to the Fixtures and Personalty, free and clear of any Liens options (except as set
forth in the Leases), leases (other than the Leases), covenants and other rights, titles, interests
or estates of any nature whatsoever except the Permitted Encumbrances. Except to the extent any of
the following constitutes Excluded Property, this Security Instrument (a) constitutes a valid and
enforceable first priority mortgage lien against the Property, Improvements and Fixtures; (b)
creates valid and enforceable first priority security interest in and to the Personalty and, to the
extent that the terms Leases and Rents include items covered by the Uniform Commercial Code as
adopted in the State of New York, in the Leases and Rents; and (c) constitutes a valid and
enforceable first priority assignment of the Leases and Rents not covered by such Uniform
Commercial Code, all in accordance with the terms hereof.

Section 3.2 Hazardous Materials. Except as could not reasonably be expected to
result in a Material Adverse Effect, the Collateral has not been used to treat, store or dispose of
any Hazardous Materials in violation of Environmental Laws, and, no such Hazardous Materials
(including without limitation, any materials containing asbestos), are located on, in or under the
Collateral or used or emitted in connection therewith in violation of Environmental Laws, except as
disclosed in writing in any environmental assessment reports delivered to Agent and upon which
Agent and Lenders are entitled to rely. Grantor has obtained and shall maintain all licenses,
permits and approvals required with respect to Hazardous Materials, and is in full compliance with
all of the terms, conditions and requirements of such licenses, permits and approvals, in each
case, except as could not reasonably be expected to result in a Material Adverse Effect. No
portion of the Property is a wetland. Grantor shall promptly notify Agent of any (a) material
change in the nature or extent of any Hazardous Materials, maintained on, in or under the
Collateral or used or emitted in connection therewith and (b) change in wetlands located on the
Property.

Section 3.3 Separate Tract. The Property is not a part of a larger tract of land
owned by Grantor or any of its Affiliates and is not otherwise included under any unity of title or
similar covenant with other lands not encumbered by this Security Instrument

 

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Section 3.4 Leases. (a) Grantor has good title to the Leases and Rents and all
requisite right, power and authority to assign the Leases (other than the Boucher Brothers
Agreement) and Rents, and no other Person has any right, title or interest therein (other than the
lessee’s interest therein held by a Tenant thereunder).

(b) Grantor has duly and punctually performed all of the material terms, covenants, conditions
and warranties of the Leases on Grantor’s part to be performed, except for any nonperformance which
could not reasonably be expected to result in a Material Adverse Effect.

(c) Except for transactions which have been terminated, Grantor has not previously sold,
assigned, transferred, encumbered, mortgaged or pledged the Leases or the Rents, whether now due or
hereafter to become due.

(d) There are no options to purchase all or any portion of the Collateral contained in any
Lease. There are no options to renew by any Tenant except as stated in the Leases. Grantor shall
furnish to Agent, promptly upon Agent’s request, true and complete copies of all Leases, and all
extensions, supplements, modifications and amendments thereof.

(e) Grantor shall observe, perform and discharge all of its material obligations, covenants
and warranties under the Leases, and Grantor shall give prompt notice to Agent of any failure on
the part of Grantor to observe, perform or discharge any of the same.

(f) So long as the Obligations remain unpaid and undischarged, and unless Agent otherwise
consents in writing, the fee and the leasehold estates in and to the Collateral shall not merge,
but shall always remain separate and distinct, notwithstanding the union of such estates (without
implying Agent’s consent to such union) either in Grantor, Agent or in any Tenant or in any third
party by purchase or otherwise.

(g) From time to time upon Agent’s written request, Grantor shall furnish to Agent a current
rent roll and the affidavit of an officer of Grantor, certifying as to certain matters with respect
to the Leases and Rents, in form and substance reasonably satisfactory to Agent.

(h) From time to time upon the written request of Agent, but no more often than annually,
Grantor shall cause to be furnished to Agent the estoppel certificate of each Tenant, in form and
substance reasonably acceptable to Agent.

Section 3.5 Use. Grantor shall use the Collateral for commercial purposes only.
Grantor shall not use, maintain, operate or occupy, or allow the use, maintenance, operation or
occupancy of, the Collateral in any manner or for any purpose which (a) except as could not
reasonably be expected to result in a Material Adverse Effect, violate any Legal Requirement, or
(b) makes void, voidable or cancelable, or increases the premium of, any insurance then in force
with respect thereto.

 

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Section 3.6 Alterations or Waste. Grantor shall not commit or permit any physical
waste of the Collateral, and shall not, without the prior written consent of Agent, which consent
shall not be unreasonably withheld, conditioned or delayed, make or permit to be made
any alteration (excluding any external structures) to the Collateral in excess of $5,000,000
per calendar year, except for (i) tenant improvement work under a Lease approved by Agent, (ii)
alterations necessary to protect the safety of tenants or patrons of other users of the Property
and the value of the Property, (iii) all alterations necessary to comply with Section 3.11
and (iv) the replacement of FF&E to the extent being of a routine and recurring nature and
performed in the ordinary course of business of Grantor.

Section 3.7 Compliance with Legal Requirements. Except as could not reasonably be
expected to result in a Material Adverse Effect, Grantor shall promptly and faithfully comply with,
conform to and obey all present and future Legal Requirements including, without limitation, the
Americans with Disabilities Act of 1990, as amended (42 USC § 12101, et seq.), the Federal
Architectural Barriers Act, as amended (42 USC § 4151, et seq.), the Fair Housing Amendments Act of
1988, as amended (42 USC § 3601, et seq.) and The Rehabilitation Act of 1973, as amended (29 USC §
794), whether or not same shall necessitate structural changes in, improvements to, or interfere
with the use or enjoyment of the Collateral.

Section 3.8 [Intentionally Omitted].

Section 3.9 Prior Security Instrument Status. Grantor shall protect the first
priority status of the Lien of this Security Instrument and shall not place, or permit to be
placed, except for Permitted Encumbrances, otherwise convey, mortgage, hypothecate or encumber the
Collateral with, any other Lien, regardless of whether same is allegedly or expressly inferior to
the title created by this Security Instrument, except in favor of Mortgagee. If any such Lien is
asserted against the Collateral, Grantor shall promptly, and at its sole cost and expense, (a) give
Agent written notice thereof within 5 days from Grantor obtaining knowledge of such Lien and (b)
take such action so as to cause the same to be released, bonded or stayed to Agent’s reasonable
satisfaction, or so long as the property subject to the lien of this Security Instrument is not
impaired, contest the same in accordance with the provisions of the Credit Agreement. Such notice
shall specify who is asserting such Lien and shall detail the origin and nature of the underlying
facts giving rise to such asserted Lien.

Section 3.10 Payment of Impositions.

(a) Payment of Impositions. Grantor shall duly pay and discharge, or cause to be paid
and discharged, the Impositions as provided in Section 8.5 of the Credit Agreement.

(b) Change in Law. If after the date hereof any change in Applicable Law governing
the taxation of deeds of trust, mortgages or security agreements, or assignments of leases or debts
secured thereby or the manner of collecting such taxes shall occur, and Agent reasonably determines
that such change, adoption would adversely affect Agent’s, the Issuing Bank’s or the Lenders’
rights or benefits under the Loan Agreement, Grantor shall promptly pay any tax resulting from such
adoption, change or making on or before the due date thereof.

Section 3.11 Repair. Grantor shall protect and preserve the Collateral and maintain
all Collateral in good repair, working order and condition, ordinary wear and tear and casualty
events excepted.

 

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Section 3.12 Insurance.

(a) Types of Insurance. Grantor shall procure for, deliver to, and maintain for the
benefit of Agent, or cause the Tenant(s) to procure for, deliver to and maintain for the benefit of
Agent, during the term of this Security Instrument original paid up insurance policies or certified
copies of paid up insurance policies (or, if there is blanket coverage, Agent shall require an
underlier policy with the Collateral identified and specifically allocated amounts shown) in such
amounts, form and substance as are required under Section 8.4 of the Credit Agreement.

(b) Insurance Companies, Form of Policies. All insurance policies maintained pursuant
to this Section shall be in form and substance satisfactory to Agent, provided that all
policies of liability coverage shall require not less than 30 days’ prior written notice to Agent
of any cancellation, termination, expiration or change in coverage. Without limiting the
discretion of Agent with respect to required endorsements to insurance policies, all such policies
for loss of or damage to the Collateral shall contain a standard mortgagee clause (without
contribution) naming Agent as mortgagee with loss proceeds payable to 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 insured; (ii) the occupation or use of the Collateral for
purposes more hazardous than permitted by the terms of any such policy; (iii) any foreclosure or
other action by Agent under the Loan Documents; or (iv) any change in title to or ownership of the
Collateral or any portion thereof, such proceeds to be held for application as provided in the Loan
Documents.

(c) Proof of Insurance. Within one (1) Business Day of the expiration or renewal date
of each policy maintained pursuant to this Section, Grantor shall deliver to Agent evidence
reasonably satisfactory to Agent that such policy has been renewed and that any such premiums
related to such policy have been timely paid (which premiums may be financed pursuant to a payment
or financing plan provided by the insurance carrier providing such insurance). In the event of
foreclosure of this Security Instrument or any other transfer of title to the Collateral in
extinguishment of the Obligations, all right, title, and interest of Grantor in and to all
insurance policies then in force with respect to the Collateral shall pass to the purchaser or
Agent.

(d) Grantor’s Statement of Insurance Carried. If at any time requested by Agent,
Grantor shall furnish to Agent copies of certificates evidencing the amounts of insurance
maintained in compliance with this Section 3.12, of the risks covered by such insurance, and of the
insurance company or companies which carry such insurance.

(e) Payment of Proceeds to Agent. While an Event of Default exists, Agent is hereby
authorized and empowered, at its option, to adjust or compromise any loss under any insurance
policies maintained pursuant to this Section and to collect and receive the proceeds from any such
policy or policies. In addition, Grantor hereby authorizes and directs each insurance company to
make payment for all losses involving casualty insurance proceeds (other than business interruption
insurance proceeds) in excess of $5,000,000 (a “Major Casualty”) directly to Agent. If any
insurance company fails to disburse directly and solely to Agent in accordance with the
requirements of the immediately preceding sentences, but disburses instead either solely to Grantor
or to Grantor and Agent jointly, Grantor agrees immediately to endorse and transfer such proceeds
to Agent. Upon the failure of Grantor to endorse and transfer such
proceeds as aforesaid, Agent may execute such endorsements or transfers for and in the name of
Grantor, and Grantor hereby irrevocably appoints Agent as Grantor’s agent and attorney-in-fact to
do so, such appointment being coupled with an interest and being irrevocable.

 

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(f) Application of Proceeds. After deducting from said insurance proceeds all of its
actual, out-of-pocket expenses incurred in the collection and administration of such sums,
including reasonable attorneys’ fees actually incurred, Agent shall apply the net proceeds of any
Major Casualty or any part thereof:

(i) upon the written request of Grantor (which request shall set forth in reasonably
sufficient detail that each of the following conditions have been satisfied), towards the
restoration of the Collateral, provided that the following conditions (the
“Restoration Conditions”) are met to the reasonable satisfaction of Agent:

(a) in Agent’s reasonable judgment, the Collateral can, with diligent
restoration, be returned to a condition at least equal to the condition thereof that
existed prior to the casualty within 60 days prior to the Maturity Date;
provided however that this condition shall not apply in the event that (i) a
new Appraisal of the Property in its then current condition is delivered pursuant to
Section 4.2(c) of the Credit Agreement, (ii) a forward looking calculation of the
Adjusted Net Operating Income of the Property for the immediately succeeding four
(4) fiscal quarters, on a Pro Forma Basis taking into account the then current
condition of the Property, is mutually agreed upon by Grantor and Agent, (iii) MG
Borrower shall have delivered a Borrowing Base Certificate to Agent which Borrowing
Base Certificate shall be calculated using the information determined pursuant to
the immediately preceding clauses (i) and (ii) and (iv) based on the Borrowing Base
calculated in the Borrowing Base Certificate delivered pursuant to the immediately
preceding clause (iii), Borrowers is in compliance with Section 2.6(b) of the Credit
Agreement.

(b) no Event of Default exists;

(c) all necessary Governmental Approvals can be obtained to allow the
rebuilding and reoccupancy of the Collateral;

(d) there are sufficient sums available (through net proceeds and contributions
by Grantor), for restoration or repair; and

(e) the amount of such proceeds (other than business interruption insurance
proceeds) is not greater than $100,000,000; or

(ii) if the Restoration Conditions are not satisfied within 90 days following a Major
Casualty, to the payment of the Obligations, whether or not due and as provided in Section
11.4 of the Credit Agreement or for any other purposes or objects for which Agent is
expressly entitled to advance or apply funds under the Loan Documents;

all without affecting the Lien of this Security Instrument, and any balance of such moneys then
remaining shall be paid to Grantor or whomever may be legally entitled thereto. Agent and
Lenders shall not be held responsible for any failure to collect any insurance proceeds due under
the terms of any policy regardless of the cause of such failure.

 

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Section 3.13 Restoration Following Casualty. If any act or occurrence of any kind or
nature, ordinary or extraordinary, foreseen or unforeseen (including any casualty for which
insurance was not obtained or obtainable), shall result in damage to, or loss or destruction of,
the Collateral in an amount in excess of $500,000, Grantor shall give notice thereof to Agent
promptly and, at Grantor’s sole cost and expense and regardless of whether the insurance proceeds
(if any) shall be sufficient for the purpose, Grantor shall commence and continue diligently to
completion to restore, repair, replace and rebuild the Collateral in accordance with all Legal
Requirements as nearly as possible to its value, condition and character immediately prior to such
damage, loss or destruction.

Section 3.14 Hold Harmless. Grantor shall defend, at its own cost and expense, and
hold Agent and Lenders harmless from any action, proceeding or claim affecting the Collateral or
the Loan Documents, and all costs and expenses incurred by Agent and/or Lenders in protecting its
interests hereunder in such an event (including all court costs and attorneys’ fees) shall be borne
by Grantor and secured hereby, except to the extent the same are caused by the gross negligence or
willful misconduct of Agent or any Lender, as applicable.

Section 3.15 [Intentionally Omitted].

Section 3.16 No Conflicts, Etc. The execution, delivery and performance of this
Security Instrument and the other Security Documents encumbering or relating to any of the
Collateral, in accordance with their respective terms do not and will not, by the passage of time,
the giving of notice, or both: (a) require any Governmental Approval or violate any Applicable Law
relating to Grantor or any of the Collateral; (b) conflict with, result in a breach of or
constitute a default under the organizational documents of Grantor, or any indenture, agreement or
other instrument to which Grantor is a party or by which it or any of the Collateral may be bound;
or (c) except as provided herein or therein, result in or require the creation or imposition of any
Lien upon or with respect to any of the Collateral.

Section 3.17 Licenses and Permits. Grantor currently holds and will continue to hold
(i) all certificates of occupancy, licenses, registrations, permits, consents, franchises and
approvals of any Governmental Authority or any other Person, the absence of which could reasonably
be expected to result in a material adverse effect on the ownership, occupancy or operation of the
Property and Improvements, taken as a whole, and (ii) the right to use the name “Delano” pursuant
to the Delano Management Agreement in connection with the operation of the Property and
Improvements. As of the date hereof, all such certificates of occupancy, licenses, registrations,
permits, consents, franchises and approvals are current and in full force and effect.

 

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ARTICLE IV

Condemnation

Section 4.1 Condemnation.

(a) Taking. If all or any portion of the Collateral is taken by condemnation or
eminent domain powers of any Governmental Authority (or any transfer by private sale in lieu
thereof), either temporarily or permanently, then, if any Event of Default then exists or the award
and other proceeds payable in connection therewith exceeds $5,000,000 (a “Major Taking”), then such
amount shall be paid to Agent and applied to payment of the Obligations after deducting any costs
(including reasonable attorneys’ fees) incurred by Agent in connection therewith, or otherwise
applied as provided in Section 11.4 of the Credit Agreement.

(b) Participation in Proceedings. Grantor shall promptly notify Agent of any actual
or threatened initiation of any condemnation or eminent domain proceeding as to any part of the
Collateral and, upon Agent’s request, shall promptly deliver to Agent copies of any and all papers
served or received in connection with such proceedings. Agent shall have the right, at its option,
to participate in such proceedings at the sole cost and expense of Grantor (including without
limitation the Agent’s attorneys’ fees). Grantor shall execute such documents and take such other
steps as required to permit such participation.

(c) Right to Settle Claims. Agent is hereby authorized, at any time that an Event of
Default shall have occurred and be continuing, to adjust, compromise and collect any condemnation
or eminent domain award or settle a claim for damages and to apply the same to the Obligations in
accordance with the applicable provisions of the Loan Documents.

(d) Use of Proceeds. Grantor hereby assigns to Agent for the benefit of Lenders any
proceeds or awards which may become due by reason of any condemnation or other taking for public
use of the whole or any part of the Collateral or any rights appurtenant thereto, and Agent is
authorized, at its option, to collect and receive all such compensation, awards or damages in
respect of a Major Taking or otherwise when any Event of Default exists and to give proper receipts
and acquittances therefor without any obligation to question the amount of any such compensation,
awards or damages. The proceeds of any such condemnation award or proceeds or any part thereof, to
the extent not applied pursuant to Section 4.1(a), shall be applied:

(i) if the Restoration Conditions in Section 3.12(f) are satisfied, towards
restoration of the Collateral; or

(ii) if the Restoration Conditions are not satisfied, to the payment of the
Obligations, whether or not due and as provided in Section 11.4 of the Credit Agreement, or
for any other purposes or objects for which Agent is expressly entitled to advance or apply
funds under the Loan Documents.

(e) Further Assignment. Grantor agrees to execute such further assignments of any
compensation, awards, damages, claims, rights of action and proceeds as Agent may reasonably
require to effect the terms of this Security Instrument. If, prior to the receipt by Agent of such
award or proceeds, the Collateral shall have been bid on foreclosure of this Security Instrument,
Agent shall have the right to receive such award or proceeds to the extent of any unpaid
Obligations following such sale, with legal interest thereon, whether or not a deficiency judgment
on this Security Instrument, the Obligations or the other Loan Documents shall have been sought or
recovered, and to the extent of attorneys’ fees, costs and
disbursements incurred by Agent in connection with the collection of such award or proceeds.
If Grantor fails to assign such compensation, awards, damages, claims, rights of action, and
proceeds as aforesaid, Agent may execute such endorsements or transfers for and in the name of
Grantor and Grantor hereby appoints Agent as Grantor’s agent and attorney-in-fact so to do, such
appointment being coupled with an interest and being irrevocable.

 

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ARTICLE V

Events of Default

The term “Event of Default,” as used herein, shall mean the occurrence or happening,
at any time and from time to time, of any one or more of the following (and Grantor shall be
entitled to no notice of default other than as provided for below):

Section 5.1 Credit Agreement. The occurrence of an Event of Default under and as
defined in the Credit Agreement.

Section 5.2 Foreclosure of Other Liens. If the holder of any Lien on any of the
Collateral or any Lien secured by a pledge of a direct or indirect ownership interest in Grantor
institutes foreclosure proceedings for the enforcement of its Lien, unless, as to mechanics’ or
materialmen’s Lien, (i) such Lien is released from or cannot be enforced against the Collateral (by
bonding the same off or otherwise) within 10 days after such foreclosure proceedings are instituted
and (ii) the filing of such mechanic’s or materialmen’s Lien or other action taken by the lienor in
connection therewith is not otherwise an Event of Default hereunder or under the Credit Agreement.

Section 5.3 Disposition of Collateral and Beneficial Interest in Grantor. Except as
expressly permitted under the Credit Agreement or any other Loan Document, the occurrence of any
sale, lease, exchange, assignment, conveyance, transfer or other disposition of all or any part of
the Collateral, or any part thereof or any interest therein, or the conveyance, assignment,
transfer or other disposition of all or any part of a direct beneficial ownership interest in
Grantor.

Section 5.4 Further Encumbrances. Except as permitted under the Credit Agreement or
any other Loan Document, and except for the Permitted Encumbrances, Grantor creates, places or
permits to be created or placed, or through any act or failure to act, acquiesces in the placing
of, or allows to remain, any Lien on all or any part of the Collateral (regardless of whether such
Lien is expressly subordinate to the lien of this Security Instrument or any other Security
Document) or if Grantor violates the provisions of Section 3.19.

Section 5.5 Event of Default under any other Loan Document. If an Event of Default
shall occur under and as defined in any other Loan Document purported to create a Lien on any of
the Collateral.

 

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ARTICLE VI

Remedies

Section 6.1 Remedies. If an Event of Default exists, Agent may, and at the direction
of the Requisite Lenders shall, exercise any or all of the following rights, remedies and
recourses:

(a) Termination of License. (i) Terminate the License granted to Grantor in
Section 8.3 hereof and exercise the rights, powers and privileges of landlord under
the Leases, and then and thereafter, with or without taking possession of the Collateral, in
Grantor’s own name or in the name of Agent, demand, collect, receive, sue for, attach and
levy on the Rents (including demand for Rents collected for the period in which the demand
occurs) and give proper receipts, releases and acquittances therefor.

(ii) Deliver a written demand to any Tenant for payment of Rents, which demand
shall be sufficient evidence of each such Tenant’s obligation and authority to make
all future payments of Rents to Agent without the necessity for further consent by
the Grantor. Grantor, for itself and its agents, covenants and agrees not to
countermand any such written demand to Tenants for payment of Rents.

(b) Entry on Collateral. (i) Demand that Grantor, and upon such demand
Grantor shall, forthwith surrender to Agent the actual possession of the Collateral, and to
the extent not prohibited by Applicable Law, enter and take possession of all of the
Collateral without the appointment of a receiver, or an application therefor, and exclude
Grantor and its agents and employees wholly therefrom, and have joint access with Grantor to
the books, papers and accounts of Grantor.

(ii) If Grantor shall for any reason fail to surrender or deliver the
Collateral or any part thereof after such demand by Agent, Agent may seek a judgment
or decree conferring upon Agent the right to immediate possession or requiring
Grantor to deliver immediate possession of the Collateral to Agent, and Grantor
hereby specifically covenants and agrees that Grantor shall not oppose, contest or
otherwise hinder or delay Agent in any action or proceeding by Agent to obtain such
judgment or decree. Grantor shall pay to Agent, upon demand, all expenses of
obtaining such judgment or decree, including reasonable compensation to Agent, its
attorneys and agents, and all such expenses and compensation shall, until paid,
become part of the Obligations and shall be secured by this Security Instrument.

 

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(iii) Upon every such entering on or taking of possession, Agent may hold,
store, use, operate, manage and control the Collateral and conduct the business
thereof, and, from time to time, (A) make all necessary and proper maintenance,
repairs, renewals, replacements, additions, betterments and improvements thereto and
thereon and purchase or otherwise acquire additional fixtures, personalty and other
property, (B) insure or keep the Collateral insured,
(C) manage and operate the Collateral and exercise all the rights and powers of
Grantor to the same extent as Grantor could in its own name or otherwise act with
respect to the same, and (D) enter into any and all agreements with respect to the
exercise by others of any of the powers herein granted to Agent, all as Agent from
time to time may determine to be in its best interest. Anything in this Security
Instrument to the contrary notwithstanding, neither Agent nor any Lender shall be
obligated to discharge or perform the duties of the landlord to any Tenant or incur
any liability as the result of any exercise by Agent of its rights under this
Security Instrument, and Agent shall be liable to account only for the Rents
actually received by Agent.

(iv) Make, modify, enforce, cancel or accept surrender of any Lease, remove and
evict any Tenant, increase or decrease Rents under any Lease, appear in and defend
any action or proceeding purporting to affect the Collateral, and perform and
discharge each and every obligation, covenant and agreement of Grantor contained in
any Lease, whether or not Agent takes possession of the Collateral.

(v) Neither the entering upon and taking possession of the Collateral, nor the
collection of any Rents and the application thereof as aforesaid, shall cure or
waive any Event of Default theretofore or thereafter occurring, or affect any notice
of an Event of Default hereunder or invalidate any act done pursuant to any such
notice. Neither Agent nor any Lender shall be liable to Grantor, anyone claiming
under or through Grantor, or anyone having an interest in the Collateral by reason
of anything done or left undone by Agent hereunder. Nothing contained in this
subsection (b) shall require Agent to incur any expense or do any act. If the Rents
are not sufficient to meet the costs of taking control of and managing the
Collateral and/or collecting the Rents, any funds expended by Agent or Lenders for
such purposes shall become Obligations of Grantor to Agent or Lenders, as the case
may be, secured by this Security Instrument. Such amounts, together with interest
at the Post-Default Rate, and attorneys’ fees, if applicable, shall be immediately
due and payable. Notwithstanding Agent’s continuance in possession or receipt and
application of Rents, Agent shall be entitled to exercise every right provided for
in this Security Instrument or by Applicable Law upon or after the occurrence of an
Event of Default. Any of the actions referred to in this subsection (b) may be
taken by Agent at such time as Agent is so entitled, without regard to the adequacy
of any security for the Obligations hereby secured.

 

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(c) Foreclosure and Sale. If the Obligations have been accelerated pursuant to
the Credit Agreement, institute an action to foreclose this Security Instrument, or take
such other action as may be allowed at law or in equity, for the enforcement hereof and
realization on the Collateral or any other security which is herein or elsewhere in the Loan
Documents provided for the Collateral or any part thereof at one or more sales before the
door of the courthouse of the county in which the Property or any part of the Property is
situated, or such other place as is required or permitted by Applicable Law, without notice
except as required or set forth herein or otherwise required by Applicable
Law, to the highest bidder for cash, or to proceed to final judgment and execution
thereon, in order to pay the Obligations, and all expenses of sale and of all proceedings in
connection therewith, including reasonable attorneys’ fees, all costs of suit, interest at
the Post-Default Rate as provided in the Credit Agreement on any judgment obtained by Agent
from and after the date of any sale of the Collateral (which may be sold in one parcel or in
such parcels, manner or order as Agent shall elect) until actual payment is made of the full
amount due Agent and Lenders, without further stay, any law, usage or custom to the contrary
notwithstanding. In the event of any sale pursuant to any order in any judicial proceedings
or otherwise, the Collateral may be sold as an entirety or in separate parcels and in such
manner or order as Agent in its sole discretion may elect, and if Agent so elects, Agent may
sell the Personalty covered by this Security Instrument at one or more separate sales in any
manner permitted by the Uniform Commercial Code as adopted in the State of New York, and one
or more exercises of the powers herein granted shall not extinguish nor exhaust such powers,
until the entire Collateral is sold or the Obligations are paid in full. If the Obligations
are now or hereafter further secured by any chattel mortgages, pledges, contracts of
guaranty, assignments of lease or other security instruments, Agent may at its option
exhaust the remedies granted under any of said security instruments, either concurrently or
independently, and in such order as Agent may determine.

Immediately upon the first insertion of any advertisement or notice of any such sale, there
shall be and become due and owing from the Grantor all reasonable expenses incident to said
advertisement or notice, all court costs and all reasonable expenses incident to any foreclosure
proceedings brought under this Security Instrument, including reasonable attorneys’ fees. No party
shall be required to receive only the aggregate indebtedness then secured hereby with the interest
thereon to the date of payment unless the same shall be accompanied by a tender of the said
expenses, costs and commissions.

Agent, may, in addition to and not in abrogation of the rights covered under the immediately
preceding subparagraph, or elsewhere in this Article VI, either with or without entry or
taking possession as herein provided or otherwise, proceed by a suit or suits in law or in equity
or by any other appropriate proceeding or remedy (i) to enforce payment of the Obligations or the
performance of any term, covenant, condition or agreement of this Security Instrument or any other
right and (ii) to pursue any other remedy available to it, all as Agent at its sole discretion
shall elect.

(d) Receiver. Agent, to the extent permitted by Applicable Law, upon
application to a court of competent jurisdiction, shall be entitled as a matter of strict
right, without notice and without regard to the adequacy or value of any security for the
Obligations or the solvency of any party bound for its payment, to the appointment of a
receiver to take possession of and to operate the Collateral and to collect and apply the
incomes, rents, issues, profits and revenues thereof. The receiver shall have all of the
rights and powers permitted under the laws of the State of Florida. Grantor shall pay to
Agent upon demand all expenses, including receiver’s fees, attorneys’ fees, costs and
agent’s compensation, incurred pursuant to the provisions of this subsection, and any such
amounts paid by Agent shall be added to the Obligations and shall be secured by this
Security Instrument.

 

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(e) Performance by Agent. At Agent’s option and without any obligation to do
so, pay, perform or observe any term, covenant or condition of this Security Instrument not
paid, performed or observed by Grantor, and all payments made or costs or expenses incurred
by Agent in connection therewith shall be secured hereby and shall be, without demand,
immediately repaid by Grantor to Agent with interest thereon at the Post-Default Rate.
Agent shall be the sole judge of the necessity for any such actions and of the amounts to be
paid Agent is hereby empowered to enter and to authorize others to enter upon the Collateral
or any part thereof for the purpose of performing or observing any such defaulted term,
covenant or condition without thereby becoming liable to Grantor or any person in possession
holding under Grantor.

(f) Relief From Automatic Stay. If Grantor is the subject of any insolvency,
bankruptcy, receivership, dissolution, reorganization, or similar proceeding, federal or
state, voluntary or involuntary, under any present or future Applicable Law, Agent shall be
entitled to relief from the automatic stay as to the enforcement of its remedies under the
Loan Documents against the Collateral, including specifically, but not limited to, the stay
imposed by 11 U.S.C. Section 362, as amended, and Grantor hereby consents to the immediate
lifting of any such automatic stay and will not contest any motion by Agent to lift such
stay.

(g) Other. Exercise any and all other rights, remedies and recourses granted
under this Security Instrument (including, without limitation, those set forth in
Articles VII, VIII and IX hereinbelow) or now or hereafter existing
in equity, at law, by virtue of statute or otherwise.

Section 6.2 Separate Sales. With respect to sales hereunder, the Collateral may be
sold in one or more parcels and in such manner and order as Agent, in its sole discretion, may
elect, it being expressly understood and agreed that the right of sale arising out of any Event of
Default shall not be exhausted by any one or more sales.

Section 6.3 Remedies Cumulative, Concurrent and Non-Exclusive. Agent and Lenders
shall have all rights, remedies and recourses granted in this Security Instrument and available
under Applicable Law (including specifically those granted by the Uniform Commercial Code in effect
and applicable to the Collateral or any portion thereof), and if such Event of Default also
constitutes an Event of Default under the Credit Agreement, all rights, remedies and recourses
granted in the Loan Documents and available under Applicable Law. All such rights and remedies (a)
shall be cumulative and concurrent, to the fullest extent permitted by Applicable Law, (b) may be
pursued separately, successively or concurrently against Grantor, MG Borrower or any other Loan
Party or any other Person, or against any of the Collateral (as defined in the Credit Agreement),
or against any one or more of them, at the sole discretion of Agent, all to the fullest extent
permitted by Applicable Law, (c) may be exercised as often as occasion therefor shall arise, it
being agreed by Grantor that the exercise or failure to exercise any of same shall in no event be
construed as a waiver or release thereof or of any other right, remedy or recourse, and (d) are
intended to be, and shall be, nonexclusive.

 

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Section 6.4 No Conditions Precedent to Exercise of Remedies. Neither Grantor, MG
Borrower, any other Loan Party or any other Person obligated for payment of all or any
part of, or fulfillment of all or any of, the Obligations, shall be relieved of such
obligation by reason of (a) the failure of Agent or any Lender to comply with any request of
Grantor, MG Borrower, any Loan Party or any other Person so obligated, to foreclose this Security
Instrument or to enforce any provisions of the other Loan Documents, (b) the release, regardless of
consideration, of any of the Collateral (as defined in the Credit Agreement) or the addition of any
other property to such Collateral, (c) any agreement or stipulation between any subsequent owner of
any of such Collateral and Agent extending, renewing, rearranging or in any other way modifying the
terms of the Loan Documents without first having obtained the consent of, given notice to or paid
any consideration to Grantor, MG Borrower, such other Loan Party or such other Person, and in such
event, Grantor, MG Borrower, all such other Loan Parties and all such other Persons shall continue
to be liable to make payment according to the terms of any such extension or modification agreement
unless expressly released and discharged, in writing, by Agent, or (d) by any other act or
occurrence, save and except the complete payment and the complete fulfillment of all of the
Obligations.

Section 6.5 Release of and Resort to Collateral. Agent may release, regardless of
consideration, any part of the Collateral without, as to the remainder of the Collateral, in any
way impairing, affecting, subordinating or releasing any of the Liens created or evidenced by any
of the Loan Documents or their position as a first and prior Lien in and to the Collateral (as
defined in the Credit Agreement). For payment of the Obligations, Agent may resort to any security
therefor held by Agent in such order and manner as Agent may elect.

Section 6.6 Waiver of Appraisement, Valuation, etc. Grantor agrees, to the full
extent permitted by Applicable Law, that neither Grantor nor anyone claiming through or under
Grantor will set up, claim or seek to take advantage of any moratorium, reinstatement, forbearance,
appraisement, valuation, stay, extension, homestead, exemption or redemption laws now or hereafter
in force in order to prevent or hinder the enforcement or foreclosure of this Security Instrument
or the absolute sale of the Collateral, the delivery of possession thereof immediately after such
sale to the purchaser at such sale, or the exercise of any other right or remedy hereunder.
Grantor, for itself and all who may at any time claim through or under it, hereby waives to the
full extent that it may lawfully so do, the benefit of all such Applicable Laws, and any and all
right to have assets subject to the Lien of this Security Instrument marshaled upon any foreclosure
or sale under the power herein granted or a sale in inverse order of alienation.

Section 6.7 Discontinuance of Proceedings. In case Agent shall have proceeded to
enforce any right, power or remedy under this Security Instrument by foreclosure, entry or
otherwise, and such proceeding shall have been withdrawn, discontinued or abandoned for any reason,
or shall have been determined adversely to Agent, then in every such case (a) Grantor and Agent
shall be restored to their former positions and rights, (b) all rights, powers and remedies of
Agent shall continue as if no such proceeding had been taken, (c) each and every Event of Default
declared or occurring prior or subsequent to such withdrawal, discontinuance or abandonment shall
be and shall be deemed to be a continuing Event of Default and (d) neither this Security
Instrument, nor the Obligations, nor any other Loan Document, shall be or shall be deemed to have
been reinstated or otherwise affected by such withdrawal, discontinuance or abandonment. Grantor
hereby expressly waives the benefit of any Applicable
Law now provided, or which may hereafter be provided, which would produce a result contrary to
or in conflict with the provisions of this Section.

 

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Section 6.8 Application of Proceeds. The proceeds of any sale of, and the Rents and
other amounts generated by the holding, leasing, operation or other use of, the Collateral
(including, without limitation, the Leases) shall be applied by Agent (or the receiver, if one is
appointed) as provided in Section 11.4 of the Credit Agreement.

Section 6.9 Leases. Agent, at its option, is authorized to foreclose this Security
Instrument subject to the rights of any Tenants of the Collateral under any Leases, and the failure
to make any Tenants parties to any such foreclosure proceedings and to foreclose their rights shall
not be, nor be asserted to be by Grantor, a defense to any proceedings instituted by Agent to
collect the Obligations.

Section 6.10 Purchase by Agent or Lenders. Upon any foreclosure sale or sales of all
or any portion of the Collateral under the power of sale herein granted Agent may bid for and
purchase the Collateral and shall be entitled to apply all or any part of the Obligations as a
credit to the purchase price.

Section 6.11 Grantor as Tenant Holding Over. In the event of any such foreclosure
sale or sales under the power herein granted, Grantor shall be deemed a tenant holding over and
shall forthwith deliver possession to the purchaser or purchasers at such sale or be summarily
dispossessed according to provisions of law applicable to tenants holding over.

Section 6.12 Suits to Protect the Collateral. Agent shall have the power to
institute and maintain such suits and proceedings as it may deem expedient (a) to prevent any
impairment of the Collateral by any acts which may be unlawful or constitute an Event of Default
under this Security Instrument, (b) to preserve or protect its interest in the Collateral and in
the Leases and Rents arising therefrom, and (c) to restrain the enforcement of or compliance with
any legislation or other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid, if the enforcement of or compliance with such enactment rule or order would
impair the security hereunder or be prejudicial to the interest of Agent. In such event, Grantor
shall, at the request of the Agent, promptly pay any amount reasonably expended by the Agent in
such performance or attempted performance to the Agent, together with interest thereon at the
applicable Post-Default Rate from the date of such expenditure until paid.

Section 6.13 Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting
Grantor, its creditors or its property, Agent, to the extent permitted by Applicable Law, shall be
entitled to file such proofs of claim and other documents as may be necessary or advisable in order
to have the claims of Agent allowed in such proceedings for the entire amount of the Obligations at
the date of the institution of such proceedings and for any additional amount of the Obligations
after such date.

Section 6.14 Occupancy After Foreclosure. The purchaser at any foreclosure sale
pursuant to Section 6.1(c) shall become the legal owner of the Collateral or the portion
thereof foreclosed. All occupants (except those which have previously executed a prior
written agreement with purchaser) of the Collateral or any part thereof shall become tenants at
sufferance of the purchaser at the foreclosure sale and shall deliver possession thereof
immediately to the purchaser upon demand, subject to the rights, if any, of Tenants.

 

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Section 6.15 Waiver of Grantor’s Rights. BY EXECUTION OF THIS SECURITY INSTRUMENT,
GRANTOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF AGENT AND LENDERS TO ACCELERATE THE INDEBTEDNESS
SECURED BY THIS SECURITY INSTRUMENT UPON AN EVENT OF DEFAULT WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE OTHER THAN SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER
THE PROVISIONS OF THIS SECURITY INSTRUMENT; (B) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
WAIVES ANY AND ALL RIGHTS WHICH GRANTOR MAY HAVE UNDER THE CONSTITUTION OF THE UNITED STATES OF
AMERICA (INCLUDING, WITHOUT LIMITATION, THE FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS
PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW,
(1) TO NOTICE AND TO JUDICIAL HEARING PRIOR TO THE EXERCISE BY AGENT OF ANY RIGHT OR REMEDY HEREIN
PROVIDED TO AGENT, EXCEPT SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE
PROVISIONS OF THIS SECURITY INSTRUMENT AND (2) CONCERNING THE APPLICATION, RIGHTS OR BENEFITS OF
ANY STATUTE OF LIMITATION OR ANY MORATORIUM, REINSTATEMENT, MARSHALING, FORBEARANCE, APPRAISEMENT,
VALUATION, STAY, EXTENSION, HOMESTEAD, EXEMPTION OR REDEMPTION LAWS; (C) ACKNOWLEDGES THAT GRANTOR
HAS READ THIS SECURITY INSTRUMENT AND ANY AND ALL QUESTIONS OF GRANTOR REGARDING THE LEGAL EFFECT
OF THIS SECURITY INSTRUMENT AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO GRANTOR, AND GRANTOR
HAS CONSULTED WITH COUNSEL OF GRANTOR’S CHOICE PRIOR TO EXECUTING THIS SECURITY INSTRUMENT; AND (D)
ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF GRANTOR HAVE BEEN MADE KNOWINGLY,
INTENTIONALLY AND WILLINGLY BY GRANTOR AS PART OF A BARGAINED FOR LOAN TRANSACTION AND THAT THIS
SECURITY INSTRUMENT IS VALID AND ENFORCEABLE BY AGENT AGAINST GRANTOR IN ACCORDANCE WITH ALL THE
TERMS AND CONDITIONS HEREOF.

ARTICLE VII

Security Agreement

Section 7.1 Security Interest. This Security Instrument shall also constitute and
serve as a security agreement on personal property within the meaning of under the Uniform
Commercial Code as enacted in New York with respect to the Personalty, Fixtures, Leases and Rents.
To this end, Grantor has GRANTED, BARGAINED, CONVEYED, ASSIGNED, TRANSFERRED and SET OVER, and by
these presents, does GRANT, BARGAIN, CONVEY, ASSIGN, TRANSFER and SET OVER, to Agent for the
benefit of the Lenders a security interest in all of Grantor’s right, title and interest in, to,
under and with respect to the Personalty, Fixtures, Leases and Rents now owned or hereafter owned
or acquired, in each case,
to the extent not constituting Excluded Property, to secure the full and timely payment,
performance and discharge of the Obligations. It is the intent of Grantor, Agent and Lenders that
this Security Instrument encumber all Leases and Rents, in each case, to the extent not
constituting Excluded Property, that all items contained in the definition of “Leases” and
“Rents” which are included within Article 9 of the Uniform Commercial Code as adopted in
New York be covered by the security interest granted in this Article VII and that all items
contained in the definition of “Leases” and “Rents” which are excluded from Article
9 of the Uniform Commercial Code as adopted in New York be covered by the provisions of Article
II and Article VIII hereof.

 

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Section 7.2 Financing Statements. Grantor hereby authorizes Agent to file such
Financing Statements and such further assurances as Agent may, from time to time, reasonably
consider necessary to create, perfect and preserve Agent’s security interest herein granted, and
Agent may cause such statements and assurances to be recorded and filed, at such times and places
as may be required or permitted by law, to so create, perfect and preserve such security interest.

Section 7.3 Uniform Commercial Code Remedies. Agent shall have all the rights and
remedies with respect to the Personalty, Fixtures, Leases and Rents afforded to a “secured party”
by the Uniform Commercial Code as adopted in New York as to property within the scope thereof, in
addition to, and not in limitation of, the other rights and remedies afforded by the Loan
Documents.

Section 7.4 Foreclosure of Security Interest. If an Event of Default exists, Agent
may elect, in addition to exercising any and all other rights and remedies set forth in Article
VI or referred to in Section 7.3 or Article VII hereof, to proceed in the
manner set forth in Article 9 of the Uniform Commercial Code as adopted in New York, relating to
the procedure to be followed when a Security Agreement covers both real and personal property.

Section 7.5 No Obligation of Secured Party. The assignment and security interest
herein granted shall not be deemed or construed to constitute Agent or any Lender as a trustee or
mortgagee in possession of the Collateral, to obligate Agent or any Lender to lease the Collateral
or attempt to do same, or to take any action, incur any expense or perform or discharge any
obligation, duty or liability whatsoever under any of the Leases or otherwise.

Section 7.6 Information for Fixture Filing. This Security Instrument is also being
filed as a fixture filing with respect to the portions of the Collateral that are or are to become
fixtures relating to the Property or Improvements. Grantor’s exact legal name, type of legal
entity and jurisdiction of formation are as set forth in the first paragraph of this Security Deed.
Grantor’s organizational identification number is 2345191. Grantor hereby represents to Agent and
Lenders that, during the past five years prior to the date hereof, Grantor has not changed its name
or merged with or otherwise combined its business with any Person; provided,
however, Grantor has converted from a limited partnership. Without giving Agent at least
30-days’ prior written notice and to the extent such action is not otherwise prohibited by any of
the Loan Documents, Grantor shall not (a) change its name; (b) reorganize or otherwise become
formed under the laws of another jurisdiction or (c) become bound by a security agreement (other
than a Loan Document) of another Person under Section 9-203(d) of the
Uniform Commercial Code as in effect in any applicable jurisdiction. The information
contained in this Section is provided in connection with the requirements of the Uniform Commercial
Code so that this Security Instrument shall serve as a financing statement. The name of Grantor
shall be the “Debtor” and the name of the Agent shall be the “Secured Party,” and a
statement indicating the collateral covered hereby is set forth in the definition of
“Collateral” above.

 

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ARTICLE VIII

Assignment of Leases and Rents

Section 8.1 Assignment. For and in consideration of ONE DOLLAR ($1.00), and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to secure the full and timely payment of the Obligations and the full and timely
performance and discharge of the Obligations, Grantor has GRANTED, BARGAINED, SOLD, CONVEYED,
ASSIGNED, TRANSFERRED, SET OVER and DELIVERED, and by these presents does hereby GRANT, BARGAIN,
SELL, CONVEY, ASSIGN, TRANSFER, SET OVER and DELIVER absolutely unto Agent for the benefit of the
Lenders the Leases (whether now existing or entered into after the date hereof) and the Rents,
subject only to the hereinafter described License, TO HAVE AND TO HOLD the Leases and the Rents
unto Agent, its successors and assigns, for the benefit of the Lenders forever, and Grantor does
hereby bind itself, its successors and assigns to WARRANT and FOREVER DEFEND the title to the
Leases and the Rents unto Agent against every Person whomsoever lawfully claiming or to claim the
same or any part thereof, in each case, other than the Boucher Brothers Agreement, but only to the
extent, and for so long as, Grantor’s right to assign the Boucher Brothers Agreement is prohibited
pursuant to the terms thereof or such prohibition is rendered unenforceable or otherwise deemed
ineffective by the Uniform Commercial Code or any other Applicable Law. If an Event of Default
exists, Agent shall have the right power and privilege (but shall be under no duty) to demand
possession of the Rents, which demand shall, to the fullest extent permitted by Applicable Law, be
sufficient action by Agent to entitle Agent to immediate and direct payment of the Rents (including
delivery to Agent of Rents collected for the period in which the demand occurs and for any
subsequent period), for application as provided herein, all without the necessity of any further
action by Agent including, without limitation, any action to obtain possession of the Improvements
or the Property. Grantor hereby authorizes and directs the Tenants under the Leases to pay Rents
to Agent upon written demand by Agent accompanied by a notice from the Agent of the occurrence of
an Event of Default, without further consent of Grantor, without any obligation on the part of any
Tenant to determine whether an Event of Default has in fact occurred and regardless of whether
Agent has taken possession of any portion of the Property, and the Tenants may rely upon any
written statement delivered by Agent to the Tenants. Any such payment to Agent shall constitute
payment to Grantor under the Leases, and Grantor hereby appoints Agent as Grantor’s lawful
attorney-in-fact for giving, and Agent is hereby empowered to give, acquittances to any Tenants for
such payments to Agent after a default.

 

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Section 8.2 Intentionally Omitted.

Section 8.3 Limited License. Provided that there exists no Event of Default,
Grantor shall have the right under a limited license granted hereby, and Agent hereby grants to
Grantor a limited license (the “License”), to collect, all of the Rents arising from or out
of the Leases, or any renewals or extensions thereof, or from or out of the Collateral or any part
thereof.

Section 8.4 Grantor’s Indemnities. Grantor hereby agrees to indemnify and hold Agent
and Lenders free and harmless from and against any and all liability, loss, cost, damage or expense
which Agent and/or Lenders may incur under or by reason of this assignment, or for any action taken
by the Agent hereunder, or by reason or in defense of any and all claims and demands whatsoever
which may be asserted against Agent and/or Lenders arising out of the Leases (except to the extent
caused by the gross negligence or willful misconduct of Agent or any Lender), including
specifically, but without limitation, any claim by any Tenant of credit for Rents paid to and
received by Grantor, but not delivered to Agent, for any period under any Lease more than 1 month
in advance of the due date thereof. If Agent or any Lender incurs any such liability, loss, cost,
damage or expense, the amount thereof, including reasonable attorneys’ fees, with interest thereon
at the Post-Default Rate, shall be payable by Grantor to Agent immediately, without demand, and
shall be secured hereby and by all other Loan Documents.

Section 8.5 Appointment of Attorney-in-Fact. Grantor hereby further constitutes and
appoints Agent the true and lawful attorney-in-fact of the Grantor, and in the name, place and
stead of said Grantor, to subject and subordinate at any time and from time to time any Lease or
any part thereof to the lien and security interest of the Security Instrument or any other
mortgage, security deed, deed of trust or security agreement on or to any ground lease of the
Collateral, or to request or require such subordination, where such reservation, option or
authority was reserved to the Grantor under any such Lease, or in any case where the Grantor
otherwise would have the right, power or privilege so to do. The foregoing appointment is
irrevocable and continuing and coupled with an interest, and such rights, powers and privileges
shall be exclusive in Agent and its successors and assigns so long as any part of the Obligations
secured hereby remains unpaid and undischarged. Grantor hereby warrants that Grantor has not at
any time prior to the date hereof exercised any such rights, and Grantor hereby covenants not to
exercise any such right, to subordinate any such Lease to the lien of this Security Instrument or
to any other security deed, mortgage, deed of trust or security agreement or to any ground lease.

Section 8.6 Exculpation of Agent. The acceptance by Agent of this assignment of the
Leases and Rents, with all of the rights, powers, privileges and authority created hereby shall
not, prior to entry upon and taking possession of the Collateral by Agent, be deemed or construed
to constitute Agent a “mortgagee in possession”, nor thereafter or at any time or in any event
obligate the Agent to appear in or defend any action or proceeding relating to the Leases, the
Rents or the Collateral or to take any action hereunder or to expend any money or incur any
expenses or perform or discharge any obligation, duty or liability under any Lease or to assume any
obligation or responsibility for any security deposits or other deposits delivered to Grantor by
any Tenant and not assigned and delivered to Agent, nor shall Agent be liable in any way for any
injury or damage to persons or property sustained by any person or persons, firm or corporation in
or about the Collateral.

Section 8.7 [Intentionally Omitted].

 

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ARTICLE IX

Miscellaneous

Section 9.1 Performance at Grantor’s Expense. Grantor shall pay to Agent and Lenders
immediately upon demand all costs and expenses incurred by Agent and Lenders in connection herewith
as provided in Section 13.2 of the Credit Agreement, and the same shall be secured hereby. For all
purposes of this Security Instrument, Agent’s reasonable and documented costs and expenses shall
include, without limitation, all appraisal and re-appraisal fees (in each case, subject to the
limitations provided in Section 13.2 of the Credit Agreement as well as the other applicable
limitations set forth in the Credit Agreement in respect of appraisals), reasonable and documented
out-of-pocket legal fees (including, without limitation, fees for trial, appeal or other
proceedings), accounting fees, environmental consultant fees (if any), auditor fees, and the cost
to Agent of any documentary taxes, recording fees, brokerage fees, title search fees, title
insurance premiums and title surveys (including any such title related fees and premiums incurred
in connection with title updates). In addition, Grantor recognizes and agrees that formal written
appraisals of the Collateral by a licensed independent appraiser may be required by federal
regulatory reporting requirements on an annual or specialized basis, which shall be at Grantor’s
expense.

Section 9.2 Survival of Obligations. Each and all of the Obligations shall survive
the execution and delivery of the Loan Documents, and the consummation of the transactions
contemplated thereby, and shall continue in full force and effect until the Obligations shall have
been paid and performed in full as provided in Section 13.9 of the Credit Agreement;
provided however, that nothing contained in this Section shall limit the
obligations of Grantor as set forth in Section 3.14 and 8.4 herein.

Section 9.3 Recording and Filing. Grantor shall cause the Loan Documents and all
amendments and supplements thereto and substitutions therefor to be recorded, filed, re-recorded
and refiled in such manner and in such places as Agent shall reasonably request and shall pay all
such recording, filing, re-recording and refiling taxes, fees and other charges.

Section 9.4 Notices. All notices or other communications required or permitted to be
given pursuant to this Security Instrument shall be made and delivered as provided in Section 13.1
of the Credit Agreement.

Section 9.5 No Waiver. Any failure by Agent or Lenders to insist, or any election by
Agent or Lenders not to insist, upon strict performance by Grantor of any of the terms, provisions
or conditions of this Security Instrument shall not be deemed to be a waiver of same or of any
other term, provision or condition hereof, and Agent and Lenders shall have the right at any time
or times thereafter to insist upon strict performance by Grantor of any and all such terms,
provisions and conditions. No delay or omission by Agent or Lenders to exercise any right, power
or remedy accruing upon any breach or Event of Default shall exhaust or impair any such right,
power or remedy or shall be construed to be a waiver of any such breach or Event of Default, or
acquiescence therein, and every right, power and remedy given
by this Security Instrument to Agent or Lenders may be exercised from time to time and as
often as may be deemed expedient by Agent or Lenders. No consent or waiver, expressed or implied,
by Agent or Lenders to or of any breach or Event of Default by Grantor in the performance of the
Obligations of Grantor or to any other Event of Default shall be deemed or construed to be a
consent or waiver to or of any other breach or Event of Default in the performance of the same or
any other Obligations of Grantor. Failure on the part of Agent to complain of any act or failure
to act or to declare an Event of Default, irrespective of how long such failure continues, shall
not constitute a waiver of rights hereunder or impair any rights, powers, or remedies of Agent or
Lenders hereunder.

 

-26-

 

No act or omission by Agent or Lenders shall release, discharge, modify, change or otherwise
affect the liability of Grantor under this Security Instrument or any of the other Loan Documents
to which it is a party or in respect of any Obligations of Grantor or the liability of any
subsequent purchaser of the Collateral or any part thereof, or any maker, cosigner, endorser,
surety or guarantor, or preclude Agent or Lenders from exercising any right, power or privilege
herein granted or intended to be granted in the event of any Event of Default then made or by any
subsequent Event of Default, or alter the Lien of this Security Instrument. Without limiting the
generality of the foregoing, Agent and Lenders may:

(a) grant forbearance or an extension of time for the payment of all or any portion of
the Obligations;

(b) take other or additional security for the payment of the Obligations;

(c) waive or fail to exercise any right granted hereunder or in the Credit Agreement or
the other Loan Documents;

(d) change any of the terms, covenants, conditions or agreements of the Credit
Agreement, this Security Instrument, or the other Loan Documents;

(e) consent to the filing of any map, plat or replat affecting the Collateral;

(f) consent to the granting of any easement or other right affecting the Collateral;

(g) make or consent to any agreement subordinating the security interest or lien
hereof; or

(h) take or omit to take any action whatsoever with respect to the Credit Agreement,
this Security Instrument, the Collateral or any document or instrument evidencing, securing
or in any way relating to the Obligations;

all without releasing, discharging, modifying, changing or affecting any such liability, or
precluding Agent or Lenders from exercising any such right, power or privilege, or affecting the
Lien of this Security Instrument. In the event of the sale or transfer by operation of law or
otherwise of all or any part of the Collateral, Agent, without notice, is hereby authorized and
empowered to deal with any such vendee or transferee with reference to the Collateral or the
Obligations, or with reference to any of the terms, covenants, conditions or agreements hereof,
as fully and to the same extent as it might deal with the original parties hereto and without in
any way releasing or discharging any liabilities, Obligations or undertakings.

 

-27-

 

Section 9.6 Agent’s Right to Perform the Obligations. If Grantor shall fail, refuse
or neglect to make any payment or perform any act required by the Loan Documents after the
expiration of relevant notice and cure periods, then at any time thereafter, and without notice to
or demand upon Grantor and without waiving or releasing any other right, remedy or recourse Agent
may have because of same, Agent may (but shall not be obligated to) make such payment or perform
such act for the account of and at the expense of Grantor, and shall have the right to enter the
Property and Improvements for such purpose and to take all such action thereon and with respect to
the Collateral as it may deem necessary or appropriate. If Agent shall elect to pay any Imposition
or other sums due with reference to the Collateral, Agent may do so in reliance on any bill,
statement or assessment procured from the appropriate Governmental Authority or other issuer
thereof without inquiring into the accuracy or validity thereof. Similarly, in making any payments
to protect the security intended to be created by the Loan Documents, Agent shall not be bound to
inquire into the validity of any apparent or threatened adverse title, lien, encumbrance, claim or
charge before making an advance for the purpose of preventing or removing the same. Grantor shall
indemnify Agent and Lenders for all losses, expenses, damages, claims and causes of action,
including reasonable attorneys’ fees, incurred or accruing by reason of any acts performed by Agent
pursuant to the provisions of this Section or by reason of any other provision in the Loan
Documents. All sums paid by Agent or Lenders pursuant to this Section, and all other sums expended
by Agent or Lenders to which they shall be entitled to be indemnified, together with interest
thereon at the Post-Default Rate from the date of such payment or expenditure, shall constitute
additions to the Obligations, shall be secured by the Liens created by the Loan Documents and shall
be paid by Grantor to Agent upon demand.

Section 9.7 Covenants Running with the Land. All Obligations contained in the Loan
Documents are intended by the parties to be, and shall be construed as, covenants running with the
Property.

Section 9.8 Successors and Assigns. Subject to Section 13.5 of the Credit Agreement,
all of the terms of this Security Instrument shall apply to, be binding upon and inure to the
benefit of the parties thereto, their successors, assigns, heirs and legal representatives, and all
other Persons claiming by, through or under them.

Section 9.9 Severability. This Security Instrument is intended to be performed in
accordance with, and only to the extent permitted by, all applicable Legal Requirements. If any
provision of this Security Instrument or the application thereof to any Person or circumstance
shall, for any reason and to any extent, be invalid or unenforceable, then neither the remainder of
the instrument in which such provision is contained nor the application of such provision to other
Persons or circumstances nor the other instruments referred to hereinabove shall be affected
thereby, but rather, shall be enforced to the greatest extent permitted by Applicable Law.

 

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Section 9.10 Modification. This Security Instrument may not be amended, revised,
waived, discharged, released or terminated orally, but only by a written instrument or instruments
as provided in Section 13.6 of the Credit Agreement.

Section 9.11 Assignment. This Security Instrument is assignable by Agent and any
assignment hereof by Agent shall operate to vest in the assignee all rights and powers herein
conferred upon and granted to Agent.

Section 9.12 [Intentionally Omitted].

Section 9.13 Counterparts. This Security Instrument may be executed in any number of
counterparts, each of which shall be an original, but all of which together shall constitute but
one instrument.

Section 9.14 APPLICABLE LAW. THE PROVISIONS OF THIS SECURITY INSTRUMENT REGARDING
THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS HEREIN GRANTED SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA.
ALL OTHER PROVISIONS OF THIS SECURITY INSTRUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

Section 9.15 Subrogation. If any or all of the proceeds of the Obligations have been
used to extinguish, extend or renew any obligations heretofore existing against the Collateral,
then, to the extent of such funds so used, the obligations secured hereby shall be subrogated to
all of the rights, claims, liens, titles and interests heretofore existing against the Collateral
to secure the indebtedness so extinguished, extended or renewed, and the former rights, claims,
liens, titles and interests, if any, are not waived, but rather, are continued in full force and
effect in favor of Agent and are merged with the lien or security title and interest created herein
as cumulative security for the repayment and the satisfaction of the Obligations.

Section 9.16 Headings. Titles and captions of Articles, Sections, subsections and
clauses in this Security Instrument are for convenience only, and neither limit nor amplify the
provisions of this Security Instrument.

Section 9.17 Conflict. Notwithstanding anything herein to the contrary, in the event
of a conflict between this Security Instrument and the Credit Agreement, the Credit Agreement shall
govern.

 

-29-

 

Section 9.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS SECURITY INSTRUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW
YORK, OR THE COURTS OF THE STATE OF FLORIDA AND,
BY EXECUTION AND DELIVERY OF THIS SECURITY INSTRUMENT, THE GRANTOR HEREBY IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. THE GRANTOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK JURISDICTION OVER THE GRANTOR, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY INSTRUMENT BROUGHT IN ANY OF THE AFORESAID
COURTS THAT ANY SUCH COURT LACKS JURISDICTION OVER THE GRANTOR. THE GRANTOR FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE GRANTOR AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 9.4 HEREOF, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE MORTGAGEE, OR ANY LENDER, TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
GRANTOR IN ANY OTHER JURISDICTION.

(b) THE GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS SECURITY INSTRUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

(c) GRANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE OBLIGATIONS, THE CREDIT AGREEMENT, THE NOTE OR THIS SECURITY
INSTRUMENT OR ANY ACTS OR OMISSIONS OF AGENT, LENDERS, THEIR OFFICERS, EMPLOYEES, DIRECTORS OR
AGENTS IN CONNECTION THEREWITH.

 

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Section 9.19 Limitation on Interest. It is the intent of the Grantor and the
Mortgagee in the execution of this Security Instrument and all other instruments evidencing or
securing the Obligations to contract in strict compliance with applicable usury laws. In
furtherance thereof, the Mortgagee and the Grantor stipulate and agree that none of the terms
and provisions contained in this Security Instrument shall ever be construed to create a
contract for the use, forbearance or retention of money requiring payment of interest at a rate in
excess of the maximum interest rate permitted to be charged by relevant law. If this Security
Instrument or any other instrument evidencing or securing the Obligations violates any applicable
usury law, then the interest rate payable in respect of the Loans or the Post-Default Rate, as
applicable, shall be the highest rate permissible by law.

Section 9.20 Further Assurances. The Grantor shall, upon the request of the
Mortgagee and at the expense of the Grantor: (a) promptly correct any defect, error or omission
which may be discovered in this Security Instrument or any UCC financing statements filed in
connection herewith; (b) promptly execute, acknowledge, deliver and record or file such further
instruments (including, without limitation, further mortgages, deeds of trust, security deeds,
security agreements, financing statements, continuation statements and assignments of rents or
leases) and promptly do such further acts as may be necessary, desirable or proper to carry out
more effectively the purposes of this Security Instrument and to subject to the Liens and security
interests hereof any property intended by the terms hereof to be encumbered hereby, including, but
not limited to, any renewals, additions, substitutions, replacements or appurtenances to the
Collateral; and (c) promptly execute, acknowledge, deliver, procure and record or file any document
or instrument (including specifically any financing statement) deemed advisable by the Mortgagee to
protect, continue or perfect the Liens or the security interests hereunder against the rights or
interests of third Persons.

Section 9.21 Future Advances. This Security Instrument is given to secure the
Obligations under, or in respect of, the Loan Documents and shall secure not only obligations with
respect to presently existing indebtedness under the foregoing documents and agreements but also
any and all other indebtedness which may hereafter be owing to the Lenders and/or the Mortgagee
under the Loan Documents, however incurred, whether interest, discount or otherwise, and whether
the same shall be deferred, accrued or capitalized, including future advances and re-advances,
pursuant to the Credit Agreement or the other Loan Documents, whether such advances are obligatory
or to be made at the option of the Lenders and/or the Agent, or otherwise, to the same extent as if
such future advances were made on the date of the execution of this Security Instrument. The Lien
of this Security Instrument shall be valid as to all indebtedness secured hereby, including future
advances, from the time of its filing for record in the recorder’s office of the county in which
the Collateral is located. This Security Instrument is intended to and shall be valid and have
priority over all subsequent Liens and encumbrances, including statutory Liens, excepting solely
taxes and assessments levied on the real estate, to the extent of the maximum amount secured
hereby, and Permitted Encumbrances related thereto. Although this Security Instrument is given to
secure all future advances made by the Mortgagee and/or the Lender to or for the benefit of the MG
Borrower, the Grantor and/or the Collateral, whether obligatory or optional, the Grantor and the
Mortgagee hereby acknowledge and agree that the Mortgagee and the Lenders are obligated by the
terms of the Loan Documents to make certain future advances, including advances of a revolving
nature, subject to the fulfillment of the relevant conditions set forth in the Loan Documents.

 

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[Remainder of Page Intentionally Left Blank]

 

-32-

 

IN WITNESS WHEREOF, Grantor has executed this Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Filing under seal, as of the day and year first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	WITNESS:	 	 	 	GRANTOR:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BEACH HOTEL ASSOCIATES LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Meredith Dahl
	 	 	 	 	 	By:
	 	Morgans Group LLC, its Member	 	 
	 

	 	 

Name: Meredith Dahl
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	By: Morgans Hotel Group Co., its	 	 
	 

	 	 	 	 	 	 	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Grace Chen
	 	 	 	 	 	By:
	 	/s/ Richard Szymanski	 	 
	 

	 	 

Name: Grace Chen
	 	 	 	 	 	 	 	 

Name: Richard Szymanski
	 	 
	 

	 	 	 	 	 	 	 	 	 	Title: Chief Financial Officer & Secretary	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	c/o Morgans Group, LLC

475 Tenth Avenue

New York, New York 10018

Attention: Richard Szymanski

Telecopy Number: (212) 277-4270

Telephone Number: (212) 277-4188	 	 

[Acknowledgement on Next Page]

 

 

 

	 	 	 	 	 
	STATE OF New York
	 	)	 	 
	 
	 	)	 	SS:
	COUNTRY OF New York
	 	)	 	 

The foregoing instrument was acknowledged before me this 25th day of July, 2011 by
Richard Szymanski as Chief Financial Officer and Secretary of Morgans Group LLC, a Delaware limited
liability company, the sole member of BEACH HOTEL ASSOCIATES, LLC, a Delaware limited liability
company, on behalf of the company. He/she/they personally appeared before me and is/are personally
known to me or produced a driver’s license as identification and did not take an oath.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Notary:
	 	/s/ Grace Chen	 	 
	[NOTARIAL SEAL]

	 	 	 	 	 	 

Print Name: Grace Chen
	 	 
	 

	 	 	 	 	 	NOTARY PUBLIC, STATE OF New York	 	 
	 

	 	 	 	 	 	My commission expires 4/2/15	 	 

 

 

 

EXHIBIT A

LEGAL DESCRIPTION

Lots 9, 10, 11 and 12, in Block 29 of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, a subdivision
of Miami-Dade County, Florida, according to the Plat thereof duly recorded upon the Public records
of Miami-Dade County, Florida in Plat Book 2, page 77 thereof;

Also that tract of land shown on plat of FISHER’S FIRST SUBDIVISION OF ALTON BEACH, according
to the Plat thereof recorded in Plat Book 2, page 77, Public Records of Miami-Dade County, Florida,
described as follows:

Begin at the Southeast corner of Lot 9 in Block 29 as shown on plat of FISHER’S FIRST
SUBDIVISION OF ALTON BEACH, according to the Plat thereof recorded in Plat Book 2, page 77, Public
Records of Miami-Dade County, Florida; thence run in a Northerly direction along the Easterly line
of said Block 29 of the aforesaid plat and the Northerly extension thereof a distance of 136.897
feet, more or less, to the point of intersection of the center line of 17th Street; thence run
Easterly along the center line of 17th Street; extended, a distance of 204.17 feet, more or less to
the point of intersection of said center line of 17th Street extended Easterly to the Erosion
Control Line of the Atlantic Ocean said Line recorded in Plat Book 105, page 62, Public Records of
Miami-Dade County, Florida, thence run Southerly along the said Erosion Control Line, a distance of
137.465 feet to the intersection of the extension Easterly of the Southerly Line of referenced Lot
9, thence run Westerly along the Easterly extension of Lot 9, a distance of 200.96 feet, more of
less, to the Point of Beginning.

Less and except, however, that certain portion of such land as was appropriated and taken by
the City of Miami Beach, Florida, in that certain eminent domain or condemnation proceeding a final
judgment for which was recorded in Deed Book 3106, page 96, which covers that portion of the
premises lying northerly of the northerly line of said Block 29 extended easterly to the Erosion
Control Line recorded in Plat Book 105, page 62 of the Public Records of Miami-Dade County,
Florida.

 

 

 

EXHIBIT B

to

SECURITY INSTRUMENT

(DESCRIPTION OF PERMITTED ENCUMBRANCES)

Those items recorded in the records of Miami-Dade County, Florida, as set forth in Schedule B,
Section 2, of that certain Commitment for Title Insurance issued by Chicago Title Insurance
Company, Commitment No. 3508183, as endorsed and marked in connection with the making of the Loan
referenced in the foregoing security instrument.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}]]