Document:

Exhibit 10.1

 

Execution Version

 

 

 

Published
CUSIP Number:  86800BAC0

 

CREDIT AGREEMENT

 

Dated as of November 1, 2010

 

among

 

SUNSTONE HOTEL PARTNERSHIP, LLC,

as Borrower,

 

SUNSTONE HOTEL INVESTORS, INC.,

as a Guarantor,

 

BANK OF AMERICA, N.A.,

as Administrative Agent 

and

L/C Issuer,

 

and

 

The Other Lenders Party Hereto

 

JPMORGAN CHASE BANK, N.A.,

as

Syndication Agent

 

MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
as successor by merger to

Banc of America Securities LLC

 

and

JPMORGAN SECURITIES LLC,

as

Joint Lead Arrangers and Joint Bookrunners

 

 

 

 

TABLE OF CONTENTS

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Article I. Definitions and Accounting Terms

  	
   

  	
  1

  
	
  1.01

  	
  Defined Terms

  	
   

  	
  1

  
	
  1.02

  	
  Other Interpretive Provisions

  	
   

  	
  31

  
	
  1.03

  	
  Accounting Terms

  	
   

  	
  31

  
	
  1.04

  	
  Rounding

  	
   

  	
  32

  
	
  1.05

  	
  Times of Day

  	
   

  	
  32

  
	
  1.06

  	
  Letter of Credit Amounts

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  Article II. The Commitments and Credit Extensions

  	
   

  	
  32

  
	
  2.01

  	
  Committed Loans

  	
   

  	
  32

  
	
  2.02

  	
  Borrowings, Conversions and Continuations
  of Committed Loans

  	
   

  	
  33

  
	
  2.03

  	
  Letters of Credit

  	
   

  	
  34

  
	
  2.04

  	
  Prepayments

  	
   

  	
  41

  
	
  2.05

  	
  Termination or Reduction of
  Commitments

  	
   

  	
  42

  
	
  2.06

  	
  Repayment of Loans

  	
   

  	
  42

  
	
  2.07

  	
  Interest

  	
   

  	
  42

  
	
  2.08

  	
  Fees

  	
   

  	
  43

  
	
  2.09

  	
  Computation of Interest and
  Fees; Retroactive Adjustments of Applicable Rate

  	
   

  	
  44

  
	
  2.10

  	
  Evidence of Debt

  	
   

  	
  44

  
	
  2.11

  	
  Payments Generally; Administrative
  Agent’s Clawback

  	
   

  	
  45

  
	
  2.12

  	
  Sharing of Payments by Lenders

  	
   

  	
  46

  
	
  2.13

  	
  Extension of Maturity Date

  	
   

  	
  47

  
	
  2.14

  	
  Increase in Commitments

  	
   

  	
  48

  
	
  2.15

  	
  Cash Collateral

  	
   

  	
  49

  
	
  2.16

  	
  Defaulting Lenders

  	
   

  	
  50

  
	
  2.17

  	
  Collateral and Guaranties

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  Article III. Taxes, Yield Protection and Illegality

  	
   

  	
  53

  
	
  3.01

  	
  Taxes

  	
   

  	
  53

  
	
  3.02

  	
  Illegality

  	
   

  	
  57

  
	
  3.03

  	
  Inability to Determine Rates

  	
   

  	
  57

  
	
  3.04

  	
  Increased Costs; Reserves on
  Eurodollar Rate Loans

  	
   

  	
  58

  
	
  3.05

  	
  Compensation for Losses

  	
   

  	
  59

  
	
  3.06

  	
  Mitigation Obligations;
  Replacement of Lenders

  	
   

  	
  60

  
	
  3.07

  	
  Survival

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IV. Borrowing Base

  	
   

  	
  60

  
	
  4.01

  	
  Initial Borrowing Base

  	
   

  	
  60

  
	
  4.02

  	
  Changes in Borrowing Base
  Calculation

  	
   

  	
  60

  
	
  4.03

  	
  Requests for Admission into
  Borrowing Base

  	
   

  	
  60

  
	
  4.04

  	
  Eligibility

  	
   

  	
  61

  
	
  4.05

  	
  Approval

  	
   

  	
  61

  
	
  4.06

  	
  Notice of Changes in Borrowing
  Base due to Admission of New Borrowing Base Properties

  	
   

  	
  62

  
	
  4.07

  	
  Appraisals of Borrowing Base
  Properties

  	
   

  	
  62

  
	
  4.08

  	
  Release of Borrowing Base
  Property

  	
   

  	
  62

  
	
  4.09

  	
  Exclusion Events

  	
   

  	
  62

  

 

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  4.10

  	
  Guaranties

  	
   

  	
  64

  
	
  4.11

  	
  Documentation Required with
  Respect to Borrowing Base Properties

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  Article V. Conditions Precedent to Credit Extensions

  	
   

  	
  66

  
	
  5.01

  	
  Conditions to Closing

  	
   

  	
  66

  
	
  5.02

  	
  Conditions to all Credit
  Extensions

  	
   

  	
  68

  
	
  5.03

  	
  Post Closing Items

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VI. Representations and Warranties

  	
   

  	
  69

  
	
  6.01

  	
  Existence, Qualification and
  Power; Compliance with Laws

  	
   

  	
  69

  
	
  6.02

  	
  Authorization; No Contravention

  	
   

  	
  69

  
	
  6.03

  	
  Governmental Authorization;
  Other Consents

  	
   

  	
  69

  
	
  6.04

  	
  Binding Effect

  	
   

  	
  70

  
	
  6.05

  	
  Financial Statements; No
  Material Adverse Effect

  	
   

  	
  70

  
	
  6.06

  	
  Litigation

  	
   

  	
  70

  
	
  6.07

  	
  No Default

  	
   

  	
  70

  
	
  6.08

  	
  Ownership of Property; Liens

  	
   

  	
  70

  
	
  6.09

  	
  Environmental Compliance

  	
   

  	
  71

  
	
  6.10

  	
  Insurance

  	
   

  	
  72

  
	
  6.11

  	
  Taxes

  	
   

  	
  72

  
	
  6.12

  	
  ERISA Compliance

  	
   

  	
  72

  
	
  6.13

  	
  Subsidiaries; Equity Interests

  	
   

  	
  73

  
	
  6.14

  	
  Margin Regulations; Investment
  Company Act

  	
   

  	
  73

  
	
  6.15

  	
  Disclosure

  	
   

  	
  73

  
	
  6.16

  	
  Compliance with Laws

  	
   

  	
  73

  
	
  6.17

  	
  Taxpayer Identification Number

  	
   

  	
  74

  
	
  6.18

  	
  Intellectual Property; Licenses,
  Etc

  	
   

  	
  74

  
	
  6.19

  	
  Damages/Condemnation/Zoning

  	
   

  	
  74

  
	
  6.20

  	
  Representations Concerning
  Leases

  	
   

  	
  74

  
	
  6.21

  	
  Ground Lease Representations

  	
   

  	
  74

  
	
  6.22

  	
  Material Agreements

  	
   

  	
  75

  
	
  6.23

  	
  Labor Matters

  	
   

  	
  75

  
	
  6.24

  	
  Reciprocal Agreements

  	
   

  	
  75

  
	
  6.25

  	
  Management Agreements

  	
   

  	
  75

  
	
  6.26

  	
  Franchise Agreements; License
  Agreements

  	
   

  	
  75

  
	
  6.27

  	
  Certificate of Occupancy; Licenses

  	
   

  	
  76

  
	
  6.28

  	
  Solvency

  	
   

  	
  76

  
	
  6.29

  	
  REIT Status of Parent

  	
   

  	
  76

  
	
  6.30

  	
  Operating Leases

  	
   

  	
  76

  
	
  6.31

  	
  PIPs

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VII. Affirmative Covenants

  	
   

  	
  77

  
	
  7.01

  	
  Financial Statements

  	
   

  	
  77

  
	
  7.02

  	
  Certificates; Other Information

  	
   

  	
  78

  
	
  7.03

  	
  Notices

  	
   

  	
  79

  
	
  7.04

  	
  Payment of Obligations

  	
   

  	
  81

  
	
  7.05

  	
  Preservation of Existence, Etc

  	
   

  	
  81

  
	
  7.06

  	
  Maintenance of Properties

  	
   

  	
  81

  
	
  7.07

  	
  Maintenance of Insurance

  	
   

  	
  81

  
	
  7.08

  	
  Compliance with Laws

  	
   

  	
  83

  
	
  7.09

  	
  Books and Records

  	
   

  	
  83

  

 

ii

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  7.10

  	
  Inspection Rights

  	
   

  	
  83

  
	
  7.11

  	
  Use of Proceeds

  	
   

  	
  83

  
	
  7.12

  	
  Environmental Matters

  	
   

  	
  83

  
	
  7.13

  	
  Condemnation, Casualty and
  Restoration

  	
   

  	
  87

  
	
  7.14

  	
  Ground Leases

  	
   

  	
  87

  
	
  7.15

  	
  [Reserved]

  	
   

  	
  88

  
	
  7.16

  	
  [Reserved]

  	
   

  	
  88

  
	
  7.17

  	
  REIT Status

  	
   

  	
  88

  
	
  7.18

  	
  Operation of Borrowing Base
  Properties

  	
   

  	
  88

  
	
  7.19

  	
  Leases and Rents

  	
   

  	
  89

  
	
  7.20

  	
  Management Agreements

  	
   

  	
  89

  
	
  7.21

  	
  Franchise Agreements; License
  Agreements

  	
   

  	
  90

  
	
  7.22

  	
  Operating Leases

  	
   

  	
  91

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VIII. Negative Covenants

  	
   

  	
  92

  
	
  8.01

  	
  Liens

  	
   

  	
  92

  
	
  8.02

  	
  Investments

  	
   

  	
  93

  
	
  8.03

  	
  Indebtedness

  	
   

  	
  93

  
	
  8.04

  	
  Fundamental Changes

  	
   

  	
  94

  
	
  8.05

  	
  Dispositions

  	
   

  	
  94

  
	
  8.06

  	
  Restricted Payments

  	
   

  	
  95

  
	
  8.07

  	
  Change in Nature of Business

  	
   

  	
  95

  
	
  8.08

  	
  Transactions with Affiliates

  	
   

  	
  96

  
	
  8.09

  	
  Burdensome Agreements

  	
   

  	
  96

  
	
  8.10

  	
  Use of Proceeds

  	
   

  	
  96

  
	
  8.11

  	
  Lease Approval

  	
   

  	
  96

  
	
  8.12

  	
  Fiscal Year and Accounting
  Methods

  	
   

  	
  96

  
	
  8.13

  	
  Amendments to Documents

  	
   

  	
  96

  
	
  8.14

  	
  Financial Covenants

  	
   

  	
  97

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IX. Events of Default and Remedies

  	
   

  	
  98

  
	
  9.01

  	
  Events of Default

  	
   

  	
  98

  
	
  9.02

  	
  Remedies Upon Event of Default

  	
   

  	
  100

  
	
  9.03

  	
  Application of Funds

  	
   

  	
  100

  
	
   

  	
   

  	
   

  	
   

  
	
  Article X. Administrative Agent

  	
   

  	
  101

  
	
  10.01

  	
  Appointment and Authority

  	
   

  	
  101

  
	
  10.02

  	
  Rights as a Lender

  	
   

  	
  101

  
	
  10.03

  	
  Exculpatory Provisions

  	
   

  	
  102

  
	
  10.04

  	
  Reliance by Administrative Agent

  	
   

  	
  102

  
	
  10.05

  	
  Delegation of Duties

  	
   

  	
  103

  
	
  10.06

  	
  Resignation of Administrative
  Agent

  	
   

  	
  103

  
	
  10.07

  	
  Non-Reliance on Administrative
  Agent and Other Lenders

  	
   

  	
  104

  
	
  10.08

  	
  No Other Duties, Etc

  	
   

  	
  104

  
	
  10.09

  	
  Administrative Agent
  May File Proofs of Claim

  	
   

  	
  104

  
	
  10.10

  	
  Collateral and Guaranty Matters

  	
   

  	
  105

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XI. Miscellaneous

  	
   

  	
  106

  
	
  11.01

  	
  Amendments, Etc

  	
   

  	
  106

  
	
  11.02

  	
  Notices; Effectiveness;
  Electronic Communication

  	
   

  	
  108

  
	
  11.03

  	
  No Waiver; Cumulative Remedies;
  Enforcement

  	
   

  	
  110

  

 

iii

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  11.04

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  110

  
	
  11.05

  	
  Payments Set Aside

  	
   

  	
  112

  
	
  11.06

  	
  Successors and Assigns

  	
   

  	
  112

  
	
  11.07

  	
  Treatment of Certain
  Information; Confidentiality

  	
   

  	
  116

  
	
  11.08

  	
  Right of Setoff

  	
   

  	
  117

  
	
  11.09

  	
  Interest Rate Limitation

  	
   

  	
  117

  
	
  11.10

  	
  Counterparts; Integration;
  Effectiveness

  	
   

  	
  117

  
	
  11.11

  	
  Survival of Representations and
  Warranties

  	
   

  	
  118

  
	
  11.12

  	
  Severability

  	
   

  	
  118

  
	
  11.13

  	
  Replacement of Lenders

  	
   

  	
  118

  
	
  11.14

  	
  Governing Law; Jurisdiction;
  Etc.

  	
   

  	
  119

  
	
  11.15

  	
  Waiver of Jury Trial

  	
   

  	
  119

  
	
  11.16

  	
  No Advisory or Fiduciary
  Responsibility

  	
   

  	
  120

  
	
  11.17

  	
  Electronic Execution of
  Assignments and Certain Other Documents

  	
   

  	
  120

  
	
  11.18

  	
  USA PATRIOT Act

  	
   

  	
  120

  
	
  11.19

  	
  ENTIRE AGREEMENT

  	
   

  	
  121

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
   

  	
  S-1

  

 

iv

 

	
  Section

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.01

  	
   

  	
  Commitments and Applicable Percentages

  	
   

  	
   

  
	
  4.01

  	
   

  	
  Initial Borrowing Base Properties

  	
   

  	
   

  
	
  5.03

  	
   

  	
  Post Close Items

  	
   

  	
   

  
	
  6.13

  	
   

  	
  Subsidiaries; Other Equity Investments

  	
   

  	
   

  
	
  6.25

  	
   

  	
  Management Agreements

  	
   

  	
   

  
	
  6.26

  	
   

  	
  Franchise Agreements; License
  Agreements

  	
   

  	
   

  
	
  6.30

  	
   

  	
  Operating Leases

  	
   

  	
   

  
	
  8.01

  	
   

  	
  Existing Liens

  	
   

  	
   

  
	
  8.03

  	
   

  	
  Existing Indebtedness

  	
   

  	
   

  
	
  11.02

  	
   

  	
  Administrative Agent’s Office; Certain
  Addresses for Notices

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Form of

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Committed Loan Notice

  	
   

  	
   

  
	
  B

  	
   

  	
  Note

  	
   

  	
   

  
	
  C

  	
   

  	
  Compliance Certificate

  	
   

  	
   

  
	
  D-1

  	
   

  	
  Assignment and Assumption

  	
   

  	
   

  
	
  D-2

  	
   

  	
  Administrative Questionnaire

  	
   

  	
   

  
	
  E-1

  	
   

  	
  Parent Guaranty

  	
   

  	
   

  
	
  E-2

  	
   

  	
  Subsidiary Guaranty

  	
   

  	
   

  
	
  F

  	
   

  	
  Pledge Agreement

  	
   

  	
   

  
	
  G

  	
   

  	
  Opinion Matters

  	
   

  	
   

  
	
  H

  	
   

  	
  Borrowing Base Report

  	
   

  	
   

  
	
  I

  	
   

  	
  Form of Guaranty and Indemnity
  Recourse Exceptions

  	
   

  	
   

  

 

v

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”)
is entered into as of November 1, 2010,  among
SUNSTONE HOTEL PARTNERSHIP, LLC, a Delaware limited liability company (the “Borrower”), SUNSTONE HOTEL
INVESTORS, INC., a Maryland corporation (“Parent”), each
lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”),
and BANK OF AMERICA, N.A.,  as
Administrative Agent and L/C Issuer.

 

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

 

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

 

Article I.

Definitions and Accounting Terms

 

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

 

“Acceptable Borrowing Base Appraisal”
means an independent appraisal, compliant with the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 and in form and substance
acceptable to Administrative Agent in its sole discretion, conducted by a third
party appraiser that is a member of the Appraisal Institute or such other
Person selected by and engaged by Administrative Agent.

 

“Acceptable Ground Lease”
means (a) the Existing Ground Leases and (b) each other ground lease
with respect to an Acceptable Property executed by a Loan Party, as lessee,
that (i) has a remaining lease term (including extension or renewal
rights) of at least fifty (50) years, calculated as of the date such Acceptable
Property is admitted into the Borrowing Base, (ii) is free and clear of
any Liens (other than Permitted Liens), negative pledges, or other restrictions
to the transfer or encumbrance of such Acceptable Property other than customary
provisions included in ground leases, and (iii) contains customary
financing provisions including, without limitation, notice and cure rights.

 

“Acceptable Properties” means,
as of any date, (a) the Initial Borrowing Base Properties; and (b) the
Properties identified by Borrower in the Borrowing Base Report and approved by
Administrative Agent, which Properties are (i) (A) Properties having three
hundred (300) or more keys and competing in the upper-upscale segment as
defined by Smith Travel Research, (B) free and clear of any Liens (other
than Permitted Liens), negative pledges, or other restrictions to the transfer
or encumbrance of such Property, other than customary exceptions, reasonably
acceptable to Administrative Agent, (C) located within the continental
United States in a top 20 MSA, (D) branded by a nationally recognized
hotel company reasonably acceptable to Administrative Agent, (E) owned, in
fee simple title or through a leasehold interest in such Property pursuant to
an Acceptable Ground Lease by (1) Borrower or (2) a Wholly Owned
Subsidiary of Borrower that has executed a Subsidiary Guaranty and whose Equity
Interests are owned, directly or indirectly by Borrower or a Subsidiary
Guarantor, free and clear of any Liens (other than the Liens granted pursuant
to the Loan Documents), (F) subject to management agreements, and
franchise agreements, reasonably acceptable to Administrative Agent,
(G) eligible for inclusion in the Borrowing Base pursuant to Section 4.04, or (ii) approved by
Administrative Agent and Required Lenders or Super Majority Lenders, as
applicable, pursuant to Sections 4.03 and
4.05, and “Acceptable
Property” means any one of the Acceptable Properties.

 

 

“Adjusted NOI” means, with
respect to any Borrowing Base Property for any period, (a) the sum of
(i) the aggregate gross revenues from the operations of such Borrowing
Base Property during such period (including amounts received as ground lease
income for the Renaissance Orlando), less
(ii) all expenses and other proper charges incurred in connection with the
operation of such Borrowing Base Property during such period (including real
estate taxes and ground lease payments, but excluding any non-recurring or
non-cash adjustments, management fees, franchise fees, debt service charges,
income taxes, depreciation, amortization and other non-cash expenses), less (b) management fees equal to the greater of
(i) the actual management fees paid, and (ii) three percent (3.00%)
of such aggregate gross revenues from the operations of such Borrowing Base
Property during such period, to the extent not paid and not already deducted in
clause (a) above as an actual
operating expense, less
(c) franchise fees equal to the greater of (i) the actual franchise
fees paid, and (ii) four percent (4.00%) of such aggregate gross revenues
from the operations of such Borrowing Base Property during such period, to the
extent not paid and not already deducted in clause (a)
above as an actual operating expense, less
(d) FF&E Reserves for such Property. 
Adjusted NOI for any Borrowing Base Property that has been owned by a
Loan Party for a period of at least twelve (12) months as of the date of
determination shall be calculated on a trailing twelve (12) month period.  For any Borrowing Base Property that has been
owned by a Loan Party for a period of less than twelve (12) months as of the
date of determination, Adjusted NOI for such Borrowing Base Property shall be
calculated on an annualized basis until such time as such Borrowing Base
Property has been owned by such Loan Party for at least twelve (12) months.
Notwithstanding the calculation set forth in this definition, in no event shall
any Borrowing Base Property have an Adjusted NOI of less than $0.00.

 

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

 

“Administrative Agent’s Office”
means Administrative Agent’s address and, as appropriate, account as set forth
on Schedule 11.02, or such other
address or account as Administrative Agent may from time to time notify
Borrower and the Lenders.

 

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

 

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

 

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

 

“Agreement” means this Credit
Agreement.

 

“Applicable Percentage” means
with respect to any Lender at any time, the percentage (carried out to the
ninth decimal place) of the Aggregate Commitments represented by such Lender’s
Commitment at such time, subject to adjustment as provided in Section 2.16.  If the Commitment of each Lender to make
Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 9.02
or if the Aggregate Commitments have expired, then the Applicable Percentage of
each Lender shall be determined based on the Applicable Percentage of such
Lender most recently in effect, giving effect to any subsequent
assignments.  The initial Applicable
Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.

 

2

 

“Applicable Rate” means, from
time to time, the following percentages per annum, based upon the Consolidated  Leverage Ratio as set forth in the most recent Compliance
Certificate received by Administrative Agent pursuant to Sections 7.01(a)
and (b):

 

	
  Applicable Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Pricing Level

  	
   

  	
  Consolidated Leverage

  Ratio

  	
   

  	
  Eurodollar Rate

  Loans and

  Letters of Credit

  	
   

  	
  Base Rate

  Loans

  	
   

  
	
  1

  	
   

  	
  <6.0 to 1.0

  	
   

  	
  3.25

  	
  %

  	
  2.25

  	
  %

  
	
  2

  	
   

  	
  >6.0 to 1.0 but <7.0 to 1.0

  	
   

  	
  3.75

  	
  %

  	
  2.75

  	
  %

  
	
  3

  	
   

  	
  >7.0 to 1.0

  	
   

  	
  4.25

  	
  %

  	
  3.25

  	
  %

  

 

Any increase or decrease in the Applicable Rate resulting from a change
in the Consolidated  Leverage Ratio
shall become effective as of the first Business Day immediately following the
date a Compliance Certificate is delivered pursuant to Sections 7.01(a)
and (b); provided,
however, that if a Compliance Certificate is not delivered when due
in accordance with such Section,
then Pricing Level 3 shall apply as of the first Business Day after the date on
which such Compliance Certificate was required to have been delivered.  The Applicable Rate in effect from the
Closing Date through the date of delivery of the Compliance Certificate
delivered pursuant to Section 7.01(a)
for the fiscal quarter ended December 31, 2010 shall be determined based
upon Pricing Level 3.

 

“Appraised Value” means, with
respect to any Borrowing Base Property as of any date, the appraised value of
such Borrowing Base Property on an “as-is” basis as set forth in the most recent
Acceptable Borrowing Base Appraisal, as received by Administrative Agent
pursuant to Section 4.07 or Section 4.11(j), as applicable.

 

“Appraised Value Amount”
means, with respect to the Borrowing Base Properties as of any date, the sum of
(a) the product of (i) the Appraised Value of each Borrowing Base
Property other than Royal Palm times
(ii) 55%, plus (b) the product of
(i) the Appraised Value of Royal Palm times
(ii) (x) prior to the effectiveness of the Extended Maturity Date,
35% and (y) thereafter, 55%.

 

“Approved Costs” means, for
any Property, the sum of the acquisition, construction, and other capitalized
costs of such Property (or the Equity Interests of the Company that owns such
Property), whether in the form of cash, property, liabilities assumed, or other
consideration.

 

“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.

 

“Arrangers”
means collectively, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
successor by merger to Banc of America Securities LLC, and JPMorgan Securities
LLC, in their respective capacities as joint lead arrangers and joint
bookrunners, and “Arranger” means any one of
the Arrangers.

 

“Assets Under Development”
means any Property that is a new-build or major conversion of a non-hotel
property to a hotel.

 

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

 

“Assignment and Assumption”
means an assignment and assumption entered into by a Lender and an assignee
(with the consent of any party whose consent is required by Section 11.06(b)), and accepted
by Administrative Agent, in substantially the form of Exhibit D-1
or any other form approved by Administrative Agent.

 

3

 

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

 

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

 

“Availability Period” means
the period from and including the Closing Date to the earliest of (a) the
Maturity Date, (b) the date of termination of the Aggregate Commitments
pursuant to Section 2.05, and
(c) the date of termination of the Commitment of each Lender to make Loans
and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant
to Section 9.02.

 

“Available Commitments” means
as of any date the amount equal to: (a) the Borrowing Base, less (b) the Outstanding Amount.

 

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

 

“Base Rate” means for any day
a fluctuating rate per annum equal to the highest of (a) the Federal Funds
Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as
publicly announced from time to time by Bank of America as its “prime rate,”
and (c) the Eurodollar Rate for an Interest Period of thirty (30) days
plus 1.00%.  The “prime rate” is a rate
set by Bank of America based upon various factors including Bank of America’s
costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate.  Any
change in such prime rate announced by Bank of America shall take effect at the
opening of business on the day specified in the public announcement of such
change.

 

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

 

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

 

“Benefit Plan” means any
employee benefit plan within the meaning of Section
3(3) of ERISA, maintained for employees of Parent or Borrower or
any such Plan to which Parent or Borrower is required to contribute on behalf
of any of its employees.

 

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

 

“Borrower Materials” has the
meaning specified in Section 7.02.

 

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

 

4

 

“Borrowing Base” means, as of
any date of determination, the difference of (without duplication) (a) the
lesser of (i) the Appraised Value Amount and (ii) the Mortgageability
Amount minus (b) Consolidated Recourse
Indebtedness.

 

Notwithstanding the foregoing,
the Borrowing Base shall be limited as follows:

 

(a)           the amount of Adjusted NOI
attributable to any single Borrowing Base Property shall not exceed twenty
percent (20%) of the aggregate Adjusted NOI attributable to all Borrowing Base
Properties, and any such excess shall be excluded from the calculation of the
Borrowing Base;

 

(b)           the amount of Adjusted NOI
attributable to the Acceptable Ground Lease related to the Renaissance Orlando
shall not exceed five percent (5.00%) of the aggregate Adjusted NOI
attributable to all Borrowing Base Properties, and any such excess shall be
excluded from the calculation of the Borrowing Base;

 

(c)           the amount of Adjusted NOI
attributable to all Borrowing Base Properties within a single MSA, shall not
exceed forty percent (40%) of the aggregate Adjusted NOI attributable to all
Borrowing Base Properties, and any such excess shall be excluded from the
calculation of the Borrowing Base;

 

(d)           the amount of Appraised Value Amount
attributable to the Royal Palm shall not exceed twenty percent (20.00%) of the
Appraised Value Amount attributable to all Borrowing Base Properties other than
the Royal Palm, and any such excess shall be excluded from the calculation of
the Borrowing Base;

 

(e)           the Borrowing Base may at no time
consist of less than five (5) Borrowing Base Properties; and

 

(f)            the aggregate Adjusted NOI, as
limited by the preceding clauses (a)
through (c), shall at no time be less
than $15,000,000.

 

“Borrowing Base Properties”
means (a) the Initial Borrowing Base Properties, and (b) Acceptable
Properties that become a Borrowing Base Property pursuant to Section 4.03, but excluding any
Acceptable Properties that have been released from the Borrowing Base pursuant
to Section 4.08, and “Borrowing Base Property” means any
one of the Borrowing Base Properties.

 

“Borrowing Base Property Owner”
means each Company that holds title (either in fee or through an Acceptable
Ground Lease) to a Borrowing Base Property.

 

“Borrowing Base Report” means
a report in substantially the form of Exhibit H
(or such other form approved by Administrative Agent) certified by a
Responsible Officer of Borrower, setting forth in reasonable detail the total
square footage, Occupancy Rate, Approved Costs, Adjusted NOI, Mortgageability
Amount, and Appraised Value for the Borrowing Base Properties (individually and
in the aggregate).

 

“Business Day” means any day
other than a Saturday, Sunday or other day on which commercial banks are
authorized to close under the Laws of, or are in fact closed in, the state
where Administrative Agent’s Office is located and, if such day relates to any
Eurodollar Rate Loan, means any such day that is also a London Banking Day.

 

5

 

“Cash Collateral” shall have a
meaning correlative to the definition of Cash Collateralize and shall include
the proceeds of such cash collateral and other credit support.

 

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

 

“Cash Equivalent” means: (a)
securities issued, guaranteed or insured by the United States or any of its
agencies with maturities of not more than one year from the date acquired; (b)
certificates of deposit with maturities of not more than one year from the date
acquired issued by a United States federal or state chartered commercial bank of
recognized standing, or a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, acting through a
branch or agency, which bank has capital and unimpaired surplus in excess of
$500,000,000 and which bank or its holding company has a short-term commercial
paper rating of at least A-2 or the equivalent by S&P or at least P-2 or
the equivalent by Moody’s; (c) reverse repurchase agreements with terms of not
more than seven days from the date acquired, for securities of the type
described in clause (a) above and entered
into only with commercial banks having the qualifications described in clause (b) above; (d) commercial
paper issued by any Person incorporated under the laws of the United States or
any State thereof and rated at least A-2 or the equivalent thereof by S&P
or at least P-2 or the equivalent thereof by Moody’s, in each case with
maturities of not more than one year from the date acquired; and (e)
investments in money market funds registered under the Investment Company Act
of 1940, as amended, which have net assets of at least $500,000,000 and at
least 85% of whose assets consist of securities and other obligations of the
type described in clauses (a) through (d) above.

 

“Casualty” has the meaning
specified in Section 7.13(b).

 

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

 

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

 

(a)           any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of
such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan) becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
except that a person or group shall be deemed to have “beneficial ownership” of
all securities that such person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time (such right,
an “option right”)), directly or
indirectly, of thirty-five percent (35%) or more of the equity securities of
Parent or Borrower entitled to vote for members of the board of directors or
equivalent governing body of Borrower, as the case may be, on a fully-diluted
basis (and taking into account all such securities that such person or group
has the right to acquire pursuant to any option right);

 

6

 

(b)           during any period of twelve (12) consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of Parent or Borrower, as the case may be, cease to be composed
of individuals (i) who were members of that board or equivalent governing
body on the first day of such period, (ii) whose election or nomination to
that board or equivalent governing body was approved by individuals referred to
in clause (i) above constituting
at the time of such election or nomination at least a majority of that board or
equivalent governing body or (iii) whose election or nomination to that
board or other equivalent governing body was approved by individuals referred
to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii)
and clause (iii), any individual
whose initial nomination for, or assumption of office as, a member of that
board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors);

 

(c)           Parent or Wholly Owned Subsidiaries
of Parent shall cease to be the beneficial and legal owners of at least
fifty-one percent (51%) of the Equity Interests of Borrower or shall cease to
have the ability to manage and Control Borrower; or

 

(d)           a “Change of
Control” under and as defined in the Indenture shall occur.

 

“Closing Date” means the first
date all the conditions precedent in Section 5.01
are satisfied or waived in accordance with Section 11.01.

 

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

 

“Collateral” means the Pledged
Equity, and all other property of the Companies on which Liens have been
granted to Administrative Agent, for the benefit of the Lenders, to secure the
Obligations.

 

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

 

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

 

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

 

“Companies” means, without
duplication, Parent and its Subsidiaries (including Borrower), and “Company” means any one of the
Companies.

 

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

 

“Condemnation” means a
temporary or permanent taking by any Governmental Authority as the result, in
lieu, or in anticipation, of the exercise of the right of condemnation or
eminent domain of all or any part of the Borrowing Base Properties, or any
interest therein or right accruing thereto, including any right of access
thereto.

 

7

 

“Consolidated Adjusted EBITDA”
means, for any period, for the Companies on a consolidated basis, an amount
equal to the sum of (a) Consolidated
EBITDA for such period minus
(b) FF&E Reserves for such period.

 

“Consolidated EBITDA” means,
for any period, for the Companies on a consolidated basis, as reported in the “Adjusted
EBITDA” reconciliation section of the Parent’s quarterly earnings release, an amount
equal to Consolidated Net Income for such period plus
(a) the following to the extent deducted in calculating such Consolidated
Net Income: (i) Consolidated Interest Charges for such period,
(ii) the provision for Federal, state, local and foreign income taxes
payable by the Companies for such period, (iii) depreciation and
amortization expense and (iv) non-cash items and non-recurring expenses
and acquisition closing costs that were capitalized prior to FAS 141-R of the
Companies reducing such Consolidated Net Income which do not represent a
recurring cash item in such period or any future period and minus (b) the following to the extent included in
calculating such Consolidated Net Income: (i) Federal, state, local and
foreign income tax credits of the Companies for such period and (ii) all
non-cash items increasing Consolidated Net Income for such period; provided, however, that, prior to the occurrence of a
Consolidation Event, no net income attributable to the Doubletree JV shall be
included in the calculation of Consolidated EBITDA.

 

“Consolidated Fixed Charge Coverage Ratio”  means, as of any date of determination, the ratio of
(a) Consolidated Adjusted EBITDA for the period of the four (4) prior
fiscal quarters ending on such date to
(b) Consolidated Fixed Charges for such period.

 

“Consolidated Fixed Charges”  means, for any period, for the Companies on a consolidated
basis, the sum of (a) all regularly scheduled principal payments (but
excluding any regularly scheduled principal payments on any Indebtedness which
pays such Indebtedness in full, but only to the extent that the amount of such
final payment is greater than the scheduled principal payment immediately
preceding such final payment), (b) all Consolidated Interest Charges that
are paid or payable in cash during such period, (c) any Restricted Payment
with respect to any Preferred Equity Interests, and (d) taxes paid or
payable in cash.

 

“Consolidated Interest Charges”
means, for any period, for the Companies on a consolidated basis, the sum of
(a) all interest, premium payments, debt discount, fees, charges and
related expenses of the Companies in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
and (b) the portion of rent expense of the Companies with respect to such
period under capital leases that is treated as interest in accordance with
GAAP; provided that Consolidated Interest
Charges shall not include any amortization of deferred financing fees and
non-cash interest expense pursuant to APB 14-1.

 

“Consolidated Leverage Ratio”
means, as of any date of determination, the ratio of (a) Consolidated Net
Indebtedness as of such date to (b) Consolidated
EBITDA for the period of the four (4) fiscal quarters most recently ended.

 

“Consolidated Net Income”
means, for any period, for the Companies on a consolidated basis, the net
income of the Companies (excluding extraordinary gains and extraordinary losses)
for that period.

 

“Consolidated Net
Indebtedness” means, as of any date of
determination, for the Companies on a consolidated basis, the difference of
(a) all Indebtedness minus,
(b) the greater of (i) $0.00 and (ii) the difference of
(x) the amount of cash and cash equivalents of the Companies that are not
the subject of any Lien or other arrangement (other than Liens granted under
the Loan Documents) with any creditor to have their claim satisfied out of the
asset (or proceeds thereof) prior to the general creditors of the owner of such
asset, minus (y) $25,000,000, minus (z) the Outstanding Amount.

 

8

 

“Consolidated Recourse Indebtedness”
means, as of any date of determination, for the Companies on a consolidated
basis, the sum of (a) the outstanding principal amount of all Recourse
Debt (excluding the Obligations hereunder) plus (b) without duplication,
all Guarantees issued by Borrower and the Guarantors with respect to
outstanding Recourse Debt of Persons other than the Companies.

 

“Consolidated Secured Indebtedness”
means, as of any date of determination, for the Companies on a consolidated
basis, without duplication, all Indebtedness (excluding the Obligations)
secured by a Lien on property owned or being purchased by such Person
(including Indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse.

 

“Consolidated Tangible Asset Value”
means, as of any date of determination, for the Companies on a consolidated
basis, the value of all assets of the Companies (net of all depreciation
expenses related to such assets) as shown on the Parent’s most recent financial
statements delivered pursuant to Section 7.01(a)
and  7.01(b), minus
the Intangible Assets of the Companies (net of all depreciation expenses
related to such assets) on that date.

 

“Consolidated Tangible Net Worth”
means, as of any date of determination, for the Companies on a consolidated
basis, Shareholders’ Equity of the Companies on that date minus
the Intangible Assets of the Companies on that date.

 

“Consolidation Event” means,
with respect to the Doubletree JV, the first to occur of the following: (a) the
Companies shall, after the Closing Date, make or commit to make any Investments
in the Doubletree JV in excess of $1,000,000 in the aggregate in any fiscal
year of the Companies, (b) any Company shall have any recourse liability for
the payment of any Indebtedness or other liabilities (other than customary
non-recourse carve-outs) of the Doubletree JV, or (c) Borrower shall provide a
Consolidation Notice to Administrative Agent.

 

“Consolidation Notice” means a
written notice delivered by Borrower to Administrative Agent providing notice
that Borrower has elected as of the effective date set forth in such notice
(which effective date must be at least ten (10) Business Days following the
date such notice is given) to include the 
Companies’ interest in the Doubletree JV as an Unconsolidated Subsidiary
as set forth in Section 1.03, without
regarding to the proviso thereto.

 

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

 

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

 

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

 

“Customary Recourse Exceptions”
means, with respect to any Non-Recourse Debt, exclusions from the exculpation
provisions with respect to such Non-Recourse Debt for fraud, misapplication of
cash, environmental claims, breach of representations or warranties, failure to
pay taxes and insurance, 

 

9

 

and other circumstances customarily excluded by institutional lenders
from exculpation provisions and/or included in separate indemnification
agreements in non-recourse financings of real estate.  Notwithstanding the generality of the
language included in this defined term, the terms set forth in the forms of
guaranty agreement and environmental indemnity agreement attached hereto as Exhibit I shall be specifically
included as Customary Recourse Exceptions.

 

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

 

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

 

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

 

“Defaulting Lender” means,
subject to Section 2.16(b), any
Lender that, as determined by Administrative Agent, (a) has failed to perform
any of its funding obligations hereunder, including in respect of its Loans or
participations in respect of Letters of Credit, within three (3) Business Days
of the date required to be funded by it hereunder, unless such obligation is
the subject of a good faith dispute, (b) has notified Borrower, or
Administrative Agent that it does not intend to comply with its funding
obligations or has made a public statement to that effect with respect to its
funding obligations hereunder or generally under other agreements in which it
commits to extend credit, (c) has failed, within three (3) Business Days after
request by Administrative Agent, to confirm in a manner satisfactory to
Administrative Agent that it will comply with its funding obligations, unless
the subject of a good faith dispute, provided that any such Lender shall cease
to be a Defaulting Lender under this clause (c) upon receipt of such
confirmation by the Administrative Agent, or (d) has, or has a direct or
indirect parent company that has, (i) become the subject of a proceeding under
any Debtor Relief Law, (ii) had a receiver, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged
with reorganization or liquidation of its business or a custodian appointed for
it, or (iii) taken any action in furtherance of, or indicated its consent to,
approval of or acquiescence in any such proceeding or appointment; provided
that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority.

 

“Disposition” or “Dispose” means the sale, transfer,
license, lease (other than a real estate lease entered into in the ordinary
course of business as part of Property leasing operations) or other disposition
(including any sale and leaseback transaction) of any property by any Person,
including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 

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

 

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

 

10

 

“Doubletree JV” means the Companies’
joint venture Investment in the Doubletree Guestsuites Times Square.

 

“Eligible Assignee” means any Person
that meets the requirements to be an assignee under Section 11.06(b)(iii) and
(v) (subject to such consents,
if any, as may be required under Section 11.06(b)(iii)).

 

“Environmental Assessment” has the
meaning specified in Section 7.12(b).

 

“Environmental Claim” means any
investigative, enforcement, cleanup, removal, containment, remedial, or other
private or governmental or regulatory action at any time threatened,
instituted, or completed pursuant to any applicable Environmental Law against
any Company or against or with respect to any Real Property or any condition,
use, or activity on any Real Property (including any such action against
Administrative Agent or any Lender), and any claim at any time threatened or
made by any Person against any Company or against or with respect to any Real
Property or any condition, use, or activity on any Real Property (including any
such claim against Administrative Agent or any Lender), relating to any
Environmental Liability.

 

“Environmental Damages” means any and
all Environmental Liability incurred, suffered, brought, or imposed at any time
and from time to time, against any Indemnitee, whether before or after the
Release Date and arising in whole or in part from: (a) the presence of any
Hazardous Material on any Borrowing Base Property, or any escape, seepage,
leakage, spillage, emission, release, discharge, or disposal of any Hazardous
Material on or from any Borrowing Base Property, or the migration or release or
threatened migration or release of any Hazardous Material to, from, or through
any Borrowing Base Property, on or before the Release Date; or (b) any
act, omission, event, or circumstance existing or occurring in connection with
the handling, treatment, containment, removal, storage, decontamination, clean
up, transport, or disposal of any Hazardous Material which is at any time on or
before the Release Date present on any Borrowing Base Property; or (c) the
breach of any representation, warranty, covenant, or agreement related to
Hazardous Materials contained in this Agreement because of any event or
condition occurring or existing on or before the Release Date; or (d) any
violation in connection with a Borrowing Base Property on or before the Release
Date, of any Environmental Law in effect on or before the Release Date,
regardless of whether any act, omission, event, or circumstance giving rise to
the violation constituted a violation at the time of the occurrence or
inception of such act, omission, event, or circumstance; or (e) any
Environmental Claim, or the filing or imposition of any environmental Lien
against any Borrowing Base Property, because of, resulting from, in connection
with, or arising out of any of the matters referred to in the preceding subsections (a) through (d); and regardless of whether any
of the matters referred to in the preceding subsections (a) through
(d) was caused by a Loan Party
or a tenant or subtenant, or a prior owner of any Borrowing Base Property or
its tenant or subtenant, or any third party.

 

“Environmental Indemnitors” has the
meaning specified in Section 7.12(d),
and “Environmental Indemnitor” means any
one of the Environmental Indemnitors.

 

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

 

11

 

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

 

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

 

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

 

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

 

“ERISA Event” means (a) a
Reportable Event with respect to a Pension Plan; (b) the withdrawal of
Parent or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such
entity was a “substantial employer” as defined
in Section 4001(a)(2) of ERISA or
a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal (within the meanings of Sections 4203 and
4205 of ERISA) by Parent or any ERISA
Affiliate from a Multiemployer Plan or receipt by Parent of notice from any
Multiemployer Plan that is in reorganization (within the meaning of Section 4241 of ERISA); (d) the filing of a notice
of intent to terminate a Pension Plan under Section 4041
of ERISA; (e) the institution by the PBGC of proceedings to terminate a
Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (g) the
determination that any Pension Plan is considered an at-risk plan or a plan in
endangered or critical status within the meaning of Sections 430,
431 and 432
of the Code or Sections 303, 304 and 305 of ERISA;
or (h) the imposition of any liability under Title IV of ERISA, other than
for PBGC premiums due but not delinquent under Section 4007
of ERISA, upon  Parent or any ERISA
Affiliate.

 

“Eurodollar Rate” means:

 

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

 

12

 

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

 

Notwithstanding any
calculation of the Eurodollar Rate pursuant to clause
(a) above, in no event shall the BBA Libor ever be less
than one percent (1.00%) per annum.

 

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

 

“Event of Default” has the meaning
specified in Section 9.01.

 

“Exchangeable Senior Notes” means the
4.60% Exchangeable Senior Notes due in 2027, issued by Borrower pursuant to the
Indenture, and the Indebtedness evidenced thereby.

 

“Exchangeable Senior Note Conditions”
either (a) on or prior to the Exchangeable Senior Note Payment Date, the
right of holders of the Exchangeable Senior Notes to require Borrower to
repurchase Exchangeable Senior Notes on the Exchangeable Senior Note Payment
Date shall have been eliminated, (b) on or prior to the Exchangeable
Senior Note Payment Date, the Exchangeable Senior Notes shall have been
refinanced, redeemed or defeased (or funds shall have been segregated and held
in a trust or in escrow, on terms and conditions reasonably satisfactory to the
Administrative Agent, for purposes of and in an amount sufficient to discharge
all payment obligations with respect to the Exchangeable Senior Notes, other
than the obligations of Parent to issue Equity Interests in connection with a
conversion of any Exchangeable Senior Notes, in each case in a manner permitted
hereunder, or (c) on any date on or after the date that is six (6) months
prior to the Exchangeable Senior Note Payment Date, the Liquidity Condition is
satisfied.

 

“Exchangeable Senior Note Payment Date”
means the earliest date on which (a) the Exchangeable Senior Notes are
repayable pursuant to the stated maturity thereof (b) any of the holders
of the Exchangeable Senior Notes may require Borrower to repurchase their
Exchangeable Senior Notes, or (c) the Exchangeable Senior Notes are
required to be redeemed.  As of the date
hereof, the Exchangeable Senior Note Payment Date is January 15, 2013.

 

“Excluded Taxes” means, with respect
to Administrative Agent, any Lender, the L/C Issuer or any other recipient of
any payment to be made by or on account of any obligation of Borrower
hereunder, (a) taxes imposed on or measured by its overall net income
(however denominated), and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the Laws
of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable Lending Office
is located, (b) any branch profits taxes imposed by the United States or
any similar tax imposed by any other jurisdiction in which Borrower is located,
(c) any backup withholding tax that is required by the Code to be withheld
from amounts payable to a Lender that 

 

13

 

has
failed to comply with clause (A) of
Section 3.01(e)(ii), and
(d) in the case of a Foreign Lender (other than an assignee pursuant to a
request by Borrower under Section 11.13),
any United States  withholding tax that (i) is
required to be imposed on amounts payable to such Foreign Lender pursuant to
the Laws in force at the time such Foreign Lender becomes a party hereto (or
designates a new Lending Office) or (ii) is attributable to such Foreign
Lender’s failure or inability (other than as a result of a Change in Law) to
comply with clause (B) of Section 3.01(e)(ii), except to
the extent that such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new Lending Office (or assignment), to receive
additional amounts from Borrower with respect to such withholding tax pursuant
to Section 3.01(a)(ii) or (c),
and any Taxes imposed with respect to the requirements of FATCA.

 

“Exclusion Event” has the meaning
specified in Section 4.09.

 

“Exclusion Notice” has the meaning
specified in Section 4.09.

 

“Existing Ground Lease” means each of
the following, together with any amendments, assignments or modifications
thereto, all of which collectively shall be referred to herein as the “Existing Ground Leases”:

 

(a)           that certain Ground Lease dated June 9, 1989, between
Sunstone Center Court, LLC, as tenant, and The Cerritos Redevelopment Agency,
as landlord, as modified by (i) that certain Second Amendment and
Modification to Cerritos Towne Center Area Development Plan 2 Third Amended and
Restated Disposition and Development Agreement for Transpacific Development
Company and Modification to Ground Lease dated December 7, 1993, by and
among the City of Cerritos, the Cerritos Redevelopment Agency, Bloomfield
Associates, and Cerritos Associates, L.P., (ii) that certain Second Amendment
to Hotel Ground Lease dated May 31, 1996, by and among the City of
Cerritos, the Cerritos Redevelopment Agency, and Cerritos Associates, L.P., (iii) that
certain Seventh Amendment and Modification to Cerritos Towne Center Area
Development Plan 2 Third Amended and Restated Disposition and Development
Agreement for Transpacific Development Company and Modification of Ground Lease
dated September 25, 1997, by and among the City of Cerritos, the Cerritos
Redevelopment Agency, Bloomfield Associates, Cerritos Associates, L.P., and
Cerritos Associates, LLC, (iv) that certain Third Amendment to Cerritos
Towne Center Hotel Ground Lease (Phase IA-Building 2) dated April 28,
1998, by and among the City of Cerritos and Cerritos Associates, LLC, (v) that
certain Eighth Amendment and Modification to Cerritos Towne Center Area
Development Plan 2 Third Amended and Restated Disposition and Development
Agreement for Transpacific Development Company and Fourth Amendment to Cerritos
Towne Center Hotel Ground Lease dated July 22, 1999, by and among the City
of Cerritos, the Cerritos Redevelopment Agency, Bloomfield Associates, Cerritos
Associates, L.P., and Cerritos Associates, LLC, (vi) that certain Ninth
Amendment and Modification to Cerritos Towne Center Area Development Plan 2
Third Amended and Restated Disposition and Development Agreement for
Transpacific Development Company dated May 9, 2002, by and among City of
Cerritos, the Cerritos Redevelopment Agency, Bloomfield Associates, Cerritos
Associates, L.P., and Cerritos Associates, LLC, (vii) that certain Fifth
Amendment to Hotel Ground Lease dated June 27, 2005, by and among the City
of Cerritos, the Cerritos Redevelopment Agency, and Sunstone Center Court, LLC,
and (viii) that certain Assignment and Assumption of Ground Lease and
Consent dated June 27, 2005, by and among Cerritos Associates, LLC and
Sunstone Center Court, LLC;

 

(b)           that certain Amended and Restated Lease Agreement dated April 1,
2005, between Sunstone Jamboree, LLC, as tenant, and JGKallins Investments Newport,
LLC, as landlord, as modified by that certain Assignment of Lease dated May 13,
2005, by and among WHP Hotel Owner-1, L.P. and Sunstone Jamboree, LLC;

 

14

 

(c)           that certain Ground Lease dated March 10, 1983,
between Sunstone MacArthur, LLC, as tenant, and MacArthur 4500, LLC, as
landlord, as modified by (i) that certain First Amendment to Ground Lease
dated March 9, 1998, by and among Sammis Properties, L.P., .Sutton Place
MacArthur, LLC, and MacArthur Hotels Limited Partnership, (ii) that
certain Assignment, Assumption and Amendment of Ground Lease, and Consent of
Landlord dated October 12, 2004, by and among MacArthur Hotels Limited
Partnership, Atrium Plaza, LLC, and MacArthur 4500, LLC, and (iii) that
certain Assignment, Assumption and Amendment of Ground Lease, and Consent of
Landlord dated May 10, 2005, by and among Atrium Plaza, LLC, Sunstone
MacArthur, LLC, and MacArthur 4500, LLC;

 

(d)           that certain Ground Lease dated August 28, 1997,
between Sunstone OP Properties, LLC, as tenant, and Peacock, LLC, as landlord,
as modified by (i) that certain Amendment Number One to Ground Lease dated
September 2, 1997, by and among Sunstone Hotel Investors, L.P. and
Peacock, LLC, (ii) that certain Amendment Number Two to Ground Lease dated
January 23, 1998, by and among Sunstone Hotel Investors, L.P. and Peacock,
LLC, (iii) that certain Amendment Number Three to Ground Lease dated January 26,
2002, by and among Sunstone OP Properties, LLC and Peacock, LLC, (iv) that
certain Amendment Number Four to Ground Lease dated December 1, 2003, by
and among Sunstone OP Properties, LLC and Peacock, LLC, and (v) that
certain Letter Confirming Ground Rent Adjustment dated November 4, 2005,
executed by Tarsadia Hotels; and

 

(e)           that certain Ground Lease dated November 17, 1983,
between Sunstone Sea Harbor, LLC, as tenant, and Sunstone Westwood, LLC, as
landlord, as modified by (i) that certain Modification of Lease dated December 29,
1986, by and among Sea World of Florida, Inc. and SWW No. 1, (ii) that
certain Side Letter dated December 29, 1986, by and among Sea World of
Florida, Inc. and SWW No. 1, (iii) that certain Second Amendment
to Lease dated October 31, 1989, by and among Sea World of Florida, Inc.
and SWW No. 1, (iv) that certain Third Amendment to Lease dated November 3,
1990, by and among Sea World of Florida, Inc. and SWW No. 1, (v) that
certain Side Letter dated February 8, 1991, by and among Sea World of
Florida, Inc., HSH of Orlando, Inc., and SWW No. 1, (vi) that
certain Side Letter dated September 23, 1994, executed by Busch Properties, Inc.,
(vii) that certain Assignment and Assumption of Ground Lease and
Memorandum of Lease dated June 17, 2005, by and among SWW No. 1 and
Sunstone Sea Harbor, LLC, and (viii) that certain Assignment and
Assumption of Ground Lease and Other Intangible Property dated September 4,
2008, by and among Sea World of Florida, Inc. and Sunstone Westwood, LLC.

 

“Existing L/Cs” means the letters of
credit listed on Schedule 8.03 hereto.

 

“Extended Maturity Date” has the
meaning specified in Section 2.13(a).

 

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

 

“FATCA” means Sections
1471  through 1474  of
the Code.

 

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

 

15

 

“FF&E Reserves” means, with
respect to any Property, reserves for capital improvements and other capital
expenditures equal to the greater of (i) the assumed reserves stipulated
in the Management Agreement with respect to such Property and (ii) four
percent (4.00%) of the aggregate gross revenue from operations of such Property
for such time period.

 

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

 

“Franchise Agreement” means each of
the agreements described in Section (a) of
Schedule 6.26, together with any
amendments, assignments or modifications thereto, all of which collectively
shall be referred to herein as the “Franchise Agreements”.

 

“Franchisor” means, with respect to
each Franchise Agreement, the Person selected as the franchisor of the
applicable Borrowing Base Property.

 

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

 

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

 

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

 

“Funds from Operations” means, for
the Parent for any period, as reported in the “Adjusted Funds from Operations”
reconciliation section of the Parent’s quarterly earnings release, the sum of
(a) Consolidated Net Income plus
(b) depreciation and amortization expense determined in accordance with
GAAP excluding amortization expense attributable to capitalized debt costs plus (c) other non-recurring expenses and acquisition
closing costs that were capitalized prior to FAS 141-R of the Companies
reducing such Consolidated Net Income which do not represent a recurring cash
item in such period or any future period; provided that
there shall not be included in such calculation (i) any proceeds of any
insurance policy other than rental or business interruption insurance received
by such Person, (ii) any gain or loss which is classified as “extraordinary”
in accordance with GAAP, (iii) any capital gains and losses and taxes
related to capital gains and losses, (iv) income (or loss) associated with
third-party ownership of non-controlling Equity Interests, and (v) gains
or losses on the sale of discontinued operations as detailed in the most-recent
financial statements delivered pursuant to Section 7.01(a) or
(b), as applicable.

 

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

 

16

 

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

 

“Guarantee” means, as to any Person,
(a) any obligation, contingent or otherwise, of such Person guaranteeing
or having the economic effect of guaranteeing any Indebtedness or other
obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and
including any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or
other obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed
to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith.  The term “Guarantee”
as a verb has a corresponding meaning.

 

“Guaranties” means the Parent
Guaranty and the Subsidiary Guaranty, and “Guaranty”
means any one of the Guaranties.

 

“Guarantors” means, collectively,
Parent and each Subsidiary Guarantor, and “Guarantor”
means any one of the Guarantors.

 

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

 

“IFRS” means the International
Financial Reporting Standards adopted by the International Accounting Standards
Board, and that are applicable to the circumstances as of the date of
determination, consistently applied.

 

“Improvements” means any Loan Party’s
interest in and to all on site and off site improvements to the Borrowing Base
Properties, together with all fixtures, tenant improvements, and appurtenances
now or later to be located on the Borrowing Base Properties and/or in such
improvements.

 

“Indebtedness” means, as to any
Person at a particular time, without duplication, all of the following:

 

17

 

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

 

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

 

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

 

(d)           all obligations of such Person to pay the deferred
purchase price of property or services (other than trade accounts payable in
the ordinary course of business);

 

(e)           indebtedness (excluding prepaid interest thereon) secured
by a Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;

 

(f)            capital leases and Synthetic Lease Obligations;

 

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

 

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

 

For
all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture that
is itself a corporation or limited liability company) in which such Person is a
general partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person.  The amount
of any net obligation under any Swap Contract on any date shall be deemed to be
the Swap Termination Value thereof as of such date.  The amount of any capital lease or Synthetic
Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified Taxes” means Taxes other
than Excluded Taxes.

 

“Indemnitees” means Administrative
Agent (and any sub-agent thereof), each Lender, the L/C Issuer, and each
Related Party of any of the foregoing Persons.

 

“Indenture” means that certain
Indenture, dated as of June 18, 2007, by and among Borrower, Parent,
certain Subsidiaries of Parent, and Wells Fargo Bank, National Association, as
amended by that certain First Supplemental Indenture, dated as of June 18,
2007, as further amended by that certain Second Supplemental Indenture, dated
as of June 27, 2007, as further amended by that certain Third Supplemental
Indenture, dated as of July 29, 2008, and as further amended by that
certain Fourth Supplemental Indenture, dated as of May 20, 2009, as further
amended from time to time.

 

“Information” has the meaning
specified in Section 11.07.

 

“Initial Borrowing Base Properties”
means the Properties listed on Schedule 4.01,
and “Initial Borrowing Base Property”
means any one of the Initial Borrowing Base Properties.

 

18

 

“Initial Maturity Date” means
November 1, 2013.

 

“Insurance Proceeds” means the
proceeds of any insurance to which such Loan Party may be entitled to, whether
or not actually received.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Investment” means, as to any Person,
any direct or indirect acquisition or investment by such Person, whether by
means of (a) the purchase or other acquisition of capital stock or other
securities of another Person, (b) a loan, advance or capital contribution
to, Guarantee or assumption of debt of, or purchase or other acquisition of any
other debt or equity participation or interest in, another Person, including
any partnership or joint venture interest in such other Person and any
arrangement pursuant to which the investor Guarantees Indebtedness of such
other Person, or (c) the purchase or other acquisition (in one transaction
or a series of transactions) of assets of another Person that constitute a
business unit.  For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

 

“IRS” means the United States
Internal Revenue Service.

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

“L/C Issuer” means Bank of America in
its capacity as issuer of Letters of Credit hereunder, or any successor issuer
of Letters of Credit hereunder.

 

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

 

“Lease” means each existing or future
lease, sublease (to the extent of any Loan Party’s rights thereunder), or other
agreement (other than an Acceptable Ground Lease or Operating Lease) under the
terms of which any Person has or acquires any right to occupy or use any
Borrowing Base Property, or any part thereof, or interest therein, and each
existing or future guaranty of payment or performance thereunder.

 

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

 

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

 

“Letter of Credit” means any standby letter of credit issued
hereunder.

 

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

 

“Letter of Credit Expiration Date”
means the day that is seven (7) days prior to the Maturity Date then in
effect (or, if such day is not a Business Day, the next preceding Business
Day).

 

20

 

 

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

 

“Letter of Credit Sublimit” means an
amount equal to $50,000,000.  The Letter
of Credit Sublimit is part of, and not in addition to, the Aggregate
Commitments.

 

“License Agreement” means each of the
license agreements described in Section (b) of
Schedule 6.26, together with any
amendments, assignments or modifications thereto, all of which collectively
shall be referred to herein as the “License Agreements”.

 

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

 

“Liquidity Condition” means the
condition that (a) the sum of: (i) the Available Commitments; plus (ii) cash on hand and Cash Equivalents of the Loan
Parties (to the extent that such cash and Cash Equivalents are (A) available
to the Loan Parties without any restriction that would impair the application
thereto to pay Indebtedness within three (3) Business Days and (B) not
subject to any Liens other than (1) Liens created under the Loan Documents
or (2) Liens arising by operation of law, or bankers Liens and brokers
Liens arising under customary account agreements entered into in the ordinary
course of business, in each case that do not impair access to such cash or Cash
Equivalents; less (iii) capital
expenditures for which any Loan Party has entered into a Contractual Obligation
for the payment or incurrence thereof during the period from the date of
calculation through the Exchangeable Senior Note Payment Date; less (iv) to the extent not included in (iii) above,
all costs (including the purchase price thereof) set forth in and related to,
any agreements for the purchase of any Properties during the period from the
date of calculation through the Exchangeable Senior Note Payment Date; less (v) $25,000,000, less
(vi) all regularly scheduled principal payments on Indebtedness coming due
for the period from the date of calculation through the Exchangeable Senior
Note Payment Date, exceeds (b) zero.

 

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

 

“Loan Documents” means this
Agreement, each Note, the Security Documents, each Issuer Document, any
agreement creating or perfecting rights in Cash Collateral pursuant to the
provisions of Section 2.15 of this
Agreement, and the Guaranties.

 

“Loan Parties” means, collectively, Borrower,
each Guarantor, and each “Pledgor” party
to a Pledge Agreement (as defined in each such Pledge Agreement), and “Loan Party” means any one of the
Loan Parties.

 

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

 

“Management Agreement” means each of
the agreements described on Schedule 6.25,
together with any amendments, assignments or modifications thereto, all of
which collectively shall be referred to herein as the “Management
Agreements”.

 

21

 

“Manager” means, with respect to each
Management Agreement, the Person selected as the manager of the applicable
Borrowing Base Property, or any subsequent manager of the applicable Borrowing
Base Property.

 

“Material Adverse Effect” means
(a) a material adverse change in, or a material adverse effect upon, the
operations, business, assets, properties, liabilities (actual or contingent),
condition (financial or otherwise) or prospects of Borrower or the Companies
taken as a whole; (b) a material impairment of the rights and remedies of
Administrative Agent or any Lender under any Loan Document, or of the ability
of the Companies, taken as a whole, to perform their collective obligations
under the Loan Documents; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party.

 

“Material Environmental Event” means,
with respect to any Borrowing Base Property, (a) a violation of any
Environmental Law with respect to such Borrowing Base Property, or (b) the
presence of any Hazardous Materials on, about, or under such Borrowing Base
Property in violation of Environmental Laws, which, in each case, could
reasonably be expected to be a Material Property Event.

 

“Material Lease” means (a) each
Operating Lease and (b) each other Lease of a Borrowing Base Property (or
any portion thereof) whose annual base rent exceeds $100,000 and with an
initial term exceeding 5 years.

 

“Material Property Event” means, with
respect to any Borrowing Base Property, the occurrence of any event or
circumstance occurring or arising after the date of this Agreement that could
reasonably be expected to result in a (a) material adverse effect with
respect to the financial condition or the operations of such Borrowing Base
Property, (b) material adverse effect on the Appraised Value of such
Borrowing Base Property, or (c) material adverse effect on the ownership
of such Borrowing Base Property.

 

“Material Title Defects” means, with
respect to any Borrowing Base Property, defects, Liens (other than Liens for
local real estate taxes and similar local governmental charges), and other
encumbrances in the nature of easements, servitudes, restrictions, and
rights-of-way that would customarily be deemed unacceptable title exceptions
for a prudent lender (i.e., a prudent lender would reasonably determine that
such exceptions, individually or in the aggregate, materially impair the value
or operations of the Borrowing Base Property in question, would prevent the
Borrowing Base Property from being used in the manner in which it is currently
being used, or could reasonably be expected to result in a violation of any Law
which would reasonably be expected to result in a Material Property Event); provided, however, that Material Title Defects shall not
include any Liens or other encumbrances that existed as of the date of this
Agreement and that are reflected in the Title Insurance Commitments and are
acceptable to Administrative Agent and Required Lenders, or are listed on Schedule 8.01.

 

“Maturity Date” means the later of
(a) the Initial Maturity Date and (b) if Initial Maturity Date is
extended to the Extended Maturity Date pursuant to Section 2.13,
such Extended Maturity Date as determined pursuant to such Section; provided, however, that, in each case, if such date is not a Business Day, the Maturity Date shall be the next
preceding Business Day, and provided further
that if (x) on any date which is six (6) months or less prior to the
Exchangeable Senior Note Payment Date,
the Exchangeable Senior Note Conditions are not met, then such date shall be
the Maturity Date or (y) the Borrowing Base shall not consist of at least
five (5) Borrowing Base Properties prior to December 15, 2010, then December 15,
2010 shall be the Maturity Date.

 

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

 

22

 

“Mortgageability Amount” means, as of
any date of determination, the maximum Outstanding Amount which could be
covered by the then applicable Mortgageability Debt Service Coverage Ratio,
over a twelve (12) month period by the Adjusted NOI of the Borrowing Base
Properties for the most recently ended twelve (12) months, assuming payments
would be required to be made over a twenty-five (25) year amortization, with
level payments of interest and assuming an interest rate equal to the greater
of:  (i) the most recent rate published
on such date in the United States Federal Reserve Statistical Release (H.15)
for ten (10) year Treasury securities, plus three and
one-half percent (3.50%) per annum; and (ii) seven and one-half percent
(7.50%) per annum.

 

“Mortgageability Debt Service Coverage Ratio”
means 1.45 to 1.00 from the Closing Date through September 30, 2011, and
thereafter 1.60 to 1.00.

 

“MSA” means a Metropolitan
Statistical Area, as determined in the most current listing published by the
United States Office of Management and Budget.

 

“Multiemployer Plan” means any “multi-employer
plan” as defined in Section 4001(a)(3) of
ERISA, to which Parent or any ERISA Affiliate makes or is obligated to make
contributions, or during the preceding five plan years, has made or been obligated
to make contributions.

 

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

 

“Newport Fairmont” means the Fairmont
branded Property located at 4500 MacArthur Boulevard, Newport Beach, California
92660.

 

“Newport Hyatt” means the Hyatt
branded Property located at 1107 Jamboree Road, Newport Beach, California
92660.

 

“Non-Recourse Debt” means, for any
Person, any Indebtedness of such Person in which the holder of such
Indebtedness may not look to Borrower or any Guarantor personally for
repayment, other than to the extent of any security therefor or pursuant to
Customary Recourse Exceptions.

 

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

 

“Obligations” means all advances to,
and debts, liabilities, obligations, covenants and duties of, any Loan Party
arising under any Loan Document or otherwise with respect to any Loan or Letter
of Credit, whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or
against any Loan Party or any Affiliate thereof of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such
proceeding, and shall also include all present and future indebtedness,
obligations, and liabilities now or hereafter owed to any Lender or any
Affiliate of a Lender, arising from, by virtue of, or pursuant to (x) any
Swap Contract relating to the principal amount of the Committed Loans and (y) any
cash management or related services including the automatic clearing house
transfer of funds by any Lender or any Affiliate of a Lender for the account of
any Loan Party pursuant to agreement or overdrafts.

 

“Occupancy Rate” means, for any
Property, for any period, the percentage of the occupied room nights divided by
available room nights.

 

23

 

“Operating Lease” means each of the
lease agreements described in Schedule 6.30,
together with any amendments, assignments or modifications thereto, all of
which collectively shall be referred to herein as the “Operating
Leases”.

 

“Operating Lessee” means the lessee
under each Operating Lease.

 

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

 

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

 

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

 

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

 

“Parent Guaranty” means the
Guaranty made by Parent in favor of Administrative Agent for the benefit of the
Lenders, substantially in the form of Exhibit E-1.

 

“Participant” has the meaning specified
in Section 11.06(d).

 

“PBGC” means the Pension Benefit
Guaranty Corporation.

 

“Pension Act” means the Pension
Protection Act of 2006.

 

“Pension Funding Rules” means the rules of
the Code and ERISA regarding minimum required contributions (including any
installment payment thereof) to Pension Plans and set forth in, with respect to
plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302
of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302,
303, 304 and 305 of ERISA.

 

“Pension Plan” means any employee
pension benefit plan including a Multiple Employer Plan, in either case, that
is maintained or is contributed to by Borrower and any ERISA Affiliate and is
either covered by Title IV of ERISA or is subject to the minimum funding
standards under Section 412 of the Code.

 

24

 

“Permitted Disposition” means the
Disposition of a Borrowing Base Property or Disposition of the Equity Interests
of any Subsidiary or other Person that directly or indirectly owns a Borrowing
Base Property (other than Sunstone PledgeCo, LLC) for which
(a) Administrative Agent shall have received, for the benefit of Lenders,
all amounts required to be prepaid as a result of such Disposition pursuant to Section 2.04(b) and
(b) Borrower shall have delivered to Administrative Agent a Borrowing Base
Report and Compliance Certificate certifying that no Default would exist after
giving effect to such Permitted Disposition and demonstrating that Borrower is
in compliance with Section 4.08 after
giving effect to such Disposition, including the exclusion of such Borrowing
Base Property from the Borrowing Base.

 

“Permitted Financial Covenant Non-Compliance Period”
has the meaning specified in the last paragraph of Section 8.14.

 

“Permitted Liens” means Liens
permitted pursuant to Section 8.01.

 

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

 

“PIP” means, with respect to any
Borrowing Base Property, any final and binding property improvement plan,
property condition report, property deficiency report, or similar
correspondence or reports from any Franchisor or Manager to the applicable
Borrowing Base Property Owner with respect to such Borrowing Base Property.

 

“Plans” means the plans and
specifications for the Borrowing Base Properties, including existing or
proposed Improvements, and all modifications thereof and additions thereto that
are included as part of the Plans in accordance with the terms of this
Agreement.

 

“Platform” has the meaning specified
in Section 7.02.

 

“Pledge Agreement” means each Pledge
Agreement executed by Parent, Borrower, and each other Subsidiary with respect
to the Pledged Equity, substantially in the form attached hereto as Exhibit F.

 

“Pledged Equity” means a perfected,
first lien security interest in favor of Administrative Agent, for the benefit
of Lenders, in all Equity Interests of each Borrowing Base Property Owner and
each wholly-owned, either directly or indirectly, Subsidiary of Borrower; provided, however, that, the Pledged Equity shall
specifically exclude (a) the Equity Interests of any Subsidiary (other
than a Borrowing Base Property Owner) where the granting of a Lien in such
Equity Interests would breach any obligation of Parent, Borrower, or such
Subsidiary or any Affiliate thereof under any Contractual Obligation or (b) any
Equity Interests on which the Administrative Agent has released its Lien
pursuant to Section 2.17.

 

“Preferred Equity Interests” means,
with respect to any Person, Equity Interests issued by such Person that are
entitled to preference or priority over any other Equity Interests issued by
such Person any distribution of such Person’s property or assets, whether by
dividend or upon liquidation.

 

“Properties” means hotel properties
or land on which any hotel property exists, in each case, owned by any Company,
and “Property” means any one of the
Properties.

 

“Property Information” has the
meaning specified in Section 4.11.

 

“Public Lender” has the meaning
specified in Section 7.02.

 

25

 

“Qualified Franchisor” shall mean (a) Marriott
International, Inc., Hilton Worldwide, Hyatt Hotels Corporation, Starwood
Hotels & Resorts, Wyndham Hotel Group, InterContinental Hotels
Group plc, Hard Rock International, Kimpton Hotels and Restaurant Group, Inc.,
or Morgans Hotel Group, (b) a nationally recognized franchisor, in
operation for not less than five (5) years and licensing at least ten (10) full-service
hotels located in major metropolitan areas (including at least five (5) hotels
that are similar in size, scope, class, use and value as the Property being
licensed by such Person), which hotels in the aggregate have a number of rooms
not less than ten (10) times the number of rooms of such Property, or (c) a
reputable and experienced franchisor reasonably approved by Administrative
Agent possessing experience in flagging hotel properties located in major
metropolitan areas that are similar in size, scope, class, use and value as the
Property being licensed by such Person; provided, in
each case, such Person must not have been party to any bankruptcy proceedings,
voluntary or involuntary, made an assignment for the benefit of creditors or
taken advantage of any insolvency act, or any act for the benefit of debtors
within seven (7) years prior to the licensing of the applicable Property
by such Person.

 

“Qualified Manager” means (a) Marriott
International, Inc., Starwood Hotels & Resorts, Intercontinental
Hotels Group plc, Hilton Worldwide, Hard Rock International, Kimpton Hotels &
Restaurant Group, Inc., Morgans Hotel Group, Co., Davidson Hotel
Company, Sage Hospitality, Interstate Hotels & Resorts, Inc.,
Denihan Hospitality Group, Crestline Hotels & Resorts, Inc.,
Pyramid Hotel Group, LLC, Highgate Hotels, LLC, or Crescent Hotel Group, or (b) a
nationally recognized management organization in operation for not less than
five (5) years and managing at least ten (10) full-service hotels
located in major metropolitan areas (including at least five (5) hotels
that are similar in size, scope, class, use and value as the Property being
managed by such Person), which hotels in the aggregate have a number of rooms
not less than ten (10) times the number of rooms of such Property, or (c) a
reputable and experienced management organization reasonably approved by
Administrative Agent, possessing experience in managing hotel properties
located in major metropolitan areas that are similar in size, scope, class, use
and value as the Property being managed by such Person; provided,
in each case, such Person must not have been party to any bankruptcy
proceedings, voluntary or involuntary, made an assignment for the benefit of
creditors or taken advantage of any insolvency act, or any act for the benefit
of debtors within seven (7) years prior to the proposed management of the
Property by such Person.

 

“Quincy Marriott” means the Marriott
branded Property located at 1000 Marriott Drive, Quincy, Massachusetts 02169.

 

“Real Property” of any Person means
all of the right, title, and interest of such Person in and to land, Improvements,
and fixtures, including ground leases.

 

“REAs” means each construction,
operation, and reciprocal easement agreements or similar agreements (including
any separate agreements or other agreements between Borrower and one or more
other parties to any REA with respect to such REA) affecting any Borrowing Base
Property or any portion thereof, and “REA” means
any one of the REAs.

 

“Recourse Debt” means, for any Person, Indebtedness
of such Person that is not Non-Recourse Debt.

 

“Register” has the meaning specified
in Section 11.06(c).

 

“REIT” means a “real estate
investment trust” for purposes of the Code.

 

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

 

26

 

“Release” means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing into the environment (including the
abandonment or discarding of barrels, containers or other closed receptacles
containing any Hazardous Materials).

 

“Release Date” means the date on
which the Obligations have been paid in full and, all Commitments have been
terminated.

 

“Renaissance Orlando” means the
Renaissance branded Property located at 5445 Forbes Place, Orlando, Florida
32812.

 

“Rents” means all of the rents,
revenue, income, profits, and proceeds derived and to be derived from each
Borrowing Base Property or arising from the use or enjoyment of any portion
thereof or from any Lease, including but not limited to the proceeds from any
negotiated lease termination or buyout of such Lease, liquidated damages
following default under any such Lease, all proceeds payable under any policy
of insurance covering loss of rents resulting from untenantability caused by
damage to any part of the any Borrowing Base Property, all rights to recover
monetary amounts from any tenant in bankruptcy including, without limitation,
rights of recovery for use and occupancy and damage claims arising out of Lease
defaults, including rejections, under any applicable Debtor Relief Law,
together with any sums of money that may now or at any time hereafter be or
become due and payable to a Loan Party by virtue of any and all royalties,
overriding royalties, bonuses, delay rentals, and any other amount of any kind
or character arising under any and all present and all future oil, gas,
mineral, and mining leases covering any Borrowing Base Property or any part
thereof, and all proceeds and other amounts paid or owing to any Loan Party
under or pursuant to any and all contracts and bonds relating to the
construction or renovation of any Borrowing Base Property.

 

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

 

“Reporting Date” means the date that
is seven (7) months prior to the Exchangeable Senior Note Payment Date.

 

“Reporting Officer” means a
Responsible Officer that is the chief executive officer, president, chief
financial officer, treasurer, or controller of a Loan Party.

 

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

 

“Required Lenders” means, as of any
date of determination, Lenders (excluding Defaulting Lenders) having more than
fifty percent (50%) of the Aggregate Commitments or, if the Commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 9.02,
Lenders (excluding Defaulting Lenders) holding in the aggregate more than fifty
percent (50%) of the Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations being
deemed “held” by such Lender for purposes of this definition); provided that the Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders.

 

27

 

“Responsible Officer” means the chief
executive officer, president, chief financial officer, treasurer, assistant
treasurer or controller of a Loan Party, and  solely
for purposes of the delivery of incumbency certificates pursuant to Section 5.01, the secretary or
any assistant secretary of a Loan Party.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

“Restoration” means, following the
occurrence of a Casualty or a Condemnation which is of a type necessitating the
repair of a Borrowing Base Property, the completion of the repair and
restoration of such Borrowing Base Property as nearly as possible to the
condition such Borrowing Base Property was in immediately prior to such
Casualty or Condemnation, with such alterations as may be reasonably approved
by Administrative Agent, and in accordance with applicable Laws.

 

“Restricted Payment” means any
dividend or other distribution (whether in cash, securities or other property)
with respect to any capital stock or other Equity Interest of any Company, or
any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such capital stock
or other Equity Interest, or on account of any return of capital to Parent’s or
Borrower’s stockholders, partners or members (or the equivalent Person
thereof).

 

“Royal Palm” means The Royal Palm
Hotel located at 1545 Collins Avenue, Miami Beach, Florida 33139.

 

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

 

“Security Documents” means:

 

(a)           each Pledge Agreement;

 

(b)           estoppel letters, consents, comfort letters, or other
confirming agreements and/or subordination, non-disturbance and attornment
agreements executed in connection with each (i) Acceptable Ground Lease, (ii) Management
Agreement, (iii) Franchise Agreement, and (iv) License Agreement;

 

(c)           all other agreements, documents, and instruments, securing
the Obligations or any part thereof, as shall from time to time be executed and
delivered by Borrower, Subsidiary Guarantors, or any other Person in favor of
Administrative Agent; and

 

(d)           all renewals, extensions, and restatements of, and
amendments and supplements to, any of the foregoing.

 

“Share” means, for any Person, such
Person’s share of the assets, liabilities, revenues, income, losses, or
expenses of a Subsidiary or an Unconsolidated Affiliate based upon such Person’s
percentage ownership of Equity Interests of such Subsidiary or Unconsolidated
Affiliate.

 

“Shareholders’ Equity” means, as of
any date of determination, consolidated shareholders’ equity of the Companies
as of that date determined in accordance with GAAP.

 

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

 

28

 

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

 

“Subsidiary Guarantors” means, as of
any date, (a) all Subsidiaries of Parent owning a Borrowing Base Property,
(b) each other Company that is a direct or indirect holder of such entity’s
Equity Interests, and (c) each other Subsidiary of Parent in which the
granting of a Guaranty of the Obligations would not breach any obligation of
such Subsidiary or any Affiliate thereof under any Contractual Obligation, and,
in each case, that has executed a Subsidiary Guaranty, which has not been
released from its obligations under its Guaranty, pursuant to Section 2.17(d),  and “Subsidiary
Guarantor” means any one of the Subsidiary Guarantors.

 

“Subsidiary Guaranty” means the
Guaranty made by each Subsidiary Guarantor in favor of Administrative Agent for
the benefit of the Lenders, substantially in the form of Exhibit E-2.

 

“Super Majority Lenders” means, as of
any date of determination, Lenders (excluding Defaulting Lenders) having at
least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Commitments
or, if the Commitment of each Lender to make Loans and the obligation of the
L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 9.02, Lenders
(excluding Defaulting Lenders) holding in the aggregate at least sixty-six and
two-thirds percent (66 2/3%) of the Total Outstandings (with the aggregate
amount of each Lender’s risk participation and funded participation in L/C
Obligations being deemed “held” by such Lender for purposes of this
definition); provided that the Commitment of,
and the portion of the Total Outstandings held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of
Super Majority Lenders.

 

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

 

“Swap Termination Value” means, in
respect of any one or more Swap Contracts, after taking into account the effect
of any legally enforceable netting agreement relating to such Swap Contracts,
(a) for any date on or after the date such Swap Contracts have been closed
out and termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced in
clause (a), the amount(s) determined
as the mark-to-market value(s) for such Swap Contracts, as determined
based upon one or more mid-market or other readily available quotations
provided by any recognized dealer in such Swap Contracts (which may include a
Lender or any Affiliate of a Lender).

 

29

 

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

 

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

 

“Threshold Amount” means $25,000,000.

 

“Title Company” means First American
Title Insurance Company or such other title insurance company acceptable to
Administrative Agent.

 

“Title Insurance Commitments” means
the commitments to issue the title insurance policies acceptable to
Administrative Agent and Required Lenders, issued by the Title Company for each
Borrowing Base Property, along with copies of all instruments creating or
evidencing exceptions or encumbrances to title.

 

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

 

“Trustee” means Wells Fargo Bank,
National Association, as Trustee under the Indenture, together with its
successors and assigns.

 

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

 

“Unconsolidated Affiliate” means any
Person in which a Company has an Equity Interest and whose financial results
would not be consolidated under GAAP with the financial results of Parent on
the consolidated financial statements of Parent.

 

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

 

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

 

“Unused Fee Percentage” means a
percentage per annum equal to (a) at all times in which the Unused Portion
is greater than fifty percent (50%) of the Aggregate Commitments, one half of
one percent (0.50%) and (b) at all times in which the Unused Portion is
less than or equal to fifty percent (50%) of the Aggregate Commitments, four
tenths of one percent (0.40%); provided, however,
that, for any portion of the Aggregate Commitments that are unavailable to be
advanced pursuant to the terms of this Agreement, the Unused Fee Percentage
shall be a percentage per annum equal to seventy-five hundredths of one percent
(0.75%).

 

“Unused Portion” means the daily
amount by which the Aggregate Commitments exceed the sum of (i) the
Outstanding Amount of Committed Loans and (ii) the Outstanding Amount of
L/C Obligations, subject to adjustment as provided in Section 2.16.

 

“Wholly Owned Subsidiary” means any
Subsidiary of a Person in respect of which all the Equity 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.

 

30

 

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

 

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

 

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

 

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

 

1.03         Accounting Terms.

 

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

 

31

 

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

 

(c)           Consolidated Financial
Results.  All references
herein to consolidated financial statements of the Companies or to the
determination of any amount for the Companies on a consolidated basis
(including the determination of Indebtedness of the Companies) or any similar
reference shall, in each case, be deemed to (i) include (A) each
variable interest entity that Parent is required to consolidate pursuant to
FASB ASC 810 as if such variable interest entity were a Subsidiary as defined
herein, (B) each Company’s (as the case may be, but without duplication)
Share of their respective Unconsolidated Affiliates, and (ii) exclude (A) until
the occurrence of a Consolidation Event, the Doubletree JV (and the Companies’
share therein) and (B) for financial statements of the Companies required
to be delivered from the date of this Agreement through the fiscal period
ending December 31, 2011, the amounts listed as “Discontinued Operations”
and “Operations Held for Non-Sale Disposition” (together with all Indebtedness
associated therewith) as set forth in the Companies financial statements dated
as of June 30, 2010.

 

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

 

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

 

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

 

Article II.

The Commitments and Credit Extensions

 

2.01         Committed Loans.  Subject to the terms and conditions set forth
herein, each Lender severally agrees to make loans (each such loan, a “Committed Loan”) to Borrower from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Commitment; provided, however, that after giving effect to any 

 

32

 

Borrowing, (a) the
Total Outstandings shall not exceed the lesser of (i) the Aggregate
Commitments and (ii) the Borrowing Base, and (b) the aggregate
Outstanding Amount of the Committed Loans of any Lender plus
such Lender’s Applicable Percentage of the Outstanding Amount of all L/C
Obligations, shall not exceed such Lender’s Commitment.  Within the limits of each Lender’s Commitment
and the Borrowing Base, and subject to the other terms and conditions hereof,
Borrower may borrow under this Section 2.01,
prepay under Section 2.04, and
reborrow under this Section 2.01.  Committed Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

 

2.02         Borrowings, Conversions
and Continuations of Committed Loans.

 

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

 

(b)           Following receipt of a Committed Loan Notice,
Administrative Agent shall promptly notify each Lender of the amount of its
Applicable Percentage of the applicable Committed Loans, and if no timely
notice of a conversion or continuation is provided by Borrower, Administrative
Agent shall notify each Lender of the details of any automatic conversion to
Base Rate Loans described in the preceding subsection.  In the case of a Borrowing, each Lender shall
make the amount of its Committed Loan available to Administrative Agent in
immediately available funds at Administrative Agent’s Office not later than
1:00 p.m. on the Business Day specified in the applicable Committed Loan
Notice.  Upon satisfaction of the
applicable conditions set forth in Section 5.02
(and, if such Borrowing is the initial Credit Extension, Section 5.01),
Administrative Agent shall make all funds so received available to Borrower in
like funds as received by Administrative Agent either by (i) crediting the
account of Borrower on the books of Bank of America with the amount of such
funds or (ii) wire 

 

33

 

transfer of such funds, in
each case in accordance with instructions provided to (and reasonably
acceptable to) Administrative Agent by Borrower; provided,
however, that if, on the date the
Committed Loan Notice with respect to such Borrowing is given by Borrower,
there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such
L/C Borrowings, and second, shall
be made available to Borrower as provided above.

 

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

 

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

 

(e)           After giving effect to all Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than five (5) Interest
Periods in effect with respect to Committed Loans.

 

2.03         Letters of Credit.

 

(a)           The Letter of Credit
Commitment.

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

(C)           except as otherwise agreed by
Administrative Agent and the L/C Issuer, the Letter of Credit is in an initial
stated amount less than $250,000;

 

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

 

(E)           any Lender is at that time a
Defaulting Lender, unless the L/C Issuer has entered into arrangements,
including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in
its sole discretion) with Borrower or such Lender to eliminate the L/C Issuer’s
actual or potential Fronting Exposure (after giving effect to Section 2.16(a)(iv)) with
respect to the Defaulting Lender arising from either the Letter of Credit then
proposed to be issued or that Letter of Credit and all other L/C Obligations as
to which the L/C Issuer has actual or potential Fronting Exposure, as it may
elect in its sole discretion; or

 

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

 

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

 

35

 

(v)           The L/C Issuer shall be under no
obligation to amend any Letter of Credit if the beneficiary of the Letter of
Credit does not accept the proposed amendment to the Letter of Credit.

 

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

 

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

 

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

 

(ii)           Promptly after receipt of any Letter
of Credit Application, the L/C Issuer will confirm with Administrative Agent
(by telephone or in writing) that Administrative Agent has received a copy of
such Letter of Credit Application from Borrower and, if not, the L/C Issuer
will provide Administrative Agent with a copy thereof.  Unless the L/C Issuer has received written
notice from any Lender, Administrative Agent or any Loan Party, at least one
Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions contained
in Article V shall not then be
satisfied, then, subject to the terms and conditions hereof, the L/C Issuer
shall, on the requested date, issue a Letter of Credit for the account of
Borrower or enter into the applicable amendment, as the case may be, in each
case in 

 

36

 

accordance with the L/C
Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter
of Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lender’s
Applicable Percentage times the
amount of such Letter of Credit.

 

(iii)          If Borrower so requests in any
applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion,
agree to issue a Letter of Credit that has automatic extension provisions
(each, an “Auto-Extension Letter of Credit”);
provided that any such Auto-Extension
Letter of Credit must permit the L/C Issuer to prevent any such extension at
least once in each twelve-month period (commencing with the date of issuance of
such Letter of Credit) by giving prior notice to the beneficiary thereof not
later than a day (the “Non-Extension Notice Date”)
in each such twelve-month period to be agreed upon at the time such Letter of
Credit is issued.  Unless otherwise
directed by the L/C Issuer, Borrower shall not be required to make a specific
request to the L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the L/C Issuer to permit the extension of such Letter of Credit at any
time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that
the L/C Issuer shall not permit any such extension if (A) the L/C Issuer
has determined that it would not be permitted, or would have no obligation, at
such time to issue such Letter of Credit in its revised form (as extended)
under the terms hereof (by reason of the provisions of clause (ii) or (iii) of
Section 2.03(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is seven Business Days before the
Non-Extension Notice Date (1) from Administrative Agent that Required
Lenders have elected not to permit such extension or (2) from
Administrative Agent, any Lender or Borrower that one or more of the applicable
conditions specified in Section 5.02
is not then satisfied, and in each such case directing the L/C Issuer not to
permit such extension.

 

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

 

(c)           Drawings and
Reimbursements; Funding of Participations.

 

(i)            Upon receipt from the beneficiary of
any Letter of Credit of any notice of a drawing under such Letter of Credit,
the L/C Issuer shall notify Borrower and Administrative Agent thereof.  Not later than 11:00 a.m. on the date of
any payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), Borrower shall
reimburse the L/C Issuer through Administrative Agent in an amount equal to the
amount of such drawing.  If Borrower
fails to so reimburse the L/C Issuer by such time, Administrative Agent shall
promptly notify each Lender of the Honor Date, the amount of the unreimbursed
drawing (the “Unreimbursed Amount”), and
the amount of such Lender’s Applicable Percentage thereof.  In such event, Borrower shall be deemed to
have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date
in an amount equal to the Unreimbursed Amount, without regard to the minimum
and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and the conditions set forth in
Section 5.02 (other than the
delivery of a Committed Loan Notice).  

 

37

 

Any notice given by the L/C
Issuer or Administrative Agent pursuant to this Section 2.03(c)(i) may
be given by telephone if immediately confirmed in writing; provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.

 

(ii)           Each Lender shall upon any notice
pursuant to Section 2.03(c)(i) make
funds available (and Administrative Agent may apply Cash Collateral provided
for this purpose) for the account of the L/C Issuer at Administrative Agent’s
Office in an amount equal to its Applicable Percentage of the Unreimbursed
Amount not later than 1:00 p.m. on the Business Day specified in such
notice by Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each
Lender that so makes funds available shall be deemed to have made a Base Rate
Committed Loan to Borrower in such amount. 
Administrative Agent shall remit the funds so received to the L/C
Issuer.

 

(iii)          With respect to any Unreimbursed
Amount that is not fully refinanced by a Borrowing of Base Rate Loans because
the conditions set forth in Section 5.02
cannot be satisfied or for any other reason, Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default Rate.  In such event, each Lender’s payment to
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall
be deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.03.

 

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

 

(v)           Each Lender’s obligation to make
Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn
under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against the L/C Issuer, Borrower or
any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided,
however, that each Lender’s obligation
to make Committed Loans pursuant to this Section 2.03(c) is
subject to the conditions set forth in Section 5.02
(other than delivery by Borrower of a Committed Loan Notice).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of Borrower to reimburse the L/C Issuer
for the amount of any payment made by the L/C Issuer under any Letter of
Credit, together with interest as provided herein.

 

(vi)          If any Lender fails to make available
to Administrative Agent for the account of the L/C Issuer any amount required
to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the
time specified in Section 2.03(c)(ii),
then, without limiting the other provisions of this Agreement, the L/C Issuer
shall be entitled to recover from such Lender (acting through Administrative
Agent), on demand, such amount with interest thereon for the period from the
date such payment is required to the date on which such payment is immediately
available to the L/C Issuer at a rate per 

 

38

 

annum equal to the greater
of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance
with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the L/C
Issuer in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid),
the amount so paid shall constitute such Lender’s Committed Loan included in
the relevant Borrowing or L/C Advance in respect of the relevant L/C Borrowing,
as the case may be.  A certificate of the
L/C Issuer submitted to any Lender (through Administrative Agent) with respect
to any amounts owing under this clause (vi) shall
be conclusive absent manifest error.

 

(d)           Repayment of Participations.

 

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

 

(ii)           If any payment received by
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is
required to be returned under any of the circumstances described in Section 11.05 (including
pursuant to any settlement entered into by the L/C Issuer in its discretion),
each Lender shall pay to Administrative Agent for the account of the L/C Issuer
its Applicable Percentage thereof on demand of Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is
returned by such Lender, at a rate per annum equal to the Federal Funds Rate
from time to time in effect.  The
obligations of the Lenders under this clause
shall survive the payment in full of the Obligations and the termination of
this Agreement.

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

Borrower shall promptly examine a copy of each
Letter of Credit and each amendment thereto that is delivered to it and, in the
event of any claim of noncompliance with Borrower’s instructions or other
irregularity, Borrower will immediately notify the L/C Issuer.  Borrower shall be conclusively deemed to have
waived any such claim against the L/C Issuer and its correspondents unless such
notice is given as aforesaid.

 

(f)            Role of L/C Issuer.  Each Lender and
Borrower agree that, in paying any drawing under a Letter of Credit, the L/C
Issuer shall not have any responsibility to obtain any document (other than any
sight draft, certificates and documents expressly required by the Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document.  None of the L/C Issuer,
Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the
request or with the approval of the Lenders or Required Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or
willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document.  Borrower hereby assumes
all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall
not, preclude Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.  None of the L/C Issuer, Administrative Agent,
any of their respective Related Parties nor any correspondent, participant or
assignee of the L/C Issuer shall be liable or responsible for any of the
matters described in clauses (i) through
(v) of Section 2.03(e);
provided, however,
that anything in such clauses to the contrary notwithstanding, Borrower may
have a claim against the L/C Issuer, and the L/C Issuer may be liable to
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by Borrower which Borrower proves
were caused by the L/C Issuer’s willful misconduct or gross negligence or the
L/C Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of a Letter of Credit.   In furtherance and
not in limitation of the foregoing, the L/C Issuer may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and the
L/C Issuer shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.

 

40

 

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

 

(h)           Letter of Credit Fees.  Borrower shall pay to Administrative Agent
for the account of each Lender in accordance with its Applicable Percentage a
Letter of Credit fee (the “Letter of Credit Fee”)  for each Letter of Credit equal to the Applicable Rate times the daily amount available to be drawn under such
Letter of Credit; provided, however, any Letter of
Credit Fees otherwise payable for the account of a Defaulting Lender with
respect to any Letter of Credit as to which such Defaulting Lender has not
provided Cash Collateral satisfactory to the L/C Issuer pursuant to this Section 2.03 shall be payable,
to the maximum extent permitted by applicable Law, to the other Lenders in
accordance with the upward adjustments in their respective Applicable
Percentages allocable to such Letter of Credit pursuant to Section 2.16(a)(iv),
with the balance of such fee, if any, payable to the L/C Issuer for its own
account.  For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due
and payable on the first Business Day after the end of each March, June, September and
December, commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter
on demand and (ii) computed on a quarterly basis in arrears.  If there is any change in the Applicable Rate
during any quarter, the daily amount available to be drawn under each Letter of
Credit shall be computed and multiplied by the Applicable Rate separately for
each period during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary
contained herein, upon the request of Required Lenders, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

 

(i)            Fronting Fee and
Documentary and Processing Charges Payable to L/C Issuer.  Borrower shall pay
directly to the L/C Issuer for its own account a fronting fee with respect to
each Letter of Credit, at the rate per annum specified in any letter agreement
between Borrower and Administrative Agent, computed on the daily amount
available to be drawn under such Letter of Credit on a quarterly basis in
arrears.  Such fronting fee shall be due
and payable on the tenth Business Day following the last day of each March,
June, September and December in
respect of the most recently-ended quarterly period (or portion thereof, in the
case of the first payment), commencing with the first such date to occur
after the issuance of such Letter of Credit, on the Letter of Credit Expiration
Date and thereafter on demand.  For
purposes of computing the daily amount available to be drawn under any Letter
of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.06.  In addition, Borrower shall pay directly to
the L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in
effect.  Such customary fees and standard
costs and charges are due and payable on demand and are nonrefundable.

 

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

 

2.04         Prepayments.

 

(a)           Voluntary Prepayments.  Borrower may, upon notice to Administrative
Agent, at any time or from time to time voluntarily prepay Committed Loans in
whole or in part without premium or penalty; provided
that (i) such notice must be received by Administrative Agent not later
than 11:00 a.m. (A) three Business Days prior to any date of
prepayment of Eurodollar Rate 

 

41

 

Loans and (B) on the
date of prepayment of Base Rate Committed Loans; (ii) any prepayment of
Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base
Rate Committed Loans shall be in a principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof or, in each case, if less, the entire
principal amount thereof then outstanding. 
Each such notice shall specify the date and amount of such prepayment
and the Type(s) of Committed Loans to be prepaid and, if Eurodollar Rate
Loans are to be prepaid, the Interest Period(s) of such Loans.  Administrative Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such
Lender’s Applicable Percentage of such prepayment.  If such notice is given by Borrower, Borrower
shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest on the amount prepaid, together
with any additional amounts required pursuant to Section 3.05.  Subject to Section 2.16,
each such prepayment shall be applied to the Committed Loans of the Lenders in
accordance with their respective Applicable Percentages.

 

(b)           Mandatory Prepayments —
Borrowing Base.  If for any
reason the Total Outstandings at any time exceed the lesser of (i) the
Aggregate Commitments then in effect and (ii) the Borrowing Base, Borrower
shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in
an aggregate amount equal to such excess; provided, however, that Borrower shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.04(b) unless
after the prepayment in full of the Committed Loans the Total Outstandings
exceed the lesser of (i) the Aggregate Commitments then in effect, and
(ii) the Borrowing Base.

 

2.05         Termination or Reduction
of Commitments.  Borrower may,
upon notice to Administrative Agent (which notice may be conditioned on closing
of alternative financing), terminate the Aggregate Commitments, or from time to
time permanently reduce the Aggregate Commitments; provided that (i) any
such notice shall be received by Administrative Agent not later than 11:00 a.m.
five (5) Business Days (or such shorter period as shall be acceptable to
Administrative Agent) prior to the date of termination or reduction,
(ii) any such partial reduction shall be in an aggregate amount of $10,000,000
or any whole multiple of $1,000,000 in excess thereof, (iii) Borrower
shall not terminate or reduce the Aggregate Commitments if, after giving effect
thereto and to any concurrent prepayments hereunder, the Total Outstandings
would exceed the Aggregate Commitments, and (iv) if, after giving effect
to any reduction of the Aggregate Commitments, the Letter of Credit Sublimit
exceeds the amount of the Aggregate Commitments, such Letter of Credit Sublimit
shall be automatically reduced by the amount of such excess.  Administrative Agent will promptly notify the
Lenders of any such notice of termination or reduction of the Aggregate
Commitments.  Any reduction of the
Aggregate Commitments shall be applied to the Commitment of each Lender
according to its Applicable Percentage. 
All fees accrued until
the effective date of any termination of the Aggregate Commitments shall be
paid on the effective date of such termination. 
Unless the Aggregate Commitments are terminated in their entirety, the Aggregate
Commitments shall not be less than $20,000,000.

 

2.06         Repayment of Loans.

 

Borrower shall repay to the
Lenders on the Maturity Date the aggregate principal amount of Committed Loans
outstanding on such date.

 

2.07         Interest.

 

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

 

42

 

(b)           (i)            If any
amount of principal of any Loan is not paid when due, whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)           If any amount (other than principal
of any Loan) payable by Borrower under any Loan Document is not paid when due,
whether at stated maturity, by acceleration or otherwise, then upon the request
of Required Lenders, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

 

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

 

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

 

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

 

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

 

(a)           Unused Fee.  Borrower shall pay
to Administrative Agent for the account of each Lender in accordance with its
Applicable Percentage, an unused fee equal to the applicable Unused Fee
Percentage times the Unused Portion.  The unused fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Article V
is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with
the first such date to occur after the Closing Date, and on the last day of the
Availability Period.  The unused fee
shall be calculated quarterly in arrears, and if there is any change in the
Unused Fee Percentage during any quarter, the actual daily amount shall be
computed and multiplied by the Unused Fee Percentage separately for each period
during such quarter that such Unused Fee Percentage was in effect.

 

(b)           Other Fees.

 

(i)            Borrower shall pay to the Arrangers
and Administrative Agent for their own respective accounts fees in the amounts
and at the times specified in any letter agreement between Borrower,
Administrative Agent, certain Lenders, and Arrangers regarding fees  payable with respect to the Obligations.  Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.

 

43

 

(ii)           Borrower shall pay to the Lenders
such fees as shall have been separately agreed upon in writing in the amounts
and at the times so specified.  Such fees
shall be fully earned when paid and shall not be refundable for any reason
whatsoever.

 

2.09         Computation of Interest
and Fees; Retroactive Adjustments of Applicable Rate.

 

(a)           All computations of interest for Base Rate Loans
(including Base Rate Loans determined by reference to the Eurodollar Rate)
shall be made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed.  All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which may result in more fees or interest, as
applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the
day on which the Loan is made, and shall not accrue on a Loan, or any portion
thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on
which it is made shall, subject to Section 2.11(a),
bear interest for one day.  Each
determination by Administrative Agent of an interest rate or fee hereunder
shall be conclusive and binding for all purposes, absent manifest error.

 

(b)           If, as a result of any restatement of or other adjustment
to the financial statements of Borrower or for any other reason, Borrower or
the Lenders determine that (i) the Consolidated Leverage Ratio as
calculated by Borrower as of any applicable date was inaccurate and (ii) a
proper calculation of the Consolidated Leverage Ratio would have resulted in
higher pricing for such period, Borrower shall immediately and retroactively be
obligated to pay to Administrative Agent for the account of the applicable
Lenders or the L/C Issuer, as the case may be, promptly on demand by
Administrative Agent (or, after the occurrence of an actual or deemed entry of
an order for relief with respect to Borrower under the Bankruptcy Code of the
United States, automatically and without further action by Administrative
Agent, any Lender or the L/C Issuer), an amount equal to the excess of the
amount of interest and fees that should have been paid for such period over the
amount of interest and fees actually paid for such period.  This paragraph shall not limit the rights of
Administrative Agent, any Lender or the L/C Issuer, as the case may be, under Section 2.03(c)(iii), 2.03(i) or 2.07(b) or
under Article IX.  Borrower’s obligations under this paragraph
shall survive the termination of the Aggregate Commitments and the repayment of
all other Obligations hereunder.

 

2.10         Evidence of Debt.

 

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

 

44

 

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

 

2.11         Payments Generally;
Administrative Agent’s Clawback.

 

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

 

(b)           Clawback.

 

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

 

45

 

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

 

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

 

(c)           Failure to Satisfy
Conditions Precedent.  If any
Lender makes available to Administrative Agent funds for any Loan to be made by
such Lender as provided in the foregoing provisions of this Article II, and such funds are
not made available to Borrower by Administrative Agent because the conditions
to the applicable Credit Extension set forth in Article V
are not satisfied or waived in accordance with the terms hereof, Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

 

(d)           Obligations of Lenders
Several.  The obligations of
the Lenders hereunder to make Committed Loans, to fund participations in
Letters of Credit and to make payments pursuant to Section 11.04(c) are
several and not joint.  The failure of
any Lender to make any Committed Loan, to fund any such participation or to
make any payment under Section 11.04(c) on
any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Committed Loan,
to purchase its participation or to make its payment under Section 11.04(c).

 

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

 

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

 

46

 

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

 

(ii)           the provisions of this Section shall not be construed
to apply to (x) any payment made by or on behalf of Borrower pursuant to
and in accordance with the express terms of this Agreement (including the
application of funds arising from the existence of a Defaulting Lender),
(y) the application of Cash Collateral provided for in Section 2.15, or (z) any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Committed Loans or subparticipations in L/C
Obligations to any assignee or participant, other than an assignment to
Borrower or any Affiliate thereof (as to which the provisions of this Section shall apply).

 

Each Loan Party consents to
the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such
participation.

 

2.13         Extension of Maturity
Date.

 

(a)           Requests for Extension.  Borrower may, by notice to Administrative
Agent (who shall promptly notify the Lenders) not earlier than ninety (90) days
and not later than sixty (60) days prior to the Initial Maturity Date, request
that each Lender extend such Lender’s Initial Maturity Date for an additional
364 days from the Initial Maturity Date (the “Extended
Maturity Date”), and such requested extension will be granted
subject to the satisfaction of the conditions set forth in clause
(b) below.

 

(b)           Conditions to
Effectiveness of Extensions.  As a condition precedent to such
extension, (i) Borrower shall deliver to Administrative Agent a
certificate of each Loan Party dated as of the Initial Maturity Date (in
sufficient copies for each Lender) signed by a Responsible Officer of such Loan
Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to
such extension and (B) in the case of Borrower, certifying that, before
and after giving effect to such extension, (y) the representations and
warranties contained in Article VI
and the other Loan Documents are true and correct in all material respects on
and as of the Initial Maturity Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct in all material respects as of such earlier
date, and except that for purposes of this Section 2.13,
the representations and warranties contained in subsections (a) and (b) of
Section 6.05 shall be deemed to
refer to the most recent statements furnished pursuant to subsections (a) and
(b), respectively, of Section 7.01, and (z) no
Default exists, (ii) Administrative Agent shall have received, at Borrower’s
expense, an Acceptable Borrowing Base Appraisal of each Borrowing Base Property
dated not more than sixty (60) days prior to the Initial Maturity Date, and
(iii) Borrower shall have paid to Administrative Agent, for the account of
each Lender in accordance with its Applicable Percentage, an extension fee
equal to the Aggregate Commitments times one half of one percent (0.50%).

 

47

 

2.14         Increase in Commitments.

 

(a)           Request for Increase.  Provided there exists no Default, upon notice
to Administrative Agent (which shall promptly notify the Lenders), Borrower may
from time to time, request an increase in the Aggregate Commitments by an
amount (for all such requests) not exceeding $100,000,000; provided
that (i) any such request for an increase shall be in a minimum amount of
$10,000,000, (ii) Borrower may make a maximum of three (3) such
requests, and (iii) no such request may be submitted after the date that
is six (6) months prior to the then applicable Maturity Date.  At the time of sending such notice, Borrower
(in consultation with Administrative Agent) shall specify the time period
within which each Lender is requested to respond (which shall in no event be
less than ten Business Days from the date of delivery of such notice to the
Lenders).

 

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

 

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

 

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

 

(e)           Conditions to
Effectiveness of Increase.  As
a condition precedent to such increase, Borrower shall deliver to
Administrative Agent a certificate of each Loan Party dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of such Loan Party (x) certifying and attaching the resolutions
adopted by such Loan Party approving or consenting to such increase, and
(y) in the case of Borrower, certifying that, before and after giving
effect to such increase, (A) the representations and warranties contained
in Article VI  and the other Loan
Documents are true and correct in all material respects on and as of the
Increase Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct in all material respects as of such earlier date, and except that
for purposes of this Section 2.14,
the representations and warranties contained in subsections (a) and
(b) of Section 6.05
shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 7.01, (B) no
Default exists, and (C) a Borrowing Base Report.  Borrower shall prepay any Committed Loans
outstanding on the Increase Effective Date (and pay any additional amounts
required pursuant to Section 3.05)
to the extent necessary to keep the outstanding Committed Loans ratable with
any revised Applicable Percentages arising from any nonratable increase in the
Commitments under this Section.

 

48

 

(f)            Conflicting Provisions.  This Section shall
supersede any provisions in Section 2.12
or 11.01 to the contrary.

 

2.15         Cash Collateral.

 

(a)           Certain Credit Support
Events.  Upon the request of
Administrative Agent or the L/C Issuer (i) if the L/C Issuer has honored
any full or partial drawing request under any Letter of Credit and such drawing
has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit
Expiration Date, any L/C Obligation for any reason remains outstanding,
Borrower shall, in each case, immediately Cash Collateralize the then
Outstanding Amount of all L/C Obligations. 
At any time that there shall exist a Defaulting Lender, immediately upon
the request of Administrative Agent, the L/C Issuer, Borrower shall deliver to
Administrative Agent Cash Collateral in an amount sufficient to cover all
Fronting Exposure (after giving effect to Section 2.16(a)(iv) and
any Cash Collateral provided by the Defaulting Lender).  Should any L/C Obligations be outstanding
during a period that would otherwise qualify as a Permitted Financial Covenant
Non-Compliance Period (other than the existence of such L/C Obligations),
Borrower may immediately Cash Collateralize the then Outstanding Amount of such
L/C Obligations to qualify for a Permitted Financial Covenant Non-Compliance
Period.

 

(b)           Grant of Security Interest.  All Cash Collateral (other than credit
support not constituting funds subject to deposit) shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of America.  Borrower, and to the extent provided by any
Lender, such Lender, hereby grants to (and subjects to the control of)
Administrative Agent, for the benefit of Administrative Agent, the L/C Issuer
and the Lenders, and agrees to maintain, a first priority security interest in
all such cash, deposit accounts and all balances therein, and all other
property so provided as collateral pursuant hereto, and in all proceeds of the
foregoing, all as security for the obligations to which such Cash Collateral
may be applied pursuant to Section 2.15(c).  If at any time Administrative Agent
determines that Cash Collateral is subject to any right or claim of any Person
other than Administrative Agent as herein provided, or that the total amount of
such Cash Collateral is less than the applicable Fronting Exposure and other
obligations secured thereby, Borrower or the relevant Defaulting Lender will,
promptly upon demand by Administrative Agent, pay or provide to Administrative
Agent additional Cash Collateral in an amount sufficient to eliminate such
deficiency.

 

(c)           Application.  Notwithstanding anything to the contrary
contained in this Agreement, Cash Collateral provided under any of this Section 2.15 or Sections 2.03, 2.04, 2.16 or
9.02 in respect of Letters of Credit
shall be held and applied to the satisfaction of the specific L/C Obligations,
obligations to fund participations therein (including, as to Cash Collateral
provided by a Defaulting Lender, any interest accrued on such obligation) and
other obligations for which the Cash Collateral was so provided, prior to any
other application of such property as may be provided for herein.

 

(d)           Release.  Cash Collateral (or the appropriate portion
thereof) provided to reduce Fronting Exposure or other obligations shall be
released promptly following (i) the elimination of the applicable Fronting
Exposure or other obligations giving rise thereto (including by the termination
of Defaulting Lender status of the applicable Lender (or, as appropriate, its
assignee following compliance with Section 11.06(b)(vi)))
or (ii) Administrative Agent’s good faith determination that there exists
excess Cash Collateral; provided, however, (x) that Cash Collateral furnished by or on
behalf of a Loan Party shall not be released during the continuance of a
Default or Event of Default (and following application as provided in this Section 2.15 may be otherwise
applied in accordance with Section 9.03),
and (y) the Person providing Cash Collateral and the L/C Issuer may agree
that Cash Collateral shall not be released but instead held to support future
anticipated Fronting Exposure or other obligations.

 

49

 

2.16         Defaulting Lenders.

 

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

 

(i)            Waivers and Amendments.  That Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement
shall be restricted as set forth in Section 11.01.

 

(ii)           Reallocation of Payments.  Any payment of principal, interest, fees or
other amounts received by Administrative Agent for the account of that
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article IX or otherwise, and
including any amounts made available to Administrative Agent by that Defaulting
Lender pursuant to Section 11.08), shall be
applied at such time or times as may be determined by Administrative Agent as
follows: first, to the payment of any amounts
owing by that Defaulting Lender to Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts
owing by that Defaulting Lender to the L/C Issuer hereunder; third, if so determined by Administrative Agent or requested
by the L/C Issuer, to be held as Cash Collateral for future funding obligations
of that Defaulting Lender of any participation in any Letter of Credit; fourth, as Borrower may request (so long as no Default or
Event of Default exists), to the funding of any Loan in respect of which that
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by Administrative Agent; fifth,
if so determined by Administrative Agent and Borrower, to be held in a
non-interest bearing deposit account and released in order to satisfy
obligations of that Defaulting Lender to fund Loans under this Agreement; sixth, to the payment of any amounts owing to the Lenders or
the L/C Issuer as a result of any judgment of a court of competent jurisdiction
obtained by any Lender or the L/C Issuer against that Defaulting Lender as a
result of that Defaulting Lender’s breach of its obligations under this Agreement;
seventh, so long as no Default or Event
of Default exists, to the payment of any amounts owing to Borrower as a result
of any judgment of a court of competent jurisdiction obtained by Borrower
against that Defaulting Lender as a result of that Defaulting Lender’s breach
of its obligations under this Agreement; and eighth,
to that Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided that if (x) such
payment is a payment of the principal amount of any Loans or L/C Borrowings in
respect of which that Defaulting Lender has not fully funded its appropriate
share and (y) such Loans or L/C Borrowings were made at a time when the
conditions set forth in Section 5.02
were satisfied or waived, such payment shall be applied solely to pay the Loans
of, and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basis
prior to being applied to the payment of any Loans of, or L/C Borrowings owed
to, that Defaulting Lender.  Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender or to
post Cash Collateral pursuant to this Section 2.16(a)(ii) shall
be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably
consents hereto.

 

50

 

(iii)          Certain Fees.  That Defaulting Lender (x) shall not be
entitled to receive any unused fee pursuant to Section 2.08(a) for
any period during which that Lender is a Defaulting Lender (and Borrower shall
not be required to pay any such fee that otherwise would have been required to
have been paid to that Defaulting Lender) pursuant to Section 2.08(a) and
(b) for any period during which
that Lender is a Defaulting Lender (and Borrower shall (A) be required to
pay to the L/C Issuer the amount of such fee allocable to its Fronting Exposure
arising from that Defaulting Lender and (B) not be required to pay the
remaining amount of such fee that otherwise would have been required to have
been paid to that Defaulting Lender) and (y) shall be limited in its right
to receive Letter of Credit Fees as provided in Section 2.03(h).

 

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

 

(b)           Defaulting Lender Cure.  If Borrower, Administrative Agent, and the
L/C Issuer agree in writing in their sole discretion that a Defaulting Lender
should no longer be deemed to be a Defaulting Lender, Administrative Agent will
so notify the parties hereto, whereupon as of the effective date specified in
such notice and subject to any conditions set forth therein (which may include
arrangements with respect to any Cash Collateral), that Lender will, to the
extent applicable, purchase that portion of outstanding Loans of the other
Lenders or take such other actions as Administrative Agent may determine to be
necessary to cause the Committed Loans and funded and unfunded participations
in Letters of Credit to be held on a pro rata basis by the Lenders in
accordance with their Applicable Percentages (without giving effect to Section 2.16(a)(iv)), whereupon
that Lender will cease to be a Defaulting Lender; provided
that no adjustments will be made retroactively with respect to fees accrued or
payments made by or on behalf of Borrower while that Lender was a Defaulting
Lender; and provided, further,
that except to the extent otherwise expressly agreed by the affected parties,
no change hereunder from Defaulting Lender to Lender will constitute a waiver
or release of any claim of any party hereunder arising from that Lender’s
having been a Defaulting Lender.

 

2.17         Collateral and Guaranties.

 

(a)           Collateral.  To secure the full and complete payment and
performance of the Obligations, Borrower and certain Subsidiaries shall enter
into a Pledge Agreement pursuant to which each such entity grants, pledges,
assigns, and creates first priority Liens in favor of Administrative Agent (for
the ratable benefit of Lenders) in 100% of the Pledged Equity.

 

(b)           Guaranties.  Pursuant to the Parent Guaranty, Parent shall
unconditionally guarantee in favor of Administrative Agent and Lenders the full
payment and performance of the Obligations. 
Pursuant to the Subsidiary Guaranty or any joinder thereto substantially
in the form attached to the Subsidiary Guaranty, Parent and Borrower shall
cause each Subsidiary to execute a Subsidiary Guaranty unconditionally
guaranteeing in favor of Administrative Agent and Lenders the full payment and
performance of the Obligations, other than Subsidiaries who are, or whose
Affiliates are, subject to any Contractual Obligation which prohibits such
Subsidiary from guaranteeing the Obligations.

 

51

 

(c)           Future Liens and
Guaranties.  Promptly upon the
designation, formation, or acquisition of any new Subsidiary of any Company
(each new Subsidiary being referred to herein as the “Additional
Assets”), Parent or Borrower shall (or shall cause the
appropriate Subsidiary to) execute and deliver within 30 days, to
Administrative Agent all further instruments and documents (including, without
limitation, Pledge Agreements, all certificates and instruments representing
shares of stock or other equity interests, a counterpart of the Subsidiary
Guaranty, and documents of the types referred to in clauses 5.01(a)(v) and 5.01(a)(vii) of
Section 5.01(a),  and upon request, favorable opinions of counsel to such new
Subsidiary (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documents to be delivered), all in
form, content and scope reasonably satisfactory to Administrative Agent), and
shall take all further action that may be necessary or desirable, or that
Administrative Agent may reasonably request, to (a) grant, perfect, and
protect Liens in favor of Administrative Agent for the benefit of Lenders in
such Additional Assets, as security for the Obligations to the extent Liens are
required in such assets pursuant to Section 2.17(a) or
(b) to grant a Guarantee of the
Obligations to the extent Guarantees are required for such Obligations pursuant
to Section 2.17(b), it being expressly understood that the granting of such
additional security and a Guaranty for the Obligations is a material inducement
to the execution and delivery of this Agreement by each Lender, and provided
that to the extent any Subsidiary or an Affiliate thereof is subject to any
Contractual Obligation which prohibits the Equity Interests from being pledged
to secure the Obligations or the granting of a Guaranty of the Obligations, no
such pledge or Guarantee shall be required hereunder.  Upon satisfying the terms and conditions
hereof, (i) such Additional Assets shall be included in the “Collateral” for all purposes under
the Loan Documents, and all references to the “Collateral”
in the Loan Documents shall include the Additional Assets and (ii) such
new Subsidiaries shall be included in the definition of “Subsidiary
Guarantor” for all purposes under the Loan Documents, and all
references to the “Subsidiary Guarantor” in the
Loan Documents shall include such new Subsidiaries.

 

(d)           Release of Collateral and
Guaranties.

 

(i)            Upon any sale, transfer, or
disposition of Pledged Equity which is expressly permitted pursuant to the Loan
Documents (or is otherwise authorized by requisite Lenders), and upon ten (10) Business
Days’ (or such lesser time period agreed to by Administrative Agent in its sole
discretion) prior written request by Borrower (which request must be
accompanied by true and correct copies of (i) all documents of transfer or
disposition, including any contract of sale, and (ii) all requested
release instruments), Administrative Agent shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be necessary to
evidence the release of Liens granted to Administrative Agent for the benefit
of Lenders pursuant hereto in such Pledged Equity and to release the Guaranty
executed by such Subsidiary, provided that the Administrative Agent has
received information reasonably acceptable to it that the Trustee will be
releasing the Guarantee of such Subsidiary provided pursuant to the Indenture.

 

(ii)           Upon the incurrence of any
Indebtedness by a Subsidiary Guarantor which is expressly permitted pursuant to
Section 8.03, in the case of
any Borrowing Base Property Owner, or the existence of any Indebtedness by any
other Subsidiary Guarantor, and upon ten (10) Business Days’ (or such
lesser time period agreed to by Administrative Agent in its sole discretion)
prior written request by Borrower, Administrative Agent 

 

52

 

shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Guaranty executed by such Subsidiary
or any other Subsidiary and the pledge of the Pledged Equity issued by such
Subsidiary or any other Subsidiary; provided that, (A) the
Indebtedness incurred by the applicable Subsidiary is secured by a Property, (B) the
terms of such Indebtedness expressly prohibit such Subsidiaries from providing
a Guarantee of the Obligations, or the pledge of the Equity Interests issued by
the affected Subsidiaries, as applicable, (C) Borrower has provided to
Administrative Agent true and correct copies of all documents evidencing such
Indebtedness, and (D) the Administrative Agent has received information
reasonably acceptable to it that the Trustee will also be releasing the
Guarantee of such Subsidiary provided pursuant to the Indenture.

 

(iii)          The actions of Administrative Agent
under this Section 2.17(d) are,
in addition to the conditions set forth in clauses (i) and
(ii) above, subject to the
following:  (i) no such release of
Liens or Guaranties shall be granted if any Default would exist after giving
effect thereto; (ii) Administrative Agent shall not be required to execute
any such document on terms which, in Administrative Agent’s opinion, would
expose Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens or
Guaranty without recourse or warranty; (iii) such release shall not in any
manner discharge, affect, or impair any other Obligations or Liens existing or
arising under the Loan Documents, and (iv) in the event that the Pledged
Equity or any Guaranty of any Borrowing Base Property Owner is requested to be
released, then Borrower shall furnish Administrative Agent with evidence that
after giving effect to such requested release, the Outstanding Amount shall not
exceed the Borrowing Base.

 

(e)           Notwithstanding the provisions of this Section 2.17, Sunstone Holdco
1, LLC, Sunstone Holdco 3, LLC, Sunstone Holdco 4, LLC, and Sunstone Holdco 5,
LLC (each a  “Specified
Subsidiary”), shall not be required to be a pledgor under the
Pledge Agreement or a Subsidiary Guarantor under the Subsidiary Guaranty until
such time as (i) all Contractual Obligations with respect to Indebtedness,
Management Agreements, Franchise Agreements, and ground leases binding on such
Specified Subsidiary or any Affiliate thereof as of the date of this Agreement
have been terminated and (ii) there exist no Contractual Obligations
entered into by such Specified Subsidiary or any Affiliate thereof after the
date of this Agreement which restrict or could be interpreted to restrict such
Specified Subsidiary or any Affiliate thereof from granting a Guaranty of the
Obligations or a pledge of Equity Interests to secure the Obligations.

 

Article III.

Taxes, Yield Protection and Illegality

 

3.01         Taxes.

 

(a)           Payments Free of Taxes;
Obligation to Withhold; Payments on Account of Taxes.

 

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

 

53

 

(ii)           If Borrower or Administrative Agent
shall be required by the Code to withhold or  deduct
any Taxes, including both United States Federal backup withholding and
withholding taxes, from any payment, then (A) Administrative Agent shall
withhold or make such deductions as are determined by Administrative Agent to
be required based upon the information and documentation it has received
pursuant to subsection (e) below,
(B) Administrative Agent shall timely pay the full amount withheld or
deducted to the relevant Governmental Authority in accordance with the Code,
and (C) to the extent that the withholding or deduction is made on account
of Indemnified Taxes or Other Taxes, the sum payable by Borrower shall be
increased as necessary so that after any required withholding or the making of
all required deductions (including deductions applicable to additional sums
payable under this Section) Administrative
Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to
the sum it would have received had no such withholding or deduction been made.

 

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

 

(c)           Tax Indemnifications.

 

(i)            Without limiting the provisions of subsection (a) or (b) above, Borrower shall, and
does hereby, indemnify Administrative Agent, each Lender and the L/C Issuer,
and shall make payment in respect thereof within ten (10) days after
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section)
withheld or deducted by Borrower or Administrative Agent or paid by
Administrative Agent, such Lender or the L/C Issuer, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  Borrower shall also, and does
hereby, indemnify Administrative Agent, and shall make payment in respect
thereof within 10 days after demand therefor, for any amount which a Lender or
the L/C Issuer for any reason fails to pay indefeasibly to Administrative Agent
as required by clause (ii) of this
subsection.  A certificate as to the amount of any such
payment or liability delivered to Borrower by a Lender or the L/C Issuer (with
a copy to Administrative Agent), or by Administrative Agent on its own behalf
or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest
error.

 

(ii)           Without limiting the provisions of subsection (a) or (b) above, each Lender and the
L/C Issuer shall, and does hereby, indemnify Borrower and Administrative Agent,
and shall make payment in respect thereof within ten (10) days after
demand therefor, against any and all Taxes and any and all related losses,
claims, liabilities, penalties, interest and expenses (including the fees,
charges and disbursements of any counsel for Borrower or  Administrative
Agent) incurred by or asserted against Borrower or Administrative Agent by any
Governmental Authority as a result of the failure by such Lender or the L/C
Issuer, as the case may be, to deliver, or as a result of the inaccuracy,
inadequacy or deficiency of, any documentation required to be delivered by such
Lender or the L/C Issuer, as the case may be, to Borrower or Administrative 

 

54

 

Agent pursuant to subsection (e).  Each Lender and the L/C Issuer hereby
authorizes Administrative Agent to set off and apply any and all amounts at any
time owing to such Lender or the L/C Issuer, as the case may be, under this
Agreement or any other Loan Document against any amount due to Administrative
Agent under this clause (ii).  The agreements in this clause (ii) shall
survive the resignation and/or replacement of Administrative Agent, any
assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all other Obligations.

 

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

 

(e)           Status of Lenders; Tax
Documentation.

 

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

 

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

 

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

 

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

 

55

 

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

 

(2)           executed originals of IRS Form W-8ECI,

 

(3)           executed originals of IRS Form W-8IMY
and all required supporting documentation,

 

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

 

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

 

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

 

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

 

56

 

3.02         Illegality.  If any Lender determines that any Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Loans whose interest is determined by reference to the Eurodollar Rate, or
to determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed material restrictions on the authority of
such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to Borrower through
Administrative Agent, (a) any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to
Eurodollar Rate Loans shall be suspended, and (b) if such notice asserts
the illegality of such Lender making or maintaining Base Rate Loans the
interest rate on which is determined by reference to the Eurodollar Rate
component of the Base Rate, the interest rate on which Base Rate Loans of such
Lender shall, if necessary to avoid such illegality, be determined by
Administrative Agent without reference to the Eurodollar Rate component of the
Base Rate, in each case until such Lender notifies Administrative Agent and
Borrower that the circumstances giving rise to such determination no longer
exist.  Upon receipt of such notice,
(x) Borrower shall, upon demand from such Lender (with a copy to
Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate
Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate
Loans of such Lender shall, if necessary to avoid such illegality, be
determined by Administrative Agent without reference to the Eurodollar Rate
component of the Base Rate), either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate
Loans to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Rate Loans and (y) if such notice asserts the
illegality of such Lender determining or charging interest rates based upon the
Eurodollar Rate, Administrative Agent shall during the period of such
suspension compute the Base Rate applicable to such Lender without reference to
the Eurodollar Rate component thereof until Administrative Agent is advised in
writing by such Lender that it is no longer illegal  for such Lender to determine or charge
interest rates based upon the Eurodollar Rate. 
Upon any such prepayment or conversion, Borrower shall also pay accrued
interest on the amount so prepaid or converted.

 

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

 

57

 

3.04         Increased Costs; Reserves
on Eurodollar Rate Loans.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

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

 

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

 

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

 

(c)           any assignment of a Eurodollar Rate Loan on a day other
than the last day of the Interest Period therefor as a result of a request by
Borrower pursuant to Section 11.13;

 

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

 

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

 

59

 

3.06         Mitigation Obligations;
Replacement of Lenders.

 

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

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04, or if Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01,
Borrower may replace such Lender in accordance with Section 11.13.

 

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

 

Article IV.

Borrowing Base

 

4.01         Initial Borrowing Base.  As of the Closing Date, the Borrowing Base
shall consist of the Initial Borrowing Base Properties as set forth on Schedule 4.01.

 

4.02         Changes in Borrowing Base
Calculation.  Each change in
the Borrowing Base shall be effective upon receipt of a new Borrowing Base
Report pursuant to Section 7.02(b);
provided that any increase in the Borrowing Base reflected in such Borrowing
Base Report shall not become effective until the fifth (5th) Business Day
following delivery thereof and provided further that any change in the
Borrowing Base as a result of the receipt of a new Acceptable Borrowing Base
Appraisal pursuant to Section 4.07
shall be effective upon the date that Administrative Agent approves such
appraisal, and any change in the Borrowing Base as a result of the admission of
an Acceptable Property into the Borrowing Base pursuant to Section 4.03
shall be effective upon the date that such Acceptable Property is admitted into
the Borrowing Base.

 

4.03         Requests for Admission
into Borrowing Base.  Borrower
shall provide Administrative Agent with a written request for a Property to be
admitted into the Borrowing Base.  Such
request shall be accompanied by information regarding such Property including
the following: (a) a general description of such Property’s location,
market, and amenities; (b) a property description; (c) purchase
information (including any contracts of sale and closing statements);
(d) cash flow projections for the next three (3) years and operating
statements for at least the previous three (3) years or since opening or
acquisition if open or acquired less than three (3) years; (e) a property
condition report; (f) the documents and information with respect to such
Property listed in Section 4.11; and
(g) such other information reasonably requested by Administrative Agent as
shall be necessary in order for Administrative Agent and Required Lenders to
determine whether such Property is eligible to be a Borrowing Base Property.

 

60

 

4.04         Eligibility.  In order for a Property to be eligible for
inclusion in the Borrowing Base, such Property shall have characteristics
consistent with the following general guidelines:

 

(a)           all Property Information shall be reasonably acceptable to
Administrative Agent;

 

(b)           no Material Title Defect or Material Property Event with
respect to such Property shall exist;

 

(c)           such Property shall have reasonably satisfactory access to
public utilities;

 

(d)           the admission of such Property into the Borrowing Base
shall not breach any obligation of any Loan Party under any Contractual
Obligation;

 

(e)           the Environmental Assessment with respect to such Property
shall not reveal any Material Environmental Event;

 

(f)            such Property shall be an Acceptable Property; and

 

(g)           the structural engineering report with respect to such
Property shall not reveal any material defects.

 

4.05         Approval.

 

(a)           Each Property that meets all of the requirements to be
admitted to the Borrowing Base set forth in this Article IV
shall be subject to Administrative Agent’s and Required Lenders’
approval for admission into the Borrowing Base. 
Notwithstanding the foregoing guidelines, Administrative Agent and
Lenders hereby approve all Initial Borrowing Base Properties (i) as
Acceptable Properties and (ii) for admission into the Borrowing Base; provided that, Administrative Agent and Lenders must receive
and approve the documentation and other items marked as “Post-Closing Borrowing
Base” on Schedule 5.03 with respect to
the Initial Borrowing Base Properties, before any value will be assigned to the
Initial Borrowing Base Properties for purposes of calculating the Borrowing
Base.

 

(b)           Any Property not meeting all of the requirements to be
admitted to the Borrowing Base set forth in this Article IV
shall be subject to the approval of Administrative Agent and the
Super Majority Lenders.

 

(c)           Upon receipt by Administrative Agent of the written
request for a Property to be admitted into the Borrowing Base as set forth in Section 4.03, Administrative
Agent shall within five (5) Business Days distribute a copy of such
request to each Lender.  Each Lender will
have ten (10) Business Days from the date of such Lender’s receipt of such
request to approve the inclusion of the proposed Property in the Borrowing
Base.  If Administrative Agent does not
receive a response from a Lender regarding its approval of the Property within
such ten (10) Business Day period, the admission of the Property into the
Borrowing Base will be deemed approved by such Lender.  If such Property is denied admission to the
Borrowing Base by the affirmative vote of the Required Lenders, Borrower may
request in writing that Administrative Agent re-submit such Property for a vote
by the Super Majority Lenders as set forth in this clause
(c).

 

61

 

4.06         Notice of Changes in
Borrowing Base due to Admission of New Borrowing Base Properties.  If a Property is admitted into the Borrowing
Base after the date of this Agreement, then Administrative Agent shall notify
Borrower and Lenders in writing of any changes to the Borrowing Base as a
result of the admission of such Property into the Borrowing Base.

 

4.07         Appraisals of Borrowing
Base Properties.

 

(a)           Administrative Agent or Required Lenders will be entitled
to obtain, at Borrower’s expense, once during each twelve (12) month period, an
Acceptable Borrowing Base Appraisal of each Borrowing Base Property or any part
thereof; provided that, in addition to the
foregoing, Administrative Agent will be entitled to obtain additional
Acceptable Borrowing Base Appraisals of any Borrowing Base Property or any part
thereof if (i) a Default has occurred and is continuing; (ii) an
Exclusion Event has occurred and is continuing; or (iii) an appraisal is
required under applicable Law. 
Notwithstanding the foregoing, Administrative Agent shall, upon its
reasonable belief that a Material Property Event has occurred with respect to a
Borrowing Base Property, or is likely to occur, be entitled to obtain from time
to time, at its own expense, an Acceptable Borrowing Base Appraisal for such
Borrowing Base Property.

 

(b)           Borrower may at its option request that Administrative
Agent obtain, at Borrower’s expense, an Acceptable Borrowing Base Appraisal of
any Borrowing Base Property or any part thereof, and Administrative Agent shall
notify Borrower and Lenders in writing of any changes to the Borrowing Base as
a result of the receipt of such Acceptable Borrowing Base Appraisal.

 

4.08         Release of Borrowing Base
Property.  Upon the written
request of Borrower and so long as no Default would exist after giving effect
to any requested release, Administrative Agent shall release a Borrowing Base
Property from the Borrowing Base, and shall release the pledge of the Pledged
Equity in the applicable Borrowing Base Property Owner and the Guaranty by the
applicable Borrowing Base Property Owner; provided  that (a) Administrative Agent shall have no obligation
to release any such Borrowing Base Property or the pledge of the Pledged Equity
of the Borrowing Base Property Owner without a Borrowing Base Report setting
forth in reasonable detail the calculations required to establish the amount of
the Borrowing Base without such Borrowing Base Property and a Compliance
Certificate setting forth in reasonable detail the calculations required to
show that the Loan Parties are in compliance with the terms of this Agreement
without the inclusion of such Borrowing Base Property in the calculation of the
Borrowing Base, in each case as of the day of such release and after giving
effect to any such release and/or any Borrowing Base additions, (b) if the
Borrowing Base Property has been Disposed of pursuant to a Permitted
Disposition, Borrower shall have prepaid the amounts, if any, required by Section 2.04(b), and
(c) Quincy Marriott, Newport Fairmont, and Newport Hyatt may only be
released from the Borrowing Base under this Section 4.08
(i) with the approval of Administrative Agent and Super Majority Lenders
and (ii) pursuant to (x) a Disposition to a third-party,
non-Affiliate purchaser or (y) a substitution of such Property being
released with an Acceptable Property, approved for admission to the Borrowing
Base as set forth in this Article IV.

 

4.09         Exclusion Events.  Each of the following events shall be an “Exclusion Event” with respect to a
Borrowing Base Property:

 

(a)           any Borrowing Base Property suffers a Material
Environmental Event after the date of this Agreement (without regard to whether
such Material Environmental Event constitutes a Default or Event of Default
under this Agreement);

 

62

 

(b)           a Material Property Event has occurred with respect to any
Borrowing Base Property after the date such Property was admitted into the
Borrowing Base (or in the case of a Casualty, in respect of such Borrowing Base
Property, is reasonably likely to become a Material Property Event) and such
Material Property Event continues for thirty (30) days; provided that Borrower
shall have the right to a ten (10) Business Day extension to remedy any
continuing situation so long as such Material Property Effect can be remedied
and such Loan Party has been and continues to diligently pursue such remedy;

 

(c)           a Lien securing claims in excess of $2,000,000 for the
performance of work or the supply of materials which is established against a
Borrowing Base Property, or any stop notice served on the owner of such
Borrowing Base Property, Administrative Agent or a Lender, remains unsatisfied
or unbonded for a period of thirty (30) days after the date of filing or
service;

 

(d)           any PIP reflecting any condition requiring corrective
action shall be received by any Loan Party with respect to any Borrowing Base
Property, and such condition remains uncured beyond the period allowed for cure
stated in such PIP, or as otherwise agreed to in writing by the Franchisor or
Manager, as applicable, with respect to such PIP;

 

(e)           such Borrowing Base Property is abandoned;

 

(f)            such Borrowing Base Property is so demolished, destroyed
or damaged that, in the reasonable opinion of Administrative Agent, it cannot
be restored or rebuilt with available funds to a profitable condition within a
reasonable period of time and in any event, prior to the Maturity Date or in
such manner as would result or does result in the termination of any Franchise
Agreement, Management Agreement, or License Agreement applicable to such Borrowing
Base Property; and

 

(g)           any Condemnation which (i) would result in the
blockage or substantial impairment of access or utility service to the
Improvements with respect to such Borrowing Base Property, (ii) would
cause such Borrowing Base Property to fail to comply with any Law, or (iii) is
reasonably likely to result in a Material Property Event.

 

After the occurrence of any Exclusion Event, Administrative Agent shall
promptly notify Lenders and  Borrower
(the “Exclusion Notice”) that,
effective five (5) Business Days after the giving of such notice and for
so long as such circumstance exists, such Property shall no longer be
considered a Borrowing Base Property for purposes of determining the Borrowing
Base. Borrowing Base Properties which have been subject to an Exclusion Event
may be released from the Borrowing Base by Borrower; provided
that such release shall be subject to the conditions for release set forth in Section 4.08 above.

 

If Administrative Agent delivers an Exclusion Notice and such Exclusion
Event no longer exists, then Borrower may give Administrative Agent written
notice thereof (together with reasonably detailed evidence of the cure of such
condition) and such Borrowing Base Property shall, effective with the delivery
by Borrower of the next Borrowing Base Report, be considered a Borrowing Base
Property for purposes of calculating the Borrowing Base as long as such
Borrowing Base Property meets all the requirements to be included in the
Borrowing Base set forth in this Article IV.  Any Property that is excluded from the
Borrowing Base pursuant to this Section 4.09
may subsequently be reinstated as a Borrowing Base Property, even if an
Exclusion Event exists, upon such terms and conditions as Administrative Agent
and Super Majority Lenders may approve.

 

63

 

4.10         Guaranties.  Pursuant to the Subsidiary Guaranties, each
Borrowing Base Property Owner shall unconditionally guarantee in favor of
Administrative Agent for the benefit of the Lenders the full payment and
performance of the Obligations.

 

4.11         Documentation Required
with Respect to Borrowing Base Properties.  Borrower shall deliver, or shall cause the
applicable Subsidiary to deliver (unless Administrative Agent is independently
obtaining any item described below, in which case Borrower agrees to cooperate
with Administrative Agent in obtaining such item, all at the expense of
Borrower) each of the following with respect to each Property to be admitted to
the Borrowing Base, including the Initial Base Borrowing Properties (the “Property Information”):

 

(a)           unless otherwise agreed or approved by Administrative
Agent, (i) two (2) hard copy prints or, if agreed by Administrative
Agent, a legible electronic copy satisfactory to Administrative Agent, of
either (1) a current as-built survey of each Borrowing Base Property and
Improvements thereon, or (2) a non-current survey accompanied by an
affidavit of the owner of the Borrowing Base Property satisfactory to
Administrative Agent and the Title Company to the effect that the Property and
Improvements depicted in the survey are the same as exist on the ground as of
the current date of the affidavit, and all as is otherwise satisfactory to
Administrative Agent and the Title Company; and (ii) a flood insurance
policy in an amount required by Administrative Agent, but in no event less than
the amount sufficient to meet the requirements of applicable law and the Flood
Disaster Protection Act of 1973, or evidence satisfactory to Administrative Agent
that such Property is not located in a flood hazard area;

 

(b)           unless otherwise agreed or approved by Administrative
Agent, true and correct copies of all existing Plans with respect to such
Property within the possession or control of the Loan Parties (including the
site plan) requested by Administrative Agent, together with evidence
satisfactory to Administrative Agent that the same comply in all material
respects to applicable requirements of Governmental Authorities;

 

(c)           (i) true and correct copies of each Material Lease
and any Guarantees thereof, and (ii) estoppel certificates and
subordination and attornment agreements (including nondisturbance agreements if
and to the extent agreed by Administrative Agent in its discretion), with
respect to each Material Lease, in form and content satisfactory to
Administrative Agent, from the tenants and subtenants as Administrative Agent
may require;

 

(d)           solely with respect to property located in an earthquake
zone, an engineering report or structural inspection report for such Property
that is (i) prepared by an engineering firm reasonably acceptable to the
Administrative Agent, (ii) if requested by the Administrative Agent,
addressed to the Administrative Agent, (iii) not more than 12 months old
and (iv) otherwise in form and substance acceptable to the Administrative
Agent;

 

(e)           an Environmental Assessment of such Property, made within
ninety (90) days prior to the date such Property is admitted to the Borrowing
Base, showing that such Property is in compliance with Environmental Laws, and
such additional evidence as may be required by Administrative Agent (all
reports, drafts of reports, and recommendations, whether written or oral, from
such engineering firm shall be made available and communicated to Administrative
Agent);

 

64

 

(f)            (i) evidence that such Property has fully adequate
direct and free access to one or more public streets, dedicated to public use,
fully installed and accepted by the appropriate Governmental Authority, that
all fees, costs and expenses of the installation and acceptance thereof have
been paid in full, and that there are no restrictions on the use and enjoyment
of such streets which would adversely affect such Property; (ii) evidence
that all applicable zoning ordinances, restrictive covenants, and Laws
affecting such Property (A) permit the use for which such Property is
intended and (B) have been or will be complied with without the existence
of any variance, non-complying use, nonconforming use (other than a legally
non-conforming use) or other special exception or if a variance, permit or
special exception is required, such has been obtained and remains in full force
and effect; (iii) evidence that such Property and all Improvements comply
and will comply with all Laws regarding subdivision and platting and would so
comply if such Property and the Improvements thereon were conveyed as a
separate parcel; and (iv) evidence of compliance by Borrower or the
applicable Loan Party and such Property, and any proposed construction, use and
occupancy of the Improvements, with such other applicable Laws as
Administrative Agent may request, including all Laws regarding access and
facilities for handicapped or disabled persons including, without limitation
and to the extent applicable, The Federal Architectural Barriers Act (42 U.S.C.
§ 4151 et seq.), The Fair Housing Amendments Act of 1988 (42 U.S.C. § 3601 et
seq.), The Americans With Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.),
The Rehabilitation Act of 1973 (29 U.S.C. § 794), and any applicable state
requirements;

 

(g)           evidence (i) of the identity of all taxing
authorities and utility districts (or similar authorities) currently exercising
ad valorem or real property taxing or assessment jurisdiction over such
Property or any portion thereof; (ii) that all taxes, standby fees and any
other similar charges due and payable have been paid, including copies of
receipts or statements marked “paid” by the appropriate authority; and
(iii) that such Property is a separate tax lot or lots with separate
assessment or assessments of such Property and Improvements, independent of any
other Property or improvements and, to the extent such Property is subject to
any subdivision ordinance or Law, that such Property is a separate legally
subdivided parcel;

 

(h)           a Title Insurance Commitment from the Title Company
(neither Parent nor Borrower nor their respective counsel shall have any
interest, direct or indirect, in the Title Company or its agent);

 

(i)            (i) evidence that, except for Permitted Liens, no
contractor’s, supplier’s, mechanic’s or materialman’s Lien claim or notice, lis pendens, judgment, or other claim or encumbrance against
such Property has been filed for record in the county where such Property is
located or in any other public record which by Law provides notice of claims or
encumbrances regarding such Property; (ii) a certificate or certificates
of a reporting service acceptable to Administrative Agent, reflecting the
results of searches made not earlier than forty-five (45) days prior to the
date such Property is admitted to the Borrowing Base, (A) of the central
and local Uniform Commercial Code records, showing, except for Permitted Liens,
and Liens for taxes not yet due and payable, no filings against any of the
Collateral or against Borrower or the applicable Loan Party related to the
Property otherwise, except as consented to by Administrative Agent; and
(B) if required by Administrative Agent, of the appropriate judgment and
tax Lien records, showing no outstanding judgment or tax Lien against Borrower
or the applicable Loan Party;

 

(j)            an Acceptable Borrowing Base Appraisal of such Property;

 

(k)           to the extent reasonably deemed necessary by
Administrative Agent, an executed REA estoppel letter from each party to any
REA for such Property;

 

65

 

(l)            a true, correct, and complete copy of each Management
Agreement, and to the extent required by Administrative Agent in its
discretion, estoppel letters, consents, comfort letters, or other confirming
agreements ;

 

(m)          a true, correct, and complete copy of each Franchise
Agreement and each License Agreement, and to the extent required by
Administrative Agent in its discretion, estoppel letters, consents, comfort
letters, or other confirming agreements;

 

(n)           if such Property is held pursuant to an Acceptable Ground
Lease, (i) true and correct copies of such Acceptable Ground Lease and any
Guarantees thereof; (ii) to the extent required by Administrative Agent in
its discretion, estoppel certificates executed by the lessor under such
Acceptable Ground Lease, in form and content satisfactory to Administrative
Agent; and (iii) evidence of Borrower’s or the applicable Loan Party’s
compliance with such Acceptable Ground Lease;

 

(o)           evidence of the insurance required pursuant to Section 7.07;

 

(p)           operating statements (which shall be audited, to the
extent available) with respect to such Property for each of the two (2) fiscal
years (to the extent available) and capital expenditure history for the three (3) fiscal
years immediately preceding, pro-forma operating statements or operating
budgets and capital expenditure budgets, all of which are acceptable to
Administrative Agent; and

 

(q)           such other assurances, certificates, documents, consents,
or opinions as Administrative Agent reasonably may require.

 

Article V.

Conditions Precedent to Credit Extensions

 

5.01         Conditions to Closing.  The effectiveness of this Agreement is
subject to satisfaction of the following conditions precedent:

 

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

 

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

 

(ii)           a Note executed by Borrower in favor
of each Lender that has requested a Note at least two Business Days prior to
the Closing Date;

 

(iii)          Pledge Agreements executed by Borrower
and Subsidiary Guarantors, as debtor, and delivered to Administrative Agent, as
secured party for the ratable benefit of Lenders, granting and creating Liens
in favor of Lenders in and to 100% of the issued and outstanding Pledged Equity
of Subsidiary Guarantors, owned by such pledgor, together
with (i) one or more financing statements, in favor of
Administrative Agent, as secured party on behalf of Lenders, covering all such
Pledged Equity, and (ii) delivery to Administrative Agent of all
certificated Pledged Equity, together with
executed blank stock powers for each certificate delivered, all in form
acceptable to Administrative Agent;

 

66

 

(iv)          To the extent requested by
Administrative Agent, Lien searches in the name of each Loan Party, and any
other name(s) as Administrative Agent may deem appropriate in such Loan
Party’s jurisdiction of formation and each state or jurisdiction where such
Loan Party maintains an office or has real property, showing no financing
statements or other Lien instruments of record except for Permitted Liens or
Liens being released on the Closing Date;

 

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

 

(vi)          such documents and certifications as
Administrative Agent may reasonably require to evidence that each Loan Party is
duly organized or formed, and that each Loan Party is validly existing, in good
standing and qualified to engage in business in each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect;

 

(vii)         favorable opinions of (A) Latham &
Watkins, LLP, counsel to the Loan Parties, (B) in-house counsel to the
Loan Parties, and (C) Maryland counsel to Parent, each addressed to
Administrative Agent and each Lender, as to the matters set forth in Exhibit G and such other
matters concerning the Loan Parties and the Loan Documents as Required Lenders
may reasonably request;

 

(viii)        a certificate of a Responsible Officer
of each Loan Party either (A) attaching copies of all consents, licenses
and approvals required in connection with the execution, delivery and
performance by such Loan Party and the validity against such Loan Party of the
Loan Documents to which it is a party, and such consents, licenses and
approvals shall be in full force and effect, except to the extent that failure
to do so could not reasonably be expected to have a Material Adverse Effect or
to the extent such consents, licenses and approvals are permitted to be
delivered after the date hereof pursuant to Section 5.03
or (B) stating that no such consents, licenses or approvals are so
required;

 

(ix)           a certificate signed by a Responsible
Officer of Borrower certifying (A) that the conditions specified in Sections 5.02(a) and (b) have been satisfied, and
(B) that there has been no event or circumstance since the date of the
Audited Financial Statements that has had or could be reasonably expected to
have, either individually or in the aggregate, a Material Adverse Effect;

 

(x)            a duly completed Borrowing Base
Report and Compliance Certificate as of the last day of the fiscal quarter of
Borrower ended on June 30, 2010, signed by a Responsible Officer of
Borrower;

 

67

 

(xi)           the Property Information required
pursuant to Section 4.11 with
respect to each of the Initial Borrowing Base Properties;

 

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

 

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

 

(b)           Any fees required to be paid on or before the Closing Date
shall have been paid.

 

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

 

Without limiting the generality of the provisions of
the last paragraph of Section 10.03,
for purposes of determining compliance with the conditions specified in this Section 5.01, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Lender unless Administrative Agent shall have received notice from such Lender
prior to the proposed Closing Date specifying its objection thereto.

 

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

 

(a)           The representations and warranties of Borrower and each
other Loan Party contained in Article VI
or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and
correct in all material respects on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date, and except that for purposes
of this Section 5.02, the representations and
warranties contained in subsections (a) and
(b) of Section 6.05 shall be deemed to refer to the
most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 7.01.

 

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

 

(c)           Administrative Agent and, if applicable, the L/C Issuer
shall have received a Request for Credit Extension in accordance with the requirements
hereof.

 

(d)           After giving effect to the Credit Extension, the Total
Outstandings shall not exceed the Borrowing Base.

 

68

 

Each Request for Credit Extension (other than a
Committed Loan Notice requesting only a conversion of Committed Loans to the
other Type or a continuation of Eurodollar Rate Loans) submitted by Borrower
shall be deemed to be a representation and warranty that the conditions
specified in Sections 5.02(a) and (b) have been satisfied on and
as of the date of the applicable Credit Extension.

 

5.03         Post Closing Items.  Each Lender hereby waives receipt of the
items listed on Schedule 5.03 (the “Post-Closing Items”) as a condition
precedent to the effectiveness of this Agreement; provided
that, notwithstanding Lenders’ waiver of the Post-Closing Items as a
condition precedent to the effectiveness of this Agreement, Borrower
acknowledges and agrees that (a) if Borrower fails to provide to
Administrative Agent any Post Closing Item marked as “Post-Closing Required” on
Schedule 5.03, in form and substance
acceptable to Administrative Agent, on or before the close of business on the
date set forth opposite such Post Closing Item on Schedule
5.03, then an Event of Default shall exist under this Agreement,
(b) Borrower shall, from the date of this Agreement through January 31,
2011, exercise commercially reasonable efforts to provide to Administrative
Agent any Post Closing Item marked as “Post-Closing Commercially Reasonable
Efforts” on Schedule 5.03, in form and
substance acceptable to Administrative Agent, and (c) until Borrower shall
provide to Administrative Agent each Post Closing Item marked as “Post-Closing
Borrowing Base” on Schedule 5.03 with respect to
any Initial Borrowing Base Property, in form and substance acceptable to
Administrative Agent, such Initial Borrowing Base Property shall not be
included in the calculation of the Borrowing Base.

 

Article VI.

Representations and Warranties

 

Each of Parent and Borrower represents and warrants
to Administrative Agent and the Lenders that:

 

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

 

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

 

6.03         Governmental
Authorization; Other Consents. 
No approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other Person is necessary
or required in connection with the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan
Document; except to the extent that the same could not reasonably be expected
to have a Material Adverse Effect.

 

69

 

6.04         Binding Effect.  This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. 
This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable against each Loan Party that is party thereto in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability.

 

6.05         Financial Statements; No
Material Adverse Effect.

 

(a)           The Audited Financial Statements (i) were prepared in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; (ii) fairly present
the financial condition of the Companies as of the date thereof and their
results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of the Companies as of the date
thereof, including liabilities for taxes, material commitments and
Indebtedness.

 

(b)           The unaudited consolidated and consolidating balance sheet of the Companies dated
June 30, 2010, and the related consolidated and consolidating statements of income or operations, shareholders’
equity and cash flows for the fiscal quarter ended on that date (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and
(ii) fairly present the financial condition of the Companies as of the
date thereof and their results of operations for the period covered thereby,
subject, in the case of clauses (i) and
(ii), to the absence of footnotes
and to normal year-end audit adjustments.

 

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

 

6.06         Litigation.  There
are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of Parent or Borrower after due and diligent investigation, threatened
or contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against any Company or against any of their properties or
revenues that (a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby, or
(b) either individually or in the aggregate, if determined adversely,
could reasonably be expected to have a Material Adverse Effect.

 

6.07         No Default.  No Company is in default under or with
respect to any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or
would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.

 

6.08         Ownership of Property;
Liens.  Each Company has good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of its business, except
for such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  The property of each Loan Party is subject to
no Liens, other than Permitted Liens.

 

70

 

6.09         Environmental Compliance.

 

(a)           The Companies conduct in the ordinary course of business a
review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
Parent and Borrower have reasonably concluded that, with respect to the
Borrower, the Borrowing Base Properties, and the Borrowing Base Property
Owners, such Environmental Laws and claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)           After due inquiry
and investigation in accordance with good commercial or customary practices to
determine whether contamination is present on any Borrowing Base Property, or
elsewhere as a result of the off-site disposal of Hazardous Materials by the
Loan Parties in connection with any Borrowing Base Property, without regard to
whether Administrative Agent or any Lender has or hereafter obtains any
knowledge or report of the environmental condition of such Borrowing Base
Property, except as may be indicated in the environmental assessment reports
delivered to Administrative Agent in connection with its due diligence
investigations in connection with this Agreement (the “Environmental Reports”): (i) during the period of
any Loan Party’s ownership of each of the Borrowing Base Properties, except in
the ordinary course of business of operating each of the Borrower Base
Properties as a hotel, such Borrowing Base Property has not been used for
landfill, dumping, or other waste disposal activities or operations, for
generation, storage, use, sale, treatment, processing, recycling, or disposal
of any Hazardous Material, for underground or aboveground storage tanks, or for
any other use that could reasonably be expected to cause a Material Property
Event, and to each Company’s actual knowledge, no such use on any adjacent
property occurred at any time prior to the date hereof which could reasonably
be expected to cause a Material Property Event; (ii) to the best of each
Company’s knowledge, except as otherwise disclosed to Administrative Agent in
writing, there is no Hazardous Material, storage tank (or similar vessel)
whether underground or otherwise, sump or well currently on any Borrowing Base
Property which could reasonably be expected to cause a Material Property Event;
(iii) except as could not reasonably be expected to cause a Material
Property Event, no Company has received any written notice of, or has any
knowledge of, any Environmental Claim or any completed, pending, proposed or
threatened investigation or inquiry concerning the presence or release of any
Hazardous Material on any Borrowing Base Property or to its actual knowledge on
any adjacent property or concerning whether any condition, use or activity on
any Borrowing Base Property or any adjacent property is in violation of any
Environmental Law; (iv) except as could not reasonably be expected to
cause a Material Property Event, the present conditions, uses, and activities
on each Borrowing Base Property do not violate any Environmental Law and the
use of any Borrowing Base Property which any Company (and each tenant and
subtenant) makes and intends to make of any Borrowing Base Property complies
and will comply with all applicable Environmental Laws; (v) no Borrowing
Base Property appears on the National Priorities List, any federal or state “superfund”
or “superlien” list, or any other list or database of properties maintained by
any local, state, or federal agency or department showing properties which are
known to contain or which are suspected of containing a Hazardous Material;
(vi) no Company has ever applied for and been denied environmental
impairment liability insurance coverage relating to any Borrowing Base
Property; and (vii) no Company has, nor, to any Company’s knowledge, have
any tenants or subtenants, been denied any permit or authorization to
construct, occupy, operate, use, or conduct any activity on any Borrowing Base
Property by reason of any Environmental Law.

 

71

 

Even though a Loan Party
may have provided Administrative Agent with an Environmental Assessment or
other environmental report together with other relevant information regarding
the environmental condition of the Borrowing Base Properties, Borrower
acknowledges and agrees that Administrative Agent is not accepting any Property
as a Borrowing Base Property based solely on that assessment, report, or information.  Rather Administrative Agent has relied on the
assessments, reports, and representations and warranties of Borrower in this
Agreement, and Administrative Agent is not waiving any of its rights and
remedies in the environmental provisions of this Agreement or any other Loan
Document.

 

6.10         Insurance.  The properties of the Companies are insured
with financially sound and reputable insurance companies not Affiliates of any
Company, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Companies operates.

 

6.11         Taxes.  The Companies have filed all Federal, state
and other material tax returns and reports required to be filed, and have paid
all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against
any Company that would, if made, have a Material Adverse Effect.  No Company is party to any tax sharing
agreement that would reasonably be expected to have a Material Adverse Effect.

 

6.12         ERISA Compliance.

 

(a)           Except as would not reasonably be expected to have a
Material Adverse Effect: (i) each Benefit Plan and each Pension Plan is in
compliance in all respects with the applicable provisions of ERISA, the Code
and other Federal or state laws, and (ii) Parent and Borrower and to the
knowledge of Parent and Borrower, each ERISA Affiliate have made all required
contributions to each Pension Plan and each Multiemployer Plan (if any), and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been
made by Parent, Borrower or, to the knowledge of Parent or Borrower, any ERISA
Affiliate, with respect to any Pension Plan. 
Each Benefit Plan and each Pension Plan that is intended to be a
qualified plan under Section 401(a) of
the Code has received a favorable determination letter from the IRS or is
entitled to rely on a favorable opinion letter, in either case, to the effect
that the form of such Plan is qualified under Section 401(a) of
the Code and the trust related thereto has been determined by the IRS to be
exempt from federal income tax under Section 501(a) of
the Code, or an application for such a letter is currently being processed by
the IRS.

 

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

 

(c)           Except as would not reasonably be expected to result in a
Material Adverse Effect, (i) No ERISA Event has occurred, and neither
Parent nor Borrower is aware of any fact, event or circumstance that could
reasonably be expected to constitute or result in an ERISA Event 

 

72

 

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

 

6.13         Subsidiaries; Equity
Interests.  Parent and
Borrower have no Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 6.13, and all of the
outstanding Equity Interests in such Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by a Loan Party in the amounts
specified on Part (a) of Schedule 6.13
free and clear of all Liens.  Neither
Parent nor Borrower has any equity investments in any other corporation or
entity other than those specifically disclosed in Part (b) of Schedule 6.13.

 

6.14         Margin Regulations;
Investment Company Act.

 

(a)           Neither Parent nor Borrower is engaged and will not
engage, principally or as one of their important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock.

 

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

 

6.15         Disclosure.  There is no material fact or condition
relating to the Loan Documents or the financial condition, business, or
property of any Company which would reasonably be expected to result in a
Material Adverse Effect and which has not been related, in writing, to
Administrative Agent.  No report,
financial statement, certificate or other information furnished (whether in
writing or orally) by or on behalf of any Company to Administrative Agent or
any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan
Document (in each case, as modified or supplemented by other information so
furnished) which taken as a whole, contained, at the time of its delivery, any
material misstatement of fact or omitted to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not materially misleading; provided that,
with respect to projections, estimates and other forward looking information,
Parent and Borrower represent only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.

 

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

 

73

 

6.17         Taxpayer Identification
Number.  Borrower’s true and
correct U.S. taxpayer identification number is set forth on Schedule 11.02.

 

6.18         Intellectual Property;
Licenses, Etc.  Parent,
Borrower and their Subsidiaries own, or possess the right to use, all of the material
trademarks, service marks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intellectual property rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person, except those which could not reasonably be
expected to have a Material Adverse Effect. 
To the best knowledge of Parent and Borrower, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by Borrower or any Subsidiary
materially infringes upon any rights held by any other Person.  No claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of Borrower, threatened, which,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

6.19         Damages/Condemnation/Zoning.  With respect to each Borrowing Base Property,
the Improvements have not been damaged (ordinary wear and tear excepted) and
not repaired and are not the subject of any pending or, to any Loan Party’s
knowledge, threatened Condemnation or adverse zoning proceeding, except as
could not reasonably be expected to cause a Material Property Event.

 

6.20         Representations Concerning
Leases.  A true and correct
copy of each Material Lease, and each Guarantee thereof (if any), affecting any
part of the Borrowing Base Properties has been delivered to Administrative
Agent and no such Material Lease or Guarantee contains any option to purchase
all or any portion of any Borrowing Base Property or any interest therein or
contains any right of first refusal relating to any sale of any Borrowing Base
Property or any portion thereof or interest therein.

 

6.21         Ground Lease Representations.

 

(a)           The Loan Parties have delivered true and correct copies
each Acceptable Ground Lease as required by Section 4.11(n).

 

(b)           Each Acceptable Ground Lease relating to a Borrowing Base
Property is in full force and effect.

 

(c)           To each Loan Party’s knowledge, (i) there are no
defaults or terminating events under any Acceptable Ground Lease relating to a
Borrowing Base Property by any Loan Party or any ground lessor thereunder, and
(ii) no event has occurred which but for the passage of time, or notice,
or both would constitute a default or terminating event under any Acceptable
Ground Lease relating to a Borrowing Base Property except for such defaults or
terminating events specifically disclosed to Administrative Agent in writing.

 

(d)           All rents, additional rents, and other sums due and
payable under each Acceptable Ground Lease relating to a Borrowing Base
Property have been paid in full.

 

(e)           No Loan Party nor the ground lessor under any Acceptable
Ground Lease relating to a Borrowing Base Property has commenced any action or
given or received any notice for the purpose of terminating such Acceptable
Ground Lease.

 

74

 

(f)            Each Loan Party’s interest in each Acceptable Ground
Lease relating to a Borrowing Base Property is not subject to any Liens or
encumbrances other than the ground lessor’s related fee interest, Permitted
Liens, Material Title Defects and other items shown on the Title Insurance
Commitments which the Administrative Agent has accepted, and Liens for taxes
not yet due and payable.

 

6.22         Material Agreements.  There exists no default under any contracts
material to the business of any Loan Party that could reasonably be expected to
have a Material Adverse Effect.

 

6.23         Labor Matters.  There are no actual or threatened strikes,
labor disputes, slow downs, walkouts, or other concerted interruptions of
operations by the employees of any Loan Party that could have a Material
Adverse Effect.  Hours worked by and
payment made to employees of each Loan Party have not been in violation of the
Fair Labor Standards Act or any other Laws, other than any such violations
which could not, individually or collectively, have a Material Adverse
Effect.  All payments due from any Loan
Party on account of employee health and welfare insurance have been paid or
accrued as a liability on its books, other than any such non-payment which
could not, individually or collectively, have a Material Adverse Effect.

 

6.24         Reciprocal Agreements.

 

(a)           No Loan Party is currently in default in any respect (nor
has any notice been given or received with respect to an alleged or current
default) under any of the terms and conditions of any REA, and each REA remains
unmodified and in full force and effect, in each case, except where such
failure could not reasonably be expected to cause a Material Property Event.

 

(b)           All sums due and owing by any Loan Party to the other
parties to each REA (or by the other parties to each REA to such Loan Party)
pursuant to the terms of such REA, have been paid, are current, and no lien has
attached on the applicable Borrowing Base Property (or threat thereof been
made) for failure to pay any of the foregoing except, in each case, where such
failure could not reasonably be expected to cause a Material Property Event.

 

6.25         Management Agreements.  Each Management Agreement is described in Schedule 6.25, as such schedule may
be updated from time to time by Borrower. To the best of each Loan Party’s
knowledge, each Management Agreement is in full force and effect and there is
no default or terminating event thereunder by any party thereto and, no event
has occurred that, with the passage of time and/or the giving of notice would
constitute a default or terminating event thereunder except for: (a) such
defaults or terminating events specifically disclosed to Administrative Agent
in writing, (b) those which could not reasonably be expected to cause a
Material Property Event, and (c) in the case of any default by any Manager
under any Management Agreement, a replacement Qualified Manager has entered
into a Management Agreement to replace the defaulting Manager within ninety
(90) days following such default. No management fees under any Management
Agreement are accrued and unpaid except as provided or permitted under the
express terms of such Management Agreement.

 

6.26         Franchise Agreements;
License Agreements.  To the
best of each Loan Party’s knowledge, each Franchise Agreement and each License
Agreement is in full force and effect and there is no default or terminating
event thereunder by any party thereto and, no event has occurred that, with the
passage of time and/or the giving of notice would constitute a default or
terminating event thereunder except for: (a)  such defaults or terminating
events specifically disclosed to Administrative Agent in writing, and (b) those
which could not reasonably be expected to cause a Material Property Event, and (c) in
the case of any default by any Franchisor under any Franchise Agreement, a
replacement Qualified 

 

75

 

Franchisor has entered into
a Franchise Agreement to replace the defaulting Franchisor within the ninety
(90) days following such default.  As of
the date hereof, no unpaid fees are due and payable under any Franchise
Agreement or any License Agreement, including, without limitation, any license
fees, franchise fees, reservation fees, and royalties except as provided or
permitted under the express terms of such Franchise Agreement or License
Agreement.  Each Franchise Agreement is
set forth in Section (a) of Schedule 6.26 and each License
Agreement is set forth in Section (b) of
Schedule 6.26, as such Schedule may
be updated from time to time by Borrower.

 

6.27         Certificate of Occupancy;
Licenses.  All certifications,
permits, licenses and approvals, including without limitation, certificates of
completion and occupancy permits required for the legal use, occupancy and
operation of each Borrowing Base Property by any Loan Party as a hotel for its
current uses and amenities (collectively, the “Licenses”),
have been obtained and are in full force and effect and are not subject to
revocation, suspension or forfeiture, in each case except to the extent it
would not reasonably be expected to create a Material Property Event.  Borrowers shall keep and maintain all
Licenses necessary for the operation of each Collateral Property as a hotel for
its other uses and amenities.  Each
Borrowing Base Property is used exclusively for hotel purposes and other
appurtenant and related uses including but not limited to restaurants and
lounges, and such use is in conformity with the certificate of occupancy issued
for such Borrowing Base Property, in each case except to the extent it would
not reasonably be expected to create a Material Property Event.

 

6.28         Solvency.  No Loan Party (a) has entered into the
transaction or executed this Agreement or any other Loan Document with the
actual intent to hinder, delay or defraud any creditor and (b) has not
received reasonably equivalent value in exchange for its obligations under the
Loan documents.  After giving effect to
any Credit Extension, the fair saleable value of each Loan Party’s assets
exceeds and will, immediately following the making of any such Credit
Extension, exceed such Loan Party’s total liabilities, including subordinated,
unliquidated, disputed and contingent liabilities.  No Loan Party’s assets constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted, nor will its assets constitute unreasonably small
capital immediately following the making of any Credit Extension.  No Loan Party intends to incur debt and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such debt and liabilities as they mature (taking into account
the timing and amounts of cash to be received by such Loan Party and the
amounts to be payable on or in respect of obligations of such Loan Party).

 

6.29         REIT Status of Parent.  Commencing with its taxable year ending December 31
2004, Parent has been organized and operated in conformity with the
requirements for qualification as a REIT.

 

6.30         Operating Leases.

 

(a)           (i) Each Operating Lease is in full force and effect
and has not been modified or amended in any manner whatsoever, (ii) there
are no defaults under any Operating Lease by any party thereunder, and no event
has occurred which but for the passage of time, or notice, or both would
constitute a default under such Operating Lease, (iii) all rents, additional
rents and other sums due and payable under each Operating Lease have been paid
in full, and (iv) neither the Operating Lessee nor the applicable lessor
under each Operating Lease has commenced any action or given or received any
notice for the purpose of terminating such Operating Lease;

 

(b)           The applicable interests of the Operating Lessee and the
applicable Borrowing Base Property Owners in the Operating Leases are not
subject to any Liens (other than Permitted Liens);

 

(c)           The Operating Leases do not impose restrictions on
subletting; and

 

76

 

(d)           Each Operating Lease is set forth on Schedule
6.30.

 

6.31         PIPs.  Each Loan Party has responded to and either
cured, or is diligently seeking a cure within the applicable cure period, of
all action items listed in any PIP with respect to any Borrowing Base Property,
or compliance therewith has been waived.

 

Article VII.

Affirmative Covenants

 

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, each of Parent
and Borrower shall, and shall (except in the case of the covenants set forth in
Sections 7.01, 7.02, and 7.03)
cause each Company to:

 

7.01         Financial Statements.  Deliver to Administrative Agent, in form and
detail satisfactory to Administrative Agent and Required Lenders:

 

(a)           as soon as available, but in any event within ninety (90)
days after the end of each fiscal year of Parent (commencing with the fiscal year ended December 31, 2010),
or, if earlier, fifteen (15) days after the date required to file with the SEC,
a consolidated balance sheet of the Companies as at the end of such fiscal
year, and the related consolidated  statements of
income or operations, changes in shareholders’ equity, and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and prepared in accordance with
GAAP, audited and accompanied by a report and opinion of Ernst & Young
or such other independent certified public accountant of nationally recognized
standing reasonably acceptable to Required Lenders, which report and opinion
shall be prepared in accordance with generally accepted auditing standards and
shall not be subject to any “going concern” or like qualification or exception
or any qualification or exception as to the scope of such audit;

 

(b)           as soon as available, but in
any event within forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of Parent, or, if earlier, five (5) days
after the date required to file with the SEC, a consolidated balance sheet of
the Companies as at the end of such fiscal quarter, the related consolidated
statements of income or operations for such fiscal quarter and for the portion
of Parent’s fiscal year then ended, and the related consolidated statements of
changes in shareholders’ equity, and cash flows for the portion of Parent’s
fiscal year then ended, in each case setting forth in comparative form, as
applicable, the figures for the corresponding fiscal quarter of the previous
fiscal year and the corresponding portion of the previous fiscal year, all in
reasonable detail, certified by a Reporting Officer of Parent as fairly
presenting the financial condition, results of operations, shareholders’ equity
and cash flows of the Companies in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes;

 

(c)           as soon as available, but in any event at least fifteen
(15) days before the end of each fiscal year of Parent, forecasts prepared by
management of Parent, in form satisfactory to Administrative Agent and Required
Lenders, of consolidated balance sheets and statements of income or operations
and cash flows of the Companies on a monthly basis for the immediately
following fiscal year (including the fiscal year in which the Maturity Date
occurs); and

 

77

 

(d)           (i) as soon as reasonably practicable, but in any
event at least fifteen (15) days before the end of each fiscal year of Parent,
a capital and operating budget for each Borrowing Base Property; and
(ii) as soon as reasonably practicable but in any event within thirty (30)
days after the end of each fiscal quarter, a statement of all income and
expenses in connection with each Borrowing Base Property, including a
comparison to the budget, each certified in writing as true and correct by
Responsible Officer of Parent.

 

As to any information contained in materials
furnished pursuant to Section 7.02(d),
Parent and Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing
shall not be in derogation of the obligation of Parent and Borrower to furnish
the information and materials described in clauses (a) and
(b) above at the times
specified therein.

 

7.02         Certificates; Other
Information.  Deliver to
Administrative Agent, in form and detail satisfactory to Administrative Agent
and Required Lenders:

 

(a)           concurrently with the delivery of the financial statements
referred to in Sections 7.01(a) and
(b), a duly completed Compliance
Certificate signed by a Reporting Officer of Borrower (which delivery may,
unless Administrative Agent requests executed originals, be by electronic
communication including fax or email and shall be deemed to be an original
authentic counterpart thereof for all purposes);

 

(b)           concurrently with the delivery of the financial statements
referred to in Sections 7.01(a) and
(b), a duly completed Borrowing Base
Report signed by a Reporting Officer of Borrower (which delivery may, unless
Administrative Agent requests executed originals, be by electronic
communication including fax or email and shall be deemed to be an original
authentic counterpart thereof for all purposes);

 

(c)           promptly after any request by Administrative Agent, copies
of any detailed audit reports, material management letters or material
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of Parent by independent accountants in connection with
the accounts or books of any Company, or any audit of any of them;

 

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

 

(e)           promptly, and in any event within ten (10) Business
Days upon reasonable request by Administrative Agent, but no more often than
once each fiscal quarter, information concerning the Borrowing Base Properties,
including, without limitation, operating statements, capital expenditure
budgets, copies of leases, copies of existing Environmental Assessments, and
copies of existing property inspection reports;

 

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

 

(g)           promptly after receipt thereof by any Loan Party, copies
of any final and binding PIPs relating to any Borrowing Base Property;

 

78

 

(h)           a calculation of the Liquidity Condition (i) as of
the end of each fiscal quarter through and including the fiscal quarter ending
immediately preceding the Reporting Date, concurrently with the delivery of
each Compliance Certificate as set forth in clause
(a) above, and (ii) after the Reporting Date, as of
the last day of each calendar month commencing with the month ending
immediately following the Reporting Date through and including the Exchangeable
Senior Note Payment Date, to be delivered by the 30th day after the
end of each such month;  and

 

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

 

Documents required to be delivered pursuant to Section 7.01(a) or (b) or Section 7.02(d) (to
the extent any such documents are included in materials otherwise filed with
the SEC) may be delivered electronically and if so delivered, shall be deemed
to have been delivered on the date (i) on which Borrower posts such
documents, or provides a link thereto on Borrower’s website on the Internet at
the website address listed on Schedule 11.02;
or (ii) on which such documents are posted on Borrower’s behalf on an
Internet or intranet website, if any, to which each Lender and Administrative
Agent have access (whether a commercial, third-party website or whether
sponsored by Administrative Agent); provided that:
(i) Borrower shall deliver paper copies of such documents to
Administrative Agent or any Lender upon its request to Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by Administrative Agent or such Lender and (ii) Borrower shall notify
Administrative Agent (by telecopier or electronic mail) of the posting of any
such documents and provide to Administrative Agent by electronic mail
electronic versions (i.e., soft
copies) of such documents. 
Administrative Agent shall have no obligation to request the delivery of
or to maintain paper copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by Borrower with any
such request by a Lender for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.

 

Borrower hereby acknowledges that
(a) Administrative Agent and/or the Arrangers will make available to the
Lenders and the L/C Issuer materials and/or information provided by or on
behalf of Borrower hereunder (collectively, “Borrower
Materials”) by posting Borrower Materials on IntraLinks or
another similar electronic system (the “Platform”)
and (b) certain of the Lenders (each, a “Public
Lender”) may have personnel who do not wish to receive material
non-public information with respect to Borrower or its Affiliates, or the
respective securities of any of the foregoing, and who may be engaged in
investment and other market-related activities with respect to such Persons’
securities.  Borrower hereby agrees that
(w) all Borrower Materials that are to be made available to Public Lenders
shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the first page thereof;
(x) by marking Borrower Materials “PUBLIC,” Borrower shall be deemed to
have authorized Administrative Agent, the Arrangers, the L/C Issuer and the
Lenders to treat such Borrower Materials as not containing any material non-public
information with respect to Borrower or its securities for purposes of United
States Federal and state securities laws (provided, however, that to the extent such Borrower Materials
constitute Information, they shall be treated as set forth in Section 11.07); (y) all
Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated “Public Side Information;” and
(z) Administrative Agent and the Arrangers shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Side Information.”

 

7.03         Notices.  Promptly notify Administrative Agent:

 

(a)           of the occurrence of any Default;

 

79

 

(b)           of (i) breach or non-performance of, or any default
under, a Contractual Obligation of any Company; (ii) any dispute,
litigation, investigation, proceeding or suspension between any Company and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting any Company, including
pursuant to any applicable Environmental Laws, in each case which could
reasonably be expected to result in a Material Adverse Effect;

 

(c)           of the occurrence of any ERISA Event or the amendment of a
Multiemployer Plan that is treated as a termination under ERISA Section 4041A;

 

(d)           of any litigation, arbitration or governmental
investigation or proceeding instituted or threatened against a Borrowing Base
Property, and any material development therein which, if determined adversely
to the Loan Parties, could reasonably be expected to become a Material Property
Event;

 

(e)           of any actual or threatened Condemnation of any material
portion of a Borrowing Base Property, any negotiations with respect to any such
taking, or any loss of or substantial damage to any Borrowing Base Property,
together with copies of any and all papers served in connection with such
proceedings;

 

(f)            of any notice received by any Company with respect to the
cancellation, alteration that would reasonably be expected to have a Material
Adverse Effect, or non renewal of any insurance coverage maintained with
respect to any Borrowing Base Property;

 

(g)           of any required permit, license, certificate or approval
with respect to any Borrowing Base Property that lapses or ceases to be in full
force and effect or written claim from any person that any Borrowing Base
Property, or any use, activity, operation or maintenance thereof or thereon, is
not in compliance with any Law, in each case, which could reasonably be
expected to result in a Material Property Event;

 

(h)           of the occurrence of any Exclusion Event;

 

(i)            of any material change in accounting policies or
financial reporting practices by any Company, including any determination by Borrower referred to in Section 2.09(b);

 

(j)            of (i) the
giving to any Loan Party of any notice of any default by any Loan Party under
any Acceptable Ground Lease and deliver to Administrative Agent a true copy of
each such notice within five (5) Business Days of such Loan Party’s
receipt thereof, and (ii) any bankruptcy, reorganization, or insolvency of
the landlord under any Acceptable Ground Lease or of any notice thereof, and
deliver to Administrative Agent a true copy of such notice within five (5) Business
Days of any Loan Parties’ receipt;

 

(k)           of the occurrence
of any Consolidation Event;

 

(l)            on any date on
which the Liquidity Condition is required to be satisfied but is not satisfied;
and

 

(m)          of any report, study, inspection, or test that indicates
any material adverse condition relating to any Borrowing Base Property or any
Improvements, which reasonably could result in a Material Property Event.

 

80

 

Each notice pursuant to this Section 7.03
shall be accompanied by a statement of a Responsible Officer of Parent setting
forth details of the occurrence referred to therein and stating what action
Parent and/or Borrower has taken and proposes to take with respect
thereto.  Each notice pursuant to Section 7.03(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.

 

7.04         Payment of Obligations.  Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all
tax liabilities, assessments and governmental charges or levies upon a Company
or its properties or assets, unless the same are being contested in good faith
by appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by such Company; (b) all lawful
claims which, if unpaid, would by law become a Lien upon its property unless
the same are being contested in good faith by appropriate proceedings
diligently conducted and adequate reserves in accordance with GAAP are being
maintained by such Company; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any instrument
or agreement evidencing such Indebtedness and only to the extent that the
failure to pay the same would constitute an Event of Default.

 

7.05         Preservation of Existence, Etc.  (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization except in a transaction permitted by Section 8.04 or 8.05;
(b) take all reasonable action to maintain all rights, privileges,
permits, licenses and franchises necessary or desirable in the normal conduct
of its business, except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.

 

7.06         Maintenance of Properties.  Keep all Properties including, without
limitation, the Borrowing Base Properties in good order, repair, operating
condition, and appearance, causing all necessary repairs, renewals,
replacements, additions, and Improvements to be promptly made, and not allow
any of the Borrowing Base Properties to be misused, abused or wasted or to
deteriorate (ordinary wear and tear excepted), except where the failure to do
so could reasonably be expected to have a Material Adverse Effect.  Notwithstanding the foregoing, no Borrowing
Base Property Owner shall, without the prior written consent of Administrative
Agent make any structural alteration to a Borrowing Base Property or any other
alteration thereto which materially impairs the value thereof.

 

7.07         Maintenance of Insurance.

 

(a)           Obtain and maintain, at Borrower or the applicable Loan
Party’s sole expense: (a) property insurance with respect to all insurable
property of such Loan Party, against loss or damage by fire, lightning,
windstorm, explosion, hail, tornado and such additional hazards as are
presently included in special form (also known as “all-risk”) coverage and
against any and all acts of terrorism and such other insurable hazards as
Administrative Agent may require, in an amount not less than one hundred
percent (100%) of the full replacement cost, including the cost of debris
removal, without deduction for depreciation and sufficient to prevent any Loan
Party and Administrative Agent and Lenders from becoming coinsurers;
(b) if and to the extent any portion of any Borrowing Base Property or the
Improvements is, under the Flood Disaster Protection Act of 1973 (for purposes
of this Section, “FDPA”), as it may be amended
from time to time, in a Special Flood Hazard Area, within a Flood Zone
designated A or V in a participating community, a flood insurance policy in an
amount required by Administrative Agent, but in no event less than the amount
sufficient to meet the requirements of applicable Law and the FDPA, as such
requirements may from time to time be in effect; (c) general liability
insurance, on an “occurrence” basis against claims for “personal injury”
liability, including bodily injury, death, or 

 

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property damage liability,
for the benefit of the Loan Parties as named insureds and Administrative Agent
for the benefit of Lenders as additional insured; (d) statutory workers’
compensation insurance with respect to any work on or about any of the
Borrowing Base Properties (including employer’s liability insurance, if
required by Administrative Agent), covering all employees and contractors of
each Loan Party; and (e) such other insurance on the Borrowing Base
Properties and endorsements as may from time to time be required by
Administrative Agent (including but not limited to soft cost coverage,
automobile liability insurance, business interruption insurance, or delayed
rental insurance, boiler and machinery insurance, earthquake insurance, wind
insurance, sinkhole coverage, and/or permit to occupy endorsement) and against
other insurable hazards or casualties which at the time are commonly insured
against in the case of premises similarly situated, due regard being given to
the height, type, construction, location, use and occupancy of buildings and
Improvements.  Sublimits shall be
permitted where insurance capacity is restricted and to the extent commercially
available for comparable properties on similar terms.  All insurance policies shall be issued and
maintained by insurers, in amounts, with deductibles, limits and retentions,
and in forms satisfactory to Administrative Agent acting reasonably and reflective
of then current market practices of similarly situated property owners.  All insurance companies providing insurance
required pursuant to this Agreement or any other Loan Document must be licensed
to do business in the state in which the Borrowing Base Property is located and
must have an A. M. Best Company financial and performance ratings of A-:IX or
better.  All insurance policies
maintained, or caused to be maintained, with respect to the Borrowing Base
Properties, except for general liability insurance, shall provide that each such
policy shall be primary without right of contribution from any other insurance
that may be carried, Administrative Agent or any Lender and that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured.  If any insurer which has issued an insurance
policy pursuant to this Agreement or any other Loan Document becomes insolvent
or is the subject of any petition, case, proceeding or other action pursuant to
any Debtor Relief Law, or if in Administrative Agent’s reasonable opinion the
financial responsibility of such insurer is or becomes inadequate, each Loan
Party shall in each instance promptly upon its discovery thereof or upon the
request of Administrative Agent therefor, promptly obtain and deliver to
Administrative Agent a like policy (or, if and to the extent permitted by
Administrative Agent, acceptable evidence of insurance) issued by another
insurer, which insurer and policy meet the requirements of this Agreement or
such other Loan Document, as the case may be.

 

(b)           Cause all certificates of insurance or other evidence of
each initial insurance policy to be delivered to Administrative Agent on or
prior to the Closing Date, with all premiums fully paid current, and each
renewal or substitute policy (or evidence of insurance) shall be delivered to
Administrative Agent, with all premiums fully paid current, at least ten (10) days
before the termination of the policy it renews or replaces.

 

(c)           Pay all premiums on policies required hereunder as they
become due and payable and promptly deliver to Administrative Agent evidence
satisfactory to Administrative Agent of the timely payment thereof.  If any loss occurs at any time when the Loan
Parties have failed to perform the Loan Parties’ covenants and agreements in
this Section 7.07 with respect to
any insurance payable because of loss sustained to any part of any Borrowing
Base Property or otherwise, whether or not such insurance is required by
Administrative Agent and the Lenders, Administrative Agent and the Lenders
shall nevertheless be entitled to the benefit of all insurance covering the
loss and held by or for a Loan Party, to the same extent as if it had been made
payable to Administrative Agent for the benefit of Lenders.

 

82

 

(d)           Cause all insurance policies provided for or contemplated
by this Section 7.07 with
respect to the assets and properties of the Loan Parties that constitute
Collateral to name the applicable Loan Party as the insured.  In addition, such insurance policies shall
provide for at least thirty (30) days’ (or ten (10) days in the case of
termination for non-payment) prior written notice to Administrative Agent of
any material modification or cancellation of such policy.

 

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

 

7.09         Books and Records.  Maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP (or, if the
Companies are required to adopt IFRS, then IFRS) consistently applied shall be
made of all financial transactions and matters involving the assets and
business of Parent or such Company, as the case may be.

 

7.10         Inspection Rights.  Permit representatives and independent
contractors of Administrative Agent and each Lender to visit and inspect and
photograph any Borrowing Base Property and any of its other properties, to
examine its corporate, financial and operating records, and all recorded data
of any kind or nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and schematics, and
make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with its directors, officers, and independent public
accountants (provided that the Loan Parties shall have the right to have their
representatives present at any meeting with the independent public
accountants), all subject to confidentiality constraints and at the expense of
Borrower and at such reasonable times during normal business hours and once
annually unless reasonably requested more frequently by Administrative Agent,
upon reasonable advance notice to the applicable Loan Party; provided, however, that
when an Event of Default exists Administrative Agent or any Lender (or any of
their respective representatives or independent contractors) may do any of the
foregoing at the expense of Borrower at any time during normal business
hours.  Any inspection or audit of the
Borrowing Base Properties or the books and records, including recorded data of
any kind or nature, regardless of the medium of recording including, without
limitation, software, writings, plans, specifications and schematics of
Borrower or the applicable Loan Party, or the procuring of documents and
financial and other information, by Administrative Agent on behalf of itself or
on behalf of Lenders shall be for Administrative Agent’s and Lenders’
protection only, and shall not constitute any assumption of responsibility to
Borrower or anyone else with regard to the condition, construction, maintenance
or operation of the Borrowing Base Properties nor Administrative Agent’s
approval of any certification given to Administrative Agent nor relieve
Borrower or any other Loan Party of Borrower’s or any other Loan Party’s
obligations.

 

7.11         Use of Proceeds.  Use the proceeds of the Credit Extensions for
working capital, capital expenditures, acquisition financing, repayment of
Indebtedness, and general corporate purposes, including acquisitions of
property, not in contravention of any Law or of any Loan Document.

 

7.12         Environmental Matters.

 

(a)           Violations; Notice to
Administrative Agent.

 

(i)            Not cause, commit, permit, or allow
to continue (A) any violation of any Environmental Law which could
reasonably be expected to cause a Material Adverse Effect: (I) by any Loan
Party; and (II) by or with respect to the Borrowing Base Properties or any
use of or condition or activity on the Borrowing Base Properties, or
(B) the attachment of any environmental Liens on the Borrowing Base
Properties;

 

83

 

(ii)           Except as could not reasonably be expected to cause a Material Adverse
Effect, shall not place, install, dispose of, or release, or cause,
permit, or allow the placing, installation, disposal, spilling, leaking,
dumping, or release of, any Hazardous Material or storage tank (or similar
vessel) on the Borrowing Base Properties; provided, however, that any Hazardous
Material or storage tank (or similar vessel) disclosed in the Environmental
Reports or otherwise permitted pursuant to any tenant lease affecting any
Borrowing Base Property shall be permitted on any Borrowing Base Property so
long as such Hazardous Material or storage tank (or similar vessel) is
maintained in compliance with all applicable Environmental Laws;

 

(iii)          Promptly upon request deliver to
Administrative Agent a copy of each report pertaining to any Borrowing Base
Property or to any Loan Party prepared by or on behalf of such Loan Party in
response to any Environmental Claim; and

 

(iv)          Immediately advise Administrative Agent
in writing of (i) discovery of any Hazardous Material on any Borrowing
Base Property that could reasonably be expected to cause a Material Property
Event or (ii) any Environmental Claim, in each case as soon as such Loan
Party first obtains knowledge thereof, including a full description of the
nature and extent of the Environmental Claim and/or Hazardous Material and all
relevant circumstances.

 

(b)           Site Assessments and
Information.  If
Administrative Agent shall ever have good cause to believe that any Hazardous
Material affects any Borrowing Base Property which could cause a Material
Property Event, or if any Environmental Claim is made against a Borrowing Base
Property Owner or a Borrowing Base Property, or if an Event of Default shall
have occurred and be continuing, then if requested by Administrative Agent, at
Borrower’s expense, deliver to Administrative Agent from time to time, in each
case within sixty (60) days after Administrative Agent’s request, an
Environmental Assessment (hereinafter defined) made after the date of
Administrative Agent’s request.  As used
in this Agreement, the term “Environmental Assessment”
means a report of an environmental assessment of the applicable Borrowing Base
Property and of such scope (including but not limited to the taking of soil
borings and air and groundwater samples and other above and below ground
testing) as Administrative Agent may request, by a consulting firm approved by
Administrative Agent, which approval will not be unreasonably withheld and made
in accordance with ASTM standard practice, which is (i) either addressed
to Administrative Agent or subject to a reliance letter reasonably satisfactory
to Administrative Agent, (ii) in form and substance reasonably acceptable
to Administrative Agent, and (iii) accompanied by a certification from
Borrower that it is complying in good faith with the recommendations set forth
therein.  If any Loan Party fails to
furnish Administrative Agent within ten (10) days after Administrative
Agent’s request with a copy of an agreement with an acceptable environmental
consulting firm to provide such Environmental Assessment, or if any Loan Party
fails to furnish to Administrative Agent such Environmental Assessment within
sixty (60) days after Administrative Agent’s request, Administrative Agent may
cause any such Environmental Assessment to be made at Borrower’s expense and
risk.  Each Loan Party shall cooperate
with each consulting firm making any such Environmental Assessment and shall
supply to the consulting firm, from time to time and promptly on request, all
information reasonably available to the applicable Loan Party to facilitate the
completion of the Environmental Assessment. Administrative Agent and its
designees are hereby granted access to the Borrowing Base Properties at any
time or times, upon reasonable 

 

84

 

notice (which may be written
or oral), and a license which is coupled with an interest and irrevocable, to
make or cause to be made such Environmental Assessments.  Administrative Agent may disclose to any
information Administrative Agent ever has about the environmental condition or
compliance of the Borrowing Base Properties to the extent required by Law or as
permitted by Section 11.07. 
Administrative Agent shall be under no duty to make any Environmental
Assessment of the Borrowing Base Properties, and in no event shall any
Environmental Assessment by Administrative Agent be or give rise to a
representation that any Hazardous Material is or is not present on the
Borrowing Base Properties, or that there has been or shall be compliance with
any Environmental Law, nor shall Borrower or any other Person be entitled to
rely on any Environmental Assessment made by Administrative Agent or at
Administrative Agent’s request.  Neither
Administrative Agent nor any Lender owes any duty of care to protect any Loan
Party or any other Person against any Hazardous Material or other adverse
condition affecting the Borrowing Base Properties.

 

(c)           Remedial Actions.  If any Hazardous Material is discovered on
any Borrowing Base Property at any time and regardless of the cause, which is
in violation of any Environmental Law, promptly, Borrower shall or shall cause
the applicable Loan Party to, at the Loan Parties’ sole risk and expense, to
the extent required by Environmental Laws, remove, treat, and dispose of the
Hazardous Material in compliance with all applicable Environmental Laws and
solely under the applicable Loan Party’s name (or if removal is prohibited by
any Environmental Law, take whatever action is required by Environmental Law),
in addition to taking such other action as is necessary to have the full use
and benefit of such Borrowing Base Property as currently conducted, and
Borrower shall provide Administrative Agent with satisfactory evidence thereof.
Within sixty (60) days after completion of such remedial actions, the
applicable Loan Party shall obtain and deliver to Administrative Agent an
Environmental Assessment of the applicable Borrowing Base Property made after
such completion and confirming to Administrative Agent’s satisfaction that all
required remedial action as stated above has been taken and successfully
completed and that there is no evidence or suspicion of any contamination or
risk of contamination on the applicable Borrowing Base Property or any adjacent
property, or of violation of any Environmental Law, with respect to any such
Hazardous Material.  During the
continuance of an Event of Default, Administrative Agent on behalf of Lenders
may, but shall never be obligated to, remove or cause the removal of any
Hazardous Material from any Borrowing Base Property (or if removal is
prohibited by any Environmental Law, take or cause the taking of such other
action as is required by any Environmental Law) if the Loan Parties fail
promptly to commence such remedial actions as required above and thereafter
diligently to prosecute the same to the satisfaction of Administrative Agent
(without limitation of the rights of Administrative Agent on behalf of Lenders
to exercise all rights and remedies available by reason of the continuance of
an Event of Default); and Administrative Agent and its designees are hereby
granted access to the Borrowing Base Properties at any time or times, during
the continuance of an Event of Default, upon reasonable notice (which may be
written or oral), and a license which is coupled with an interest and
irrevocable, to remove or cause such removal or to take or cause the taking of
any such other action.

 

(d)           Environmental Indemnification.

 

(i)            Each of Borrower, Parent, and each
Guarantor (collectively “Environmental Indemnitors”)
shall indemnify, defend, save and hold harmless each Indemnitee from and
against any and all Environmental Damages; unless, and to the extent that, such
Environmental Damages arise solely and directly from the gross negligence or
willful misconduct of Indemnitees.  THIS OBLIGATION SHALL INCLUDE ANY CLAIMS RESULTING FROM THE NEGLIGENCE
OR 

 

85

 

ALLEGED NEGLIGENCE OF ANY
INDEMNITEE.  This
obligation shall include, but shall not be limited to, (A) injury or
damage to any Person, property, or natural resource occurring on or off of such
Borrowing Base Property including the cost of demolition and rebuilding of any
Improvements on any Borrowing Base Property that constitutes Environmental
Liabilities, (B) the burden of defending Environmental Claims (with
counsel reasonably approved by Indemnitees), even if such Environmental Claims
are groundless, false, fraudulent, frivolous, or ultimately defeated, and
conducting all negotiations of any description, (C) paying and
discharging, when and as the same shall become due, any and all judgments,
penalties, or other sums due against any Indemnitee in respect of Environmental
Claims, (D) all costs of (1) removal and/or remediation of any kind,
and disposal of any Hazardous Materials, (2) the investigation or
remediation of any such Hazardous Material or violation of Environmental Law,
to the extent required by Environmental Laws, including the preparation of any
feasibility studies or reports and (3) the performance of any cleanup,
remediation, removal, response, abatement, containment, closure, restoration,
monitoring, or similar work to the extent required by any Environmental Law
(including any of the same in connection with any foreclosure action or
transfer in lieu thereof), (E) all costs of determining whether any
Borrowing Base Property is in compliance and causing each Borrowing Base
Property to be in compliance with all applicable Environmental Laws, (F) all
liability to pay or indemnify any Person or Governmental Authority for costs
expended in connection with any of the foregoing, and (G) each Indemnitee’s
attorneys’ fees, consultants’ fees and court costs.  Any Indemnitee may (i) at its expense,
employ additional counsel of its choice to associate with counsel employed by
Environmental Indemnitors, and (ii) settle any Environmental Claim against
it, whether or not subject to indemnification hereunder, provided that, if an
Environmental Claim is subject to indemnification hereunder and Environmental
Indemnitors desire that Indemnitees not enter into a settlement which
Indemnitees propose to accept, then Indemnitees shall not enter into such
settlement if Environmental Indemnitors provide to Indemnitees collateral
security or other financial assurance reasonably acceptable to Indemnitees in
an amount determined by Indemnitees as reasonably necessary to ensure the
fulfillment by Environmental Indemnitors of their indemnity obligation in
connection with the applicable Environmental Claim.

 

(ii)           Each Environmental Indemnitor and its
successors and assigns hereby waives, releases and agrees not to make any claim
or bring any cost recovery action against Administrative Agent or any Lender
under any Environmental Law now existing or hereafter enacted.  It is expressly understood and agreed that to
the extent that Administrative Agent or any Lender is strictly liable under any
Environmental Laws, the Environmental Indemnitors’ obligations to
Administrative Agent or such Lender under this Agreement shall likewise be
without regard to fault on the part of any Environmental Indemnitor with
respect to the violation or condition which results in liability to
Administrative Agent or such Lender.

 

(iii)          If the undertakings in the preceding clauses (i) and (ii), or in any portion thereof, are
at any time determined to be unenforceable because it is violative of any Law
or public policy, Environmental Indemnitors will contribute the maximum portion
that they are permitted to pay and satisfy under applicable Law to the payment
and satisfaction of all Environmental Damages incurred by the Indemnitees as
set forth above.

 

(iv)          Environmental Indemnitors shall pay to
each Indemnitee all costs and expenses (including the reasonable fees and
disbursements of the Indemnitee’s legal counsel) incurred by that Indemnitee in
connection with the enforcement of the terms of this Section 7.12(d).

 

86

 

(v)           With respect to any of the Borrowing
Base Properties located in the State of California, and to the extent that
California law necessarily governs with respect to the provisions of this Section 7.12 notwithstanding
the parties’ choice of New York Law, then the definition of Environmental Laws
shall be deemed to include references to (1) the Porter-Cologne Water
Cleanup Act, (2) the Waste Management Act of 1980, (3) the Toxic Pit
Cleanup Act, (4) the Underground Tank Act of 1984, (5) the California
Waste Quality Improvement Act, and (6) California Health and Safety Code
Sections 25117 and 25316.

 

(e)           Survival of
Indemnity.    Environmental
Indemnitors’ obligations under Section 7.12(d) shall
survive the making and repayment of the Obligations and the expiration or termination
of the Commitments and this Agreement, and any transfer of any Environmental
Indemnitor’s right, title and interest in and to any or all of any Borrowing
Base Property (whether by sale or otherwise) until such time as any claim
described in Section 7.12(d) hereof
shall be barred by the applicable statute of limitations.  No Environmental Indemnitor, without the
prior written consent of Administrative Agent in each instance, may assign,
transfer or set over to another, in whole or in part, all or any part of its
benefits, rights, duties, or obligations hereunder.  The burden of proof with regard to
establishing the date upon which any event or condition occurred or upon which
a Hazardous Material was placed, disposed or Released on, to or from any
Borrowing Base Property, shall be upon Environmental Indemnitors.

 

7.13         Condemnation, Casualty and
Restoration.

 

(a)           The applicable Loan Party shall, at its expense,
diligently prosecute any proceeding for the Condemnation of any Borrowing Base
Property.  If such Condemnation is
reasonably likely to result in a Material Property Event, the applicable Loan
Party shall give prompt notice of such Condemnation to Administrative Agent and
such property shall be subject to exclusion from the Borrowing Base, as set
forth in Section 4.09.

 

(b)           If any Borrowing Base Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a “Casualty”), and either (i) the
aggregate cost of repair of such damage or destruction shall be equal to or in
excess of twenty percent (20%) of the total most recent Appraised Value in
respect of such Borrowing Base Property or (ii) such Casualty is
reasonably likely to result in a Material Property Event, give prompt notice of
such Casualty to Administrative Agent and in the case of clause (ii) above,
such property shall be subject to exclusion from the Borrowing Base, as set
forth in Section 4.09.  To the extent such property is not removed by
Borrower as a Borrowing Base Property in accordance with Section 4.08,
the applicable Loan Party shall pay or cause to be paid, all Restoration costs
whether or not such costs are covered by insurance.  Administrative Agent may, but shall not be
obligated to, make proof of loss if not made promptly by a Loan Party.  If an Event of Default has occurred and is
then continuing, the applicable Loan Party shall adjust all claims for
Insurance Proceeds in consultation with, and approval of, Administrative Agent.

 

7.14         Ground Leases.

 

With respect to Borrowing
Base Properties that are subject to ground leases:

 

87

 

(a)           Pay or cause to be
paid all rents, additional rents, and other sums required to be paid by the
applicable Loan Party, as tenant under and pursuant to the provisions of any such
Acceptable Ground Leases;

 

(b)           Diligently perform
and observe all of the terms, covenants, and conditions any Acceptable Ground
Lease as tenant under such Acceptable Ground Lease;

 

(c)           Exercise any
individual option to extend or renew the term of such Acceptable Ground Lease
upon demand by Administrative Agent made at any time within thirty (30) days
prior to the last day upon which any such option may be exercised, and each
applicable Loan Party hereby expressly authorizes and appoints Administrative Agent
as its attorney-in-fact to, at any time after the occurrence and during the
continuation of a Default, exercise any such option in the name of and upon
behalf of such Loan Party, which power of attorney shall be irrevocable and
shall be deemed to be coupled with an interest; and

 

(d)           Not cancel, terminate, surrender, or amend any such
Acceptable Ground Lease without the prior written consent of Administrative
Agent, unless, in the case of an amendment, the same would not reasonably be
expected to cause a Material Property Event.

 

If any Loan Party shall default in the performance
or observance of any term, covenant, or condition of any such Acceptable Ground
Lease on the part of such Loan Party and shall fail to cure the same prior to
the expiration of any applicable cure period provided thereunder,
Administrative Agent shall have the right, but shall be under no obligation,
to[, at any time after the occurrence and during the continuation of a
Default,] pay any sums and to perform any act or take any action as may be
appropriate to cause all of the terms, covenants, and conditions of such
Acceptable Ground Lease on the part of any Loan Party to be performed or
observed on behalf of such Loan Party, to the end that the rights of such Loan
Party in, to, and under such Acceptable Ground Lease shall be kept unimpaired
and free from default.  If the landlord
under any such Acceptable Ground Lease shall deliver to Administrative Agent a
copy of any notice of default under such Acceptable Ground Lease, such notice
shall constitute full protection to Administrative Agent for any action taken
or omitted to be taken by Administrative Agent, in good faith, in reliance
thereon at any time after the occurrence and during the continuation of a
Default.

 

7.15         [Reserved].

 

7.16         [Reserved].

 

7.17         REIT Status.  At all times, Parent (including its
organization and method of operations) shall qualify as a REIT.

 

7.18         Operation of Borrowing
Base Properties.  In each
case, unless the failure to do so would not be reasonably likely to have a
Material Adverse Effect, (a) operate each Borrowing Base Property in a
good and workmanlike manner and in accordance with each Franchise Agreement and
each License Agreement applicable thereto, (except as permitted by Sections 6.26 and 6.27 above), and pay all fees or
charges of any kind in connection therewith; (b) keep each Borrowing Base
Property occupied so as not to impair the insurance carried thereon, and not
use or occupy or conduct any activity on, or allow the use or occupancy of or the
conduct of such activity on, such Borrowing Base Property in any manner which
constitutes a public or private nuisance or which makes void, voidable, or
cancelable, or increases the premium of, any insurance then in force with
respect thereto; (c) not (i) initiate or permit any zoning
reclassification of any Borrowing Base Property or seek any variance under
existing zoning ordinances applicable to such Borrowing Base Property or (ii) file
any plat, condominium declaration, or restriction, in each case, that is
adverse to the interests of the Loan Parties or use or permit the use of such
Borrowing 

 

88

 

Base Property in such a
manner which would result in such use becoming a nonconforming use under
applicable zoning ordinances or other Laws; (d) preserve, protect, renew,
extend, and retain all material rights and privileges granted for or applicable
to each Borrowing Base Property; and (e) not permit any drilling or
exploration for or extraction, removal or production of any mineral,
hydrocarbon, gas, natural element, compound or substance (including sand and
gravel) from the surface or subsurface of any Borrowing Base Property
regardless of the depth thereof or the method of mining or extraction thereof.

 

7.19         Leases and Rents.  In each case, unless the failure to do so
would not be reasonably likely to have a Material Adverse Effect, (a) not
default under any Lease which would reasonably be expected to result in a
Material Property Event, (b) not waive, release, discount, set off, or
compromise any Rents in a manner that could reasonably be expected to result in
a Material Property Event; (c) after the occurrence of a Default promptly
upon request by Administrative Agent, deliver to Administrative Agent executed
originals of all material Leases and copies of all records relating thereto;
and (d) allow no merger of the leasehold estates created by the Leases,
with the fee estate of any Borrowing Base Property without the prior written
consent of Administrative Agent.

 

7.20         Management Agreements.

 

(a)           (i) Promptly perform and observe, all of the
covenants required to be performed and observed under each Management Agreement
relating to a Borrowing Base Property and do all things necessary to preserve
and to keep unimpaired its material rights thereunder except where failure
could not reasonably be expected to cause a Material Adverse Effect;
(ii) promptly notify Administrative Agent of any material default or
termination event under any Management Agreement relating to a Borrowing Base
Property that could reasonably be expected to cause a Material Adverse Effect;
(iii) promptly deliver to Administrative Agent a copy of any notice of
default or termination event or other material notice received by any Loan Party
under any Management Agreement relating to a Borrowing Base Property;
(iv) promptly give notice to Administrative Agent of any notice of
termination of a Management Agreement or Borrowing Base Property to the extent
such enforcement is deemed by the Borrower to be prudent under the
circumstances and where failure to so enforce the same could reasonably be
expected to result in a Material Adverse Effect; and (v) promptly enforce
the performance and observance of all of the covenants required to be performed
under the Agreements relating to the Borrowing Base Property under the terms
and conditions of the applicable Management Agreement, except where failure
could not reasonably be expected to cause a Material Adverse Effect.

 

(b)           No Loan Party shall, without the prior written consent of
Administrative Agent (which consent shall not be unreasonably withheld,
conditioned or delayed), except to the extent any such actions could not
reasonably be expected to cause a Material Property Event: (i) surrender,
terminate, or cancel any Management Agreement or otherwise replace the Manager
or enter into any other management agreement with respect to any Borrowing Base
Property; (ii) reduce or consent to the reduction of the term of any
Management Agreement; (iii) increase or consent to the increase of the
amount of any management fees under any Management Agreement; or
(iv) otherwise modify, change, supplement, alter, amend, waive, or release
any of its rights and remedies under, any Management Agreement in any material
respect.

 

(c)           Notwithstanding Sections 7.20(a) or
(b) above, no breach or default
by any party under a Management Agreement nor any termination of a Management
Agreement shall give rise to a Default hereunder if the Companies replace the
applicable Manager with a Qualified Manager within ninety (90) days following
such breach, default, or termination by such Manager; provided,
however, that, this clause (c) shall
in no way affect the determination as to whether such breach or termination
constitutes a Material Property Event.

 

89

 

7.21         Franchise Agreements;
License Agreements.

 

(a)           Operate each Borrowing Base Property under the terms and
conditions of the applicable Franchise Agreement, unless the failure to do so
could reasonably be expected to have a Material Adverse Effect, and,
(i) pay all sums required to be paid under each Franchise Agreement,
(ii) diligently perform, observe, and enforce all of the terms, covenants,
and conditions of each Franchise Agreement and each License Agreement, in each
case relating to a Borrowing Base Property, on the part of each Loan Party to
be performed, observed, and enforced to the end that all things shall be done
which are necessary to keep unimpaired the rights of each Loan Party under each
such Franchise Agreement and each License Agreement, in each case relating to a
Borrowing Base Property, except to the extent the foregoing could not
reasonably be expected to have a Material Adverse Effect, and
(iii) promptly notify Administrative Agent of the giving of any notice to
any Loan Party of any default of any Franchise Agreement or any License
Agreement, in each case relating to a Borrowing Base Party, on the part of such
Loan Party to deliver to Administrative Agent a true copy of each such notice.

 

(b)           No Loan Party shall, without the prior consent of
Administrative Agent, except to the extent any such actions could not
reasonably be expected to have a Material Adverse Effect, (i) surrender
any Franchise Agreement or any License Agreement relating to a Borrowing Base
Property, (ii) terminate or cancel any Franchise Agreement or any License
Agreement relating to a Borrowing Base Property, or (iii) modify, change,
supplement, alter or amend any Franchise Agreement or any License Agreement
relating to a Borrowing Base Property, in any respect, either orally or in
writing, in each case.  In the event that
Borrower replaces any Franchise Agreement or License Agreement, the replacement
franchisor or licensor shall be a Qualified Franchisor.

 

(c)           After the occurrence and during the continuance of an Event
of Default, if any Loan Party shall default in the performance or observance of
any material term, covenant, or condition of any Franchise Agreement or any
License Agreement relating to a Borrowing Base Property to be performed or
observed, then, in each case, if the same could reasonably be expected to cause
a Material Property Event, without limiting the generality of the other
provisions of this Agreement, and without waiving or releasing any Loan Party
from any of their obligations hereunder, Administrative Agent shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
or take any action as may be appropriate to cause all the terms, covenants, and
conditions of such Franchise Agreement or such License Agreement on the part of
such Loan Party to be performed or observed to be promptly performed or
observed on behalf of such Loan Party, to the end that the rights of such Loan
Party in, to, and under such Franchise Agreement and such License Agreement
shall be kept unimpaired and free from default. 
Administrative Agent and any person designated by Administrative Agent
shall have, and are hereby granted, the right to enter upon each Borrowing Base
Property at any time and from time to time after the occurrence and during the
continuance of an Event of Default for the purpose of taking any such
action.  If any Franchisor or any
licensee under any License Agreement relating to a Borrowing Base Property
shall deliver to Administrative Agent a copy of any notice sent to any Loan
Party of default under such Franchise Agreement or such License Agreement, such
notice shall constitute full protection to Administrative Agent for any action
taken or omitted to be taken by Administrative Agent in good faith, in reliance
thereon.

 

(d)           Any sums expended by Administrative Agent pursuant to this
Section 7.21 shall bear
interest at the Default Rate from the date such cost is incurred to the date of
payment to Administrative Agent, shall be deemed to constitute a portion of the
Obligations, shall be secured by the Lien of the Security Documents and the
other Loan Documents and shall be immediately due and payable upon demand by
Administrative Agent therefor.

 

90

 

(e)           After the occurrence and during the continuance of an
Event of Default, each Loan Party shall, promptly upon request of
Administrative Agent, use diligent good faith efforts to obtain and deliver an
estoppel certificate from each Franchisor or each licensee under any License Agreement
stating that (i) such Franchise Agreement or License Agreement is in full
force and effect and has not been modified, amended, or assigned,
(ii) none of such Franchisor, such licensor or any Loan Party is in
default under any of the terms, covenants, or provisions of such Franchise
Agreement or License Agreement, and such Franchisor or such licensor knows of
no event which, but for the passage of time or the giving of notice or both,
would constitute an event of default under such Franchise Agreement or License
Agreement, (iii) none of such Franchisor, such licensor or any Loan Party
has commenced any action or given or received any notice for the purpose of
terminating such Franchise Agreement or License Agreement, and (iv) all
sums due and payable to such Franchisor or such licensor under such Franchise
Agreement or License Agreement have been paid in full.

 

(f)            In the event that any Management Agreement also serves as
a franchise agreement or contains provisions typically contained in franchise
agreements, then the provisions of this Section 7.21
shall also apply to such Management Agreement.

 

(g)           Notwithstanding Sections 7.21(a) or
(b) above, no breach or default
by any party under a Franchise Agreement nor any termination of a Franchise
Agreement shall give rise to a Default hereunder if the Companies replace the
applicable Franchisor with a Qualified Franchisor within ninety (90) days
following such breach, default, or termination by such Franchisor; provided, however, that, this clause
(g) shall in no way affect the determination as to whether
such breach or termination constitutes a Material Property Event.

 

7.22         Operating Leases.  Unless otherwise waived by the parties
thereto, in writing:

 

(a)           promptly perform and/or observe (or cause Operating Lessee
to perform and/or observe) all of the covenants and agreements required to be
performed and observed by it under any Operating Lease and do all things
necessary to preserve and to keep unimpaired its rights thereunder;

 

(b)           promptly notify (or cause Operating Lessee to notify)
Administrative Agent of any event of default under any Operating Lease;

 

(c)           promptly enforce (or cause Operating Lessee to enforce)
the performance and observance of all of the covenants and agreements required
to be performed and/or observed by any Operating Lessee under any Operating
Lease;

 

(d)           promptly upon request of Administrative Agent, deliver (or
cause Operating Lessee to deliver) to Administrative Agent an estoppel
certificate from Operating Lessee stating that (i) the Operating Lease is
in full force and effect and has not been modified, amended or assigned (other
than amendments restatements, or renewals of such Operating Lease on
substantially the same terms as existing prior to such amendment restatement,
or renewal), (ii) no Loan Party is in default under any of the terms,
covenants or provisions of any Operating Lease and no Operating Lessee knows of
any event which, but for the passage of time or the giving of notice or both,
would constitute an event of default under its Operating Lease, (iii) no
Loan Party has commenced any action or given or received any notice for the
purpose of terminating any Operating Lease and (iv) all sums due and
payable under any Operating Lease have been paid in full; and

 

91

 

(e)           maintain (or cause Operating Lessee to maintain) each
Operating Lease in full force and effect during the term of the Loan.

 

Article VIII.

Negative Covenants

 

So long as any Lender shall have any Commitment hereunder,
any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or
any Letter of Credit shall remain outstanding, each of Parent and Borrower
shall not, nor shall it permit any Subsidiary to, directly or indirectly:

 

8.01         Liens.  Create, incur, assume or suffer to exist any
Lien upon any of the property, assets or revenues, whether now owned or
hereafter acquired of Parent, Borrower, or any Borrowing Base Property Owner,
other than the following:

 

(a)           Liens pursuant to any Loan Document;

 

(b)           Liens existing on the date hereof and listed on Schedule 8.01 and any renewals
or extensions thereof, provided that
(i) the property covered thereby is not changed, (ii) the amount
secured or benefited thereby is not increased except as contemplated by Section 8.03(b), (iii) the
direct or any contingent obligor with respect thereto is not changed, and
(iv) any renewal or extension of the obligations secured or benefited
thereby is permitted by Section 8.03(b);

 

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

 

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

 

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

 

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

 

(g)           easements, rights-of-way, restrictions, restrictive
covenants, encroachments, protrusions and other similar encumbrances affecting
real property which, in the aggregate, are not substantial in amount, and which
do not in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business of
the applicable Person, and any replacement, extension or renewal of any such
Lien;

 

(h)           Liens securing judgments for the payment of money not
constituting an Event of Default under Section 9.01(h);

 

92

 

(i)            all Liens, encumbrances and other matters disclosed in
the Title Insurance Commitments acceptable to Administrative Agent and Required
Lenders;

 

(j)            the rights of tenants under leases or subleases;

 

(k)           Liens in favor of Citibank N.A., to cash collateralize the
Existing L/Cs;

 

(l)            other Liens securing Indebtedness including unfunded
commitments therefor, not in excess of the Threshold Amount; and

 

(m)          other Liens securing Indebtedness permitted by Section 8.03(g), other than
Liens in any Pledged Equity or any Borrowing Base Property .

 

8.02         Investments.          
Permit the Companies’ aggregate Investments in:

 

(a)           Unconsolidated Affiliates to at any time exceed ten (10%)
of Consolidated Tangible Asset Value;

 

(b)           distressed Indebtedness and mezzanine loans to at any time
exceed ten (10%) of Consolidated Tangible Asset Value;

 

(c)           Assets Under Development to at any time exceed ten (10%)
of Consolidated Tangible Asset Value; or

 

(d)           assets of the types described in clauses (a) through
(c) above to at any time exceed
twenty-five percent (25%) of Consolidated Tangible Asset Value.

 

8.03         Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness of Parent, Borrower, or any Borrowing Base Property Owner, except:

 

(a)           Indebtedness under the Loan Documents;

 

(b)           Indebtedness outstanding on the date hereof and listed on Schedule 8.03 and any
refinancings, refundings, renewals or extensions thereof; provided
that (i) the amount of such
Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder  and (ii) the terms relating to principal
amount, amortization, maturity, collateral (if any) and subordination (if any),
and other material terms taken as a whole, of any such refinancing, refunding,
renewing or extending Indebtedness, and of any agreement entered into and of
any instrument issued in connection therewith, are no less favorable in any
material respect to the Loan Parties or the Lenders than the terms of any
agreement or instrument governing the Indebtedness being refinanced, refunded,
renewed or extended and the interest rate applicable to any such refinancing,
refunding, renewing or extending Indebtedness does not exceed the then
applicable market interest rate;

 

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

 

93

 

(d)           Guarantees by the Loan Parties of Indebtedness otherwise
permitted hereunder of other Loan Parties;

 

(e)           Indebtedness under the Existing L/Cs, listed on Schedule 8.03 hereto;

 

(f)            other Indebtedness in aggregate outstanding amount not at
any time exceeding the Threshold Amount; and

 

(g)           other Recourse Debt (which shall include any Recourse Debt
permitted pursuant to clauses (a) through
(f) above) which would be
permitted pursuant to Section 8.14.

 

8.04         Fundamental Changes.  Merge, dissolve, liquidate, consolidate with
or into another Person, or Dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except that, so long
as no Default exists or would result therefrom:

 

(a)           any Subsidiary may merge, liquidate into, or consolidate
with (i) Borrower, provided that
Borrower shall be the continuing or surviving Person, or (ii) any one or
more other Persons, provided that
when any Guarantor is merging or liquidating into, or consolidating with
another Person, the surviving Person shall be a Subsidiary, and shall comply
with all the terms hereof;

 

(b)           any Subsidiary may Dispose of all or substantially all of
its assets (upon voluntary liquidation or otherwise) to Borrower or to another
Subsidiary; provided that if the transferor in such
a transaction is a Guarantor, then the transferee must either be Borrower or a
Guarantor; and

 

(c)           Dispositions permitted by Section 8.05.

 

8.05         Dispositions.  Make any Disposition or enter into any
agreement to make any Disposition, except:

 

(a)           Dispositions of obsolete or worn out property, whether now
owned or hereafter acquired, in the ordinary course of business;

 

(b)           Dispositions of inventory, fixtures, furnishings, and
equipment in the ordinary course of business;

 

(c)           Dispositions of equipment or real property (other than
Borrowing Base Properties) to the extent that (i) such property is
exchanged for credit against the purchase price of similar replacement property
or (ii) the proceeds of such Disposition are reasonably promptly applied
to the purchase price of such replacement property;

 

(d)           Dispositions of property by any Subsidiary to Borrower or
to a Wholly Owned Subsidiary; provided that
if the transferor of such property is a Guarantor, the transferee thereof must
either be Borrower or a Guarantor;

 

94

 

(e)           Dispositions of Borrowing Base Properties (or of the
Pledged Equity in Subsidiaries or other Persons that own, directly or
indirectly, Borrowing Base Properties) that are Permitted Dispositions;

 

(f)            Dispositions of Properties and other property of the
Companies (including Pledged Equity in any Subsidiary or other Person) that
does not constitute a Borrowing Base Property (or, in the case of a Disposition
of Pledged Equity, that such Subsidiary or other Person does not own a
Borrowing Base Property); provided that
no Default would exist after giving effect to such Disposition; and

 

(g)           Dispositions permitted by Section 8.04.

 

provided, however, that
any Disposition pursuant to clauses (a) through
(f) shall be for fair market
value.

 

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

 

(a)           during any time in which (i) the Consolidated
Leverage Ratio is less than or equal to 7.0 to 1.0 and (ii) no Event of
Default exists, Parent or Borrower may, for any fiscal year of the
Companies, declare and make Restricted Payments in an aggregate amount equal to
the greater of (x) the minimum amount required to maintain Parent’s status
as a REIT or (y) ninety five percent (95%) of Funds from Operations for
such fiscal year;

 

(b)           each Subsidiary of Parent may make Restricted Payments to
Parent, Borrower and to a Subsidiary Guarantor;

 

(c)           Parent, Borrower and each Subsidiary of Borrower may
declare and make dividend payments or other distributions payable solely in the
Equity Interests of such Person or its direct or indirect parent (including the
issuance of Equity Interests in connection with the conversion of any
convertible notes or other Indebtedness);

 

(d)           Parent, Borrower and each Subsidiary of Borrower may
purchase, redeem or otherwise acquire shares of its Equity Interests or
warrants or options to acquire any such Equity Interests with the proceeds
received from the substantially concurrent issue of new shares of its Equity
Interests;

 

(e)           during any time in which (i) the Consolidated
Leverage Ratio exceeds 7.0 to 1.0 or (ii) any Event of Default (other than
an Event of Default that shall have occurred pursuant to Sections 9.01(a) or (f)) exists, Restricted Payments by
Parent or Borrower in an amount equal to the minimum amount required to
maintain Parent’s status as a REIT; and

 

(f)            during any time any Event of Default shall have occurred
pursuant to Sections 9.01(a) or
(f), or the Obligations have been
accelerated, no Restricted Payments by Parent shall be permitted.

 

8.07         Change in Nature of
Business.  Engage in any
material line of business substantially different from those lines of business
conducted by the Companies on the date hereof or any business substantially
related or incidental thereto.

 

95

 

8.08         Transactions with
Affiliates.  Enter into any
transaction of any kind with any Affiliate of a Company, whether or not in the
ordinary course of business, other than (i) transactions between or among Parent,
Borrower, and Guarantors or (ii) on fair and reasonable terms
substantially as favorable to such Company as would be obtainable by such
Company at the time in a comparable arm’s length transaction with a Person
other than an Affiliate.

 

8.09         Burdensome Agreements.  Permit Parent, Borrower or any Borrowing Base
Property Owner to enter into any Contractual Obligation (other than this
Agreement or any other Loan Document or any other document currently in effect)
that: (a) limits the ability (i) of Parent, Borrower or any Borrowing
Base Property Owner to make Restricted Payments to Parent, Borrower or any
Borrowing Base Property Owner or to otherwise transfer property (except, in
each case, customary restrictions on assignments and transfers contained in
leases, licenses and other contractual obligations) to Parent, Borrower or any
Borrowing Base Property Owner (except for documentation related to Indebtedness
secured by Liens permitted under Section 8.01(l) so
long as such restriction applies only to the assets financed by such
Indebtedness), (ii) of any Borrowing Base Property Owner, to Guarantee the
Indebtedness of Borrower, or (iii) of Parent, Borrower or any Borrowing
Base Property Owner to create, incur, assume or suffer to exist the Liens
arising under the Loan Documents on the property of such Person (except for
documentation related to Indebtedness secured by Liens permitted under Section 8.01(l) so long as
such restriction applies only to the assets financed by such Indebtedness);
(b) requires the grant of a Lien to secure an obligation of such Person if
a Lien is granted to secure another obligation of such Person, except, in each
case, customary restrictions on assignments and transfers contained in leases,
licenses and other contractual obligations; or (c) requires any such
Person to grant any Liens (other than Permitted Liens) in the Pledged Equity or
any Borrowing Base Property.

 

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

 

8.11         Lease Approval.  Permit any Loan Party to enter into any
Material Lease of space in the Improvements with respect to any Borrowing Base
Property unless approved or deemed approved by Administrative Agent prior to
execution or pursuant to a form of Material Lease previously approved by
Administrative Agent; provided that a
Loan Party may, without Administrative Agent’s approval, enter into any
Material Lease on Borrower’s standard form of tenant lease, and any revisions
thereto, as previously approved by Administrative Agent.  The applicable Loan Party shall provide to
Administrative Agent a correct and complete copy of each Material Lease,
including any exhibits, and any guaranties thereof, prior to execution.  Borrower shall pay all reasonable costs
incurred by Administrative Agent in reviewing and approving Material Leases and
any guaranties thereof, and also in negotiating subordination agreements and
subordination, nondisturbance and attornment agreements with tenants, including
reasonable attorneys’ fees and costs.

 

8.12         Fiscal Year and Accounting
Methods.  No Company will
change its fiscal year for book accounting purposes or its method of
accounting, other than (a) immaterial changes
in methods or as required by GAAP, (b) in connection with an acquisition,
such changes to the newly-acquired entity so as to conform its fiscal year and
its method of accounting to those of the Companies, or (c) if the
Companies are required to adopt IFRS, then the Companies may change to IFRS.

 

8.13         Amendments to Documents.  On and after the Closing Date, no Company
shall amend or permit any amendments to:

 

96

 

(a) any Company’s
charter, bylaws, partnership agreement, or other organizational documents if
such action could materially adversely affect the rights of Lenders; or

 

(b)  the maturity date
or the date of any mandatory repurchase or redemption applicable to the
Exchangeable Senior Notes under the Indenture, unless,
in the case of this clause (b), (i) Borrower
shall have provided to Administrative Agent (A) written notice of such
amendment at least thirty (30) days prior to the effective date thereof and (B) as
of the date of the notice referenced in clause (A) and
as of the effective date of such amendment, a Compliance Certificate
demonstrating that no Default exists and a calculation demonstrating that the
Liquidity Condition is satisfied as of each such date, and (ii) no Default
shall exist after giving effect to any such amendment.

 

8.14         Financial Covenants.

 

(a)           Consolidated Tangible Net
Worth.  Permit Consolidated
Tangible Net Worth at any time to be less than the sum of (i) $653,760,000 plus
(ii) an amount equal to 80% of the aggregate increases in Shareholders’
Equity of the Companies after the date hereof by reason of the issuance and
sale of Equity Interests of the Companies (other than issuances to Parent,
Borrower, or a Wholly Owned Subsidiary), including upon any conversion of debt
securities of the Companies into such Equity Interests.

 

(b)           Consolidated Fixed Charge
Coverage Ratio.  Permit the
Consolidated Fixed Charge Coverage Ratio, at any time during the following
periods, to be less than the ratio set forth below opposite such period:

 

	
  Period

  	
   

  	
  Minimum Consolidated

   Fixed Charge Coverage

   Ratio

  	
   

  
	
  Closing Date through
  December 31, 2011

  	
   

  	
  1.10 to 1.0

  	
   

  
	
  January 1, 2012
  through June 30, 2012

  	
   

  	
  1.20 to 1.0

  	
   

  
	
  July 1, 2012 through
  December 31, 2012

  	
   

  	
  1.30 to 1.0

  	
   

  
	
  January 1, 2013 and
  thereafter

  	
   

  	
  1.50 to 1.0

  	
   

  

 

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

 

	
  Period

  	
   

  	
  Maximum

   Consolidated 

  Leverage Ratio

  	
   

  
	
  Closing Date through
  March 31, 2011

  	
   

  	
  8.65 to 1.0

  	
   

  
	
  April 1, 2011 through
  December 31, 2011

  	
   

  	
  8.25 to 1.0

  	
   

  
	
  January 1, 2012
  through June 30, 2012

  	
   

  	
  7.75 to 1.0

  	
   

  
	
  July 1, 2012 through
  December 31, 2012

  	
   

  	
  7.00 to 1.0

  	
   

  
	
  January 1, 2013 and
  thereafter

  	
   

  	
  6.50 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

97

 

(d)           Consolidated Recourse
Indebtedness.  Permit, at any
time, the aggregate Consolidated Recourse Indebtedness of the Companies to
exceed ten percent (10%) of Consolidated Tangible Asset Value.

 

(e)           Secured Leverage Ratio.  Permit, at any time, the aggregate Consolidated
Secured Indebtedness of the Companies to exceed fifty percent (50%) of the
Consolidated Tangible Asset Value.

 

Notwithstanding the provisions of this Section 8.14
to the contrary, so long as no Loans or L/C Obligations are outstanding (or, if
any L/C Obligations are outstanding, Borrower shall have Cash Collateralized
such L/C Obligations pursuant to Section 2.15(a)),
it shall not be a Default under this Agreement if the Companies are not in
compliance with the requirements of this Section 8.14
as of any date of determination (any period of such non-compliance being the “Permitted Financial Covenant Non-Compliance Period”);
provided, however, that (a) the
total amount of time that all such Permitted Financial Covenant Non-Compliance
Periods, in the aggregate, shall exist shall be no more than two (2) fiscal
quarters during the term of this Agreement (for clarification, if a Permitted
Financial Covenant Non-Compliance Period occurs during any given fiscal
quarter, such fiscal quarter shall count for purposes of the foregoing even
though the Permitted Financial Covenant Non-Compliance Period lasted less than
the entire fiscal quarter)) and (b) Lenders shall have no obligation to
extend any Loans and L/C Issuer shall have no obligation to issue any Letters
of Credit during any Permitted Financial Covenant Non-Compliance Period.

 

Article IX.

Events of Default and Remedies

 

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

 

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

 

(b)           Specific Covenants.  Borrower or any other Loan Party fails to
perform or observe any term, covenant or agreement contained in any of Section 7.01, 7.02,  7.03, 7.05(a),
7.10, 7.11
or Article VIII; or

 

(c)           Other Defaults.  Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in subsection (a) or
(b) above) contained in any
Loan Document on its part to be performed or observed and such failure
continues for thirty (30) days; or

 

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

 

(e)           Cross-Default.  (i) Any default shall occur under any
Recourse Debt (including, without limitation, any failure to make any
payment when due, by scheduled maturity, required prepayment, repurchase, or
redemption, in each case, whether automatically or otherwise), acceleration,
demand, or otherwise or any failure to observe or perform any other agreement
or condition relating to any such Recourse Debt), other than Indebtedness
hereunder and 

 

98

 

Indebtedness under Swap
Contracts, having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $10,000,000, either
individually or in the aggregate, in the case of any Loan Party, or
(ii) any default shall occur under any Non-Recourse Debt having an
aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $150,000,000, either individually or in the
aggregate, in the case of any Company, the payment of which (x) has been
accelerated or otherwise demanded or has become due, (y) has been required
to be repurchased, prepaid, defeased or redeemed (automatically or otherwise),
or (z) an offer to repurchase, prepay, defease or redeem such Non-Recourse
Debt has been made, in each case, prior to its stated maturity; or
(iii) there occurs under any Swap Contract an Early Termination Date (as
defined in such Swap Contract) resulting from (A) any event of default
under such Swap Contract as to which Borrower or any Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (B) any Termination
Event (as so defined) under such Swap Contract as to which Borrower or any
Subsidiary is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by Borrower or such Subsidiary as a result thereof is
greater than the Threshold Amount; or

 

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

 

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

 

(h)           Judgments.  There is entered against any Loan Party
(i) one or more final judgments or orders for the payment of money in an
aggregate amount (as to all such judgments or orders) exceeding $20,000,000 (to
the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage), or (ii) any one or more non-monetary
final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of ten (10) consecutive
days during which a stay of enforcement of such judgment, by reason of a
pending appeal or otherwise, is not in effect; or

 

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

 

99

 

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

 

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

 

(l)            REIT Status.  Parent shall fail to maintain its status as a
REIT.

 

9.02         Remedies Upon Event of
Default.  If any Event of
Default occurs and is continuing, Administrative Agent shall, at the request
of, or may, with the consent of, Required Lenders, take any or all of the
following actions:

 

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

 

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

 

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

 

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

 

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

 

9.03         Application of Funds.  After the exercise of remedies provided for
in Section 9.02 (or after the
Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set
forth in the proviso to Section 9.02),
any amounts received on account of the Obligations shall, subject to the
provisions of Sections 2.15 and 2.16, be applied by Administrative
Agent in the following order:

 

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

 

100

 

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

 

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

 

Fourth, to payment of that portion of the Obligations
constituting unpaid principal of the Loans and L/C Borrowings, to payment of
that portion of the Obligations constituting Indebtedness of any Company under
Swap Contracts or cash management services that are secured by the Collateral,
ratably among the Lenders, the applicable Affiliates of Lenders, and the L/C
Issuer in proportion to the respective amounts described in this clause Fourth
held by them;

 

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

 

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

 

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

 

Article X.

Administrative Agent

 

10.01       Appointment and Authority.  Each of the Lenders and the L/C Issuer hereby
irrevocably appoints Bank of America to act on its behalf as Administrative
Agent hereunder and under the other Loan Documents and authorizes
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to Administrative Agent by the terms hereof or thereof,
together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are
solely for the benefit of Administrative Agent, the Lenders and the L/C Issuer,
and Borrower shall not   have rights as a third party beneficiary of
any of such provisions.

 

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

 

101

 

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

 

(a)           shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing;

 

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

 

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

 

Administrative Agent shall not be liable for any
action taken or not taken by it (i) with the consent or at the request of
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 11.01
and 9.02) or (ii) in the absence of
its own gross negligence or willful misconduct. 
Administrative Agent shall be deemed not to have knowledge of any
Default unless and until notice describing such Default is given to
Administrative Agent by Borrower, a Lender or the L/C Issuer.

 

Administrative Agent shall not be responsible for or
have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith,
(iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth herein or therein or the occurrence of any
Default, (iv) the validity, enforceability, effectiveness or genuineness
of this Agreement, any other Loan Document or any other agreement, instrument
or document or (v) the satisfaction of any condition set forth in Article V or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to
Administrative Agent.

 

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

 

102

 

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

 

10.06       Resignation of Administrative
Agent.

 

(a)           Administrative Agent may at
any time give notice of its resignation to the Lenders, the L/C Issuer, Parent
and Borrower.  Upon receipt of any such
notice of resignation, Required Lenders shall have the right, in consultation
with Parent and Borrower, to appoint a successor, which shall be a bank with an
office in the United States, or an Affiliate of any such bank with an office in
the United States.  If no such successor
shall have been so appointed by Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders and the L/C Issuer, appoint a successor Administrative
Agent meeting the qualifications set forth above; provided
that if Administrative Agent shall notify Parent, Borrower and the Lenders that
no qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents and (2) all
payments, communications and determinations provided to be made by, to or through
Administrative Agent shall instead be made by or to each Lender and the L/C
Issuer directly, until such time as Required Lenders appoint a successor
Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as provided
above in this Section).  The fees payable by Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between Borrower and such successor.  After the retiring Administrative Agent’s
resignation hereunder and under the other Loan Documents, the provisions of
this Article and Section 11.04 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while the retiring Administrative Agent was acting
as Administrative Agent.

 

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

 

103

 

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

 

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

 

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

 

(a)           to file and prove a claim
for the whole amount of the principal and interest owing and unpaid in respect
of the Loans, L/C Obligations and all other Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders, the L/C Issuer and Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders, the L/C Issuer and Administrative
Agent and their respective agents and counsel and all other amounts due the
Lenders, the L/C Issuer and Administrative Agent under Sections 2.03(i) and
(j), 2.08  and 11.04
allowed in such judicial proceeding; and

 

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

 

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender and the L/C Issuer to make such
payments to Administrative Agent and, in the event that Administrative Agent
shall consent to the making of such payments directly to the Lenders and the
L/C Issuer, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Administrative Agent and
its agents and counsel, and any other amounts due Administrative Agent under Sections 2.08 and 11.04.

 

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

 

104

 

10.10       Collateral and Guaranty Matters.  The Lenders and the L/C Issuer irrevocably
authorize Administrative Agent, at its option and in its discretion,

 

(a)           To transfer or release any
Lien on any Collateral (i) upon termination of the Aggregate Commitments
and payment and satisfaction in full of all Obligations (other than contingent
indemnification obligations) and the expiration or termination of all Letters
of Credit, (other than Letters of Credit as to which other arrangements
reasonably satisfactory to the Administrative Agent and the L/C Issuer have
been made), (ii) that is sold or to be sold as part of or in connection
with any sale permitted hereunder or under any other Loan Document,
(iii) subject to Section 11.01,
if approved, authorized or ratified in writing by Required Lenders,
(iv) after foreclosure or other acquisition of title if approved by the
Required Lenders, or (v) that is permitted or required to be released in
accordance with Section 2.17;

 

(b)           to release any Guarantor
from its obligations under any Subsidiary Guaranty if such Person ceases to be
a Subsidiary or ceases to be required to be a Guarantor as a result of a
transaction as set forth in Sections 2.17
or 8.04(a);  and

 

(c)           If all or any portion of the
Collateral is acquired by foreclosure or by retention in full or partial
satisfaction of the Obligations, Administrative Agent shall take title to the
Collateral in its name or by an Affiliate of Administrative Agent, but for the
benefit of all Lenders in their Applicable Percentages on the date of the
foreclosure sale or retention in full or partial satisfaction of the
Obligations.  Administrative Agent and
all Lenders hereby expressly waive and relinquish any right of partition with
respect to any Collateral so acquired.

 

(d)           Each Lender authorizes and
directs Administrative Agent to enter into the Security Documents for the
benefit of Lenders.  Except
to the extent unanimity is required hereunder, (i) each Lender agrees that
any action taken by Required Lenders in accordance with the provisions of the
Loan Documents, and the exercise by Required 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 Lenders, and (ii) each Lender agrees that any action
taken by Required Lenders in accordance with the provisions of the Loan
Documents, and the exercise by Required 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 Lenders.

 

(e)           Administrative Agent is hereby
authorized on behalf of all Lenders, without the necessity of any notice to or
further consent from any Lender, from time to time to take any action with
respect to any Collateral or Security Documents which may be necessary to
perfect and maintain perfected the Liens upon the Collateral granted pursuant
to the Security Documents.

 

(f)            Administrative Agent shall
have no obligation whatsoever to any Lender or to any other Person to assure
that the Collateral exists or is owned by Borrower or any Guarantor or is cared
for, protected, or insured or has been encumbered or that the Liens granted to
Administrative 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 at all or in any particular
manner or under any duty of care, disclosure, or fidelity, or to continue
exercising, any of the rights granted or available to Administrative Agent in
this Section 10.10 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, Administrative
Agent may act in any manner it may deem appropriate, in its sole discretion,
given Administrative Agent’s own interest in the Collateral as one of the
Lenders and that Administrative Agent shall have no duty or liability
whatsoever to any Lender, other than to act without gross negligence or willful
misconduct.

 

105

 

(g)           In furtherance of the
authorizations set forth in this Section 10.10,
each Lender hereby irrevocably appoints Administrative Agent its
attorney-in-fact, with full power of substitution, for and on behalf of and in
the name of each such Lender, (i) to enter into Security Documents
(including, without limitation, any appointments of substitute trustees under
any Security Document), (ii) to take action with respect to the Collateral
and Security Documents to perfect, maintain, and preserve Lenders’ and the
Administrative Agent’s Liens, as applicable, and (iii) to execute
instruments of release or to take other action necessary to release Liens upon
any Collateral to the extent authorized herein. 
This power of attorney shall be liberally, not restrictively, construed
so as to give the greatest latitude to Administrative Agent’s power, as
attorney, relative to the Collateral matters described in this Section 10.10.  The powers and authorities herein conferred
on Administrative Agent may be exercised by Administrative Agent through any
Person who, at the time of the execution of a particular instrument, is an
officer of Administrative Agent.  The
power of attorney conferred by this Section 10.10
is granted for valuable consideration and is coupled with an interest and is
irrevocable so long as the Obligations, or any part thereof, shall remain
unpaid, Lenders are obligated to make any Loans, or the L/C Issuer is obligated
to issue Letters of Credit, under the Loan Documents.

 

(h)           To the extent any Lender or
any Affiliate of a Lender issues a Swap Contract in accordance with the
requirements of the Loan Documents and accepts the benefits of the Liens in the
Collateral arising pursuant to the Security Documents, such Lender (for itself
and on behalf of any such Affiliates) agrees (a) to appoint Administrative
Agent, as its nominee and agent, to act for and on behalf of such Lender or
Affiliate thereof in connection with the Security Documents and (b) to be
bound by the terms of this Section 10.10;
whereupon all references to “Lender” in this Section 10.10
and in the Collateral Documents shall include, on any date of determination,
any Lender or Affiliate of a Lender that is party to a then-effective Swap
Contract which complies with the requirements of the Loan Documents.  Additionally, if the Obligations owed to any
Lender or Affiliate of a Lender consists solely of Indebtedness arising under a
Swap Contract (such Lender or Affiliate being referred to in this Section 10.10 as an “Issuing
Lender”), then such Issuing Lender (by accepting the benefits of any Security
Documents) acknowledges and agrees that pursuant to the Loan Documents and
without notice to or consent of such Issuing Lender: (w) Liens in the
Collateral may be released in whole or in part; (x) all Guaranties may be
released; (y) any Security Document may be amended, modified,
supplemented, or restated; and (z) all or any part of the Collateral may
be permitted to secure other Indebtedness.

 

Upon request by Administrative Agent at any time, Required Lenders will
confirm in writing Administrative Agent’s authority to release its interest in
particular types or items of property, or to release any Guarantor from its
obligations under the Guaranty pursuant to this Section 10.10.

 

Article XI.

Miscellaneous

 

11.01       Amendments, Etc.  No amendment or
waiver of any provision of this Agreement or any other Loan Document, and no
consent to any departure by Borrower or any other Loan Party therefrom, shall
be effective unless in writing signed by Required Lenders and Borrower or the
applicable Loan Party, as the case may be, and acknowledged by Administrative
Agent, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver
or consent shall:

 

(a)           waive any condition set
forth in Section 5.01(a) without
the written consent of each Lender;

 

106

 

(b)           extend or increase the
Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 9.02) without the
written consent of such Lender;

 

(c)           postpone any date fixed by
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder
or under any other Loan Document without the written consent of each Lender
directly affected thereby;

 

(d)           reduce the principal of, or
the rate of interest specified herein on, any Loan or L/C Borrowing, or
(subject to clause (iv) of the second proviso to
this Section 11.01) any fees or
other amounts payable hereunder or under any other Loan Document, without the
written consent of each Lender directly affected thereby; provided,
however, that only the consent of
Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any
obligation of Borrower to pay interest or Letter of Credit Fees at the Default
Rate or amend any financial covenant or ratio hereunder (or any defined term
used therein) even if the effect of such amendment would be to reduce the rate
of interest on any Loan or L/C Borrowing or to reduce any fee payable under
this Agreement;

 

(e)           change Section 9.03
in a manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender;

 

(f)            change any provision of this
Section or the definition of “Required Lenders” or “Super Majority Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to
amend, waive or otherwise modify any rights hereunder or make any determination
or grant any consent hereunder, without the written consent of each Lender; or

 

(g)           release (i) the Parent
Guaranty or all or substantially all of the value of the Subsidiary Guaranty
without the written consent of each Lender, except to the extent the release of
any Guarantor is permitted pursuant to Sections 4.08
or 10.10 (in which case such release may be made by
Administrative Agent acting alone) or (ii) all or substantially all of the
Collateral;

 

and, provided  further,
that (i) no amendment, waiver or consent shall, unless in writing and
signed by the L/C Issuer in addition to the Lenders required above, affect the
rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating
to any Letter of Credit issued or to be issued by it; (ii) no amendment,
waiver or consent shall, unless in writing and signed by Administrative Agent
in addition to the Lenders required above, affect the rights or duties of
Administrative Agent under this Agreement or any other Loan Document; and
(iii) each letter agreement between Borrower, Administrative Agent,
certain Lenders, and Arrangers regarding fees payable with respect to the
Obligations may be amended, or rights or privileges thereunder waived, in a
writing executed only by the parties thereto. 
Notwithstanding anything to the contrary herein, no Defaulting Lender
shall have any right to approve or disapprove any amendment, waiver or consent
hereunder (and any amendment, waiver or consent which by its terms requires the
consent of all Lenders or each affected Lender may be effected with the consent
of the applicable Lenders other than Defaulting Lenders), except that
(x) the Commitment of any Defaulting Lender may not be increased or extended
without the consent of such Lender and (y) any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender that
by its terms affects any Defaulting Lender more adversely than other affected
Lenders shall require the consent of such Defaulting Lender.

 

and, provided further, that if, in
connection with any proposed amendment, waiver, or consent (a “Proposed Change”) requiring the
consent of all Lenders or Super Majority Lenders, the consent of Required
Lenders is obtained, but the consent of other requisite Lenders is not obtained
(any such Lender 

 

107

 

whose consent is not obtained as described in this paragraph being
referred to as a “Non-Consenting
Lender”), then, so long as the Administrative Agent is not a
Non-Consenting Lender, at Borrower’s request, Administrative Agent or an
Eligible Assignee shall have the right (but not the obligation) with
Administrative Agent’s approval, to purchase from the Non-Consenting Lenders,
and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders’ Commitments for an amount equal to the principal
balances thereof and all accrued interest and fees with respect thereto through
the date of sale pursuant to an Assignment and Acceptance, without premium or
discount. Administrative Agent is irrevocably appointed as attorney-in-fact to
execute any such Assignment and Acceptance if such Lender fails to execute same
within twenty (20) days of such request of assignment.  Such Lender shall be entitled to receive, in
cash, concurrently with such assignment, all amounts owed to it under the Loan
Documents, including all principal, interest and fees through the date of
assignment (but excluding any prepayment charge).

 

11.02       Notices; Effectiveness;
Electronic Communication.

 

(a)           Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below),
all notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier or by electronic mail
(subject to clause (b) below) as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

 

(i)            if to Borrower,
Administrative Agent, or the L/C Issuer, to the address, telecopier number,
electronic mail address or telephone number specified for such Person on Schedule 11.02; and

 

(ii)           if to any other Lender, to
the address, telecopier number, electronic mail address or telephone number
specified in its Administrative Questionnaire (including, as appropriate, notices
delivered solely to the Person designated by a Lender on its Administrative
Questionnaire then in effect for the delivery of notices that may contain
material non-public information relating to Borrower).

 

Notices and other communications sent by hand or
overnight courier service, or mailed by certified or registered mail, shall be
deemed to have been given when received; notices and other communications sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient).  Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below,
shall be effective as provided in such subsection (b).

 

(b)           Electronic Communications.  Notices and other communications to the
Lenders and the L/C Issuer hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender or the L/C Issuer
pursuant to Article II if such
Lender or the L/C Issuer, as applicable, has notified Administrative Agent that
it is incapable of receiving notices under such Article by electronic
communication.  Administrative Agent or
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that
approval of such procedures may be limited to particular notices or
communications.

 

108

 

Unless Administrative Agent otherwise prescribes,
(i) notices and other communications sent to an e-mail address shall be
deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or
communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of
notification that such notice or communication is available and identifying the
website address therefor.

 

(c)           The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED
OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION
WITH THE BORROWER MATERIALS OR THE PLATFORM. 
In no event shall Administrative Agent or any of its Related Parties
(collectively, the “Agent Parties”) have any
liability to Borrower, any Lender, the L/C Issuer or any other Person for
losses, claims, damages, liabilities or expenses of any kind (whether in tort,
contract or otherwise) arising out of Borrower’s or Administrative Agent’s
transmission of Borrower Materials through the Internet, except to the extent
that such losses, claims, damages, liabilities or expenses are determined by a
court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that
in no event shall any Agent Party have any liability to Borrower, any Lender,
the L/C Issuer or any other Person for indirect, special, incidental, consequential
or punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc.  Each of Borrower, Administrative Agent, and
the L/C Issuer may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto.  Each other Lender may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to Borrower, Administrative Agent, and the L/C Issuer.  In addition, each Lender agrees to notify
Administrative Agent from time to time to ensure that Administrative Agent has
on record (i) an effective address, contact name, telephone number,
telecopier number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such
Lender.  Furthermore, each Public Lender
agrees to cause at least one individual at or on behalf of such Public Lender
to at all times have selected the “Private Side Information” or similar
designation on the content declaration screen of the Platform in order to
enable such Public Lender or its delegate, in accordance with such Public
Lender’s compliance procedures and applicable Law, including United States
Federal and state securities Laws, to make reference to Borrower Materials that
are not made available through the “Public Side Information” portion of the
Platform and that may contain material non-public information with respect to
Borrower or its securities for purposes of United States Federal or state
securities laws.

 

(e)           Reliance by Administrative Agent,
L/C Issuer and Lenders.  Administrative Agent, the L/C
Issuer and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Committed Loan Notices) purportedly given by or on behalf
of Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not 

 

109

 

preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as
understood by the recipient, varied from any confirmation thereof.  Borrower shall indemnify Administrative
Agent, the L/C Issuer, each Lender and the Related Parties of each of them from
all losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of Borrower.  All telephonic notices to and other
telephonic communications with Administrative Agent may be recorded by
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

11.03       No Waiver; Cumulative Remedies;
Enforcement.  No failure
by any Lender, the L/C Issuer or Administrative Agent to exercise, and no delay
by any such Person in exercising, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers
and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.

 

Notwithstanding anything to the contrary contained
herein or in any other Loan Document, the authority to enforce rights and
remedies hereunder and under the other Loan Documents against the Loan Parties
or any of them shall be vested exclusively in, and all actions and proceedings
at law in connection with such enforcement shall be instituted and maintained exclusively
by, Administrative Agent in accordance with Section 9.02
for the benefit of all the Lenders and the L/C Issuer; provided,
however, that the foregoing shall not
prohibit (a) Administrative Agent from exercising on its own behalf the
rights and remedies that inure to its benefit (solely in its capacity as
Administrative Agent) hereunder and under the other Loan Documents,
(b) the L/C Issuer from exercising the rights and remedies that inure to
its benefit (solely in its capacity as L/C Issuer) hereunder and under the
other Loan Documents, (c) any Lender from exercising setoff rights in
accordance with Section 11.08 (subject
to the terms of Section 2.12), or
(d) any Lender from filing proofs of claim or appearing and filing
pleadings on its own behalf during the pendency of a proceeding relative to any
Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as
Administrative Agent hereunder and under the other Loan Documents, then
(i) Required Lenders shall have the rights otherwise ascribed to
Administrative Agent pursuant to Section 9.02
and (ii) in addition to the matters set forth in clauses (b),
(c) and (d) of
the preceding proviso and subject to Section 2.12,
any Lender may, with the consent of Required Lenders, enforce any rights and
remedies available to it and as authorized by Required Lenders.

 

11.04       Expenses; Indemnity; Damage
Waiver.

 

(a)           Costs and Expenses.  Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by Administrative Agent and its Affiliates
(including the reasonable fees, charges and disbursements of counsel for
Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution, delivery
and administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the
L/C Issuer in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by Administrative Agent, any Lender or the L/C
Issuer (including the fees, charges and disbursements of any counsel for
Administrative Agent, any Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys who may be
employees of Administrative Agent, any Lender or the L/C Issuer, in
connection with the enforcement or protection of its rights (A) in
connection with this Agreement and the other Loan Documents, including its
rights under this Section, or (B) in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

 

110

 

(b)           Indemnification by Borrower.  Borrower shall indemnify each Indemnitee
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and
disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and
time charges and disbursements for attorneys who may be employees of any
Indemnitee, incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by Borrower or any other Loan Party arising
out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto of their respective obligations hereunder or thereunder, the
consummation of the transactions contemplated hereby or thereby, or, in the
case of Administrative Agent (and any sub-agent thereof) and its Related
Parties only, the administration of this Agreement and the other Loan Documents
(including in respect of any matters addressed in Section 3.01), (ii) any Loan or Letter
of Credit or the use or proposed use of the proceeds therefrom (including any
refusal by the L/C Issuer to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to Borrower or any of its Subsidiaries, to the
extent provided in Section 7.12(d), or
(iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by Borrower or any other
Loan Party, and regardless of whether any Indemnitee is a party thereto, IN ALL CASES, WHETHER OR NOT CAUSED BY
OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR
SOLE NEGLIGENCE OF THE INDEMNITEE; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by Borrower or any
other Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if
Borrower or such other Loan Party has obtained a final and nonappealable
judgment in its favor on such claim as determined by a court of competent
jurisdiction.

 

(c)           Reimbursement by Lenders.  To the extent that Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or
(b) of this Section to be paid by it to
Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related
Party of any of the foregoing, each Lender severally agrees to pay to
Administrative Agent (or any such sub-agent), the L/C Issuer or such Related
Party, as the case may be, such Lender’s Applicable Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that
the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against Administrative
Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or
against any Related Party of any of the foregoing acting for Administrative
Agent (or any such sub-agent) or L/C Issuer in connection with such capacity.  The obligations of the Lenders under this subsection (c) are subject
to the provisions of Section 2.11(d).

 

111

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable
law, Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof.  No Indemnitee referred to in subsection (b) above shall
be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed to such unintended recipients by
such Indemnitee through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby other than for
direct or actual damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

 

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

 

(f)            Survival.  The agreements in this Section shall
survive the resignation of Administrative Agent or the L/C Issuer, the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

 

11.05       Payments Set Aside.  To the extent that any payment by or on
behalf of Borrower is made to Administrative Agent, the L/C Issuer or any
Lender, or Administrative Agent, the L/C Issuer or any Lender exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each
Lender and the L/C Issuer severally agrees to pay to Administrative Agent upon
demand its applicable share (without duplication) of any amount so recovered
from or repaid by Administrative Agent, plus interest thereon from the date of
such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect. 
The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding
sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

11.06       Successors and Assigns.

 

(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of Administrative Agent and each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except
(i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of
this Section, or (iii) by way of
pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and
void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of
this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of Administrative
Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

112

 

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans
(including for purposes of this subsection (b),
participations in L/C Obligations) at the time owing to it); provided that any such assignment shall be subject to the
following conditions:

 

(i)            Minimum Amounts.

 

(A)          in the case of an assignment
of the entire remaining amount of the assigning Lender’s Commitment and the
Loans at the time owing to it or in the case of an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned;
and

 

(B)           in any case not described in
subsection (b)(i)(A) of this
Section, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or,
if the Commitment is not then in effect, the principal outstanding balance of
the Loans of the assigning Lender subject to each such assignment, determined
as of the date the Assignment and Assumption with respect to such assignment is
delivered to Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date, shall not be less than
$5,000,000  unless each of Administrative Agent
and, so long as no Event of Default has occurred and is continuing, Borrower
otherwise consents (each such consent not to be unreasonably withheld or
delayed); provided, however,
that concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such minimum amount has
been met.

 

(ii)           Proportionate Amounts.  Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment assigned;

 

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

 

(A)          the consent of Borrower
(such consent not to be unreasonably withheld) shall be required unless
(1) an Event of Default has occurred and is continuing at the time of such
assignment or (2) such assignment is to a Lender, an Affiliate of a Lender
or an Approved Fund; provided that
Borrower shall be deemed to have consented to any such assignment unless it
shall object thereto by written notice to Administrative Agent within five (5) Business
Days after having received notice thereof;

 

(B)           the consent of
Administrative Agent (such consent not to be unreasonably withheld or delayed)
shall be required if such assignment is to a Person that is not a Lender, an
Affiliate of such Lender or an Approved Fund with respect to such Lender; and

 

113

 

 

(C)         the consent of the L/C
Issuer (such consent not to be unreasonably withheld or delayed) shall be
required for any assignment that increases the obligation of the assignee to
participate in exposure under one or more Letters of Credit (whether or not then
outstanding).

 

(iv)          Assignment and Assumption.  The parties to each assignment shall execute
and deliver to Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee in the amount of $3,500; provided,
however, that Administrative Agent may,
in its sole discretion, elect to waive such processing and recordation fee in
the case of any assignment.  The
assignee, if it is not a Lender, shall deliver to Administrative Agent an Administrative
Questionnaire.

 

(v)           No Assignment to Certain Persons.  No such assignment shall be made (A) to
Borrower or any of Borrower’s Affiliates or Subsidiaries, or (B) to any
Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming
a Lender hereunder, would constitute any of the foregoing Persons described in
this clause (B), or (C) to a
natural person.

 

(vi)          Certain Additional Payments.  In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to Administrative Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the
assignee of participations or subparticipations, or other compensating actions,
including funding, with the consent of Borrower and Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment
liabilities then owed by such Defaulting Lender to Administrative Agent or any
Lender hereunder (and interest accrued thereon) and (y) acquire (and fund
as appropriate) its full pro rata share of all Loans and participations in
Letters of Credit in accordance with its Applicable Percentage.  Notwithstanding the foregoing, in the event
that any assignment of rights and obligations of any Defaulting Lender
hereunder shall become effective under applicable Law without compliance with
the provisions of this paragraph, then the assignee of such interest shall be
deemed to be a Defaulting Lender for all purposes of this Agreement until such
compliance occurs.

 

Subject to acceptance and recording thereof by
Administrative Agent pursuant to subsection (c) of
this Section, from and after the
effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05,
and 11.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, Borrower (at its expense) shall
execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection (d) of
this Section.

 

114

 

(c)           Register.  Administrative Agent, acting solely for this
purpose as an agent of Borrower (and such agency being solely for tax
purposes), shall maintain at Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and Borrower, Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary.  In addition,
Administrative Agent shall maintain on the Register information regarding the
designation, and revocation of designation, of any Lender as a Defaulting
Lender. 
The Register shall be available for inspection by Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, Borrower or Administrative Agent, sell participations
to any Person (other than a natural person, a Defaulting Lender or Borrower,
Parent, or any of Borrower’s or Parent’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of
such Lender’s rights and/or obligations under this Agreement (including all or
a portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations) 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) Borrower,
Administrative Agent, the Lenders and the L/C Issuer shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement.

 

Any agreement or instrument pursuant to which a
Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any  provision
of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 11.01
that affects such Participant.  Subject
to subsection (e) of this Section, Borrower agrees that each
Participant shall be entitled to the benefits of Sections 3.01,
3.04 and 3.05  to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to subsection (b) of
this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.08  as though it were a Lender, provided
such Participant agrees to be subject to Section 2.12
as though it were a Lender.

 

(e)           Limitations upon Participant
Rights.  A Participant shall not be
entitled to receive any greater payment under Section 3.01
or 3.04  than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with Borrower’s prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 3.01 unless Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of Borrower, to comply with Section 3.01(e) as
though it were a Lender.

 

(f)            Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

115

 

(g)           Resignation as L/C Issuer after
Assignment. 
Notwithstanding anything to the contrary contained herein, if at any
time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank
of America may, (i) upon 30 days’ notice to Borrower and the Lenders,
resign as L/C Issuer.  In the event of
any such resignation as L/C Issuer, Borrower shall be entitled to appoint from
among the Lenders a successor L/C Issuer hereunder; provided,
however, that no failure by Borrower to
appoint any such successor shall affect the resignation of Bank of America as
L/C Issuer.  If Bank of America resigns
as L/C Issuer, it shall retain all the rights, powers, privileges and duties of
the L/C Issuer hereunder with respect to all Letters of Credit outstanding as
of the effective date of its resignation as L/C Issuer and all L/C Obligations
with respect thereto (including the right to require the Lenders to make Base
Rate Committed Loans or fund risk participations in Unreimbursed Amounts
pursuant to Section 2.03(c)).  Upon the appointment of a successor L/C
Issuer, (a) such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring L/C Issuer, and
(b) the successor L/C Issuer shall issue letters of credit in substitution
for the Letters of Credit, if any, outstanding at the time of such succession
or make other arrangements satisfactory to Bank of America to effectively
assume the obligations of Bank of America with respect to such Letters of
Credit.

 

11.07       Treatment of Certain Information;
Confidentiality.  Each of
Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its Affiliates and to its and its Affiliates’ respective partners,
directors, officers, employees, agents, trustees, advisors and representatives
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any
regulatory authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a
Lender pursuant to Section 2.14(c) or
(ii) any actual or prospective counterparty (or its advisors) to any swap
or derivative transaction relating to Borrower and its obligations,
(g) with the consent of Borrower or (h) to the extent such Information
(x) becomes publicly available other than as a result of a breach of this Section or (y) becomes
available to Administrative Agent, any Lender, the L/C Issuer or any of their
respective Affiliates on a nonconfidential basis from a source other than Borrower.  For purposes of this Section,
“Information” means all information
received from Borrower or any Subsidiary relating to Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is
available to Administrative Agent, any Lender or the L/C Issuer on a
nonconfidential basis prior to disclosure by Borrower or any Subsidiary,
provided that, in the case of information received from Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential.  Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to
have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

Each of Administrative Agent, the Lenders and the
L/C Issuer acknowledges that (a) the Information may include material
non-public information concerning Borrower or a Subsidiary, as the case may be,
(b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including United States Federal
and state securities Laws.

 

116

 

11.08       Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender, the L/C Issuer and each of their respective
Affiliates is hereby authorized at any time and from time to time, after
obtaining the prior written consent of Administrative Agent, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held
and other obligations (in whatever currency) at any time owing by such Lender,
the L/C Issuer or any such Affiliate to or for the credit or the account of
Borrower against any and all of the obligations of Borrower now or hereafter
existing under this Agreement or any other Loan Document to such Lender or the
L/C Issuer, irrespective of whether or not such Lender or the L/C Issuer shall
have made any demand under this Agreement or any other Loan Document and
although such obligations of Borrower may
be contingent or unmatured or are owed to a branch or office of such Lender or
the L/C Issuer different from the branch or office holding such deposit or
obligated on such indebtedness; provided, that in the event that any Defaulting
Lender shall exercise any such right of setoff, (x) all amounts so set off
shall be paid over immediately to Administrative Agent for further application
in accordance with the provisions of Section 2.16
and, pending such payment, shall be segregated by such Defaulting Lender from
its other funds and deemed held in trust for the benefit of Administrative
Agent and the Lenders, and (y) the Defaulting Lender shall provide
promptly to Administrative Agent a statement describing in reasonable detail
the Obligations owing to such Defaulting Lender as to which it exercised such
right of setoff.  The rights of each
Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Lender,
the L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to
notify Borrower and Administrative Agent promptly after any such setoff and
application, provided that the failure to give
such notice shall not affect the validity of such setoff and application.

 

11.09       Interest Rate Limitation.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under
the Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”).  If Administrative Agent or any Lender shall
receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to Borrower. 
In determining whether the interest contracted for, charged, or received
by Administrative Agent or a Lender exceeds the Maximum Rate, such Person may,
to the extent permitted by applicable Law, (a) characterize any payment
that is not principal as an expense, fee, or premium rather than interest,
(b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.

 

11.10       Counterparts; Integration;
Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement, and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.  Except as provided in Section 5.01,
this Agreement shall become effective when it shall have been executed by Administrative
Agent and when Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties
hereto.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy or other
electronic imaging means shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

117

 

11.11       Survival of Representations and
Warranties.  All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith
or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been
or will be relied upon by Administrative Agent and each Lender, regardless of
any investigation made by Administrative Agent or any Lender or on their behalf
and notwithstanding that Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.

 

11.12       Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable,
(a) the legality, validity and enforceability of the remaining provisions
of this Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.  Without limiting the foregoing provisions of
this Section 11.12, if and to the
extent that the enforceability of any provisions in this Agreement relating to
Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in
good faith by Administrative Agent, and the L/C Issuer, then such provisions
shall be deemed to be in effect only to the extent not so limited.

 

11.13       Replacement of Lenders.  If any Lender requests compensation under Section 3.04,
or if Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender is a Defaulting
Lender or if any other circumstance
exists hereunder that gives Borrower the right to replace a Lender as a party
hereto, then Borrower may, at its sole expense and effort, upon notice
to such Lender and Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 11.06),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:

 

(a)           Borrower shall have paid to
Administrative Agent the assignment fee specified in Section 11.06(b);

 

(b)           such Lender shall have
received payment of an amount equal to 100% of the outstanding principal of its
Loans and L/C Advances, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents (including
any amounts under Section 3.05) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or Borrower (in the case of all other amounts);

 

(c)           in the case of any such
assignment resulting from a claim for compensation under Section 3.04
or payments required to be made pursuant to Section 3.01,
such assignment will result in a reduction in such compensation or payments
thereafter; and

 

(d)           such assignment does not
conflict with applicable Laws.

 

A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling Borrower to require such
assignment and delegation cease to apply.

 

118

 

11.14       Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

(b)           SUBMISSION TO JURISDICTION.  EACH OF PARENT, BORROWER, AND EACH OTHER LOAN
PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN
NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN
SUCH FEDERAL COURT.  EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER
LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT, ANY LENDER OR
L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST BORROWER OR ANY OTHER LOAN
PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF VENUE.  EACH OF PARENT, BORROWER, AND EACH OTHER LOAN
PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

(d)           SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

 

11.15       Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PERSON HAS 

 

119

 

REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

11.16       No Advisory or Fiduciary
Responsibility.  In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document), Parent,
Borrower, and each other Loan Party acknowledges and agrees, and acknowledges
its Affiliates’ understanding, that: (i)(A) the arranging and other
services regarding this Agreement provided by Administrative Agent and each
Arranger are arm’s-length commercial transactions between Parent, Borrower,
each other Loan Party and their respective Affiliates, on the one hand, and
Administrative Agent and each Arranger, on the other hand, (B) each of
Parent, Borrower, and the other Loan Parties has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed
appropriate, and (C) Borrower and each other Loan Party is capable of
evaluating, and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents;
(ii)(A) Administrative Agent and each Arranger is and has been acting
solely as a principal and, except as expressly agreed in writing by the
relevant parties, has not been, is not, and will not be acting as an advisor,
agent or fiduciary for Parent, Borrower, any other Loan Party, or any of their
respective Affiliates, or any other Person and (B) neither Administrative
Agent nor any Arranger has any obligation to Parent, Borrower, any other Loan
Party, or any of their respective Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents; and (iii) Administrative Agent and the Arrangers
and their respective Affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of Parent, Borrower, the other
Loan Parties, and their respective Affiliates, and neither Administrative Agent
nor any Arranger has any obligation to disclose any of such interests to
Parent, Borrower, any other Loan Party, or any of their respective
Affiliates.  To the fullest extent
permitted by Law, each of Parent, Borrower, and the other Loan Parties hereby
waives and releases any claims that it may have against Administrative Agent
and the Arrangers with respect to any breach or alleged breach of agency or
fiduciary duty in connection with any aspect of any transaction contemplated
hereby.

 

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

 

11.18       USA PATRIOT Act.  Each Lender that is subject to the Act (as
hereinafter defined) and Administrative Agent (for itself and not on behalf of
any Lender) hereby notifies Borrower that pursuant to the requirements of the
USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to
obtain, verify and record information that identifies Borrower, which
information includes the name and address of Borrower and other information
that will allow such Lender or Administrative Agent, as applicable, to identify
Borrower in accordance with the Act. 
Borrower shall, promptly following a request by Administrative Agent or
any Lender, provide all documentation and other information that Administrative
Agent or such Lender requests in order to comply with its ongoing obligations
under applicable “know your customer” and anti-money laundering rules and
regulations, including the Act.

 

120

 

11.19       ENTIRE AGREEMENT.  THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[Signature Pages Follow.]

 

121

 

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the date first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL PARTNERSHIP, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kenneth E. Cruse

  
	
   

  	
   

  	
  Name:

  	
  Kenneth
  E. Cruse

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer, Vice President,

  
	
   

  	
   

  	
   

  	
  Secretary,
  and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARENT:

  
	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL INVESTORS, INC.,

  
	
   

  	
  a
  Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kenneth E. Cruse

  
	
   

  	
   

  	
  Name:

  	
  Kenneth
  E. Cruse

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer, Vice President,

  
	
   

  	
   

  	
   

  	
  Secretary,
  and Treasurer

  

 

 

Signature
Page to Credit Agreement

 

 

	
   

  	
  BANK
  OF AMERICA, N.A., as 

  
	
   

  	
  Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Henry Pennell

  
	
   

  	
   

  	
  Name:

  	
  Henry
  Pennell

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

 

Signature
Page to Credit Agreement

 

 

	
   

  	
  BANK
  OF AMERICA, N.A., as a Lender and L/C Issuer

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lesa J. Butler

  
	
   

  	
   

  	
  Name:

  	
  Lesa
  J. Butler

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President

  

 

 

Signature
Page to Credit Agreement

 

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Marc Costantino

  
	
   

  	
   

  	
  Name:

  	
  Marc
  Costantino

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Director

  

 

 

Signature
Page to Credit Agreement

 

 

	
   

  	
  BARCLAYS
  BANK PLC, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Craig J. Molly

  
	
   

  	
   

  	
  Name:

  	
  Craig
  J. Molly

  
	
   

  	
   

  	
  Title:

  	
  Director

  

 

 

Signature
Page to Credit Agreement

 

 

	
   

  	
  CITIBANK,
  N.A. as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John C. Rowland

  
	
   

  	
   

  	
  Name:

  	
  John
  C. Rowland

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

 

Signature
Page to Credit Agreement

 

 

 

	
   

  	
  MORGAN
  STANLEY BANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ryan Vetsch

  
	
   

  	
   

  	
  Name:

  	
  Ryan
  Vetsch

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

 

Signature
Page to Credit Agreement

 

 

	
   

  	
  UBS
  LOAN FINANCE LLC, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Irja R. Otsa

  
	
   

  	
   

  	
  Name:

  	
  Irja
  R. Otsa

  
	
   

  	
   

  	
  Title:

  	
  Associate
  Director

  

 

	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mary E. Evans

  
	
   

  	
   

  	
  Name:

  	
  Mary
  E. Evans

  
	
   

  	
   

  	
  Title:

  	
  Associate
  Director

  

 

 

Signature
Page to Credit Agreement

 

 

SCHEDULE 2.01

 

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Applicable 

  Percentage

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  38,250,000.00

  	
   

  	
  25.500000000

  	
  %

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  38,250,000.00

  	
   

  	
  25.500000000

  	
  %

  
	
  Citibank, N.A.

  	
   

  	
  $

  	
  18,375,000.00

  	
   

  	
  12.250000000

  	
  %

  
	
  UBS Loan Finance LLC

  	
   

  	
  $

  	
  18,375,000.00

  	
   

  	
  12.250000000

  	
  %

  
	
  Morgan Stanley Bank, N.A.

  	
   

  	
  $

  	
  18,375,000.00

  	
   

  	
  12.250000000

  	
  %

  
	
  Barclays Bank PLC

  	
   

  	
  $

  	
  18,375,000.00

  	
   

  	
  12.250000000

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  150,000,000.00

  	
   

  	
  100.000000000

  	
  %

  

 

 

SCHEDULE 4.01

 

INITIAL BORROWING BASE PROPERTIES

 

Kahler
Inn & Suites Rochester

Marriott
Rochester

Courtyard
by Marriott Los Angeles Airport

Marriott
Portland

Sheraton
Cerritos

Residence
Inn by Marriott Rochester

Hyatt
Regency Newport Beach

Fairmont
Newport Beach

Renaissance
Westchester

Renaissance
Los Angeles Airport

Marriott
Quincy

Royal
Palm Hotel

Renaissance
Orlando Resort Ground Lease

 

 

SCHEDULE 5.03

 

POST CLOSE ITEMS

 

A.            Post Closing
Required:

 

None.

 

B.            Post-Closing
Borrowing Base:

 

(i)            Non Property
Related:

 

 

Post
Close Item

 

I.              For each (i) Subsidiary
Guarantor not a party to the Subsidiary Guaranty and (ii) each Pledgor (as
defined in the Pledge Agreement) not a party to the Pledge Agreement, each  as of the date of the Credit Agreement, each
item listed on the attached Schedule A,
on the date that the items listed in clause (ii) below
with respect to the applicable Borrowing Base Property are satisfied in order
to permit such Subsidiary Guarantor to become a party to the Subsidiary
Guaranty or such Pledgor to become a party to the Pledge Agreement.

 

(ii)           Property
Related.

 

Each item required in Section B.(i) above, plus, with respect to
each Initial Borrowing Base Property, Administrative Agent must review and
approve the following for each such Initial Borrowing Base Property prior to
such Initial Borrowing Base Property being given any value for purposes of
determining the Borrowing Base:

 

I.              All Initial Borrowing Base Properties. For each Initial
Borrowing Base Property, (i) an Acceptable Borrowing Base Appraisal and (ii) an
Operating Lease Consent.

 

II.                                     Sheraton Cerritos:

 

 

Post
Close Item

 

1.             Management
Agreement Consent.  Manager’s
Consent Under Management Agreement (Interstate) between Sunstone Hotel
Properties, Inc., as Manager, Sunstone Hotel Partnership, LLC, as
Borrower, Sunstone Center Court LLC, as Fee Owner, Sunstone Center Court
Lessee, Inc., as Lessee, and Agent.

 

2.             Comfort Letter.  Franchise Consent between The Sheraton
Corporation, as Franchisor, Sunstone Hotel Partnership, LLC, as Borrower,
Sunstone Center Court, LLC, as Fee Owner, Sunstone Center Court Lessee, Inc.,
as Lessee, and Agent.

 

3.             Ground Lessor
Consent.  Estoppel
Certificate and Consent between City of Cerritos and Cerritos Development
Agency, as Landlord, Sunstone Center Court, LLC, as Tenant, Sunstone Holdco 8,
LLC, as Parent, and Agent.

 

 

 

III.           Marriott
Quincy:

 

Post
Close Item

 

1.             Management
Agreement Consent.  Mutual
Recognition and Non-Disturbance Agreement between Agent, Sunstone Quincy
Lessee, Inc., as Owner, and Marriott Hotel Services, Inc., as
Manager, in form and substance acceptable to Agent.

 

2.             Real Estate Due
Diligence.

 

(a)           Existing
Title Policy.

 

(b)           Current
Ad Valorem tax statements.

 

IV.           Fairmont
Newport Beach:

 

 

Post
Close Item

 

1.             Management
Agreement Consent.  Manager’s
Consent Under Management Agreement (Fairmont) between Fairmont Resorts (U.S.), Inc.,
as Manager, Sunstone Hotel Partnership, LLC, as Borrower, Sunstone Macarthur
LLC,  as Fee Owner, Sunstone Macarthur
Lessee, Inc., as Lessee, and Agent, in form and substance acceptable to
Agent.

 

2.             Ground Lessor
Consent.  Estoppel
Certificate and Consent between MacArthur 450, LLC, as Landlord, Sunstone
MacArthur, LLC, as Tenant, Sunstone Holdco 8, LLC, as Parent, and Agent.

 

V.            Marriott
Portland:

 

 

Post
Close Item

 

1.             Management Agreement
Consent.  Manager’s
Consent Under Management Agreement (Interstate) between Sunstone Hotel
Properties, Inc., as Manager, Sunstone Hotel Partnership, LLC, as
Borrower, WB Sunstone Portland, LLC, as Fee Owner, WB Sunstone-Portland, Inc.,
as Lessee, and Agent.

 

2.             Comfort Letter.  Comfort Letter between Marriott
International, Inc., as Franchisor, WB Sunstone-Portland, Inc., as
Franchisee, and Agent and
Amendment to Owner Agreement between Marriott International, Inc., as
Franchisor, Sunstone Hotel Partnership, LLC, as Borrower, WB Sunstone Portland,
LLC, as Fee Owner, WB Sunstone-Portland, Inc., as Property Lessee, and
Agent.

 

 

VI.           Marriott
Rochester:

 

 

Post
Close Item

 

1.             Management
Agreement Consent.  Manager’s
Consent Under Management Agreement (Interstate) between Sunstone Hotel
Properties, Inc., as Manager, Sunstone Hotel Partnership, LLC, as
Borrower, Sunstone SH Hotels, LLC, as Fee Owner, SHP Lessee II Corp, as Lessee,
and Agent.

 

2.             Comfort Letter.  Comfort Letter between Marriott International, Inc.,
as Franchisor, SHP Lessee II Corp., as Franchisee, and Agent and  Amendment to Owner Agreement
between Marriott International, Inc., as Franchisor, Sunstone Hotel
Partnership, LLC, as Borrower, Sunstone SH Hotels, L.L.C., as Fee Owner, SHP
Lessee II Corp., as Property Lessee, and Agent.

 

VII.         Residence
Inn by Marriott Rochester:

 

Post
Close Item

 

1.             Management
Agreement Consent.  Manager’s
Consent Under Management Agreement (Interstate) between Sunstone Hotel
Properties, Inc., as Manager, Sunstone Hotel Partnership, LLC, as
Borrower, Sunstone Hotels Rochester, LLC, as Fee Owner, Rochester RIBM Lessee, Inc.,
as Lessee, and Agent.

 

2.             Comfort Letter.  Comfort Letter between Marriott
International, Inc., as Franchisor, Rochester RIBM Lessee, Inc., as Franchisee,
and Agent and  Amendment to Owner
Agreement between Marriott International, Inc., as Franchisor, Sunstone
Hotel Partnership, LLC, as Borrower, Sunstone Hotels Rochester LLC, as Fee
Owner, Rochester RIBM Lessee, Inc., as Property Lessee, and Agent.

 

VIII.        Hyatt
Regency Newport Beach:

 

 

Post
Close Item

 

1.             Management
Agreement Consent.  Manager’s
Consent Under Management Agreement (Hyatt Corporation) between Hyatt
Corporation, as Manager, Sunstone Hotel Partnership, LLC, as Borrower, Sunstone
Jamboree, LLC, as Fee Owner, Sunstone Jamboree Lessee, Inc., as Lessee,
and Agent.

 

2.             Ground Lessor
Consents.  Estoppel
Certificate and Consent between JGKallins Investments Newport, LLC and The
Prudential Insurance Company of America, as Landlord, Sunstone Jamboree, LLC,
as Tenant, Sunstone Holdco 8, LLC, as Parent, and Agent.

 

 

IX.           Renaissance
Westchester:

 

Post
Close Item

 

1.             Parking and Zoning
Issues.  According to the zoning report,
parking for the Property is deficient by 20 spaces.  Borrower shall provide evidence of compliance
with zoning with respect to parking.

 

2.             Management
Agreement Consent.  Mutual
Recognition and Non-Disturbance Agreement between Agent, Sunstone Red Oak
Lessee, Inc., as Owner, and Renaissance Hotel Operating Company, as
Manager, in form and substance acceptable to Agent.

 

3.             Real Estate Due
Diligence.

 

(a)           Existing
Title Policy.

 

X.            Courtyard
by Marriott Los Angeles Airport:

 

Post
Close Item

 

1.             Management
Agreement Consent.  Manager’s
Consent Under Management Agreement (Interstate) between Sunstone Hotel
Properties, Inc., as Manager, Sunstone Hotel Partnership, LLC, as
Borrower, Sunstone Century, LLC, as Fee Owner, SHP Lessee Corp., as Lessee, and
Agent.

 

2.             Comfort Letter.  Comfort Letter between Marriott
International, Inc., as Franchisor, SHP Lessee Corp., as Franchisee, and
Agent and Amendment to Owner Agreement
between Marriott International, Inc., as Franchisor, Sunstone Hotel
Partnership, LLC, as Borrower, Sunstone Century, LLC, as Fee Owner, SHP Lessee
Corp., as Property Lessee, and Agent.

 

3.             Ground Lessor
Consents.  Estoppel
Certificate and Consent between Peacock, LLC, as Landlord, Sunstone LA Airport,
LLC, as Tenant, Sunstone Holdco 8, LLC, as Parent, and Agent.

 

XI.           Renaissance
Los Angeles Airport:

 

Post
Close Item

 

1.             Management
Agreement Consent.  Mutual
Recognition and Non-Disturbance Agreement between Agent, Sunstone LA Airport
Lessee, Inc., as Owner, and Renaissance Hotel Management Company, LLC, as
Manager, in form and substance acceptable to Agent.

 

 

XII.         Royal
Palm Hotel:

 

Post
Close Item

 

1.             Management
Agreement Consent.  Manager’s
Consent Under Management Agreement (Royal Palm) between James Hotel Management
Company, LLC, as Manager, Sunstone Hotel Partnership, LLC, as Borrower,
Sunstone RP Collins LLC, as Fee Owner, Sunstone RP Collins Lessee, Inc.,
as Lessee, and Agent.

 

2.             Real Estate Due
Diligence Items.

 

(a)           Current
Ad Valorem tax statements.

 

(b)                                 Current zoning
report or evidence of compliance with zoning.

 

3.             Standard Flood
Hazard Determination Form

 

XIII.        Kahler
Inn & Suites Rochester:

 

Post
Close Item

 

1.             Management
Agreement Consent.  Manager’s
Consent Under Management Agreement (Interstate) between Sunstone Hotel
Properties, Inc., as Manager, Sunstone Hotel Partnership, LLC, as
Borrower, Sunstone SH Hotels, LLC, as Fee Owner, Sunstone KIS Lessee, Inc.,
as Lessee, and Agent.

 

2.             Liens/Encumbrances.  The property is subject to a
lien for assessments under the Century Corridor Business Improvement District,
in the original amount of $9,096.85. Borrower shall provide evidence of payment
of such lien.

 

XIV.        Renaissance
Orlando Resort Ground Lease:

 

Post
Close Item

 

1.             Separately Platted
Lot.  Borrower shall provide
evidence that the property is made up of separately platted lots, or shall
provide adequate evidence that the property is not required to be separately
platted in order to transfer such properties.

 

 

C.            Post-Closing
Commercially Reasonable Efforts (by Property):

 

I.              Marriott
Quincy:

 

Post
Close Item

2.             Liens/Encumbrances.

 

(a)           Notice
of Contract naming Suffolk Construction Co., Inc., Contractor/Plaintiff,
dated August 30, 2001, recorded in Book 15456, Page 321, as
affected by Statement of Claim, recorded in
Book 15456, Page 326, as further affected by Complaint, dated
November 21, 2001, recorded in Book 15797, Page 526, as
further affected by Notice of Dissolution of Lien (RE: Lot 21), recorded in
Book 16054, Page 79. Borrower shall provide evidence that such
proceedings have been dismissed or that the subject liens have been paid.

 

(b)           Notice
of Contract naming  Suffolk Construction Co., Inc., as
plaintiff/Contractor, dated August 30, 2001, recorded in
Book 15455, Page 412, as affected by Statement of Claim, dated
August 30, 2001, recorded in Book 15455, Page 415, as
further affected by Complaint, dated November 21, 2001, recorded in
Book 15797, Page 499. Borrower shall provide evidence that such
proceedings have been dismissed or that the subject liens have been paid.

 

II.            Fairmont
Newport Beach:

 

Post
Close Item

 

1.             Parking and Zoning
Issues.  According to the zoning
summary, required parking for the Property is 597 spaces, and there are
currently only 382 parking spaces. According to the Grant of Parking Easement
recorded August 26, 1996 as Instrument No. 96-436401, Official
Records of Orange County, California, the Property has access to an additional
171 parking spaces offsite. Therefore, there is a shortage of 44 parking
spaces. Borrower shall provide evidence of compliance with zoning with respect
to parking.

 

III.           Marriott
Rochester:

 

Post
Close Item

 

1.             Separately Platted
Lot.  Borrower shall provide
evidence that the property is made up of separately platted lots, or shall
provide adequate evidence that the property is not required to be separately
platted in order to transfer such properties.

 

 

IV.           Residence
Inn by Marriott Rochester:

 

Post
Close Item

 

1.             Separately Platted
Lot.  Borrower shall provide
evidence that the property is made up of separately platted lots, or shall
provide adequate evidence that the property is not required to be separately
platted in order to transfer such properties.

 

V.            Renaissance
Los Angeles Airport:

 

Post
Close Item

1.             Parking and Zoning
Issues.

 

(a)           Code Violation: According to the zoning report,
there is an open violation for conversion of a portion of the parking garage to
a ballroom without required permits and approvals. Borrower shall provide
evidence that the violation has been cured.

 

 

Schedule A to Schedule
5.03

 

Non-Property Related
Post-Close

 

Party
Legend:

 

	
  Borrower

  	
   

  	
  Sunstone Hotel Partnership, LLC, a Delaware limited liability company

  
	
  Parent

  	
   

  	
  Sunstone Hotel Investors, Inc., a Maryland corporation

  
	
  PledgeCo

  	
   

  	
  Sunstone Pledgeco, LLC

  
	
  LA Airport

  	
   

  	
  Sunstone LA Airport LLC

  
	
  Center Court

  	
   

  	
  Sunstone Center Court, LLC

  
	
  Century

  	
   

  	
  Sunstone Century, LLC

  
	
  Hotels Rochester

  	
   

  	
  Sunstone Hotels Rochester, L.L.C.

  
	
  RP Collins

  	
   

  	
  Sunstone RP Collins, LLC

  
	
  Jamboree

  	
   

  	
  Sunstone Jamboree, LLC

  
	
  Westwood

  	
   

  	
  Sunstone Westwood, LLC

  
	
  MacArthur

  	
   

  	
  Sunstone MacArthur, LLC

  
	
  Red Oak

  	
   

  	
  Sunstone Red Oak, LLC

  
	
  KIS

  	
   

  	
  Sunstone KIS, LLC

  
	
  Skyway

  	
   

  	
  Sunstone Skyway, LLC

  
	
  Quincy

  	
   

  	
  Sunstone Quincy, LLC

  
	
  WB Portland

  	
   

  	
  WB Sunstone-Portland, LLC

  
	
  Sun CHP

  	
   

  	
  Sun CHP I, Inc.

  
	
  Sun SHP

  	
   

  	
  Sun SHP II, LLC

  
	
  WHP Hotel

  	
   

  	
  WHP Hotel Owner-2A, L.L.C.

  
	
  Outparcel

  	
   

  	
  Sunstone Outparcel L.L.C.

  
	
  Sun BB

  	
   

  	
  Sun BB, LLC

  
	
  Pico Ventures

  	
   

  	
  Pico Ventures, LLC

  
	
  Broadway

  	
   

  	
  Sunstone Broadway, LLC

  
	
  Hotel Acquisition

  	
   

  	
  Sunstone Hotel Acquisitions, LLC

  
	
  Atlantic

  	
   

  	
  Sunstone Atlantic Lender LLC

  
	
  Broadway Lender

  	
   

  	
  Sunstone Broadway Lender LLC

  
	
  RIP

  	
   

  	
  Sunstone RIP, LLC

  
	
  Holdco 6

  	
   

  	
  Sunstone Holdco 6, LLC

  
	
  Holdco8

  	
   

  	
  Sunstone Holdco 8, LLC

  
	
  Property Owners

  	
   

  	
  LA Airport, Center Court, Century, Hotels Rochester, RP Collins,
  Jamboree, Westwood, MacArthur, Red Oak, KIS, Skyway, Quincy, and WB Portland.

  
	
  Guarantors

  	
   

  	
  Parent, Property Owners, and other Guarantor Subsidiaries

  
	
  Other Guarantor Subsidiaries

  	
   

  	
  PledgeCo, Sun CHP, Sun
  SHP, WHP Hotel, Outparcel, Sun BB, Pico Ventures, Broadway, Hotel
  Acquisition, Atlantic, Broadway Lender, RIP, Holdco 6, and Holdco 8.

   

  

 

 

	
   

  	
  Post Close Item

  
	
   

  	
   

  
	
    A.

  	
  LOAN DOCUMENTS

  
	
   

  	
   

  
	
  1.

  	
  Subsidiary Guaranty
  (executed by each Property Owner, the general partner of any Property Owner
  that is a limited partnership, and each other Subsidiary Guarantor)

  
	
   

  	
   

  
	
  2.

  	
  Pledge Agreement (covering
  Borrower’s equity interests in any Subsidiary Guarantor; and certain
  Subsidiary Guarantors interests in certain Subsidiary Guarantors), and UCC-1
  Financing Statements to be recorded in conjunction therewith.

  
	
   

  	
   

  
	
  3.

  	
  Opinions of Counsel for Borrower and Guarantors

  
	
   

  	
   

  
	
  a.

  	
  Latham & Watkins LLP

  
	
  b.

  	
  In-house
  counsel

  
	
   

  	
   

  
	
    B.

  	
  Organizational Documents of Guarantors:

  
	
   

  	
   

  
	
  1.

  	
  PledgeCo

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  2.

  	
  LA Airport

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  3.

  	
  Center Court

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  4.

  	
  Century

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  

 

 

	
   

  	
  Post Close Item

  
	
   

  	
   

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  5.

  	
  Hotels Rochester

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  6.

  	
  RP Collins

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  7.

  	
  Jamboree

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  8.

  	
  Westwood

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  9.

  	
  MacArthur

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  

 

 

	
   

  	
  Post Close Item

  
	
   

  	
   

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  10.

  	
  Red Oak

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  11.

  	
  KIS

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  12.

  	
  Skyway

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  13.

  	
  Quincy

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  14.

  	
  WB Portland

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  

 

 

	
   

  	
  Post Close Item

  
	
   

  	
   

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  15.

  	
  Sun SHP

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  16.

  	
  WHP Hotel

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  17.

  	
  Outparcel

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  18.

  	
  Sun BB

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  19.

  	
  Pico Ventures

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  

 

 

	
   

  	
  Post Close Item

  
	
   

  	
   

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  20.

  	
  Broadway

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  21.

  	
  Hotel Acquisitions

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  22.

  	
  Atlantic

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  23.

  	
  Broadway Lender

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  24.

  	
  RIP

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  

 

 

	
   

  	
  Post Close Item

  
	
   

  	
   

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  25.

  	
  Sun CHP

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Incorporation

  
	
   

  	
  Bylaws

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  26.

  	
  Holdco 6

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  
	
   

  	
   

  
	
  27.

  	
  Holdco 8

  
	
   

  	
   

  
	
   

  	
  Officer’s Certificate, certifying:

  
	
   

  	
  Certificate of Formation

  
	
   

  	
  LLC Agreement

  
	
   

  	
  Certificates of Existence and Good Standing

  
	
   

  	
  Resolutions

  

 

 

SCHEDULE 6.13

 

SUBSIDIARIES; OTHER EQUITY INVESTMENTS

 

Part (a).                  Subsidiaries.

 

	
  EP Holdings, LLC

  	
   

  	
  Sunstone Holdco 3, LLC

  	
   

  	
  Sunstone Pledgeco, LLC

  
	
  Pico Ventures, LLC

  	
   

  	
  Sunstone Holdco 4, LLC

  	
   

  	
  Sunstone Quincy Lessee, Inc.

  
	
  Rochester Bevflow, Inc.

  	
   

  	
  Sunstone Holdco 5, LLC

  	
   

  	
  Sunstone Quincy, LLC

  
	
  Rochester DC, LLC

  	
   

  	
  Sunstone Holdco 6, LLC

  	
   

  	
  Sunstone Red Oak Lessee, Inc.

  
	
  Rochester RIBM Lessee, Inc.

  	
   

  	
  Sunstone Holdco 7, LLC

  	
   

  	
  Sunstone Red Oak, LLC

  
	
  RTS Lessee, Inc.

  	
   

  	
  Sunstone Holdco 8, LLC

  	
   

  	
  Sunstone RIP, LLC

  
	
  SHP DT Bevflow, Inc.

  	
   

  	
  Sunstone Holdco I, LLC

  	
   

  	
  Sunstone Sea Harbor Holdco, LLC

  
	
  SHP Lessee Corp

  	
   

  	
  Sunstone Holt Lessee, Inc.

  	
   

  	
  Sunstone Sea Harbor Lessee, Inc.

  
	
  SHP Lessee II Corp

  	
   

  	
  Sunstone Holt, LLC

  	
   

  	
  Sunstone Sea Harbor, LLC

  
	
  SHP Lessee III Corp

  	
   

  	
  Sunstone Hotel Acquisitions, LLC

  	
   

  	
  Sunstone SH Hotels, LLC

  
	
  Sun BB, LLC

  	
   

  	
  Sunstone Hotel Partnership, LLC

  	
   

  	
  Sunstone Sidewinder Lessee, Inc

  
	
  Sun CHP I, Inc.

  	
   

  	
  Sunstone Hotel TRS Lessee, Inc.

  	
   

  	
  Sunstone Sidewinder, LLC

  
	
  Sun Manhattan, LLC

  	
   

  	
  Sunstone Hotels Rochester, LLC

  	
   

  	
  Sunstone Skyway Lessee, Inc.

  
	
  Sun Napa Merlot Lessee, Inc.

  	
   

  	
  Sunstone Hotels, LLC

  	
   

  	
  Sunstone Skyway, LLC

  
	
  Sun SHP II, LLC

  	
   

  	
  Sunstone Jamboree Lessee, Inc.

  	
   

  	
  Sunstone Top Gun Lessee, Inc.

  
	
  Sunstone 42nd Street Lessee, Inc.

  	
   

  	
  Sunstone Jamboree, LLC

  	
   

  	
  Sunstone Top Gun, LLC

  
	
  Sunstone 42nd Street, LLC

  	
   

  	
  Sunstone K9 Lessee, Inc.

  	
   

  	
  Sunstone Valley River Lessee, Inc.

  
	
  Sunstone Atlantic Lender, LLC

  	
   

  	
  Sunstone K9, LLC

  	
   

  	
  Sunstone Valley River, LLC

  
	
  Sunstone Big Beaver Lessee, Inc.

  	
   

  	
  Sunstone Kahler Lessee, Inc.

  	
   

  	
  Sunstone Westwood, LLC

  
	
  Sunstone Big Beaver, LLC

  	
   

  	
  Sunstone Kahler, LLC

  	
   

  	
  Sunstone Wharf Lessee, Inc.

  
	
  Sunstone Broadhollow Lessee, Inc.

  	
   

  	
  Sunstone Kettner Lessee, Inc.

  	
   

  	
  Sunstone Wharf, LLC

  
	
  Sunstone Broadhollow, LLC

  	
   

  	
  Sunstone Kettner, LLC

  	
   

  	
  Sunstone Windy Hills Lessee, Inc.

  
	
  Sunstone Broadway Lender, LLC

  	
   

  	
  Sunstone KIS Lessee, Inc.

  	
   

  	
  Sunstone windy Hill, LLC

  
	
  Sunstone Broadway, LLC

  	
   

  	
  Sunstone KIS, LLC

  	
   

  	
  Sunstone/WB Manhattan Beach Lessee, Inc.

  
	
  Sunstone Center Court Lessee, Inc.

  	
   

  	
  Sunstone LA Airport Lessee, Inc.

  	
   

  	
  SWW No. 1, LLC

  
	
  Sunstone Center Court, LLC

  	
   

  	
  Sunstone LA Airport, LLC

  	
   

  	
  TTS Facilities, LLC

  
	
  Sunstone Century Lessee, Inc.

  	
   

  	
  Sunstone LaSalle Lessee, Inc.

  	
   

  	
  WB Sunstone-Portland, Inc.

  
	
  Sunstone Century, LLC

  	
   

  	
  Sunstone LaSalle, LLC

  	
   

  	
  WB Sunstone-Portland, LLC

  
	
  Sunstone RP Collins Lessee, Inc.

  	
   

  	
  Sunstone Leesburg Lessee, Inc.

  	
   

  	
  WB Sunstone-Riverside, LLC

  
	
  Sunstone RP Collins, LLC

  	
   

  	
  Sunstone Leesburg, LLC

  	
   

  	
  WHP Bevflow, LLC

  
	
  Sunstone Cowboy GP, LLC

  	
   

  	
  Sunstone Longhorn GP, LLC

  	
   

  	
  WHP Hotel Owner 2A, LLC

  
	
  Sunstone Cowboy Lessee GP, LLC

  	
   

  	
  Sunstone Longhorn Holdco, LLC

  	
   

  	
  WHP PPE Owner-1, LLC

  
	
  Sunstone Cowboy Lessee, LP

  	
   

  	
  Sunstone Longhorn Lessee GP, LLC

  	
   

  	
  WHP Texas Beverage 1, Inc.

  
	
  Sunstone Cowboy, LP

  	
   

  	
  Sunstone Longhorn Lessee, LP

  	
   

  	
  WHP Texas Beverage 2, Inc.

  
	
  Sunstone Downtown Lessee, Inc.

  	
   

  	
  Sunstone Longhorn, LP

  	
   

  	
   

  
	
  Sunstone Downtown, LLC

  	
   

  	
  Sunstone MacArthur Lessee, Inc.

  	
   

  	
   

  
	
  Sunstone Durante Lessee, Inc.

  	
   

  	
  Sunstone MacArthur, LLC

  	
   

  	
   

  
	
  Sunstone Durante, LLC

  	
   

  	
  Sunstone Napa, LLC

  	
   

  	
   

  
	
  Sunstone East Pratt GP, LLC

  	
   

  	
  Sunstone North State Lessee, Inc.

  	
   

  	
   

  
	
  Sunstone East Pratt Lessee, Inc.

  	
   

  	
  Sunstone North State, LLC

  	
   

  	
   

  
	
  Sunstone East Pratt, LP

  	
   

  	
  Sunstone Ocean Lessee, Inc.

  	
   

  	
   

  
	
  Sunstone El Camino Lessee, Inc.

  	
   

  	
  Sunstone Ocean, LLC

  	
   

  	
   

  
	
  Sunstone El Camino, LLC

  	
   

  	
  Sunstone OP Properties, LLC

  	
   

  	
   

  
	
  Sunstone Hartsfield Lessee, Inc.

  	
   

  	
  Sunstone Outparcel, LLC

  	
   

  	
   

  
	
  Sunstone Hartsfield, LLC

  	
   

  	
  Sunstone Philly GP, LLC

  	
   

  	
   

  
	
  Sunstone Hazelwood, LLC

  	
   

  	
  Sunstone Philly Lessee, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  Sunstone Philly, LP

  	
   

  	
   

  

 

 

Part (b).                  Other
Equity Investments.

 

None.

 

 

SCHEDULE 6.25

MANAGEMENT AGREEMENTS

 

	
  Document:

  	
   

  	
  Effective Date:

  	
   

  	
  Parties:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cerritos Sheraton

  	
   

  	
   

  	
   

  	
   

  
	
  Hotel
  Management Agreement

  	
   

  	
  June 2005

  	
   

  	
  Sunstone Center Court Lessee, Inc. and
  Sunstone Hotel Properties, Inc.

  
	
  Kahler Inn & Suites

  	
   

  	
   

  	
   

  	
   

  
	
  Master
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Sunstone Hotel Properties, Inc. and SHP
  Lessee Corp.; WHP Hotel Lessee — 1, Inc.; WB Sunstone Hollywood, Inc.;
  Sunstone/WB Manhattan Beach Lessee, Inc.; Sun Napa Merlot Lessee, Inc.; WB
  Ontario, Inc.; WB Sunstone-Riverside, Inc.; SHP Lessee II Corp.; Sunstone
  Windy Hills Lessee, Inc.; WB Sunstone-Boise, Inc.; WHP Hotel Lessee — 3, Inc.;
  WB Grand Rapids, Inc.; WHP Hotel Lessee — 2A, Inc.; Rochester RIBM Lessee, Inc.;
  Kahler E&P Partners Lessee, Inc.; WB Sunstone-Lake Oswego, Inc.; WB Sunstone-Portland,
  Inc.; WHP Hotel Lessee — 2, Inc., SHP Lessee III Corp.

  
	
  Hotel
  Management Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  SHP Lessee II Corp. and Sunstone Hotel
  Properties, Inc.

  
	
  Guaranty

  	
   

  	
  26 October 2010

  	
   

  	
  Interstate Management Company, LLC Sunstone
  Hotel Properties, Inc. and SHP Lessee Corp.; WHP Hotel Lessee — 1, Inc.; WB
  Sunstone Hollywood, Inc.; Sunstone/WB Manhattan Beach Lessee, Inc.; Sun Napa
  Merlot Lessee, Inc.; WB Ontario, Inc.; WB Sunstone-Riverside, Inc.; SHP
  Lessee II Corp.; Sunstone Windy Hills Lessee, Inc.; WB Sunstone-Boise, Inc.;
  WHP Hotel Lessee — 3, Inc.; WB Grand Rapids, Inc.; WHP Hotel Lessee — 2A, Inc.;
  Rochester RIBM Lessee, Inc.; Kahler E&P Partners Lessee, Inc.; WB
  Sunstone-Lake Oswego, Inc.; WB Sunstone-Portland, Inc.; WHP Hotel Lessee — 2,
  Inc., SHP Lessee III Corp.

  

 

 

	
  Modification of Master
  Agreement (Letter)

  	
   

  	
  1 July 2005

  	
   

  	
  Sunstone Hotel Properties, Inc. and SHP
  Lessee Corp.; Sunstone LaSalle Lessee, Inc.; WB Sunstone-Hollywood, Inc.;
  Sunstone/WB Manhattan Beach Lessee, Inc.; Sun Napa Merlot Lessee, Inc.;
  Sunstone Holt Lessee, Inc.; WB Sunstone-Riverside, Inc.; SHP Lessee II Corp.;
  WB Sunstone-Boise, Inc.; WHP Hotel Lessee — 3,Inc.; WB Grand Rapids, Inc.;
  Rochester RIBM Lessee, Inc.; Sunstone Sidewinder Lessee, Inc.; WB
  Sunstone-Lake Oswego, Inc.; WB Sunstone-Portland, Inc.; Sunstone Cowboy
  Lessee, LP; SHP Lessee III Corp.; Sunstone Durante Lessee, Inc.; Sunstone
  Kahler Lessee, Inc.; Sunstone Valley River Lessee, Inc.; Sunstone Broadhollow
  Lessee, Inc.; BA LAX, LLC; Sunstone Beverly Hills, LLC; Sunrockpoint
  Nashville Hotel Lessee, Inc.

  
	
  Amended and Restated
  Assignment of Management Agreements and Guaranty of Management Agreements,
  Subordination of Management Agreements and Consent to Assignment and
  Subordination

  	
   

  	
  22 December 2005

  	
   

  	
  Sunstone Hotel Investors, Inc., SHP Lessee
  Corp., SHP II Lessee Corp, Sunstone Broadhollow Lessee, Inc., Sunstone/WB
  Manhattan Beach Lessee and Massachusetts Mutual Life Insurance Company

  
	
  Modification of Master
  Agreement (Letter)

  	
   

  	
  1 January 2006

  	
   

  	
  Sunstone Hotel Properties, Inc. and SHP
  Lessee Corp.; Sunstone LaSalle Lessee, Inc.; WB Sunstone-Hollywood, Inc.;
  Sunstone/WB Manhattan Beach Lessee, Inc.; Sun Napa Merlot Lessee, Inc.;
  Sunstone Holt Lessee, Inc.; WB Sunstone-Riverside, Inc.; SHP Lessee II Corp.;
  WB Sunstone-Boise, Inc.; WHP Hotel Lessee — 3,Inc.; WB Grand Rapids, Inc.;
  Rochester RIBM Lessee, Inc.; Sunstone Sidewinder Lessee, Inc.; WB
  Sunstone-Lake Oswego, Inc.; WB Sunstone-Portland, Inc.; Sunstone Cowboy
  Lessee, LP; SHP Lessee III Corp.; Sunstone Durante Lessee, Inc.; Sunstone
  Kahler Lessee, Inc.; Sunstone Valley River Lessee, Inc.; Sunstone Broadhollow
  Lessee, Inc.

  
	
  Assignment and
  Assumption of Hotel Management Agreement and Master Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  SHP Lessee II Corp. and Sunstone KIS
  Lessee, Inc.

  
	
  Courtyard LAX

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  Hotel Management
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  SHP Lessee Corp. and Sunstone Hotel
  Properties, Inc.

  
	
  Amended and Restated
  Assignment of Management Agreement and Guaranty of Management Agreements,
  Subordination of Management Agreements and Consent to Assignment and
  Subordination

  	
   

  	
  22 December 2005

  	
   

  	
  Sunstone Hotel Investors, Inc., SHP Lessee
  Corp., SHP II Lessee Corp, Sunstone Broadhollow Lessee, Inc., Sunstone/WB
  Manhattan Beach Lessee and Massachusetts Mutual Life Insurance Company

  
	
  Assignment and
  Assumption of Hotel Management Agreement and Master Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  SHP Lessee Corp. and Sunstone Century
  Lessee, Inc.

  
	
  Portland Marriott

  	
   

  	
   

  	
   

  	
   

  
	
  Hotel Management
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  WB Sunstone-Portland, Inc. and Sunstone
  Hotel Properties, Inc.

  
	
  Management Agreement
  Exhibits A and B

  	
   

  	
  22 November 2004

  	
   

  	
   

  
	
  Quincy Marriott

  	
   

  	
   

  	
   

  	
   

  
	
  Management Agreement

  	
   

  	
  28 January 2000

  	
   

  	
  Marriott Hotel Services, Inc. and The 1993
  Flatley Family Trust

  
	
  Summary of Material
  Business Terms of the Management Agreement

  	
   

  	
  28 January 2000

  	
   

  	
  Marriott Hotel Services, Inc. and The 1993
  Flatley Family Trust

  
	
  First Amendment to
  Management Contract

  	
   

  	
  23 October 2000

  	
   

  	
  The 1993 Flatley Family Trust and Marriott
  Hotel Services, Inc.

  
	
  Quincy Letter Amendment

  	
   

  	
  20 December 2002

  	
   

  	
  Marriott Hotel Services, Inc. and The 1993
  Flatley Family Trust

  
	
  Assignment and
  Assumption Agreement

  	
   

  	
  1 May 2007

  	
   

  	
  The 1993 Flatley Family Trust and Sunstone
  Quincy Lessee, Inc.

  
	
  Guaranty

  	
   

  	
  1 May 2007

  	
   

  	
  Sunstone Hotel Partnership, LLC and
  Marriott Hotel Services, Inc.

  
	
  Owner Agreement

  	
   

  	
  29 June 2007

  	
   

  	
  Sunstone Quincy, LLC; Sunstone Holdco 7,
  LLC; Sunstone Quincy Lessee, Inc. and Marriott Hotel Services, Inc.

  
	
  Side Letter to
  Management Agreement

  	
   

  	
  29 December 2007

  	
   

  	
  Marriott Hotel Services, Inc. and Sunstone
  Quincy Lessee, Inc. (as successor-in-interest to the 1993 Flatley Family
  Trust)

  
	
  Second Amendment to
  Management Agreement for the Boston Marriott Quincy Hotel

  	
   

  	
  29 December 2007

  	
   

  	
  Marriott Hotel Services, Inc. and Sunstone
  Quincy Lessee, Inc. (as successor-in-interest to the 1993 Flatley Family
  Trust)

  
	
  Newport Fairmont

  	
   

  	
   

  	
   

  	
   

  
	
  Hotel Management
  Agreement

  	
   

  	
  20 April 2005

  	
   

  	
  Sunstone MacArthur Lessee, Inc. and
  Fairmont Hotels & 

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  Resorts (U.S.) Inc.

  
	
  Management Agreement
  Side Letter

  	
   

  	
  20 April 2005

  	
   

  	
  Sunstone MacArthur Lessee, Inc. and
  Fairmont Hotels & Resorts (U.S.) Inc.

  
	
  First Amendment to Hotel
  Management Agreement

  	
   

  	
  20 February 2008

  	
   

  	
  Fairmont Hotels & Resorts (U.S.) Inc.
  and Sunstone MacArthur Lessee, Inc.

  
	
  Manager’s Consent and
  Subordination of Management Agreement

  	
   

  	
  26 June 2009

  	
   

  	
  Fairmont Hotels & Resorts (U.S.), Inc.;
  Sunstone Hotel Partnership, LLC; Sunstone MacArthur Lessee, Inc; and Citicorp
  North America, Inc.

  
	
  Newport Hyatt

  	
   

  	
   

  	
   

  	
   

  
	
  Management Agreement

  	
   

  	
  9 June 1989

  	
   

  	
  CSL Newporter LTD. And Hyatt Corporation

  
	
  Accommodation Letter to
  Management Agreement

  	
   

  	
  9 June 1989

  	
   

  	
  Sunstone Jamboree Lessee, Inc. and Hyatt
  Corporation

  
	
  Assignment and
  Assumption of Management Agreements

  	
   

  	
  1 December 1998

  	
   

  	
  Patriot American Hospitality Partnership,
  L.P. and Wyndham International Operating Partnership, L.P.

  
	
  Assignment Agreement

  	
   

  	
  17 November 2000

  	
   

  	
  Patriot American Hospitality Partnership,
  L.P. and Wyndham International Operating Partnership, L.P.

  
	
  Assignment and
  Assumption of Agreements

  	
   

  	
  5 December 2002

  	
   

  	
  Patriot American Hospitality Partnership,
  L.P. and Wyndham International Operating Partnership, L.P.

  
	
  Landlord, Tenant, and
  Manager Non-Disturbance and Attornment Agreement

  	
   

  	
  13 May 2005

  	
   

  	
  Sunstone Jamboree Lessee, Inc. and Hyatt
  Corporation

  
	
  Term Extension Letter

  	
   

  	
  11 September 2008

  	
   

  	
  Sunstone Jamboree Lessee, Inc. and Hyatt
  Corporation

  
	
  Term Extension Letter

  	
   

  	
  11 December 2008

  	
   

  	
  Sunstone Jamboree Lessee, Inc. and Hyatt
  Corporation

  
	
  First Amendment to
  Management Agreement

  	
   

  	
  8 March 2010

  	
   

  	
  Sunstone Jamboree Lessee, Inc. and Hyatt
  Corporation

  
	
  Renaissance LAX

  	
   

  	
   

  	
   

  	
   

  
	
  Management Agreement

  	
   

  	
  23 June 2005

  	
   

  	
  Renaissance Hotel Management Company, LLC
  and WSRH LAX Airport, LLC

  
	
  Consent and Assignment
  and Assumption of Management Contract

  	
   

  	
  4 January 2007

  	
   

  	
  WSRH LAX Airport LLC; Sunstone Holdco 6,
  LLC; Sunstone LA Airport Lessee, Inc. and Renaissance Hotel Management
  Company, LLC

  
	
  Amended and Restated
  Owner Agreement

  	
   

  	
  10 December 2007

  	
   

  	
  WSRH LAX Airport LLC; Sunstone LA Airport
  Lessee, Inc. and Renaissance Hotel Management Company, LLC

  
	
  Assignment and Assumption
  of Amended and Restated Owner Agreement

  	
   

  	
  25 June 2009

  	
   

  	
  WSRH LAX Airport, LLC and Sunstone LA
  Airport, LLC

  
	
  Renaissance Westchester

  	
   

  	
   

  	
   

  	
   

  
	
  Management Agreement

  	
   

  	
  23 June 2005

  	
   

  	
  Renaissance Hotel Operating Company and
  Sunstone Red Oak Lessee, Inc.

  

 

 

	
  Memorandum of Management
  Agreement

  	
   

  	
  23 June 2005

  	
   

  	
  Sunstone Res Oak Lessee, Inc. and
  Renaissance Hotel Operating Company

  
	
  Rochester Marriott

  	
   

  	
   

  	
   

  	
   

  
	
  Hotel Management
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  SHP Lessee II Corp. and Sunstone Hotel
  Properties, Inc.

  
	
  Assignment and Assumption
  of Hotel Management Agreement and Master Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  SHP Lessee II Corp. and Sunstone Skyway
  Lessee, Inc.

  
	
  Rochester Residence Inn

  	
   

  	
   

  	
   

  	
   

  
	
  Master Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Sunstone Hotel Properties, Inc. and SHP
  Lessee Corp.; WHP Hotel Lessee — 1, Inc.; WB Sunstone Hollywood, Inc.;
  Sunstone/WB Manhattan Beach Lessee, Inc.; Sun Napa Merlot Lessee, Inc.; WB
  Ontario, Inc.; WB Sunstone-Riverside, Inc.; SHP Lessee II Corp.; Sunstone
  Windy Hills Lessee, Inc.; WB Sunstone-Boise, Inc.; WHP Hotel Lessee — 3,Inc.;
  WB Grand Rapids, Inc.; WHP Hotel Lessee — 2A,Inc.; Rochester RIBM Lessee, Inc.;
  Kahler E&P Partners Lessee, Inc.; WB Sunstone-Lake Oswego, Inc.; WB
  Sunstone-Portland, Inc.; WHP Hotel Lessee — 2,Inc.; SHP Lessee III Corp.

  
	
  Hotel Management
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Rochester RIBM Lessee, Inc. and Sunstone
  Hotel Properties, Inc.

  
	
  Modification of Master
  Agreement Letter

  	
   

  	
  1 January 2006

  	
   

  	
   

  
	
  Royal Palm

  	
   

  	
   

  	
   

  	
   

  
	
  Master Agreement

  	
   

  	
  19 October 2010

  	
   

  	
  James Hotel Management Company, LLC and
  Sunstone RP Collings Lessee, Inc.

  

 

 

SCHEDULE 6.26

FRANCHISE AGREEMENTS; LICENSE AGREEMENTS

 

	
  Document:

  	
   

  	
  Effective Date:

  	
   

  	
  Parties:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cerritos Sheraton

  	
   

  	
   

  	
   

  	
   

  
	
  Management Agreement

  	
   

  	
  1 January 2003

  	
   

  	
  Cerritos Associates, LLC and Sheraton
  Operating Corporation

  
	
  Sheraton Cerritos Hotel
  Change of Ownership License Agreement

  	
   

  	
  24 June 2005

  	
   

  	
  The Sheraton Corporation and Sunstone
  Center Court Lessee, Inc.

  
	
  Guarantee —
  Exhibit I & J to License Agreement

  	
   

  	
  [No Date]

  	
   

  	
  The Sheraton Corporation and Sunstone
  Center Court Lessee, Inc.

  
	
  Courtyard LAX

  	
   

  	
   

  	
   

  	
   

  
	
  Owner Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc. and SHP Lessee
  Corp.

  
	
  Relicensing Franchise
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc. and SHP Lessee
  Corp.

  
	
  Guaranty

  	
   

  	
  26 October 2004

  	
   

  	
  Sunstone Hotel Investors, Inc. and Sunstone
  Hotel Partnership, LLC in favor of and for the benefit of Marriott
  International, Inc.

  
	
  Assignment and
  Assumption of Owner Documents

  	
   

  	
  30 April 2010

  	
   

  	
  SHP Lessee Corp. and Sunstone Century
  Lessee, Inc.

  
	
  Assignment and
  Assumption of Owner Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  Sunstone OP Properties, LLC and Sunstone
  Century LLC

  
	
  Marriott Portland

  	
   

  	
   

  	
   

  	
   

  
	
  Owner Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc and WB Sunstone
  — Portland, Inc. and WB Sunstone — Portland, LLC.

  
	
  Relicensing Franchise
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc. and WB
  Sunstone — Portland, Inc.

  
	
  Memorandum of Right of
  First Refusal

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc and WB Sunstone
  — Portland, Inc. and WB Sunstone — Portland, LLC.

  
	
  Guaranty

  	
   

  	
  26 October 2004

  	
   

  	
  Sunstone Hotel Investors, Inc. and sunstone
  Hotel Partnership, LLC in favor of and for the benefit of Marriott
  International, Inc.

  
	
  Rochester Marriott

  	
   

  	
   

  	
   

  	
   

  
	
  Owner Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc. and SHP Lessee
  II Corp. and Sunstone SH Hotels LLC.

  

 

 

	
  Relicensing Franchise
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc. and SHP Lessee
  II Corp.

  
	
  Amendment to Franchise
  Agreement Required by the State of Minnesota

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc. and SHP Lessee
  II Corp.

  
	
  Guaranty

  	
   

  	
  26 October 2004

  	
   

  	
  Sunstone Hotel Investors, Inc. and Sunstone
  Hotel Partnership, LLC in favor of and for the benefit of Marriott
  International, Inc.

  
	
  Memorandum of Right of
  First Refusal

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc., SHP Lessee II
  Corp. and Sunstone SH Hotels LLC.

  
	
  Assignment and
  Assumption of Franchise Documents

  	
   

  	
  30 April 2010

  	
   

  	
  SHP Lessee II Corp. and Sunstone Skyway
  Lessee, Inc.

  
	
  Assignment and
  Assumption of Owner Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  Sunstone SH Hotels, LLC. And Sunstone
  Skyway, LLC

  
	
  Rochester Residence Inn

  	
   

  	
   

  	
   

  	
   

  
	
  Owner Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc., Rochester
  RIBM Lessee, Inc. and Sunstone Hotels Rochester, LLC.

  
	
  Relicensing Franchise
  Agreement

  	
   

  	
  26 October 2004

  	
   

  	
  Marriott International, Inc. and Rochester
  RIBM Lessee, Inc.

  
	
  Guaranty

  	
   

  	
  26 October 2004

  	
   

  	
  Sunstone Hotel Investors, Inc. and Sunstone
  Hotel Partnership, LLC. in favor of and for the benefit of Marriott
  International, Inc.

  

 

 

SCHEDULE 6.30

OPERATING LEASES

 

	
  Document:

  	
   

  	
  Effective Date:

  	
   

  	
  Parties:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cerritos Sheraton

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  27 June 2005

  	
   

  	
  Sunstone Center Court, LLC and sunstone
  Center Court Lessee, Inc.

  
	
  Courtyard LAX

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  1 November 2009

  	
   

  	
  Sunstone OP Properties LLC and SHP Lessee
  Corp.

  
	
  Assignment and
  Assumption of Lessee’s Interest in Lease Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  SHP Lessee Corp. and Sunstone Century
  Lessee, Inc.

  
	
  Assignment and
  Assumption of Lessor’s Interest in Lease Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  Sunstone OP Properties, LLC and Sunstone
  Century, LLC

  
	
  Renaissance LAX

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  4 January 2007

  	
   

  	
  Sunstone Holdco 6, LLC and Sunstone LA
  Airport Lessee, Inc.

  
	
  Assignment and
  Assumption of Lessor’s Interest in Lease Agreement

  	
   

  	
  25 June 2009

  	
   

  	
  Sunstone Holdco 6, LLC and sunstone LA
  Airport, LLC

  
	
  Royal Palm

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  27 August 2010

  	
   

  	
  Sunstone RP Collins, LLC and Sunstone RP
  Collins Lessee, Inc.

  
	
  Newport Fairmont

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  11 July 2005

  	
   

  	
  Sunstone MacArthur, LLC and Sunstone
  MacArthur Lessee, Inc.

  
	
  First Amendment of
  Operating Lease Agreement

  	
   

  	
  1 January 2008

  	
   

  	
  Sunstone MacArthur, LLC and Sunstone
  MacArthur Lessee, Inc.

  
	
  Adjustment of Rents
  Agreement

  	
   

  	
  20 December 2007

  	
   

  	
  Sunstone MacArthur, LLC and Sunstone
  MacArthur Lessee, Inc.

  
	
  Newport Hyatt

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  1 November 2009

  	
   

  	
  Sunstone Jamboree, LLC and Sunstone
  Jamborree Lessee, Inc.

  
	
  Marriott Portland

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  1 November 2009

  	
   

  	
  WB Sunstone Portland, LLC and WB Sunstone
  Portland Lessee, Inc.

  

 

 

	
  Marriott Quincy

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  1 May 2007

  	
   

  	
  Sunstone Holdco 7, LLC and Sunstone Quincy
  Lessee, Inc.

  
	
  Kahler Inn & Suites

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  1 November 2009

  	
   

  	
  Sunstone SH Hotels, LLC and SHP Lessee II
  Corp.

  
	
  Assignment and
  Assumption of Lessee’s Interest in Lease Agreement

  	
   

  	
  14 April 2010

  	
   

  	
  SHP Lessee II Corp. and Sunstone KIS
  Lessee, Inc.

  
	
  Assignment and
  Assumption of Lessor’s Interest in Lease Agreement

  	
   

  	
  14 April 2010

  	
   

  	
  Sunstone SH Hotels, LLC and Sunstone KIS,
  LLC

  
	
  Rochester Residence Inn

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  1 November 2009

  	
   

  	
  Sunstone Hotels Rochester, LLC and
  Rochester RIBM Lessee, Inc.

  
	
  Renaissance Westchester

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  1 November 2009

  	
   

  	
  Sunstone Hotels Rochester, LLC and
  Rochester RIBM Lessee, Inc.

  
	
  Rochester Marriott

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Agreement

  	
   

  	
  1 November 2009

  	
   

  	
  Sunstone SH Hotels, LLC and SHP Lessee II
  Corp.

  
	
  Assignment and Assumption
  of Lessee’s Interest in Lease Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  SHP Lessee II Corp. and Sunstone Skyway
  Lessee, Inc.

  
	
  Assignment and
  Assumption of Lessor’s Interest in Lease Agreement

  	
   

  	
  30 April 2010

  	
   

  	
  Sunstone SH Hotels, LLC and Sunstone
  Skyway, LLC

  

 

 

SCHEDULE 8.01

EXISTING LIENS

 

	
  DEBTOR

  	
   

  	
  JURISDICTION

  	
   

  	
  SECURED PARTY

  	
   

  	
  FILING INFO

  	
   

  	
  COLLATERAL

  DESCRIPTION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sunstone Hotel Partnership, LLC

  	
   

  	
  Delaware

  Secretary of State

  	
   

  	
  Massachusetts Mutual

  Life Insurance Co.

  	
   

  	
  43144328 11/3/04 92218458 7/10/09

  	
   

  	
  Portfolio of eight hotels

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sunstone Hotel
  Investors, Inc.

  	
   

  	
  Maryland

  Secretary of State

  	
   

  	
  US Bancorp.

  	
   

  	
  1362331 2/16/07

  	
   

  	
  Copier lease filing

  

 

 

SCHEDULE 8.03

 

EXISTING INDEBTEDNESS(1)

 

1.               Indebtedness pursuant to
that certain Indenture, dated as of June 18, 2007, by and among Borrower,
Parent, certain Subsidiaries of Parent, and Wells Fargo Bank, National
Association, as amended by that certain First Supplemental Indenture, dated as
of June 18, 2007, as further amended by that certain Second Supplemental
Indenture, dated as of June 27, 2007, as further amended by that certain
Third Supplemental Indenture, dated as of July 29, 2008, as further
amended by that certain Fourth Supplemental Indenture, dated as of May 20,
2009, as further amended from time to time, in the aggregate outstanding amount
of $62,500,000 as of the Closing Date.

 

Existing L/Cs

 

	
  LC #

  	
   

  	
  Issuer

  	
   

  	
  Beneficiary

  	
   

  	
  Program

  Year

  	
   

  	
  Amount

  	
   

  	
  Expiration

  Date(2)

  
	
  61639862

  	
   

  	
  Citibank, N.A.

  	
   

  	
  Discovery Re

  	
   

  	
  Workers Comp 2000-2002

  	
   

  	
  $

  	
  500,000

  	
   

  	
  4/12/2006

  
	
  61639861

  	
   

  	
  Citibank, N.A.

  	
   

  	
  Royal Indemnity

  	
   

  	
  Workers Comp 2003

  	
   

  	
  $

  	
  530,000

  	
   

  	
  4/12/2006

  
	
  61635044

  	
   

  	
  Citibank, N.A.

  	
   

  	
  Zurich

  	
   

  	
  Workers Comp 2005

  	
   

  	
  $

  	
  350,000

  	
   

  	
  1/31/2006

  
	
  61648920

  	
   

  	
  Citibank, N.A.

  	
   

  	
  Old Republic

  	
   

  	
  Workers Comp 2004

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  3/31/2007

  

 

(1)  Guarantees in
respect of Customary Recourse Exceptions are not set forth in this Schedule 8.03.

(2)  All Existing LC’s
provide for automatic renewals upon expiration

 

 

SCHEDULE 11.02

 

ADMINISTRATIVE AGENT’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES

BORROWER:

 

Sunstone Hotel Partnership, LLC

120 Vantis, Suite 350

Aliso Viejo, CA 92656

Attention: Legal Department

Telephone: 949-330-4000

Telecopier: 949-330-4090

Electronic Mail: dsloan@sunstonehotels.com

Website Address:                www.sunstonehotels.com

U.S. Taxpayer Identification Number: 20-1646175

 

PARENT:

 

Sunstone Hotel Investors, Inc.

903 Calle Amanecer, Suite 100

San Clemente, CA 92673

Attention: Legal Department

Telephone: 949-330-4000

Telecopier: 949-330-4090

Electronic Mail: dsloan@sunstonehotels.com

Website Address:                www.sunstonehotels.com

U.S. Taxpayer Identification Number: 20-1296886

 

ADMINISTRATIVE AGENT:

 

Administrative Agent’s Office  

(for payments and Requests for Credit Extensions):

Bank of America, N.A.

901 Main Street, 14th Floor

Mail Code: TX1-492-14-11

Dallas, TX 75202

Attention:  Jacqueline R. Jones

Telephone:  214-209-9254

Telecopier:  214-290-9439

Electronic Mail: 
jacqueline.r.jones@baml.com

Account No.:  1292000883

Ref:  Sunstone Hotel

ABA# 026009593

 

Other Notices as Administrative Agent:

 

Bank of America, N.A.

Agency Management

901 Main Street, 14th Floor

Mail Code: TX1-492-14-11

 

Dallas, TX 75202

Attention:  Henry C. Pennell

Telephone:  214-209-1226

Telecopier:  214-290-9448

Electronic Mail:  henry.pennell@baml.com

 

and

 

Bank of America, N.A.

901 Main Street, 64th Floor

Mail Code: TX1-492-64-01

Dallas, TX 75202

Attention:  Lesa Butler

Telephone:  214-209-1506

Telecopier:  214-209-0085

Electronic Mail:  lesa.j.butler@baml.com

 

L/C ISSUER:

 

Bank of America, N.A.

Trade Operations

1000 W. Temple Street

Mail Code: CA9-705-07-05

Los Angeles, CA 90012-1514

Attention:  Stella Rosales

Telephone:  213-481-7828

Telecopier:  213-457-8841

Electronic Mail:  stella.rosales@baml.com
                             los_angeles_standby_lc@bankofamerica.com

 

 

EXHIBIT A

 

FORM OF COMMITTED LOAN NOTICE

 

Date:                 ,
        

 

To:          Bank of America,
N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement,
dated as of November 1, 2010 (as amended, restated, extended, supplemented,
or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among SUNSTONE
HOTEL PARTNERSHIP, LLC, a Delaware limited liability company (the “Borrower”), SUNSTONE HOTEL INVESTORS, INC.,
a Maryland corporation (“Parent”),
the Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent and L/C Issuer.

 

The undersigned hereby requests (select one):

 

o            [A Borrowing of Loans]     o     [A
conversion or continuation of Loans]

 

1.             On
                                                  (a
Business Day).

 

2.             In
the amount of $                              .

 

3.             Comprised
of                                              .  [To be converted to                ]

[Type of Loan requested]

 

4.             For
Eurodollar Rate Loans:  with an Interest
Period of [one (1)][two(2)][three (3)][six (6)]  month(s).

 

The Borrowing, if any, requested herein complies
with the provisos to the first sentence of Section 2.01
of the Agreement.

 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL PARTNERSHIP, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

A-1

 

EXHIBIT B

 

FORM OF NOTE

 

           ,
20     

 

FOR VALUE RECEIVED, the undersigned (“Borrower”), hereby promises to pay
to                                          
or registered assigns (“Lender”),
in accordance with the provisions of the Agreement (as hereinafter defined), on
the Maturity Date (as defined in the Agreement defined below) the principal
amount of each Loan from time to time made by the Lender to Borrower under that
certain Credit Agreement, dated as of November 1, 2010 (as amended,
restated, extended, supplemented, or otherwise modified in writing from time to
time, the “Agreement;” the terms defined
therein being used herein as therein defined), among Borrower, SUNSTONE HOTEL
INVESTORS, INC., a Maryland corporation (“Parent”),
the Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent and L/C Issuer.

 

Borrower promises to pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such principal
amount is paid in full, at such interest rates and at such times as provided in
the Agreement.  All payments of principal
and interest shall be made to Administrative Agent for the account of Lender in
Dollars in immediately available funds at Administrative Agent’s Office.  If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Agreement.

 

This Note is one of the Notes referred to in the
Agreement, is entitled to the benefits thereof and may be prepaid in whole or
in part subject to the terms and conditions provided therein.  This Note is also entitled to the benefits of
the Guaranties and is secured by the Collateral.  Upon the occurrence and continuation of one
or more of the Events of Default specified in the Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement.  Loans made by Lender shall be evidenced by
one or more loan accounts or records maintained by Lender in the ordinary
course of business. Lender may also attach schedules to this Note and endorse
thereon the date, amount and maturity of its Loans and payments with respect
thereto.

 

Borrower, for itself, its successors and assigns,
hereby waives diligence, presentment, protest and demand and notice of protest,
demand, dishonor and non-payment of this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL PARTNERSHIP, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

B - 1

 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

	
  Date

  	
   

  	
  Type of

  Loan Made

  	
   

  	
  Amount of

  Loan Made

  	
   

  	
  End of

  Interest

  Period

  	
   

  	
  Amount of

  Principal or

  Interest

  Paid This

  Date

  	
   

  	
  Outstanding

  Principal

  Balance

  This Date

  	
   

  	
  Notation

  Made By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B - 2

 

EXHIBIT C

 

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date:              
,        

 

To:                              Bank of
America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement,
dated as of November 1, 2010 (as amended, restated, extended,
supplemented, or otherwise modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among SUNSTONE HOTEL
PARTNERSHIP, LLC, a Delaware limited liability company (the “Borrower”), SUNSTONE HOTEL INVESTORS, INC.,
a Maryland corporation (“Parent”),
the Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent and L/C Issuer.

 

The undersigned Reporting Officer hereby certifies
as of the date hereof that he/she is the                                                     of Borrower, and that, as such, he/she is
authorized to execute and deliver this Certificate to Administrative Agent on
the behalf of Borrower, and that:

 

[Use following paragraph 1 for fiscal year-end
financial statements]

 

1.                                       Parent has
delivered the year-end audited financial statements required by Section 7.01(a) of the Agreement for the fiscal
year of Parent ended as of the above date, together with the report and opinion
of an independent certified public accountant required by such section.

 

[Use following paragraph 1 for fiscal quarter-end
financial statements]

 

1.                                       Parent has
delivered the unaudited financial statements required by Section 7.01(b) of
the Agreement for the fiscal quarter of Parent ended as of the above date.  Such financial statements fairly present the
financial condition, results of operations, shareholder’s equity, and cash
flows of the Companies in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of footnotes.

 

2.                                       The undersigned
has reviewed and is familiar with the terms of the Agreement and has made, or
has caused to be made under his/her supervision, a detailed review of the
transactions and condition (financial or otherwise) of the Companies during the
accounting period covered by such financial statements.

 

3.                                       A review of the
activities of the Companies during such fiscal period has been made under the
supervision of the undersigned with a view to determining whether during such
fiscal period the Parent and its Subsidiaries performed and observed all of
their Obligations under the Loan Documents, and

 

[select one:]

 

[during such fiscal period Parent and each of its Subsidiaries has
performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Default has occurred and is continuing.]

 

C - 1

 

—or—

 

[during such fiscal period the following covenants or conditions have
not been performed or observed and the following is a list of each such Default
and its nature and status:]

 

4.                                       The
representations and warranties of Parent and Borrower contained in Article VI of the Agreement, and any representations
and warranties of any Loan Party that are contained in any document furnished
at any time under or in connection with the Loan Documents, are true and
correct in all material respects on and as of the date hereof, except to the
extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in all material respects
as of such earlier date, and except that for purposes of this Compliance
Certificate, the representations and warranties contained in Section 6.05(a) and (b) shall
be deemed to refer to the most-recent statements furnished pursuant to Section 7.01(a) and (b) respectively
of the Agreement, in each case, including the statements delivered in
connection with this Compliance Certificate.

 

5.                                       The financial
covenant analyses and information set forth on Schedules 1
and 2 attached hereto are true and
accurate on and as of the date of this Certificate.

 

IN WITNESS WHEREOF, the undersigned has
executed this Certificate as of                            ,
20      .

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL PARTNERSHIP, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

C - 2

 

For the Quarter/Year ended                               (“Statement Date”)

 

SCHEDULE 1

to the Compliance Certificate

($ in 000’s)

 

	
   

  	
   

  	
  Amount

  	
   

  	
  Percentage of

  Consolidated

  Tangible Asset

  Value

  	
   

  
	
  I.                                         Section 8.02
  —  Investments

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.                                   Consolidated
  Tangible Asset Value (See Schedule 2):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.                                     Unconsolidated
  Affiliates:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Permitted:

  	
   

  	
   

  	
   

  	
  10

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.                                     Distressed Indebtedness
  and mezzanine loans:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Permitted:

  	
   

  	
   

  	
   

  	
  10

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.                                    Assets Under
  Development:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Permitted:

  	
   

  	
   

  	
   

  	
  10

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.                                      Total of all
  Investments described in I.B. through I.D. above:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Permitted:

  	
   

  	
   

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In Compliance (Circle one)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.                                     Section 8.14(a) —  Minimum Consolidated Tangible Net Worth.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.                                   $653,760,000:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.                                     Net proceeds
  of Equity Issuances from the Closing Date to the Statement Date multiplied by 80%:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.                                     Minimum
  Consolidated Tangible Net Worth (Line II.A. plus
  Line II.B.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D                                       Consolidated
  Tangible Net Worth as of the Statement Date:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.                                      [Excess][Deficiency]
  for covenant compliance (Line II.D. minus Line
  II.C.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In Compliance (Circle one)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  

 

C - 3

 

	
  III.                                 Section 8.14(b) —
  Minimum Consolidated Fixed Charge Coverage Ratio.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.                                   Consolidated
  EBITDA (See Schedule 2):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.                                     FF&E
  Reserves:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.                                     Consolidated
  Adjusted EBITDA (Line III.A. minus Line
  III.B.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.                                    Consolidated
  Fixed Charges (See Schedule 2):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.                                      Consolidated
  Fixed Charge Coverage Ratio (Line III.C. divided by
  Line III.D.):

  	
   

  	
          to
  1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum required (Closing Date
  through 12-31-2011):

  	
   

  	
  1.10 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum required (1-1-2012 through
  06-30-2012):

  	
   

  	
  1.20 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum required  (7-1-2012 through 12-31-2012):

  	
   

  	
  1.30 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum required  (1-1-2013 and thereafter):

  	
   

  	
  1.50 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In Compliance (Circle one)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.                                Section 8.14(c) —
  Maximum Consolidated Leverage Ratio.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.                                   All
  Indebtedness:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.                                     Unrestricted
  cash and cash equivalents:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.                                     Outstanding
  Amount:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.                                    Line IV.B., minus Line IV.C., minus
  $25,000,000:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.                                      Greater
  of Line IV.D. and $0.00:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.                                      Consolidated
  Net Indebtedness (Line IV.A. minus Line
  IV.E.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.                                     Consolidated
  EBITDA (See Schedule 2):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.                                    Consolidated
  Leverage Ratio (Line IV.F. divided by
  Line IV.G.):

  	
   

  	
          to
  1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum permitted (Closing Date
  through 3-31- 2011):

  	
   

  	
  8.65 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum permitted (4-1-2011
  through 12-31-2011):

  	
   

  	
  8.25 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum permitted (1-1-2012
  through 6-30-2012):

  	
   

  	
  7.75 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum permitted (7-1-2012
  through 12-31-2012):

  	
   

  	
  7.00 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum permitted (1-1-2013 and
  thereafter):

  	
   

  	
  6.50 to 1.0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In Compliance (Circle one)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  

 

C - 4

 

	
  V.                                    Section 8.14(d) —
  Maximum Consolidated Recourse Indebtedness.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.                                   Outstanding
  principal amount of all Recourse Debt (excluding the Obligations):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.                                     All
  Guarantees issued by Borrower and the Guarantors with respect to outstanding
  Recourse Debt of Persons other than the Companies:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.                                     Consolidated
  Recourse Indebtedness (Line V.A. plus Line
  V.B.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.                                    Consolidated
  Tangible Asset Value (See Schedule 2):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.                                      Ratio of Line
  V.C. divided by Line V.D.:

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum permitted:

  	
   

  	
  10

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In Compliance (Circle one)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.                                Section 8.14(e) —
  Maximum Secured Leverage Ratio.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.                                   Consolidated
  Secured Indebtedness:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.                                     Consolidated
  Tangible Asset Value (See Schedule 2):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.                                     Ratio of Line
  VI.A. divided by Line VI.B.:

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Permitted:

  	
   

  	
  50

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In Compliance (Circle one)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.                            Section 7.02(h) —
  Minimum Liquidity Condition(1).

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.                                   Borrowing
  Base:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.                                     Outstanding
  Amount:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.                                     Line VII.A. minus Line VII.B.:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.                                    Cash on hand
  and Cash Equivalents of the Loan Parties:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.                                      Capital
  expenditures made or incurred through the Exchangeable Senior Note Payment
  Date:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.                                      All costs
  related to agreements for the purchase of any Properties through the
  Exchangeable Senior Note Payment Date:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.                                     Regularly
  scheduled principal payments on Indebtedness through the Exchangeable Senior
  Note Payment Date:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  

 

(1)  Solely to be calculated through and including the fiscal
quarter ending immediately preceding the Reporting Date, and commencing with
the month ending immediately following the Reporting Date, as of the last day
of each calendar month through and including the Exchangeable Senior Note
Payment Date.

 

C - 5

 

	
  H.                                    Line VII.C., plus Line VII.D., minus Line
  VII.E., minus Line VII.F., minus $25,000,000, minus Line
  VII.G.:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum required:

  	
   

  	
  $

  	
  0.01

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In Compliance (Circle one)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  

 

C - 6

 

For the Quarter/Year ended                                      
(“Statement Date”)

 

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

 

CALCULATION OF CONSOLIDATED EBITDA, CONSOLIDATED FIXED
CHARGES, 

CONSOLIDATED INTEREST CHARGES, AND CONSOLIDATED TANGIBLE ASSET VALUE

(all
in accordance with the definition for such term

as set forth in the Agreement)

 

Calculation of Consolidated EBITDA

 

	
   

  	
  A.                                   Consolidated
  Net Income:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.                                     Consolidated
  Interest Charges (see calculation below):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.                                     Taxes
  payable:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.                                    Depreciation
  and amortization expense:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  E.                                      Non-cash
  items and non-recurring expenses and acquisition closing costs that were
  capitalized prior to FAS 141-R which do not represent a cash item in such
  period or any future period:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  F.                                      Income Tax
  Credits:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  G.                                     Non-cash items
  increasing Consolidated Net Income

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  H.                                    Consolidated
  EBITDA (Line A., plus Line B.,
  plus Line C., plus
  Line D., plus Line E., minus
  Line F., minus Line G.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  

 

Calculation of Consolidated Fixed Charges

 

	
   

  	
  A.                                   Regularly
  scheduled principal payments(1):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.                                     Consolidated
  Interest Charges paid or payable in cash (see calculation below):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.                                     Restricted
  Payments with respect to Preferred Equity Interests:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.                                    Taxes paid or
  payable in cash:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  E.                                      Consolidated
  Fixed Charges (Line A., plus Line B.,
  plus Line C., plus
  Line D.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  

 

(1)  Excluding any regularly scheduled principal payments on any
Indebtedness which pays such Indebtedness in full, but only to the extent that
the amount of such final payment is greater than the scheduled principal
payment immediately preceding such final payment.

 

C - 7

 

Calculation of Consolidated Interest Charges

 

	
   

  	
  A.                                   All interest,
  premium payments, debt discount, fees, charges and related expenses in
  connection with borrowed money (including capitalized interest) or the
  deferred purchase price of assets in each case to the extent treated as
  interest in accordance with GAAP:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.                                     Portion of
  rent expense under capital leases that is treated as interest in accordance
  with GAAP(2):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.                                     Consolidated
  Interest Charges (Line A. plus Line
  B.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  

 

Calculation of Consolidated Tangible Asset Value

 

	
   

  	
  A.                                   All assets
  (net of all depreciation expenses related to such assets):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.                                     Intangible
  Assets (net of all depreciation expenses related to such assets):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.                                     Consolidated
  Tangible Asset Value (Line A. minus Line
  B.):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  

 

(2)  provided that Consolidated
Interest Charges shall not include any amortization of deferred financing fees
and non cash interest expense pursuant to APB 14-1.

 

C - 8

 

EXHIBIT D-1

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this “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 (the “Credit Agreement”), receipt of a
copy of which is hereby acknowledged by the 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 Administrative 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 such outstanding rights and obligations of
[the Assignor][the respective Assignors] under the Commitment described below
(including the Letters of Credit included in such Commitment) 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 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]]

 

(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.

 

D-1-1

 

3.                                       Borrower:  Sunstone Hotel Partnership, LLC, a Delaware
limited liability company

 

4.                                       Administrative
Agent:  Bank of America, N.A., as the
administrative agent under the Credit Agreement

 

5.                                       Credit
Agreement:  Credit Agreement, dated as of
November 1, 2010 (as amended, restated, extended, supplemented, or
otherwise modified in writing from time to time, the “Credit
Agreement, among Borrower, SUNSTONE HOTEL INVESTORS, INC.,
a Maryland corporation (“Parent”),
the Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent and L/C Issuer

 

6.                                       Assigned
Interest[s]:

 

	
  Assignor[s](5)

  	
   

  	
  Assignee[s](6)

  	
   

  	
  Aggregate

  Amount of

  Commitment

  for all Lenders(7)

  	
   

  	
  Amount of

  Commitment

  Assigned

  	
   

  	
  Percentage

  Assigned of

  Commitment(8)

  	
   

  	
  CUSIP

  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

[7.                                   Trade Date:
                                     ](9)

 

Effective Date:                                    
, 20      [TO BE INSERTED BY ADMINISTRATIVE 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

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

(5)                                  List each
Assignor, as appropriate.

(6)                                  List each
Assignee, as appropriate.

(7)                                  Amounts in this
column and in the column immediately to the right to be adjusted by the
counterparties to take into account any payments or prepayments made between
the Trade Date and the Effective Date.

(8)                                  Set forth, to
at least 9 decimals, as a percentage of the Commitment of all Lenders thereunder.

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

 

D-1-2

 

	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

D-1-3

 

	
  [Consented
  to and](1) Accepted:

  	
   

  
	
   

  	
   

  
	
  BANK
  OF AMERICA, N.A.,

  	
   

  
	
  as
  Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

(1)                                  To be added
only if the consent of Administrative Agent is required by the terms of the
Credit Agreement.

 

D-1-4

 

	
  [Consented
  to:](1)

  	
   

  
	
   

  	
   

  
	
  SUNSTONE
  HOTEL PARTNERSHIP, LLC,

  	
   

  
	
  a
  Delaware limited liability company

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

(1)                                  To be added
only if the consent of Borrower and/or other parties (e.g. L/C Issuer) is
required by the terms of the Credit Agreement.

 

D-1-5

 

ANNEX 1 TO ASSIGNMENT AND
ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.                                       Representations
and Warranties.

 

1.1.                              Assignor.  [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 collateral thereunder, (iii) the financial condition
of Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or
observance by Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

 

1.2.                              Assignee.  [The][Each] Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and 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 11.06(b)(iii) and (v) of the Credit Agreement (subject to such consents,
if any, as may be required under Section 11.06(b)(iii) of
the Credit Agreement), (iii) from and after the Effective Date, 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][such] Assigned
Interest and either it, or the Person exercising discretion in making its
decision to acquire [the][such] 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 7.01(a) and (b) thereof, 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 Administrative 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 hereto 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; and (b) agrees that (i) it will, independently
and without reliance upon Administrative 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.

 

2.                                       Payments.  From and after the Effective Date,
Administrative 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] Assignor for amounts which have accrued to but excluding
the Effective Date and to [the][the relevant] Assignee for amounts which have
accrued from and after the Effective Date.

 

D-1-6

 

3.                                       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 governed by, and construed in accordance
with, the law of the State of New York.

 

D-1-7

 

EXHIBIT D-2

 

FORM OF ADMINISTRATIVE QUESTIONNAIRE

 

(see attached)

 

D-1-8

 

	
  ADMINISTRATIVE DETAILS
  REPLY FORM — US DOLLAR ONLY

  
	
   

  	
   

  
	
  SUNSTONE HOTEL PARTNERSHIP, LLC

  	
  CONFIDENTIAL

  
	
  FAX ALONG WITH
  COMMITMENT LETTER TO:

  	
  HENRY PENNELL

  
	
  FAX #           

  	
  (214) 290-9448

  

 

	
  I. Borrower Name:

  	
  SUNSTONE HOTEL PARTNERSHIP, LLC

  
	
   

  	
   

  
	
   

  	
  $ 150,000,000.00

  	
  Type of Credit Facility REVOLVING FACILITY

  
	
   

  	
   

  
	
  II. Legal Name of Lender
  of Record for Signature Page:

  
	
   

  
	
   

  
	
  ·                  Signing
  Credit Agreement
                    o YES
                o NO

  
	
  ·                  Coming
  in via Assignment
                    o YES
                o NO

  
	
   

  
	
  III. Type of Lender:

  	
   

  	
   

  
	
  (Bank, Asset Manager, Broker/Dealer, CLO/CDO,
  Finance Company, Hedge Fund, Insurance, Mutual Fund, Pension Fund, Other
  Regulated Investment Fund, Special Purpose Vehicle, Other — please specify)

  
	
   

  
	
  IV. Domestic Address:

  	
   

  	
  V. Eurodollar Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  VI. Contact Information:

  	
   

  	
   

  
	
  Syndicate level information (which may contain
  material non-public information about the Borrower and its related parties or
  their respective securities will be made available to the Credit
  Contact(s).  The Credit Contacts identified must be able to receive such
  information in accordance with his/her institution’s compliance procedures
  and applicable laws, including Federal and State securities laws.

  
							

 

	
   

  	
   

  	
   

  	
   

  	
  Primary

  	
   

  	
  Secondary

  
	
   

  	
   

  	
  Credit Contact

  	
   

  	
  Operations Contact

  	
   

  	
  Operations Contact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E Mail Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IntraLinks E Mail Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Does Secondary Operations Contact need copy of notices?   o  YES   o   NO

 

D-2-1

 

	
   

  	
   

  	
  Letter of Credit

  	
   

  	
  Draft Documentation

  	
   

  	
   

  
	
   

  	
   

  	
  Contact

  	
   

  	
  Contact

  	
   

  	
  Legal Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E Mail Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

VII. Lender’s Standby Letter of Credit, Commercial Letter of Credit,
and Bankers’ Acceptance Fed Wire Payment Instructions (if applicable):

 

Pay to:

	
   

  
	
  (Bank Name)

  
	
   

  
	
  (ABA #)

  
	
   

  
	
  (Account #)

  
	
   

  
	
  (Attention)

  

 

VIII. Lender’s Fed Wire Payment Instructions:

 

Pay to:

	
   

  	
   

  
	
  (Bank Name)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (ABA#)

  	
  (City/State)

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Account #)

  	
  (Account Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Attention)

  	
   

  

 

D-2-2

 

IX. Organizational Structure and Tax Status

 

Please refer to the enclosed withholding tax instructions below and
then complete this section accordingly:

 

Lender Taxpayer Identification Number (TIN):                                 
-                                              

 

Tax Withholding Form Delivered
to Bank of America*:

 

                        W-9

 

                        W-8BEN

 

                        W-8ECI

 

                        W-8EXP

 

                        W-8IMY

 

Tax Contact

 

	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Facsimile:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  E Mail Address:

  	
   

  	
   

  

 

NON—U.S. LENDER INSTITUTIONS

 

1. Corporations:

 

If your institution is
incorporated outside of the United States for U.S. federal income tax purposes,
and is the beneficial owner of the interest and other income it receives, you
must complete one of the following three tax forms, as applicable to your
institution: a.) Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner), b.) Form W-8ECI (Income Effectively Connected to a U.S. Trade or
Business), or c.) Form W-8EXP (Certificate of Foreign Government or
Governmental Agency).

 

A U.S. taxpayer identification
number is required for any institution submitting a Form W-8 ECI.  It is also required on Form W-8BEN for
certain institutions claiming the benefits of a tax treaty with the U.S.  Please refer to the instructions when
completing the form applicable to your institution.  In addition, please be advised that U.S. tax
regulations do not permit the acceptance of faxed forms.  An original tax form must
be submitted.

 

D-2-3

 

2. Flow-Through Entities

 

If your institution is
organized outside the U.S., and is classified for U.S. federal income tax
purposes as either a Partnership, Trust, Qualified or Non-Qualified
Intermediary, or other non-U.S. flow-through entity, an original Form W-8IMY
(Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain
U.S. branches for United States Tax Withholding) must be completed by the
intermediary together with a withholding statement.  Flow-through entities other than Qualified
Intermediaries are required to include tax forms for each of the underlying
beneficial owners.

 

Please refer to the
instructions when completing this form. 
In addition, please be advised that U.S. tax regulations do not permit
the acceptance of faxed forms.  Original tax form(s) must be submitted.

 

U.S. LENDER INSTITUTIONS:

 

If your institution is
incorporated or organized within the United States, you must complete and
return Form W-9 (Request for Taxpayer Identification Number and
Certification).  Please be
advised that we require an original form W-9.

 

Pursuant to the language
contained in the tax section of the Credit Agreement, the applicable tax form
for your institution must be completed and returned on or prior to the date on
which your institution becomes a lender under this Credit Agreement.  Failure to provide the proper tax form when
requested will subject your institution to U.S. tax withholding.

 

*Additional guidance and
instructions as to where to submit this documentation can be found at this
link:

 

 

X. Bank of America Payment
Instructions:

 

Pay to:                                               Bank of
America, N.A.

ABA # 026009593

New York, NY

Acct. # 1292000883

Attn: Corporate Credit
Services

Ref: Sunstone Hotel
Partnership, LLC

 

D-2-4

EXHIBIT E-1

FORM OF
PARENT GUARANTY

 

THIS PARENT
GUARANTY AGREEMENT (this “Guaranty”)
is executed as of November 1, 2010, by Sunstone Hotel Investors, Inc.,
a Maryland corporation (“Guarantor”)
in favor of Bank of America, N.A. as administrative agent (in such capacity,
together with its successors and assigns, “Administrative Agent”),
for the benefit of the Credit Parties (hereinafter defined).

 

RECITALS:

 

A.            Sunstone
Hotel Partnership, LLC, a Delaware limited liability company (“Borrower”) may, from time to time,
be indebted to the Credit Parties pursuant to that certain Credit Agreement
dated of even date herewith (as amended, modified, supplemented, or restated
from time to time, the “Credit
Agreement”), among Borrower, Guarantor, the Lenders now or hereafter
party to the Credit Agreement (the “Lenders”),
the Administrative Agent, and Bank of America, N.A., as L/C Issuer (“L/C Issuer”) (Administrative Agent,
L/C Issuer, the Lenders, and each Swap Counterparty, as defined below, together
with their respective successors and assigns, are each a “Credit
Party,” and collectively the “Credit
Parties”).  Capitalized terms used herein
shall, unless otherwise indicated, have the respective meanings set forth in
the Credit Agreement.

 

B.            As
of the date hereof, Guarantor holds directly or indirectly all of the Equity
Interests in Borrower and will benefit from the Credit Parties’ extension of
credit to Borrower and the Swap Contracts entered into by any Loan Party with a
Lender or an Affiliate of a Lender (each such counterparty, a “Swap Counterparty”).

 

C.            This
Guaranty is integral to the transactions contemplated by the Loan Documents,
and the execution and delivery hereof is a condition precedent to the Credit
Parties’ obligations to extend credit to Borrower under the Loan Documents.

 

NOW,
THEREFORE, as an inducement to the Credit Parties to enter into the Credit
Agreement and to make Loans and issue Letters of Credit to Borrower thereunder,
and to extend such credit to Borrower as the Credit Parties may from time to
time agree to extend, and for other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged, Guarantor
hereby guarantees payment of the Guaranteed Obligations (hereinafter defined)
and hereby agrees as follows:

 

Section 1.              NATURE OF GUARANTY.  Guarantor hereby absolutely and
unconditionally guarantees, as a guarantee of payment and not merely as a
guarantee of collection, prompt payment when due, whether at stated maturity,
upon acceleration or otherwise, and at all times thereafter, of any and all
existing and future Obligations including, without limitation, all indebtedness
and liabilities of every kind, nature and character, direct or indirect,
absolute or contingent, liquidated or unliquidated, voluntary or involuntary,
of Borrower to the Credit Parties arising under the Credit Agreement, the other
Loan Documents, and the Swap Contracts (including all renewals, extensions,
modifications, amendments, and restatements thereof and all costs, attorneys’
fees and expenses incurred by any Credit Party in connection with the
collection or enforcement thereof) (collectively, the “Guaranteed
Obligations”). 
Administrative Agent’s books and records showing the amount of the
Guaranteed Obligations shall be admissible in evidence in any action or
proceeding, and, absent manifest error, shall be binding upon Guarantor and
conclusive for the purpose of establishing the amount of the Guaranteed
Obligations.  This Guaranty shall not be affected
by the genuineness, validity, regularity, or enforceability of the Guaranteed
Obligations or any instrument or agreement evidencing any Guaranteed
Obligations, or by the existence, validity, enforceability, perfection, or
extent of any collateral therefor, or by any fact or circumstance relating to 

 

E-1-1

 

the Guaranteed Obligations which might otherwise constitute a defense
to the obligations of Guarantor under this Guaranty.

 

Section 2.              NO SETOFF OR DEDUCTIONS; TAXES.  Guarantor represents and warrants that it is
incorporated and resident in the United States of America. All payments by
Guarantor hereunder shall be made in accordance with Section 3.01
of the Credit Agreement..

 

Section 3.              RIGHTS OF CREDIT PARTIES.  The Guarantor consents and agrees that the
Credit Parties may, at any time and from time to time, without notice or
demand, and without affecting the enforceability or continuing effectiveness
hereof:  (a) amend, extend, renew,
compromise, discharge, accelerate or otherwise change the time for payment or
the terms of the Guaranteed Obligations or any part thereof; (b) take,
hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise
dispose of any security for the payment of this Guaranty or any Guaranteed Obligations;
(c) apply such security and direct the order or manner of sale thereof as
any Credit Party in its sole discretion may determine; and (d) release or
substitute one or more of any endorsers or other guarantors of any of the
Guaranteed Obligations.  Without limiting
the generality of the foregoing, the Guarantor consents to the taking of, or
failure to take, any action which might in any manner or to any extent vary the
risks of the Guarantor under this Guaranty or which, but for this provision,
might operate as a discharge of the Guarantor.

 

Section 4.              CERTAIN WAIVERS.  The Guarantor waives (a) any defense
arising by reason of any disability or other defense of the Borrower, the
Guarantor, or any other guarantor (other than the defense that the Guaranteed
Obligations have been performed and indefeasibly paid in cash, to the extent of
any such payment), or the cessation from any cause whatsoever (including any
act or omission of any Credit Party) of the liability of the Borrower; (b) any
defense based on any claim that the Guarantor’s obligations exceed or are more
burdensome than those of the Borrower; (c) the benefit of any statute of
limitations affecting the Guarantor’s liability hereunder; (d) any right
to require the Credit Parties to proceed against the Borrower, proceed against
or exhaust any security for the Indebtedness, or pursue any other remedy in the
Credit Parties’ power whatsoever; (e) any benefit of and any right to
participate in any security now or hereafter held by the Credit Parties; and (f) to
the fullest extent permitted by law, any and all other defenses or benefits
that may be derived from or afforded by applicable law limiting the liability
of or exonerating guarantors or sureties. 
The Guarantor expressly waives all setoffs and counterclaims and all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor or default,
notice of intent to accelerate, notice of acceleration, and all other notices or
demands of any kind or nature whatsoever with respect to the Guaranteed
Obligations, and all notices of acceptance of this Guaranty or of the
existence, creation or incurrence of new or additional Guaranteed
Obligations.  The Guarantor waives any
rights and defenses that are or may become available to the Guarantor by reason
of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California Civil
Code.  As provided below, this Guaranty
shall be governed by, and construed in accordance with, the laws of the State
of New York.  The foregoing waivers and
the provisions hereinafter set forth in this Guaranty which pertain to
California law are included solely out of an abundance of caution, and shall
not be construed to mean that any of the above referenced provisions of
California law are in any way applicable to this Guaranty or the Guaranteed
Obligations.

 

Section 5.              OBLIGATIONS INDEPENDENT.  The obligations of the Guarantor hereunder
are those of primary obligor, and not merely as surety, and are independent of
the Guaranteed Obligations and the obligations of any other guarantor, and a
separate action may be brought against the Guarantor to enforce this Guaranty
whether or not the Borrower or any other person or entity is joined as a party.

 

Section 6.              TERMINATION; REINSTATEMENT.  This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until all Guaranteed Obligations and any other
amounts payable under this Guaranty are indefeasibly paid 

 

E-1-2

 

in full in cash (other than contingent obligations that survive
termination of the Loan Documents) and any commitments of the Credit Parties or
facilities provided by the Credit Parties with respect to the Guaranteed
Obligations are terminated. 
Notwithstanding the foregoing, this Guaranty shall continue in full
force and effect or be revived, as the case may be, if any payment by or on
behalf of the Borrower or the Guarantor is made, or the Credit Parties exercise
their right of setoff, in respect of the Guaranteed Obligations and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Credit Parties in
their discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Laws or otherwise, all
as if such payment had not been made or such setoff had not occurred and
whether or not the Credit Parties are in possession of or have released this
Guaranty and regardless of any prior revocation, rescission, termination or
reduction.  The obligations of the Guarantor
under this paragraph shall survive termination of this Guaranty.

 

Section 7.              NO SUBROGRATION.  Guarantor shall not exercise any right of
subrogation, contribution, or similar rights with respect to any payments it
makes under this Guaranty until all of the Guaranteed Obligations and any
amounts payable under this Guaranty are indefeasibly paid and performed in full
(other than contingent obligations that survive termination of the Loan
Documents) and any commitments of the Credit Parties or facilities provided by
the Credit Parties with respect to the Guaranteed Obligations are
terminated.  If any amounts are paid to
Guarantor in violation of the foregoing limitation, then such amounts shall be
held in trust for the benefit of the Credit Parties and shall forthwith be paid
to Administrative Agent, for the benefit of the Credit Parties, to reduce the
amount of the Guaranteed Obligations, whether matured or unmatured.

 

Section 8.              WAIVER OF SURETYSHIP DEFENSES.  Guarantor agrees that the Credit Parties may,
at any time and from time to time, and without notice to Guarantor under this
Guaranty, make any agreement with Borrower or with any other person or entity
liable on any of the Guaranteed Obligations or providing collateral as security
for the Guaranteed Obligations, for the extension, renewal, payment,
compromise, discharge, or release of the Guaranteed Obligations or any
collateral (in whole or in part), or for any modification or amendment of the
terms thereof or of any instrument or agreement evidencing the Guaranteed
Obligations or the provision of collateral, all without in any way impairing,
releasing, discharging, or otherwise affecting the obligations of Guarantor
under this Guaranty.  Guarantor waives
any defense arising by reason of any disability or other defense of Borrower or
any other guarantor, or the cessation from any cause whatsoever of the
liability of Borrower, or any claim that Guarantor’s obligations exceed or are
more burdensome than those of Borrower and waives the benefit of any statute of
limitations affecting the liability of Guarantor hereunder.  Guarantor waives any right to enforce any
remedy which Guarantor now has or may hereafter have against Borrower and
waives any benefit of and any right to participate in any security now or hereafter
held by Administrative Agent for the benefit of the Credit Parties.  Further, Guarantor consents to the taking of,
or failure to take, any action which might in any manner or to any extent vary
the risks of Guarantor under this Guaranty or which, but for this provision,
might operate as a discharge of Guarantor.

 

Section 9.              EXHAUSTION OF OTHER REMEDIES NOT REQUIRED.  Guarantor waives diligence by any of the
Credit Parties and action on delinquency in respect of the Guaranteed
Obligations or any part thereof, including, without limitation any provisions
of law requiring any Credit Party to exhaust any right or remedy or to take any
action against Borrower, any other guarantor, or any other person, entity, or
property before enforcing this Guaranty against Guarantor.

 

Section 10.            SUBORDINATION.  Guarantor hereby expressly subordinates the
payment of all obligations and indebtedness of Borrower owing to Guarantor,
whether now existing or hereafter arising and whether those obligations are
(a) direct, indirect, fixed, contingent, liquidated, unliquidated, joint, 

 

E-1-3

 

several, or joint and several, (b) due or to become due to
Guarantor, (c) held by or are to be held by Guarantor, (d) created
directly or acquired by assignment or otherwise, or (e) evidenced in
writing (the “Subordinated Debt”) to the
indefeasible payment in full of all Guaranteed Obligations (other than
contingent obligations that survive termination of the Loan Documents).  If Guarantor receives any payment of any
Subordinated Debt in violation of the foregoing, then Guarantor shall hold that
payment in trust for the Credit Parties and promptly turn it over
to Administrative Agent, for the benefit of the Credit Parties, in the form
received (with any necessary endorsements), to be applied in accordance
with the Credit Agreement, but without reducing or affecting in any manner the
liability of Guarantor under this Guaranty.

 

Section 11.            STAY OF ACCELERATION.  In the event that acceleration of the time
for payment of any of the Guaranteed Obligations is stayed, upon the
insolvency, bankruptcy, or reorganization of Borrower or any other person or
entity, or otherwise, all such amounts shall nonetheless be payable by
Guarantor immediately upon demand by Administrative Agent.

 

Section 12.            EXPENSES.  Guarantor shall pay to Administrative
Agent upon demand the amount of any and all costs and expenses,
including the reasonable fees and expenses of its counsel and of any experts
and agents, that Administrative Agent may incur in connection with the
preservation, protection, or enforcement of any rights of any Credit Party
under this Guaranty including in any case commenced by or against Guarantor
under the Bankruptcy Code (Title 11, United States Code) or any similar or
successor statute.  The obligations of
Guarantor under the preceding sentence shall survive termination of this
Guaranty.

 

Section 13.            AMENDMENTS.  No amendment, modification, termination, or
waiver of any provision of this Guaranty, and no consent to any departure by
Guarantor from the terms and conditions hereof, shall in any event be effective
unless the same shall be in writing and signed by Administrative Agent and
Guarantor.  Any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.

 

Section 14.            NOTICES.  Any notice or other communication herein
required or permitted to be given shall be in writing and shall be in
accordance with the provisions of Section 11.02
of the Credit Agreement.

 

Section 15.            NO WAIVER; ENFORCEABILITY.  No failure by any Credit Party to exercise,
and no delay in exercising, any right, remedy or power hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
remedy or power  hereunder preclude any other  or further exercise thereof or the exercise of any other
right.  The remedies herein provided are
cumulative and not exclusive of any remedies provided by law or in equity.  The unenforceability or invalidity of any
provision of this Guaranty shall not affect the enforceability or validity of
any other provision herein.

 

Section 16.            ASSIGNMENT.  This Guaranty shall: (a) bind Guarantor
and its successors and assigns, provided that
Guarantor may not assign its rights or obligations under this Guaranty without
the prior written consent of Administrative Agent (and any attempted assignment
without such consent shall be void); and (b) inure to the benefit of each
of the Credit Parties and their respective successors and assigns and the
Credit Parties may, without notice to Guarantor and without affecting Guarantor’s
obligations hereunder, assign or sell participations in the Guaranteed
Obligations and this Guaranty, in whole or in part.  Guarantor agrees that the Credit Parties may
disclose to any prospective purchaser and any purchaser of all or part of the
Guaranteed Obligations any and all information in the Credit Parties’
possession concerning Guarantor, this Guaranty, and any security for this
Guaranty.

 

E-1-4

 

Section 17.            CONDITION OF BORROWER.  Guarantor acknowledges and agrees that it has
the sole responsibility for, and has adequate means of, obtaining from Borrower
such information concerning the financial condition, business, and operations
of Borrower as Guarantor requires, and that no Credit Party shall have any
duty, and Guarantor is not relying on any Credit Party at any time, to disclose
to Guarantor any information relating to the business, operations, or financial
condition of Borrower.

 

Section 18.            RIGHTS OF SETOFF.  If and to the extent any payment is not made
when due hereunder, then Administrative Agent and each other Credit Party (with
the prior consent of Administrative Agent) may setoff and charge from time to
time any amount so due against any or all of Guarantor’s accounts or deposits
with Administrative Agent or such other Credit Party.

 

Section 19.            OTHER GUARANTIES.  Unless otherwise agreed by Administrative
Agent and Guarantor in writing, this Guaranty is not intended to supersede or
otherwise affect any other guaranty now or hereafter given by Guarantor for the
benefit of the Credit Parties or any term or provision thereof.

 

Section 20.            BENEFIT OF GUARANTOR. 
Guarantor represents and warrants that, by
virtue of its relationship with Borrower, the execution, delivery and
performance of this Guaranty is for the direct benefit of Guarantor and it has
received adequate consideration for this Guaranty.

 

Section 21.            ADDITIONAL GUARANTOR WAIVERS AND AGREEMENTS

 

(a)           The Guarantor
understands and acknowledges that if the Credit Parties foreclose judicially or
nonjudicially against any real property security, hereafter existing, for the
Guaranteed Obligations, that foreclosure could impair or destroy any ability
that the Guarantor may have to seek reimbursement, contribution, or
indemnification from the Borrower or others based on any right the Guarantor
may have of subrogation, reimbursement, contribution, or indemnification for
any amounts paid by the Guarantor under this Guaranty.  The Guarantor further understands and
acknowledges that in the absence of this paragraph, such potential impairment
or destruction of the Guarantor’s rights, if any, may entitle the Guarantor to
assert a defense to this Guaranty based on Section 580d of the California
Code of Civil Procedure as interpreted in Union Bank v. Gradsky, 265
Cal. App. 2d 40 (1968).  By executing
this Guaranty, the Guarantor freely, irrevocably, and unconditionally: (i) waives
and relinquishes that defense and agrees that the Guarantor will be fully
liable under this Guaranty even though the Credit Parties may foreclose, either
by judicial foreclosure or by exercise of power of sale, any deed of trust
securing the Guaranteed Obligations; (ii) agrees that the Guarantor will
not assert that defense in any action or proceeding which the Credit Parties
may commence to enforce this Guaranty; (iii) acknowledges and agrees that
the rights and defenses waived by the Guarantor in this Guaranty include any
right or defense that the Guarantor may have or be entitled to assert based
upon or arising out of any one or more of Sections 580a, 580b, 580d, or 726 of
the California Code of Civil Procedure or Section 2848 of the California
Civil Code; and (iv) acknowledges and agrees that the Credit Parties are
relying on this waiver in creating the Guaranteed Obligations, and that this
waiver is a material part of the consideration which the Credit Parties are
receiving for creating the Guaranteed Obligations.

 

(b)           The
Guarantor waives all rights and defenses that the Guarantor may have because of
any of the Guaranteed Obligations is hereafter secured by real property.  This means, among other things:  (i) the Credit Parties may collect from
the Guarantor without first foreclosing on any real or personal property
collateral pledged by the Borrower; and (ii) if the Credit Parties
foreclose on any real property collateral pledged by the Borrower: (A) the
amount of the Guaranteed Obligations may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price, and (B) the Credit Parties may collect
from the Guarantor even if the Credit Parties, by foreclosing on the real
property collateral, have destroyed any right the Guarantor may have to collect
from the Borrower.  This is an
unconditional and irrevocable waiver of any rights and defenses the Guarantor
may have because any of the Guaranteed Obligations is secured by real
property.  These rights and defenses
include, but are not limited to, any rights or defenses based upon Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure.

 

E-1-5

 

(c)           The
Guarantor waives any right or defense it may have at law or equity, including
California Code of Civil Procedure Section 580a, to a fair market value
hearing or action to determine a deficiency judgment after a foreclosure.

 

Section 22.            GOVERNING LAW; JURISDICTION; ETC.

 

(a)           GOVERNING LAW.           THIS
GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

 

(b)           SUBMISSION TO JURISDICTION. 
GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS
GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT
PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST GUARANTOR OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF VENUE. 
GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO
IN SECTION 22(b).  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

(d)           SERVICE OF PROCESS. 
EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 11.02 OF
THE CREDIT AGREEMENT.  NOTHING IN THIS
GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

(e)           WAIVER OF JURY TRIAL. 
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT 

 

E-1-6

 

OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER; AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 22.

 

Section 23.            COUNTERPARTS.  This Guaranty may be executed in counterparts
(and by different parties hereto in different counterparts), each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract.

 

Section 24.            FINAL AGREEMENT.  THIS GUARANTY AND THE OTHER LOAN DOCUMENTS
CONSTITUTE THE ENTIRE CONTRACT AMONG THE PARTIES RELATING TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY AND ALL PREVIOUS AGREEMENTS AND UNDERSTANDINGS, ORAL
OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

 

[Remainder of Page Intentionally Left Blank;

Signature Pages Follow]

 

E-1-7

 

IN WITNESS WHEREOF, the
undersigned has caused this Parent Guaranty Agreement to be duly executed and
delivered as of the date first written above.

 

	
   

  	
  PARENT:

  
	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL INVESTORS, INC., a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

Address for Notices:

 

Sunstone Hotel Investors, Inc.

120 Vantis, Suite 350

Aliso Viejo, CA 92656

Attention:    Legal Department

Telephone:  949-330-4000

Facsimile:    949-330-4090

Electronic Mail:
dsloan@sunstonehotels.com

 

E-1-8

 

EXHIBIT E-2

 

FORM OF SUBSIDIARY
GUARANTY

 

THIS SUBSIDIARY GUARANTY
AGREEMENT (this “Guaranty”) is executed as of November     ,
2010, by EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE
1 ATTACHED HERETO or who becomes a party hereto pursuant to Section 22 below (each a “Guarantor” and collectively, “Guarantors”), in favor of Bank of
America, N.A. as administrative agent (in such capacity, together with its
successors and assigns, “Administrative Agent”),
for the benefit of the Credit Parties (hereinafter defined).

 

RECITALS:

 

A.                                   Sunstone Hotel
Partnership, LLC, a Delaware limited liability company (“Borrower”)
may, from time to time, be indebted to the Credit Parties pursuant to that
certain Credit Agreement dated of even date herewith (as amended, modified,
supplemented, or restated from time to time, the “Credit Agreement”), among Borrower,
Sunstone Hotel Investors, Inc., a Maryland corporation (“Parent”), the Lenders now or
hereafter party to the Credit Agreement (the “Lenders”),
Administrative Agent, and Bank of America, N.A., as L/C Issuer (“L/C Issuer”) (Administrative Agent,
L/C Issuer, the Lenders, and each Swap Counterparty, as defined below, together
with their respective successors and assigns are each a “Credit
Party,” and collectively the “Credit
Parties”).  Capitalized
terms used herein shall, unless otherwise indicated, have the respective
meanings set forth in the Credit Agreement.

 

B.                                     Each Guarantor
is a direct or indirect Subsidiary of Parent, which, as of the date hereof
holds directly or indirectly all of the Equity Interests in Borrower, and will,
directly or indirectly, benefit from the Credit Parties’ extension of credit to
Borrower and the Swap Contracts, as defined in the Credit Agreement, entered
into by any Loan Party with a Lender or an Affiliate of Lender (each such
counterparty, a “Swap Counterparty”).

 

C.                                     This Guaranty
is integral to the transactions contemplated by the Loan Documents, and the
execution and delivery hereof is a condition precedent to the Credit Parties’
obligations to extend credit to Borrower under the Loan Documents.

 

NOW, THEREFORE, as an
inducement to the Credit Parties to enter into the Credit Agreement and to make
Loans and issue Letters of Credit to Borrower thereunder, and to extend such
credit to Borrower as the Credit Parties may from time to time agree to extend,
and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Guarantors hereby jointly and
severally guarantee payment of the Guaranteed Obligations (hereinafter defined)
and hereby agree as follows:

 

Section 1.                                          NATURE
OF GUARANTY.  Each
Guarantor hereby absolutely and unconditionally guarantees, jointly and
severally, as a guarantee of payment and not merely as a guarantee of
collection, prompt payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of any and all existing
and future Obligations including, without limitation, all indebtedness and
liabilities of every kind, nature and character, direct or indirect, absolute
or contingent, liquidated or unliquidated, voluntary or involuntary, of
Borrower to the Credit Parties arising under the Credit Agreement, the other
Loan Documents, and the Swap Contracts (including all renewals, extensions,
modifications, amendments, and restatements thereof and all costs, attorneys’
fees and expenses incurred by any Credit Party in connection with the
collection or enforcement thereof) (collectively, the “Guaranteed
Obligations”).  Administrative
Agent’s books and records showing the amount of the Guaranteed Obligations
shall, absent manifest error, be admissible in evidence in any action or

 

E-2-1

 

proceeding,
and shall be binding upon each Guarantor and conclusive for the purpose of
establishing the amount of the Guaranteed Obligations.  This Guaranty shall not be affected by the
genuineness, validity, regularity, or enforceability of the Guaranteed Obligations
or any instrument or agreement evidencing any Guaranteed Obligations, or by the
existence, validity, enforceability, perfection, or extent of any collateral
therefor, or by any fact or circumstance relating to the Guaranteed Obligations
which might otherwise constitute a defense to the obligations of any Guarantor
under this Guaranty.  The obligations of
each Guarantor hereunder shall be limited to an aggregate amount equal to the
largest amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the Bankruptcy Code (Title 11, United
States Code) or any comparable provisions of any applicable state law.

 

Section 2.                                          NO
SETOFF OR DEDUCTIONS; TAXES.  Each Guarantor represents and warrants that
it is incorporated and resident in the United States of America. All payments
by any Guarantor hereunder shall be made in accordance with Section 3.01 of the Credit Agreement.

 

Section 3.                                          RIGHTS
OF CREDIT PARTIES.  Each
Guarantor consents and agrees that the Credit Parties may, at any time and from
time to time, without notice or demand, and without affecting the
enforceability or continuing effectiveness hereof:  (a) amend, extend, renew, compromise,
discharge, accelerate or otherwise change the time for payment or the terms of
the Guaranteed Obligations or any part thereof; (b) take, hold, exchange,
enforce, waive, release, fail to perfect, sell, or otherwise dispose of any
security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply
such security and direct the order or manner of sale thereof as any Credit
Party in its sole discretion may determine; and (d) release or substitute
one or more of any endorsers or other guarantors of any of the Guaranteed
Obligations.  Without limiting the
generality of the foregoing, each Guarantor consents to the taking of, or
failure to take, any action which might in any manner or to any extent vary the
risks of such Guarantor under this Guaranty or which, but for this provision,
might operate as a discharge of such Guarantor.

 

Section 4.                                          CERTAIN
WAIVERS.  Each
Guarantor waives (a) any defense arising by reason of any disability or
other defense of the Borrower, Parent, or any other guarantor, or the cessation
from any cause whatsoever (including any act or omission of any Credit Party)
of the liability of the Borrower (other than the defense that the Guaranteed
Obligations have been performed and indefeasibly paid in cash, to the extent of
any such payment); (b) any defense based on any claim that any Guarantor’s
obligations exceed or are more burdensome than those of the Borrower; (c) the
benefit of any statute of limitations affecting any Guarantor’s liability
hereunder; (d) any right to require the Credit Parties to proceed against
the Borrower, proceed against or exhaust any security for the Indebtedness, or
pursue any other remedy in the Credit Parties’ power whatsoever; (e) any
benefit of and any right to participate in any security now or hereafter held
by the Credit Parties; and (f) to the fullest extent permitted by law, any
and all other defenses or benefits that may be derived from or afforded by
applicable law limiting the liability of or exonerating guarantors or
sureties.  Each Guarantor expressly
waives all setoffs and counterclaims and all presentments, demands for payment
or performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor or default, notice of intent to accelerate, notice
of acceleration, and all other notices or demands of any kind or nature
whatsoever with respect to the Guaranteed Obligations, and all notices of
acceptance of this Guaranty or of the existence, creation or incurrence of new
or additional Guaranteed Obligations. 
Each Guarantor waives any rights and defenses that are or may become
available to such Guarantor by reason of Sections 2787 to 2855, inclusive, 2899
and 3433 of the California Civil Code. 
As provided below, this Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.  The foregoing waivers and the provisions
hereinafter set forth in this Guaranty which pertain to California law are
included solely out of an abundance of caution, and shall not be construed to
mean that any of the above referenced provisions of California law are in any
way applicable to this Guaranty or the Guaranteed Obligations.

 

Section 5.                                          OBLIGATIONS
INDEPENDENT.  The
obligations of each Guarantor hereunder are those of primary obligor, and not
merely as surety, and are independent of the Guaranteed Obligations and the
obligations of any other guarantor, and a separate action may be brought
against each Guarantor to enforce this Guaranty whether or not the Borrower or
any other person or entity is joined as a party.

 

E-2-2

 

Section 6.                                          TERMINATION;
REINSTATEMENT.  This
Guaranty is a continuing and irrevocable guaranty of all Guaranteed Obligations
now or hereafter existing and shall remain in full force and effect until all
Guaranteed Obligations and any other amounts payable under this Guaranty are
indefeasibly paid in full in cash (other than contingent liabilities that
survive termination of the Loan Documents) and any commitments of the Credit
Parties or facilities provided by the Credit Parties with respect to the
Guaranteed Obligations are terminated. 
Notwithstanding the foregoing, this Guaranty shall continue in full
force and effect or be revived, as the case may be, if any payment by or on
behalf of the Borrower or any Guarantor is made, or the Credit Parties exercise
their right of setoff, in respect of the Guaranteed Obligations and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Credit Parties in
their discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Laws or otherwise, all
as if such payment had not been made or such setoff had not occurred and
whether or not the Credit Parties are in possession of or have released this
Guaranty and regardless of any prior revocation, rescission, termination or
reduction.  The obligations of each
Guarantor under this paragraph shall survive termination of this Guaranty.

 

Section 7.                                          NO
SUBROGRATION.  No Guarantor
shall exercise any right of subrogation, contribution, or similar rights with
respect to any payments it makes under this Guaranty until all of the
Guaranteed Obligations and any amounts payable under this Guaranty are indefeasibly
paid and performed in full (other than contingent liabilities that survive
termination of the Loan Documents) and any commitments of the Credit Parties or
facilities provided by the Credit Parties with respect to the Guaranteed
Obligations are terminated.  If any
amounts are paid to any Guarantor in violation of the foregoing limitation,
then such amounts shall be held in trust for the benefit of the Credit Parties
and shall forthwith be paid to Administrative Agent, for the benefit of the
Credit Parties, to reduce the amount of the Guaranteed Obligations, whether
matured or unmatured.

 

Section 8.                                          WAIVER
OF SURETYSHIP DEFENSES.  Each
Guarantor agrees that the Credit Parties may, at any time and from time to
time, and without notice to Guarantors under this Guaranty, make any agreement
with Borrower or with any other person or entity liable on any of the
Guaranteed Obligations or providing collateral as security for the Guaranteed
Obligations, for the extension, renewal, payment, compromise, discharge, or
release of the Guaranteed Obligations or any collateral (in whole or in part),
or for any modification or amendment of the terms thereof or of any instrument
or agreement evidencing the Guaranteed Obligations or the provision of
collateral, all without in any way impairing, releasing, discharging, or
otherwise affecting the obligations of any Guarantor under this Guaranty.  Each Guarantor waives any defense arising by
reason of any disability or other defense of Borrower or any other guarantor,
or the cessation from any cause whatsoever of the liability of Borrower, or any
claim that any Guarantor’s obligations exceed or are more burdensome than those
of Borrower and waives the benefit of any statute of limitations affecting the
liability of any Guarantor hereunder. 
Each Guarantor waives any right to enforce any remedy which such
Guarantor now has or may hereafter have against Borrower and waives any benefit
of and any right to participate in any security now or hereafter held by
Administrative Agent for the benefit of the Credit Parties.  Further, each Guarantor consents to the
taking of, or failure to take, any action which might in any manner or to any
extent vary the risks of such Guarantor under this Guaranty or which, but for
this provision, might operate as a discharge of such Guarantor.

 

Section 9.                                          EXHAUSTION
OF OTHER REMEDIES NOT REQUIRED.  Each Guarantor waives diligence by any of the
Credit Parties and action on delinquency in respect of the Guaranteed
Obligations or any part thereof, including, without limitation any provisions
of law requiring any Credit Party to exhaust any right or remedy or to take any
action against Borrower, any other guarantor, or any other person, entity, or
property before enforcing this Guaranty against any Guarantor.

 

E-2-3

 

Section 10.                                   SUBORDINATION.  Each Guarantor hereby expressly subordinates
the payment of all obligations and indebtedness of Borrower owing to such
Guarantor, whether now existing or hereafter arising and whether those
obligations are (a) direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, (b) due or to become
due to such Guarantor, (c) held by or are to be held by such Guarantor,
(d) created directly or acquired by assignment or otherwise, or
(e) evidenced in writing (the “Subordinated Debt”)
to the indefeasible payment in full of all Guaranteed Obligations (other than
contingent obligation that survive termination of the Loan Documents).  If any Guarantor receives any payment of any
Subordinated Debt in violation of the foregoing, then such Guarantor shall hold
that payment in trust for the Credit Parties and promptly turn it over
to Administrative Agent, for the benefit of the Credit Parties, in the form
received (with any necessary endorsements), to be applied in accordance
with the Credit Agreement, but without reducing or affecting in any manner the
liability of any Guarantor under this Guaranty.

 

Section 11.                                   STAY OF
ACCELERATION.  In the event
that acceleration of the time for payment of any of the Guaranteed Obligations
is stayed, upon the insolvency, bankruptcy, or reorganization of Borrower or
any other person or entity, or otherwise, all such amounts shall nonetheless be
payable by Guarantors immediately upon demand by Administrative Agent.

 

Section 12.                                   EXPENSES.  Each Guarantor shall pay to Administrative
Agent upon demand the amount of any and all costs and expenses,
including the reasonable fees and expenses of its counsel and of any experts
and agents, that Administrative Agent may incur in connection with the
preservation, protection, or enforcement of any rights of any Credit Party
under this Guaranty including in any case commenced by or against any Guarantor
under the Bankruptcy Code (Title 11, United States Code) or any similar or
successor statute.  The obligations of
Guarantors under the preceding sentence shall survive termination of this
Guaranty.

 

Section 13.                                   AMENDMENTS.  No amendment, modification, termination, or
waiver of any provision of this Guaranty, and no consent to any departure by
any Guarantor from the terms and conditions hereof, shall in any event be
effective unless the same shall be in writing and signed by Administrative
Agent and each Guarantor.  Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.

 

Section 14.                                   NOTICES.  Any notice or other communication herein
required or permitted to be given shall be sent in writing to the addresses set
forth on the signature pages hereof and shall be in accordance with the
provisions of Section 11.02 of the Credit
Agreement.

 

Section 15.                                   NO
WAIVER; ENFORCEABILITY.  No
failure by any Credit Party to exercise, and no delay in exercising, any right,
remedy or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy or power  hereunder
preclude any other  or further
exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and
not exclusive of any remedies provided by law or in equity.  The unenforceability or invalidity of any
provision of this Guaranty shall not affect the enforceability or validity of
any other provision herein.

 

Section 16.                                   ASSIGNMENT.  This Guaranty shall: (a) bind each
Guarantor and its successors and assigns, provided that no Guarantor may assign
its rights or obligations under this Guaranty without the prior written consent
of Administrative Agent (and any attempted assignment without such consent shall
be void); and (b) inure to the benefit of each of the Credit Parties and
their respective successors and assigns and the Credit Parties may, without
notice to any Guarantor and without affecting any Guarantor’s obligations
hereunder, assign or sell participations in the Guaranteed Obligations and this
Guaranty, in whole or in part.  Each
Guarantor agrees that the Credit Parties may disclose to any prospective
purchaser and any purchaser of all or part of the Guaranteed Obligations any
and all information in the Credit Parties’ possession concerning any Guarantor,
this Guaranty, and any security for this Guaranty.

 

E-2-4

 

Section 17.                                   CONDITION
OF BORROWER.  Each
Guarantor acknowledges and agrees that it has the sole responsibility for, and
has adequate means of, obtaining from Borrower such information concerning the
financial condition, business, and operations of Borrower as Guarantors
require, and that no Credit Party shall have any duty, and Guarantors are not
relying on any Credit Party at any time, to disclose to Guarantors any
information relating to the business, operations, or financial condition of
Borrower.

 

Section 18.                                   RIGHTS
OF SETOFF.  If and to
the extent any payment is not made when due hereunder, then Administrative
Agent and each other Credit Party (with the prior consent of Administrative
Agent) may setoff and charge from time to time any amount so due against any or
all of Guarantors’ accounts or deposits with Administrative Agent or such other
Credit Party.

 

Section 19.                                   OTHER
GUARANTIES.  Unless
otherwise agreed by Administrative Agent and Guarantors in writing, this
Guaranty is not intended to supersede or otherwise affect any other guaranty
now or hereafter given by Guarantors for the benefit of the Credit Parties or
any term or provision thereof.

 

Section 20.                                   BENEFIT
OF GUARANTORS.  Each
Guarantor represents and warrants that, by virtue of its relationship with
Borrower, the execution, delivery and performance of this Guaranty is for the
direct benefit of Guarantor and it has received adequate consideration for this
Guaranty.

 

Section 21.                                   LOAN DOCUMENTS.  By
execution hereof, each Guarantor covenants and agrees that certain
representations, warranties, terms, covenants, and conditions set forth in the
Loan Documents are applicable to such Guarantor and shall be imposed upon such
Guarantor, and each Guarantor reaffirms that each such representation and
warranty is true and correct in all material respects and covenants and agrees
to promptly and properly perform, observe, and comply with each such term,
covenant, or condition.  Moreover, each
Guarantor acknowledges and agrees that this Guaranty is subject to the offset
provisions of the Loan Documents in favor of the Credit Parties.  In the event the Credit Agreement or any
other Loan Document shall cease to remain in effect for any reason whatsoever
during any period when any part of the Guaranteed Obligations remains unpaid,
the terms, covenants, and agreements of the Credit Agreement or such other Loan
Document incorporated herein by reference shall nevertheless continue in full
force and effect as obligations of each Guarantor under this Guaranty.

 

Section 22.                                   ADDITIONAL GUARANTORS.  The initial Guarantors hereunder shall be the
signatories hereto and that are listed on Schedule 1
attached hereto.  From time to time
subsequent to the time hereof, in accordance with Section 2.17(c) of
the Credit Agreement, additional Persons may become parties hereto as
additional Guarantors (each an “Additional Guarantor”)
by executing a counterpart of this Guaranty in the form of Exhibit A
attached hereto.  Upon delivery of any
such counterpart to Administrative Agent, as well as delivery of all other
documents set forth in Section 2.17(c) of
the Credit Agreement, notice of which is hereby waived by Guarantors, each such
Additional Guarantor shall be a Guarantor and shall be a party hereto as if
such Additional Guarantor were an original signatory hereof.  Each Guarantor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Guarantor hereunder, or by any election by
Administrative Agent not to cause any Subsidiary Guarantor of Borrower to
become an Additional Guarantor hereunder. 
This Guaranty shall be fully effective as to any Guarantor that is or
becomes a party hereto regardless of whether any such person becomes or fails
to become or ceases to be a Guarantor hereunder.

 

E-2-5

 

Section 23.                                   ADDITIONAL
GUARANTOR WAIVERS AND AGREEMENTS

 

(a)                                  Each Guarantor
understands and acknowledges that if the Credit Parties foreclose judicially or
nonjudicially against any real property security, hereafter existing, for the
Guaranteed Obligations, that foreclosure could impair or destroy any ability
that such Guarantor may have to seek reimbursement, contribution, or
indemnification from the Borrower or others based on any right such Guarantor
may have of subrogation, reimbursement, contribution, or indemnification for
any amounts paid by such Guarantor under this Guaranty.  Each Guarantor further understands and
acknowledges that in the absence of this paragraph, such potential impairment
or destruction of such Guarantor’s rights, if any, may entitle such Guarantor
to assert a defense to this Guaranty based on Section 580d of the
California Code of Civil Procedure as interpreted in Union Bank v. Gradsky,
265 Cal. App. 2d 40 (1968).  By executing
this Guaranty, each Guarantor freely, irrevocably, and unconditionally: (i) waives
and relinquishes that defense and agrees that such Guarantor will be fully
liable under this Guaranty even though the Credit Parties may foreclose, either
by judicial foreclosure or by exercise of power of sale, any deed of trust securing
the Guaranteed Obligations; (ii) agrees that such Guarantor will not
assert that defense in any action or proceeding which the Credit Parties may
commence to enforce this Guaranty; (iii) acknowledges and agrees that the
rights and defenses waived by such Guarantor in this Guaranty include any right
or defense that such Guarantor may have or be entitled to assert based upon or
arising out of any one or more of Sections 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure or Section 2848 of the California Civil
Code; and (iv) acknowledges and agrees that the Credit Parties are relying
on this waiver in creating the Guaranteed Obligations, and that this waiver is
a material part of the consideration which the Credit Parties are receiving for
creating the Guaranteed Obligations.

 

(b)                                 Each Guarantor
waives all rights and defenses that such Guarantor may have because of any of
the Guaranteed Obligations is hereafter secured by real property.  This means, among other things:  (i) the Credit Parties may collect from
each Guarantor without first foreclosing on any real or personal property
collateral pledged by the Borrower; and (ii) if the Credit Parties
foreclose on any real property collateral pledged by the Borrower: (A) the
amount of the Guaranteed Obligations may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price, and (B) the Credit Parties may collect
from such Guarantor even if the Credit Parties, by foreclosing on the real
property collateral, have destroyed any right such Guarantor may have to
collect from the Borrower.  This is an
unconditional and irrevocable waiver of any rights and defenses each Guarantor may
have because any of the Guaranteed Obligations is secured by real
property.  These rights and defenses
include, but are not limited to, any rights or defenses based upon Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure.

 

(c)                                  Each Guarantor
waives any right or defense it may have at law or equity, including California
Code of Civil Procedure Section 580a, to a fair market value hearing or
action to determine a deficiency judgment after a foreclosure.

 

Section 24.                                   RELEASE OF GUARANTORS.  Subject to Section 2.17(d) of
the Credit Agreement, a Guarantor may be released from its obligations under
this Guaranty by Administrative Agent’s execution of a Release of Guaranty in
the form of Exhibit B attached
hereto.  Each Guarantor expressly agrees
that its obligations arising hereunder shall not be affected or diminished by
the release of any other Guarantor hereunder.

 

Section 25.                                   GOVERNING
LAW; JURISDICTION; ETC.

 

(a)                                  GOVERNING
LAW.  THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

E-2-6

 

(b)                                 SUBMISSION
TO JURISDICTION.  EACH GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS
GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT
PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ITS PROPERTIES
IN THE COURTS OF ANY JURISDICTION.

 

(c)                                  WAIVER
OF VENUE.  EACH
GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO
IN THIS SECTION 25(b).  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

(d)                                 SERVICE
OF PROCESS.  EACH PARTY
HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 11.02 OF THE CREDIT
AGREEMENT.  NOTHING IN THIS GUARANTY WILL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW.

 

(e)                                  WAIVER
OF JURY TRIAL.  EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER; AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 25.

 

Section 26.                                   COUNTERPARTS.  This
Guaranty may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.

 

E-2-7

 

SECTION 27.                     FINAL
AGREEMENT.  THIS
GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE CONTRACT AMONG THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY AND ALL
PREVIOUS AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, RELATING TO THE SUBJECT
MATTER HEREOF.  THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[Remainder of Page Intentionally
Left Blank;

Signature
Pages Follow]

 

E-2-8

 

IN WITNESS WHEREOF, each of the
undersigned has caused this Subsidiary Guaranty Agreement to be duly executed
and delivered as of the date first written above.

 

 

	
   

  	
  SUBSIDIARY GUARANTORS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Insert Names]

  

 

 

Address for each of the
foregoing Subsidiary Guarantors:

 

Sunstone
Hotel Investors, Inc.

120
Vantis, Suite 350

Aliso
Viejo, CA 92656

Attention:    Legal Department

Telephone:  949-330-4000

Facsimile:    949-330-4090

Electronic Mail:
dsloan@sunstonehotels.com

 

E-2-9

 

SCHEDULE
1

INITIAL
GUARANTORS

 

Sunstone LA Airport, LLC

Sunstone Center Court, LLC

Sunstone Century, LLC

Sunstone Hotels Rochester, L.L.C.

Sunstone RP Collins, LLC

Sunstone Jamboree, LLC

Sunstone Westwood, LLC

Sunstone MacArthur, LLC

Sunstone Red Oak, LLC

Sunstone KIS, LLC

Sunstone Skyway, LLC

Sunstone Quincy, LLC

WB Sunstone-Portland, LLC

Sun SHP II, LLC

Sunstone Pledgeco, LLC

Sunstone Holdco 6, LLC

Sunstone Holdco 8, LLC

WHP Hotel Owner-2A, L.L.C.

Sunstone Outparcel, L.L.C.

Sun BB, LLC

Sunstone Hotel Acquisitions, LLC

Pico Ventures, LLC

Sunstone Atlantic Lender, LLC

Sunstone Broadway Lender, LLC

Sunstone Broadway, LLC

Sunstone RIP, LLC, each a Delaware limited liability company

 

Sunstone CHP I, Inc., a Delaware corporation

 

E-2-10

 

EXHIBIT A

 

JOINDER TO SUBSIDIARY GUARANTY AGREEMENT

 

THIS JOINDER TO SUBSIDIARY GUARANTY AGREEMENT dated
as of                                ,
20    (this “Joinder”),
executed and delivered by                                    ,
a                              
(the “Additional Guarantor”), in
favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent (the “Administrative Agent”) for the
Lenders under that certain Credit Agreement dated as of November 1, 2010
(as amended, restated, supplemented or otherwise modified from time to time,
the “Credit Agreement”), by and among
SUNSTONE HOTEL PARTNERSHIP, LLC, a Delaware limited liability company (“Borrower”), SUNSTONE
HOTEL INVESTORS, INC., a Maryland corporation (“Parent”),
the financial institutions party thereto and their assignees (the “Lenders”) and the Administrative
Agent.

 

WHEREAS, pursuant to the Credit Agreement, the
Administrative Agent and the Lenders have agreed to make available to the
Borrower certain financial accommodations on the terms and conditions set forth
in the Credit Agreement;

 

WHEREAS, the Borrower, the Additional Guarantor, and
the existing Guarantors, though separate legal entities, are members of the
same corporate family and have determined it to be in their mutual best
interests to obtain financing from the Administrative Agent and the Lenders
through their collective efforts;

 

WHEREAS, the Additional Guarantor acknowledges that
it will receive direct and indirect benefits from the Administrative Agent and
the Lenders making such financial accommodations available to the Borrower
under the Credit Agreement and, accordingly, the Additional Guarantor is
willing to guarantee the Borrower’s obligations to the Administrative Agent and
the Lenders on the terms and conditions contained herein; and

 

WHEREAS, the Additional Guarantor’s execution and
delivery of this Joinder is a condition to the Administrative Agent and the
Lenders continuing to make such financial accommodations to the Borrower.

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the Additional
Guarantor, the Additional Guarantor agrees as follows:

 

Section 1.                    Accession to
Guaranty.  The
Additional Guarantor hereby (i) agrees that it is a “Guarantor” under that
certain Subsidiary Guaranty Agreement dated as of November     ,
2010 (as amended, supplemented, restated or otherwise modified from time to
time, the “Guaranty”), made by each of
the Guarantors party thereto, in favor of the Administrative Agent and (ii) assumes
all obligations of a “Guarantor” thereunder and agrees to be bound thereby, all
as if the Additional Guarantor had been an original signatory to the
Guaranty.  Without limiting the
generality of the foregoing, the Additional 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 the
Guarantied Obligations (as defined in the Guaranty);

 

(b)                                 makes to the Administrative
Agent  and the Lenders as of the date
hereof each of the representations and warranties contained in the Guaranty and
agrees to be bound by each of the covenants contained in the Guaranty; and

 

E-2-11

 

(c)                                  consents and agrees to each
provision set forth in the Guaranty.

 

Section 2. 
Definitions.  Capitalized
terms used herein and not otherwise defined herein shall have their respective
defined meanings given them in the Guaranty.

 

[Signatures on Next Page]

 

E-2-12

 

In witness whereof, the
undersigned Additional Guarantor has caused this Joinder to be executed and
delivered by its officer thereunto duly authorized as of the date first written
above.

 

	
   

  	
   

  
	
   

  	
  [NAME OF ADDITIONAL GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Address of Additional Guarantor:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attention:                      

  	
   

  
	
  Telephone:                    

  	
   

  
	
  Facsimile:                      

  	
   

  
	
  Electronic Mail:                          ]

  	
   

  

 

E-2-13

 

EXHIBIT B

 

FORM OF RELEASE OF GUARANTOR

 

In witness whereof, the undersigned Administrative
Agent, on behalf of the Credit Parties, hereby releases and discharges                                   
from any and all obligations and liabilities of                                  
to the Credit Parties under that certain Subsidiary Guaranty Agreement dated as
of November      , 2010 executed by the
Guarantors party thereto, in favor of Administrative Agent for the benefit of
the Credit Parties.

 

BANK OF AMERICA, N.A., as Administrative Agent

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

E-2-14

 

EXHIBIT F

FORM OF PLEDGE
AGREEMENT

 

THIS PLEDGE AGREEMENT (this “Agreement”) is dated
as of November       , 2010, and entered
into by and between SUNSTONE HOTEL PARTNERSHIP, LLC, a Delaware limited
liability company (“Borrower”)
and those subsidiaries of Borrower listed on the signature pages hereof or
which may hereafter become a party hereto pursuant to Section 16 (each
of which is a “Pledgor
Subsidiary;” and Borrower and each Pledgor Subsidiary are each a
“Pledgor”
and collectively, “Pledgors”),
the Issuers (as hereinafter defined), and BANK OF AMERICA, N.A., a national
banking association, as administrative agent for and representative of (in such
capacity herein called “Secured
Party”) the Lenders under and as defined in the Credit Agreement
(defined below) and each Swap Counterparty (defined below).

 

R  E  C
I  T  A  L  S

 

1.                                       Reference is
hereby made to that certain Credit Agreement dated as of November 1, 2010,
among Borrower, Sunstone Hotel Investors, Inc., a Maryland corporation,
the Lenders defined therein, and Bank of America, N.A., as Administrative Agent
and L/C Issuer, as amended, modified, supplemented, renewed or extended, and
all restatements thereof and any agreement that refinances the indebtedness
thereunder (the “Credit
Agreement”).

 

2.                                       Capitalized
terms used herein shall, unless otherwise indicated, have the respective
meanings set forth in the Credit Agreement as in effect on the date hereof.

 

3.                                       Each Pledgor is
the legal and beneficial owner of (a) the Pledged Shares (as defined
herein), and (b) the Pledged Interests (as defined herein), in each case,
described as owned by such Pledgor on Schedule I hereto.

 

4.                                       Each Pledgor
will, directly or indirectly, benefit from the Credit Parties’ extension of
credit to Borrower and the Swap Contracts, as defined in the Credit Agreement,
entered into by any Loan Party with a Lender or an Affiliate of Lender (each
such counterparty, a “Swap Counterparty”).

 

5.                                       The Credit
Agreement requires that each Pledgor shall grant to Secured Party, for the equal and
ratable benefit of the Lenders, the Liens contemplated by this Agreement.

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgors and Issuers hereby agree with Secured Party, for the equal and
ratable benefit of the Lenders, as follows:

 

1.                                       Definitions.  As
used herein, the following terms have the following meanings:

 

“Article 8 Opt-In
Provisions” means the provisions, if any, in the applicable
Formation Documents of an Issuer stating that the equity interests of such
Issuer are securities governed by Article 8 of the applicable Code.

 

F-1

 

“Credit Agreement” has the meaning set forth in the
Recitals hereto.

 

“Issuer” means a corporation,
partnership, or limited liability company that has issued or will issue any
Equity Interest, including, without limitation, each of the entities listed as
an “issuer” on Schedule
1 hereto.

 

“Pledged Interests”
means all of each Pledgor’s partnership interests in limited partnerships or
general partnerships, as the case may be, and membership interests in limited
liability companies, if any, described as owned by such Pledgor in Part B of Schedule 1 attached
hereto, including, without limitation (i) all of each Pledgor’s right,
title, and interest now or hereafter accruing under any limited liability
company agreement, operating agreement, or partnership agreement (any such
agreement being a “Pledged Interest  Formation Agreement”)
with respect to any interest now owned or hereafter acquired or owned by such
Pledgor in the issuer of such Pledged Interests, and (ii) all
distributions, proceeds, fees, preferences, payments, or other benefits, which
each Pledgor now is or may hereafter become entitled to receive with respect to
such interests in the issuer of such Pledged Interests and with respect to the
repayment of all loans now or hereafter made by such Pledgor to the issuer of
such Pledged Interests, and such Pledgor’s undivided percentage interest in the
assets of the issuer of such Pledged Interests.

 

“Pledged Shares”
means the shares of stock described as owned by such Pledgor in Part A of Schedule 1 attached
hereto and issued by the corporations named therein, including, without
limitation, (i) all of each Pledgor’s right, title, and interest now or hereafter
accruing under any bylaws (any such agreement being a “Pledged
Share Formation
Agreement”, and together with the
Pledged Interest Formation Agreement, the “Formation Agreements”), shareholders’
agreement, or other material agreement with respect to any interest now owned
or hereafter acquired or owned by such Pledgor in the issuer of such Pledged
Shares, and (ii) all distributions, proceeds, fees, preferences, payments,
or other benefits, which each Pledgor now is or may hereafter become entitled to
receive with respect to such interests in the issuer of such Pledged Shares and
with respect to the repayment of all loans now or hereafter made by such
Pledgor to the issuer of such Pledged Shares, and such Pledgor’s undivided
percentage interest in the assets of the issuer of such Pledged Shares.

 

“Pledgee Subsidiary” means (i) each Subsidiary of a
Pledgor that holds title to any Borrowing Base Property and (ii) all other
Subsidiaries of any Pledgor in which the granting of a Lien in the Pledged
Shares and the Pledged Interests hereunder would not breach any obligation of
such Subsidiary or any of its Affiliates under any Contractual Obligation.

 

2.                                       Pledge of Security.  Each Pledgor hereby pledges and assigns to Secured Party,
for the equal and ratable benefit of the Lenders, and hereby grants to Secured Party,
for the equal and ratable benefit of the Lenders, a Lien in, all of such
Pledgor’s right, title, and interest in and to the following (the “Collateral”):

 

(a)                                  the Pledged
Shares and the certificates representing the Pledged Shares and any interest or
securities entitlement of such Pledgor in the entries on the books of any
financial or securities intermediary pertaining to the Pledged Shares;

 

(b)                                 the Pledged
Interests, including without limitation all of such Pledgor’s right, title, and
interest as a partner in the issuer of such Pledged Interests (if it is a
partnership) or as a member of the issuer of such Pledged Interests (if it is a
limited liability company);

 

F-2

 

(c)                                  all additional
shares of, and all securities convertible into and warrants, options, and other
rights to purchase or otherwise acquire, stock of any issuer of the Pledged
Shares from time to time acquired by such Pledgor in any manner (which shares
shall be deemed to be part of the Pledged Shares), the certificates or other
instruments representing such additional shares, securities, warrants, options,
or other rights and any interest of such Pledgor in the entries on the books of
any financial intermediary pertaining to such additional shares;

 

(d)                                 all
distribution rights, income rights, liquidation interests, accounts, contract
rights, general intangibles, notes, instruments, drafts, and documents relating
to the Pledged Shares or the Pledged Interests, including, without limitation,
all dividends, cash, warrants, rights, instruments, and other property or
proceeds from time to time received or otherwise distributed in respect of or
in exchange for any or all of the Collateral;

 

 

(e)                                  to the extent
attributable to the Pledged Shares or the Pledged Interests, all promissory
notes, notes receivable, accounts, accounts receivable, and instruments owned
or held by any Pledgor or, in which any Pledgor owns or holds an interest,
evidencing obligations of the issuer of such Pledged Shares or Pledged
Interests;

 

(f)                                    all Liens,
security interests, collateral, property, and assets securing any of the
promissory notes, notes receivable, instruments, accounts receivable, and other
claims and interests described in clause (e) above;

 

(g)                                 all books,
files, computer records, computer software, electronic information, and other
files, records, or information relating to any or all of the foregoing,
including, without limitation, all of such Pledgor’s right, title and interest
in and to all stock or other ownership record books relating to any of the
Collateral; and

 

(h)                                 all
substitutions, replacements, products, proceeds, income, and profits arising
from any of the foregoing, including, without limitation, insurance
proceeds.  For purposes of this
Agreement, the term “proceeds”
includes whatever is receivable or received when Collateral or proceeds are
sold, exchanged, collected, or otherwise disposed of, whether such disposition
is voluntary or involuntary, and includes, without limitation, proceeds of any
indemnity or guaranty payable to such Pledgor or Secured Party from time to time with
respect to any of the Collateral.

 

3.                                       Security for Obligations.  This Agreement secures, and the Collateral is
collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand, or otherwise (including the payment of amounts that would become due
but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§362(a)), of all of the Obligations and all renewals or extensions thereof,
whether for principal, interest (including without limitation interest that,
but for the filing of a petition in bankruptcy with respect to any Pledgor,
would accrue on such obligations), fees, expenses, indemnities, or otherwise,
whether voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and
whether or not from time to time decreased or extinguished and later increased,
created, or incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a preference, fraudulent
transfer, or otherwise (all such obligations and liabilities being the “Underlying Debt”),
and all payment obligations of each Pledgor now or hereafter existing under Section 14 of this Agreement
(all such obligations of Pledgors, together with the Underlying Debt, being the
“Secured Obligations”).

 

F-3

 

4.                                       Delivery of Collateral.  All certificates or instruments representing
or evidencing the Collateral shall be delivered to and held by or on behalf of Secured Party
pursuant hereto and shall be in suitable form for transfer by delivery or, as
applicable, shall be accompanied by the applicable Pledgor’s endorsement, where
necessary, or duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Secured Party.  Secured Party shall have the right, at any
time after the occurrence and during the continuation of an Event of Default, and
without notice to any Pledgor, to transfer to or to register in the name of Secured Party
or any of its nominees any or all of the Collateral, subject only to the
revocable rights specified in Section 8(a). 
In addition, Secured Party shall have the right at any time after the
occurrence and during the continuation of an Event of Default to exchange
certificates or instruments representing or evidencing Collateral for
certificates or instruments of smaller or larger denominations.

 

5.                                       Consent.  To the extent the consent of a Pledgor or
Issuer, whether in its capacity as a partner, member, general partner, managing
member, shareholder, issuer, or otherwise, is required for the transfer,
conveyance, or encumbrance of all or any portion of the Pledged Interests in
any partnership or limited liability company, such Pledgor or Issuer hereby
irrevocably (a) consents to the grant of the security interests by all
applicable Pledgors described in this Pledge Agreement, (b) consents to
the transfer or conveyance of the Collateral pursuant to Secured Party’s
exercise of its rights and remedies under this Pledge Agreement or any of the
other Loan Documents, at law or in equity, (c) consents to the
admission of Secured Party or any Persons designated by Secured Party, their
nominees, or any other transferee of any Collateral as a partner (including as
the general partner) or member (including as the managing member) of such
partnership or limited liability company, and (d) agrees that all terms
and conditions in such Formation Agreement applicable to the pledge of any
Collateral, the enforcement thereof, the transfer of any Collateral or the
admission of Secured Party or any Persons designated by Secured Party, their
nominees, or any other transferee of any Collateral as a partner (including as
the general partner) or member (including as the managing member) of such
partnership or limited liability company have been satisfied or waived.

 

6.                                       Representations and Warranties.  Each Pledgor represents and warrants, as of
the date hereof, that:

 

(a)                                  Due Authorization, etc. of Collateral.  All of the
Pledged Shares and Pledged Interests have been duly authorized and validly
issued and are fully paid and nonassessable.

 

(b)                                 Description of Collateral.  The Pledged Shares and
Pledged Interests (i) constitute all of the issued and outstanding Equity
Interests of each of the Pledgee Subsidiaries, and (ii) there are no
outstanding warrants, options or other rights to purchase, or other agreements
outstanding with respect to, or property that is now or hereafter convertible
into, or that requires the issuance or sale of, any Pledged Shares or Pledged
Interests.

 

(c)                                  Ownership of Collateral.  Each Pledgor is the legal, record, and
beneficial owner of the Collateral listed next to its name on Schedule 1, free and
clear of any Lien except for the Lien created by the Loan Documents.

 

F-4

 

(d)                                 Governmental Authorizations.  No authorization, approval, or other action
by, and no notice to or filing with, any Governmental Authority is required for
either (i) the pledge by any Pledgor of the Collateral pursuant to this
Agreement and the grant by any Pledgor of the Lien granted hereby,
(ii) the execution, delivery, or performance of this Agreement by any
Pledgor, or (iii) the exercise by Secured Party of the voting or other rights,
or the remedies in respect of the Collateral, provided for in this Agreement
(except as may be required in connection with a disposition of Collateral by
laws affecting the offering and sale of securities generally).

 

(e)                                  Perfection.  Upon execution of this Agreement and (i) an
appropriate financing statement by Pledgor and the recording of the financing
statement in the appropriate office, or (ii) the establishment of “control”
(within the meaning of Article 8
or Article 9 of the Uniform Commercial Code, as adopted in the
State of New York (the “Code”))
over any portion of the Collateral constituting Certificated Securities or
Uncertificated Securities (each as defined in the Code), as applicable, Secured
Party will have a valid and perfected first priority Lien in the Collateral,
securing the payment of the Secured Obligations.

 

(f)                                    Margin Regulations.  The pledge of the Collateral pursuant to this
Agreement does not violate Regulation T, U,
or X of the Board of Governors of
the Federal Reserve System.

 

7.                                       Assurances and Covenants of each Pledgor and each Issuer.

 

(a)                                  Transfers and Other Liens.  No Pledgor shall:

 

(i)                                     sell, assign
(by operation of law or otherwise), pledge, or hypothecate or otherwise dispose
of, or grant any option with respect to, any of the Collateral except for the
Lien created under the Loan Documents; provided that
each Pledgor may sell or dispose of any Collateral so long as such sale or
disposition is not otherwise prohibited pursuant to the Credit Agreement, and
upon such permitted sale or disposition any assets so sold or disposed as
permitted by this Section 7(a) shall
be released from the Lien of this Agreement as provided in Section 17
provided that the foregoing shall not be construed to limit Pledgor’s
rights under Section 8(a)(ii) hereof;
or

 

(ii)                                  create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
for the Liens created under the Loan Documents.

 

(b)                                 Additional Collateral — Existing Pledgee Subsidiaries.  Each Pledgor
shall (i) cause each issuer of Pledged Shares or Pledged Interests not to
issue any stock or other securities in addition to or in substitution for the
Pledged Shares or Pledged Interests issued by such issuer, except to such
Pledgor and (ii) pledge hereunder pursuant to Section 7(d),
promptly upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities or interests of each issuer of
Pledged Shares or Pledged Interests.

 

(c)                                  Pledge Amendments.  Each Pledgor shall, upon obtaining any
additional shares of stock or other securities or interests required to be
pledged hereunder as provided in Sections 7(b) or (c), promptly (and in any event on or
before thirty (30) days after obtaining such securities) deliver to Secured Party
a Pledge and Security Amendment, duly executed by such Pledgor and Issuer, as
applicable, in substantially the form of Exhibit A attached hereto (a “Pledge and Security Amendment”),
as well as all certificates and instruments representing shares of stock or
other equity interests, if any, in accordance with Section 2.17(c) of
the Credit Agreement, in respect of the additional Pledged Shares or Pledged

 

F-5

 

Interests to be pledged
pursuant to this Agreement.  Each Pledgor
hereby authorizes Secured Party to attach each Pledge and Security Amendment to
this Agreement and agrees that all Pledged Shares listed on any Pledge and
Security Amendment delivered to Secured Party shall for all purposes
hereunder be considered Collateral; provided
that, the failure of any Pledgor to execute a Pledge and Security
Amendment with respect to any additional Pledged Shares pledged pursuant to
this Agreement shall not impair the Lien of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.

 

(d)                                 Further Assurances Perfection.  Each Pledgor shall from time to time, at the
expense of Pledgors, promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured
Party may reasonably request, in order to perfect and protect any Lien
granted or purported to be granted hereby or to enable Secured Party to exercise and enforce
its rights and remedies hereunder with respect to any Collateral.  Without limiting the generality of the
foregoing, each Pledgor will:

 

(i)                                     authenticate
and file, or authorize Secured Party to file, such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as
may be necessary or desirable, or as Secured Party may reasonably request, in
order to perfect and preserve the Liens granted or purported to be granted
hereby; and

 

(ii)                                at Secured Party’s
request, appear in and defend any action or proceeding that may affect any
Pledgor’s title to or Secured Party’s Lien in all or any part of the Collateral.

 

(e)                                  Authorization to File Financing Statements.

 

(i)                                     Each Pledgor
hereby authorizes Secured Party to file one or more financing or continuation
statements, and amendments thereto, relative to and limited to all or any part
of the Collateral, in such filing offices as Secured Party shall deem appropriate,
and each Pledgor shall authenticate and deliver to Secured Party such financing or
continuation statements, and amendments thereto, promptly upon the request of Secured Party
and, shall pay Secured
Party’s reasonable costs and expenses incurred in connection therewith.

 

(ii)                                  Each Pledgor
hereby further authorizes Secured Party to file one or more financing or continuation
statements, and amendments thereto, relative to and limited to all or any part
of the Collateral without the signature of such Pledgor, and each Pledgor
agrees that a carbon, photographic, or other reproduction of this Agreement or
of a financing statement authenticated by such Pledgor shall be sufficient as a
financing statement and may be filed as a financing statement in any and all
jurisdictions.

 

(f)                                    Formation Agreements.  Subject to Section 5
of this Agreement, each Pledgor shall, at its expense, maintain each applicable
Formation Agreement in full force and effect, without any cancellation,
termination, amendment, supplement, or other modification of such Formation
Agreement, except as explicitly required by its terms (as in effect on the date
hereof), except for amendments, supplements or other modifications that do not
materially adversely affect the interests of the Lenders in any material
respect and except for Formation Agreements in respect of Pledged Shares or
Pledged Interests of partnerships or limited liability companies that have been
released from this Agreement under Section 17.

 

F-6

 

8.                                       Voting Rights; Dividends; Etc.

 

(a)                                  So long as no
Event of Default shall have occurred and be continuing:

 

(i)                                     each Pledgor
shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Loan Documents;

 

(ii)                                  each Pledgor
shall be entitled to receive and retain, and to utilize free and clear of the
Lien of this Agreement, any and all dividends, cash, warrants, rights, instruments,
and other property or proceeds from time to time received or otherwise
distributed in respect of or in exchange for any Collateral; provided, however, that any and all such
dividends, distributions, property or proceeds paid or payable on the Collateral
in the form of additional securities of a Pledgee Subsidiary shall be, and
shall forthwith be delivered to Secured Party to hold as Collateral and
shall, if received by any Pledgor, be received in trust for the benefit of Secured Party,
be segregated from the other property or funds of such Pledgor and be forthwith
delivered to Secured
Party as Collateral in the same form as so received (with all necessary
endorsements); and

 

(iii)                               Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to Pledgors all such proxies,
dividend payment orders, and other instruments as any Pledgor may from time to
time reasonably request for the purpose of enabling such Pledgor to exercise
the voting and other consensual rights which it is entitled to exercise
pursuant to paragraph (i) above
and to receive the dividend payments which it is authorized to receive and
retain pursuant to paragraph
(ii) above.

 

(b)                                 Upon the
occurrence and during the continuation of an Event of Default:

 

(i)                                     upon written
notice from Secured
Party to Pledgors, all rights of any Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 8(a)(i) shall
cease, and all such rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to exercise such voting and other
consensual rights;

 

(ii)                                  all rights of
any Pledgor to receive the dividends, cash, warrants, rights, instruments, and
other property or proceeds in respect of or in exchange for any Collateral
which it would otherwise be authorized to receive and retain pursuant to Section 8(a)(ii) shall
cease, and all such rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to receive and hold as Collateral such
dividend payments; and

 

(iii)                               all dividends,
cash, warrants, rights, instruments, and other property or proceeds in respect
of or in exchange for any Collateral which are received by any Pledgor contrary
to the provisions of paragraph
(ii) of this Section 8(b) shall be received in
trust for the benefit of Secured Party, shall be segregated from other funds of such
Pledgor and shall forthwith be paid over to Secured Party as Collateral in the same
form as so received (with any necessary endorsements).

 

F-7

 

(c)                                  In order to
permit Secured
Party to exercise the voting and other consensual rights which it may be
entitled to exercise pursuant to Section 8(b)(i) and to receive all dividends
and other distributions which it may be entitled to receive under Section 8(a)(ii) or
Section 8(b)(ii),
(i) each Pledgor shall promptly execute and deliver (or cause to be
executed and delivered) to Secured Party all such proxies, dividend payment orders, and
other instruments as Secured Party may from time to time reasonably request, and (ii) without
limiting the effect of the immediately preceding clause (i), each Pledgor hereby grants
to Secured
Party an irrevocable proxy to vote the Pledged Shares and to exercise
all other rights, powers, privileges, and remedies to which a holder of the
Pledged Shares would be entitled (including, without limitation, giving or
withholding written consents of shareholders, calling special meetings of
shareholders, and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer
of any Pledged Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares or any officer or agent
thereof), upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations (except for
contingent obligations that survive termination of the Loan Documents) or
waiver or cure of such Default.

 

(d)                                 Notwithstanding
any of the foregoing, each Pledgor agrees that this Agreement shall not in any
way be deemed to obligate Secured Party or any Lender to assume any of such Pledgor’s
obligations, duties, expenses, or liabilities arising out of this Agreement
(including, without limitation, such Pledgor’s obligations as the holder of the
Pledged Shares and as holder of the Pledged Interests) or under any and all
other agreements now existing or hereafter drafted or executed (collectively,
the “Pledgor Obligations”)
unless Secured
Party otherwise expressly agrees to assume any or all of said Pledgor
Obligations in writing.  Without limiting
the generality of the foregoing, neither the grant of the Lien in the Collateral
in favor of Secured
Party as provided herein nor the exercise by Secured Party of any of its rights
hereunder nor any action by Secured Party in connection with a foreclosure on the Collateral
shall be deemed to constitute Secured Party as a partner of any
partnership or a member of any limited liability company; provided, however, that in the event Secured Party
elects to become a substituted partner of any partnership or a member of any
limited liability company in place of Pledgor while an Event of Default has
occurred and is continuing, Secured Party shall be entitled to and shall become such a
substitute partner or member.

 

9.                                       Secured Party Appointed Attorney-in-Fact.  Each Pledgor hereby irrevocably appoints Secured Party
as such Pledgor’s attorney-in-fact, with full authority in the place and stead
of such Pledgor and in the name of such Pledgor, Secured Party or otherwise, from time
to time in Secured
Party’s discretion:

 

(a)                                  to file one or
more financing or continuation statements, or amendments thereto, relative to
and limited to all or any part of the Collateral without the signature of
Pledgor;

 

(b)                                 subsequent to
the occurrence and during the continuation of an Event of Default, to ask,
demand, collect, sue for, recover, compound, receive, and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;

 

(c)                                  subsequent to
the occurrence and during the continuation of an Event of Default, to receive,
endorse, and collect any instruments made payable to any Pledgor representing
any dividend payment or other distribution in respect of the Collateral or any
part thereof and to give full discharge for the same; and

 

F-8

 

(d)                                 subsequent to
the occurrence and during the continuation of an Event of Default, to file any
claims or take any action or institute any proceedings that Secured Party
may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Secured Party with respect to any of the
Collateral.

 

10.                                 Secured Party May Perform.  If any Pledgor fails to perform any agreement
contained herein, then Secured Party may itself perform, or cause performance of, such
agreement, and the expenses of Secured Party incurred in connection
therewith shall be payable by such Pledgor under Section 14(b).

 

11.                                 Standard of Care.  The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers.  Except for the exercise of reasonable care in
the custody of any Collateral in its possession or under its control and the
accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Collateral, it being understood that Secured Party
shall have no 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 Secured Party has or is deemed to have
knowledge of such matters, (b) taking any necessary steps (other than
steps taken in accordance with the standard of care set forth above to maintain
possession or control of the Collateral) to preserve rights against any parties
with respect to any Collateral, (c) taking any necessary steps to collect
or realize upon the Secured Obligations or any guarantee therefor, or any part
thereof, or any of the Collateral, or (d) initiating any action to protect
the Collateral against the possibility of a decline in market value.  Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession or control if such Collateral is accorded treatment substantially
equal to that which Secured Party accords its own property consisting of negotiable
securities.

 

12.                                 Remedies.

 

(a)                                  If any Event of
Default shall have occurred and be continuing, then Secured Party may exercise in respect
of the Collateral, in addition to all other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party on default under the Code (whether or not the Code applies to the
affected Collateral), and Secured Party may also in its sole discretion, without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange or broker’s board or at
any of Secured
Party’s offices or elsewhere, for cash, on credit, or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Secured
Party may deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Collateral.  Secured Party or any Lender may be the
purchaser of any or all of the Collateral at any such public sale and Secured Party,
as agent for and representative of Lenders, shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or
any portion of the Collateral sold at any such public sale, to use and apply
any of the Secured Obligations as a credit on account of the purchase price for
any Collateral payable by Secured Party at such sale. 
Each purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of any Pledgor, and each Pledgor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay, and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter
enacted.  Each Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten (10) days’
prior notice to the applicable 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.  Secured Party
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given.  Secured Party
may adjourn any public or private sale from time to time

 

F-9

 

by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.  Each Pledgor hereby waives any claims against
Secured
Party arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to more
than one offeree; provided however, that Pledgors
do not waive the requirements of Section 9-610
of the Code with respect to any sale or other disposition of the Collateral
that is conducted under such Section.

 

(b)                                 Each Pledgor
recognizes that, by reason of certain prohibitions contained in the Securities
Act of 1933, as from time to time amended (the “Securities Act”), and applicable state
securities laws, Secured Party may be compelled, with respect to any sale of all
or any part of the Collateral conducted without prior registration or
qualification of such Collateral under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to the distribution or resale thereof.  Each Pledgor acknowledges that any such
private sales may be at prices and on terms less favorable than those
obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under
the Securities Act) and, notwithstanding such circumstances, each Pledgor
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that Secured Party shall have no obligation to
engage in public sales and no obligation to delay the sale of any Collateral
for the period of time necessary to permit the issuer thereof to register it
for a form of public sale requiring registration under the Securities Act or
under applicable state securities laws, even if such issuer would, or should,
agree to so register it.

 

(c)                                  If Secured Party
determines to exercise its right to sell any or all of the Collateral, then
upon Secured
Party’s written request, each Pledgor shall and shall cause each issuer
of any Pledged Shares to be sold hereunder from time to time to furnish to Secured Party
all such information as Secured Party may request in order to determine the number of
shares and other instruments included in the Collateral which may be sold by Secured Party
in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same are
from time to time in effect.

 

13.                                 Application
of Proceeds.  All
proceeds received by Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be held and
applied in accordance with the Credit Agreement.

 

14.                                 Indemnity and Expenses.

 

(a)                                  EACH
PLEDGOR AGREES TO INDEMNIFY SECURED PARTY AND EACH LENDER FROM AND AGAINST ANY AND ALL
CLAIMS, LOSSES, AND LIABILITIES IN ANY WAY RELATING TO, GROWING OUT OF, OR
RESULTING FROM THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY
(INCLUDING, WITHOUT LIMITATION, ENFORCEMENT OF THIS AGREEMENT), EXCEPT TO THE
EXTENT SUCH CLAIMS, LOSSES, OR LIABILITIES RESULT FROM SECURED PARTY’S OR
SUCH LENDER’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A
COURT OF COMPETENT JURISDICTION.

 

F-10

 

(b)                                 Pledgors shall
pay to Secured
Party upon demand the amount of any and all costs and expenses,
including the reasonable fees and expenses of its counsel and of any experts
and agents, that Secured Party may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Secured Party
hereunder, or (iv) the failure by any Pledgor to perform or observe any of
the provisions hereof.

 

15.                                 Continuing Security Interest; Transfer of Loans.  This Agreement shall create a continuing Lien
in the Collateral and shall (a) remain in full force and effect until the
payment in full of all Obligations (except for contingent obligations that
survive termination of the Loan Documents), the termination of the obligations
of Lenders to advance Borrowings or issue Letters of Credit under the Loan
Documents, and the expiration of all Letters of Credit and all Swap Contracts, (b) be
binding upon each Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the benefit
of Secured
Party and each Lender, and their respective successors, transferees, and
assigns.  Without limiting the generality
of the foregoing clause
(c), but subject to the relevant provisions of  the Loan Documents,
any Lender may assign or otherwise transfer any Secured Obligations held by it
to any other Person to the extent permitted by the Credit Agreement, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise.  Upon the indefeasible payment in full of all
Obligations (except for contingent obligations that survive termination of the
Loan Documents), the termination of the obligations of Lenders to advance Borrowings
or issue Letters of Credit under the Loan Documents, and the expiration of all
Letters of Credit and all Swap Contracts, the Lien granted hereby shall
terminate and all rights to the Collateral shall revert to Pledgors (provided that, if an Event of Default then exists, such
termination and reversion shall not occur until such time as no Event of
Default is continuing).  Upon any such
termination Secured
Party will, at Pledgors’ expense, execute and deliver to Pledgors such
documents as Pledgors shall reasonably request to evidence such termination and
Pledgors shall be entitled to the return, upon their request and at their
expense, against receipt and without recourse to Secured Party, of such Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof.

 

16.                                 Additional Pledgor Subsidiaries.  In accordance with Section 2.17(c) of
the Credit Agreement, certain additional Subsidiaries of Parent may from time
to time become parties hereto as additional Pledgor Subsidiaries (an “Additional Pledgor Subsidiary”),
and such Additional Pledgor Subsidiary and any applicable Issuer not already a
party to this Agreement, shall enter into a joinder hereto, substantially in
the form of Exhibit B,
together with all certificates and instruments representing shares of stock or
other equity interests, and listing the Collateral to be pledged by such
Additional Pledgor Subsidiary.

 

17.                                 Release of Collateral.  Collateral shall be released from the Lien of
this Agreement upon any of the following events:  (i) any sale or disposition of such
Collateral as permitted by Section 7(a) of
this Agreement or Section 8.05 of the Credit
Agreement; (ii) any release of the Lien in such Collateral by the
Administrative Agent in accordance with Sections 2.17(d) and
4.08 of the Credit Agreement; or (iii) upon
termination of Lien pursuant to Section 15.  Upon any release of Collateral pursuant to
the terms of this Section 17, (i) Secured Party
shall thereupon return to the respective Pledgor or to its order any and all
certificates and other instruments evidencing or relating to such released
Collateral and (ii) Secured Party will, at Pledgors’ expense, file, or will
authorize the respective Pledgor to file, an amendment or termination to any
financing statement releasing such Collateral.

 

18.                                 Amendments; Etc.  No amendment, modification, termination, or
waiver of any provision of this Agreement, and no consent to any departure by
Pledgor from the terms and conditions hereof, shall in any event be effective
unless the same shall be in writing and signed by Secured Party and, in the case of any
such amendment or modification, by Pledgors. 
Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.

 

F-11

 

19.                                 Notices.  Any notice
or other communication herein required or permitted to be given shall be in
writing and shall be in accordance with the provisions of Section 11.02
of the Credit Agreement.

 

20.                                 Control
Agreement; Acknowledgement by Issuers.

 

(a)                                  Pledgors hereby
authorize and instruct each Issuer to comply, and each Issuer hereby agrees to
so comply, with any instruction received thereby from Secured Party with
respect to the Collateral, without any consent or further instructions from
Pledgors (or other registered owner), and Pledgors agree that such Issuer shall
be fully protected in so complying.

 

(b)                                 Each Issuer
acknowledges receipt of a copy of this Agreement and agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable to
it.  Each Issuer further agrees that upon
request by Administrative Agent after the occurrence of an Event of Default,
upon receipt of notice from Secured Party, such Issuer shall pay any dividends,
distributions or other payments with respect to any Pledged Shares or Pledged
Interests directly to Administrative Agent. 
Each Pledgor hereby irrevocably agrees not to vote to amend, and each
Issuer hereby irrevocably agrees not to amend (i) the applicable Issuer’s
Formation Agreements to provide that its Equity Interests are securities
governed by Article 8 of the Code or (ii) the applicable Issuer’s Article 8
Opt-In Provisions of the applicable Issuer’s Formation Agreements, and each
Pledgor and each Issuer hereby agrees and acknowledges that any such vote shall
be invalid and any such amendment shall be void ab initio.

 

21.                                 Failure or Indulgence Not Waiver; Remedies Cumulative.  No failure or delay on the part of Secured Party
in the exercise of any power, right, or privilege hereunder shall impair such
power, right, or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right, or privilege preclude any other or further exercise thereof or of
any other power, right, or privilege. 
All rights and remedies existing under this Agreement are cumulative to,
and not exclusive of, any rights or remedies otherwise available.

 

22.                                 Severability.  In
case any provision in or obligation under this Agreement shall be invalid,
illegal, or unenforceable in any jurisdiction, the validity, legality, and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

 

23.                                 Headings.  Section and
subsection headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose or be given any substantive effect.

 

24.                                 Governing
Law; Jurisdiction; Etc.

 

(a)                                  GOVERNING
LAW.                                 THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

 

F-12

 

(b)                                 SUBMISSION
TO JURISDICTION.  EACH PLEDGOR IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, ANY LENDER OR L/C ISSUER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AGAINST ANY PLEDGOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)                                  WAIVER
OF VENUE.  EACH
PLEDGOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN  SECTION 24(b).  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

(d)                                 SERVICE
OF PROCESS.  EACH PARTY
HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 11.02 OF THE CREDIT
AGREEMENT.  NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW.

 

(e)                                  WAIVER
OF JURY TRIAL.  EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER; AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 24.

 

F-13

 

25.                                 Actions
Not Release.  The
security interest and Pledgors’ obligations and Secured Party’s rights
hereunder shall not be released, diminished, impaired, or adversely affected by
the occurrence of any one or more of the following events:  (i) the taking or accepting of any other
security or assurance for any or all of the Obligations; (ii) any release,
surrender, exchange, subordination, or loss of any security or assurance at any
time existing in connection with any or all of the Obligations; (iii) the
modification of, amendment to, or waiver of compliance with any terms of any of
the other Loan Documents without the notification or consent of Pledgors,
except as required therein (the right to such notification or consent being
herein specifically waived by Pledgors); (iv) the insolvency, bankruptcy,
or lack of corporate or trust power of any party at any time liable for the
payment of any or all of the Obligations, whether now existing or hereafter
occurring; (v) any renewal, extension, or rearrangement of the payment of
any or all of the Obligations, either with or without notice to or consent of
Pledgors, or any adjustment, indulgence, forbearance, or compromise that may be
granted or given by Secured Party or any Lender to Pledgors; (vi) any
neglect, delay, omission, failure, or refusal of Secured Party or any Lender to
take or prosecute any action in connection with any other agreement, document,
guaranty, or instrument evidencing, securing, or assuring the payment of all or
any of the Obligations; (vii) any failure of Secured Party or any Lender
to notify Pledgors of any renewal, extension, or assignment of the Obligations
or any part thereof, or the release of any security, or of any other action
taken or refrained from being taken by Secured Party or any Lender against
Pledgors or any new agreement between or among Secured Party or one or more
Lenders and Pledgors, it being understood that neither Secured Party nor any
Lender shall be required to give Pledgors any notice of any kind under any
circumstances whatsoever with respect to or in connection with the Obligations,
including, without limitation, notice of acceptance of this Agreement or any
Collateral ever delivered to or for the account of Secured Party hereunder; (viii) the
illegality, invalidity, or unenforceability of all or any part of the
Obligations against any party obligated with respect thereto by reason of the
fact that the Obligations, or the interest paid or payable with respect
thereto, exceeds the amount permitted by Law, the act of creating the
Obligations, or any part thereof, is ultra
vires, or the officers, partners, or trustees creating same acted in
excess of their authority, or for any other reason; (ix) if any payment by
any party obligated with respect thereto is held to constitute a preference
under applicable Laws or for any other reason Secured Party or any Lender is
required to refund such payment or pay the amount thereof to someone else; or (x) by
any fact or circumstance relating to the Obligations which might otherwise
constitute a defense to the obligations of any Pledgor under this Agreement.

 

26.                                 Counterparts.  This
Agreement may be executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute
but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.

 

27.                                 Limitation.  The obligations of each Pledgor hereunder
shall be limited to an aggregate amount equal to the largest amount that would
not render its obligations hereunder subject to avoidance under Section 548
of the Bankruptcy Code (Title 11, United States Code) or any comparable
provisions of any applicable state law.

 

[Signature
Pages to Follow]

 

F-14

 

IN WITNESS WHEREOF, each Pledgor, Issuer
and Secured
Party have caused this Agreement to be duly executed and delivered by
their respective officers thereunto duly authorized as of the date first
written above.

 

	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  SUNSTONE HOTEL PARTNERSHIP, LLC,

  	
   

  
	
  a Delaware limited liability company

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Address for Notices:

  	
   

  
	
   

  	
   

  
	
  Sunstone Hotel
  Partnership, LLC

  	
   

  
	
  120 Vantis,
  Suite 350

  	
   

  
	
  Aliso Viejo, CA 92656

  	
   

  
	
  Attention:    Legal
  Department

  	
   

  
	
  Telephone:  949-330-4000

  	
   

  
	
  Facsimile:   949-330-4090

  	
   

  
	
  Electronic Mail:
  dsloan@sunstonehotels.com

  	
   

  
	
   

  	
   

  
	
  PLEDGOR SUBSIDIARIES:

  	
   

  
	
   

  	
   

  
	
                                 ,  a                                     

  	
   

  
	
   

  	
   

  
	
  By:                                                 

  	
   

  
	
   

  	
               ,
  of each of the foregoing Pledgor Subsidiaries

  	
   

  
	
   

  	
   

  
	
  Address for each of the
  foregoing Pledgor Subsidiaries:

  	
   

  
	
   

  	
   

  
	
  Sunstone
  Hotel Investors, Inc.

  	
   

  
	
  120
  Vantis, Suite 350

  	
   

  
	
  Aliso
  Viejo, CA 92656

  	
   

  
	
  Attention: Legal
  Department

  	
   

  
	
  Telephone: 949-330-4000

  	
   

  
	
  Facsimile: 949-330-4090

  	
   

  
	
  Electronic Mail:
  dsloan@sunstonehotels.com

  	
   

  
				

 

F-15

 

	
  ISSUERS:

  	
   

  
	
   

  	
   

  
	
                                                ,  a                                               

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for each of the foregoing Issuers:

  	
   

  
	
   

  	
   

  
	
  Sunstone Hotel Investors, Inc.

  	
   

  
	
  120 Vantis, Suite 350

  	
   

  
	
  Aliso Viejo, CA 92656

  	
   

  
	
  Attention:    Legal Department

  	
   

  
	
  Telephone:  949-330-4000

  	
   

  
	
  Facsimile:   949-330-4090

  	
   

  
	
  Electronic Mail: dsloan@sunstonehotels.com

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SECURED PARTY:

  	
   

  
	
   

  	
   

  
	
  BANK OF AMERICA, N.A., a national

  	
   

  
	
  banking association, as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Notice Address:

  	
   

  
	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  
	
  901 Main St, 14th Floor

  	
   

  
	
  Mail Code:  TX1-492-14-11

  	
   

  
	
  Dallas, TX 75202

  	
   

  
	
  Attention:    Henry C. Pennell

  	
   

  
	
  Telephone:  214-209-1226

  	
   

  
	
  Facsimile:   214-290-9448

  	
   

  
	
  Electronic Mail: henry.pennell@baml.com

  	
   

  
				

 

F-17

 

SCHEDULE 1

 

PART A

 

	
  Pledgor

  	
   

  	
  Stock

  Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Class of

  Stock

  	
   

  	
  Stock

  Certificate

  Nos.

  	
   

  	
  Par

  Value

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage

  of

  Outstanding

  Stock of the

  Stock Issuer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PART B

 

General Partnerships

 

	
  Pledgor

  	
   

  	
  General

  Partnership

  Interests

  Issuer/Limited

  Partnership

  Interests Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  General

  Partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Limited Partnerships

 

	
  Pledgor

  	
   

  	
  Limited

  Partnership Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  Limited

  Partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Limited Liability Companies

 

	
  Pledgor

  	
   

  	
  Limited Liability

  Company Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  Limited

  Liability

  Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

F-19

 

EXHIBIT A

 

PLEDGE
AMENDMENT

 

This Pledge Amendment, dated
                             ,
20     (this “Pledge Amendment”),
is delivered pursuant to Section 6(d) of
the Pledge Agreement referred to below. 
The undersigned hereby agrees as follows:

 

1.             This Pledge Amendment may be attached to the Pledge
Agreement dated as of November      , 2010,
between the undersigned, each other Pledgor party thereto, and Bank of America,
N.A., as Secured
Party (the “Pledge
Agreement;” capitalized terms defined therein being used herein
as therein defined).

 

2.             The [Pledged Shares / Pledged Interests] listed on this
Pledge Amendment shall be deemed to be part of the [Pledged Shares] [Pledged
Interests] and shall become part of the Collateral and shall secure all Secured
Obligations.

 

3.             The undersigned Pledgor hereby confirms and reaffirms
the security interest in the Collateral granted to the Administrative Agent for
the benefit of the Lenders under the Pledge Agreement, and, as additional
collateral security for the prompt and complete payment when due (whether at
stated maturity, by acceleration or otherwise) of the Obligations and in order
to induce the Lenders to make their loans and other extensions of credit under
the Credit Agreement, Pledgor hereby delivers to the Administrative Agent, for
the benefit of the Lenders, all of Pledgor’s interest in [Name of New LLC/New
LP/New Company], a                                      
(“New Issuer”) listed in Schedule I hereto, together with all
certificates, options, or rights of any nature whatsoever which may be issued
or granted by New Issuer to Pledgor in respect of such interest while the
Pledge Agreement, as supplemented hereby, is in force (the “Additional Pledged [Interests/Shares]”)
and hereby grants to the Administrative Agent a first priority security
interest in the Additional Pledged [Interests/Shares] and all proceeds thereof.

 

4.             The undersigned hereby certifies that the
representations and warranties in Section 6
of the Pledge Agreement are true and correct as of the date hereof and
hereafter, as to the Pledged Shares, Pledged Interests, instruments and any
other property pledged pursuant to this Pledge Amendment.

 

5.             This Pledge Amendment is supplemental to the Pledge
Agreement, forms a part thereof and is subject to the terms thereof.  Schedule 1 to
the Pledge Agreement shall hereby be deemed to include each item listed on Schedule I of this Pledge Amendment.

 

6.             The undersigned New Issuer hereby agrees to all of the
terms and agreements applicable to such Issuer in the Pledge Agreement.

 

[Signature Page to Follow]

 

 

	
   

  	
  PLEDGOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEW ISSUER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

Schedule I

 

PART A

 

	
  Pledgor

  	
   

  	
  Stock

  Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Class of

  Stock

  	
   

  	
  Stock

  Certificate

  Nos.

  	
   

  	
  Par

  Value

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage

  of

  Outstanding

  Stock of the

  Stock Issuer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PART B

 

General Partnerships

 

	
  Pledgor

  	
   

  	
  General

  Partnership

  Interests

  Issuer/Limited

  Partnership

  Interests Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  General

  Partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Limited Partnerships

 

	
  Pledgor

  	
   

  	
  Limited

  Partnership Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  Limited

  Partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Limited Liability Companies

 

	
  Pledgor

  	
   

  	
  Limited Liability

  Company Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  Limited

  Liability

  Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

F-20

 

EXHIBIT B

 

JOINDER TO PLEDGE AGREEMENT

 

THIS JOINDER TO PLEDGE AGREEMENT dated as of                  ,
20     (this “Joinder”)
executed and delivered by                                    ,
a                                    
(the “Additional Pledgor Subsidiary”)
and                          ,
a                          
(“Issuer”) in favor of BANK OF
AMERICA, N.A., as Administrative Agent (the “Secured
Party”).

 

WHEREAS, pursuant to that certain Credit Agreement
dated as of November 1, 2010 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), by and among
SUNSTONE HOTEL PARTNERSHIP, LLC, a Delaware limited liability company (“Borrower”), SUNSTONE
HOTEL INVESTORS, INC., a Maryland corporation, the financial institutions
from time to time party thereto as “Lenders”,
the Secured Party, as Administrative Agent, and the other parties thereto, the
Lenders and the Secured Party have agreed to make available to the Borrower
certain financial accommodations on the terms and conditions set forth in the
Credit Agreement;

 

WHEREAS, to secure obligations owning by certain
parties under the Credit Agreement and the other Loan Documents, Borrower and
the other “Pledgor Subsidiaries” thereunder had executed and delivered that
certain Pledge Agreement dated as of November   , 2010 (as
amended, restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”);

 

WHEREAS, it is a condition precedent to the
continued extension by the Lenders and the Secured Party of such financial
accommodations that the Additional Pledgor Subsidiary and Issuer execute this
Joinder to become a party to the Pledge Agreement.

 

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 Additional Pledgor
Subsidiary and the Issuer, the undersigned hereby agree as follows:

 

Section 1. 
Accession to Pledge Agreement; Grant of Security Interest.  The Additional Pledgor Subsidiary agrees that
it is a “Pledgor” under the Pledge Agreement and assumes all obligations of a “Pledgor”
thereunder, all as if the Additional Pledgor Subsidiary had been an original
signatory to the Pledge Agreement.  The
Issuer agrees that it is an “Issuer” under the Pledge Agreement and assumes all
obligations of an “Issuer” thereunder, all as if the Issuer had been an
original signatory to the Pledge Agreement. 
Without limiting the generality of the foregoing, the Additional Pledgor
Subsidiary hereby:

 

(a) pledges to the Secured Party for the
benefit of the Lenders, and grants to the Secured Party for the benefit of the
Lenders a security interest in, all of the Additional Pledgor Subsidiary’s
right, title and interest in, to and under the Collateral, including the
Pledged Shares and Pledged Interests described on Schedule
I attached hereto, together with
all of the other Collateral described in Section 2
of the Pledge Agreement relating to the Pledged Shares and the Pledged
Interests, as security for the Secured Obligations;

 

(b) makes to the Secured Party and the Lenders
as of the date hereof each of the representations and warranties contained in Section 6 of the Pledge
Agreement and agrees to be bound by each of the covenants contained in the
Pledge Agreement, including without limitation, those contained in Section 7 thereof; and

 

(c) consents and agrees to each other provision
set forth in the Pledge Agreement.

 

F-21

 

Section 2. 
Definitions.  Capitalized
terms used herein and not otherwise defined herein shall have their respective
defined meanings given them in the Pledge Agreement.

 

[Signatures on Next Page]

 

F-22

 

In witness whereof, the undersigned Additional Pledgor Subsidiary and
Issuer have caused this Pledge Agreement to be executed and delivered by their
respective officers thereunto duly authorized as of  the date first
written above, and have delivered herewith, all items required by Section 16 of the Pledge
Agreement.

 

 

	
   

  	
  [NAME OF
  ADDITIONAL PLEDGOR SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for Notice:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [ISSUER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for Notice:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

F-23

 

Schedule I

 

PART A

 

	
  Pledgor

  	
   

  	
  Stock

  Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Class of

  Stock

  	
   

  	
  Stock

  Certificate

  Nos.

  	
   

  	
  Par

  Value

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage

  of

  Outstanding

  Stock of the

  Stock Issuer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PART B

 

General Partnerships

 

	
  Pledgor

  	
   

  	
  General

  Partnership

  Interests

  Issuer/Limited

  Partnership

  Interests Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  General

  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Limited Partnerships

 

	
  Pledgor

  	
   

  	
  Limited

  Partnership Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  Limited

  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Limited Liability Companies

 

	
  Pledgor

  	
   

  	
  Limited Liability

  Company Issuer

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged

  Units

  	
   

  	
  Percentage of

  Outstanding

  Interests of the

  Limited

  Liability

  Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

F-24

EXHIBIT G

 

OPINION MATTERS

 

1.             Borrower
is a Delaware limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware.

 

2.             Parent
is a Maryland corporation duly incorporated, validly existing and in good
standing under the laws of the State of Maryland.

 

3.             Borrower
has the limited liability company power and requisite authority to execute,
deliver and carry out the terms and provisions of the Loan Documents, and all
other documents and instruments delivered pursuant to the terms of such Loan
Documents, and has taken all limited liability company action necessary to duly
authorize (i) the execution, delivery and performance by Borrower of the
terms and provisions of the Loan Documents, and (ii) the performance by
Borrower of its obligations under the Loan Documents.

 

4.             Parent
and each Subsidiary Guarantor has the corporate or limited liability company,
as applicable, power and requisite authority to execute, deliver and carry out
the terms and provisions of the Loan Documents to which it is a party, and all
other documents and instruments delivered pursuant to the terms of such Loan
Documents, and has taken all corporate or limited liability company, as
applicable, action necessary to duly authorize (i) the execution, delivery
and performance by such Guarantor of the terms and provisions of the Loan
Documents to which it is a party, and (ii) the performance by such
Guarantor of its obligations under the Loan Documents to which it is a party.

 

5.             The
Loan Documents to which Borrower is a party have been duly executed, presented
and delivered by Borrower and constitute the valid and binding obligations of
Borrower, enforceable in accordance with their respective terms.

 

6.             The
Loan Documents to which Parent or any Subsidiary Guarantor is a party have been
duly executed, presented and delivered by Parent and each such Subsidiary
Guarantor, as applicable, and constitute the valid and binding obligations of
Parent and each such Subsidiary Guarantor, as applicable, enforceable in
accordance with their respective terms.

 

7.             Neither
the execution and delivery by Borrower of the Loan Documents, nor the
performance by Borrower of its obligations thereunder, nor compliance by
Borrower with the terms and provisions thereof, will (a) contravene any
provision of law, statute, rule or regulation of (i) the State of New
York (or any political subdivision thereof), (ii) the Delaware Limited
Liability Company Act, or (iii) the United States of America, in each
case, to which Borrower is subject, or conflict with, or result in any breach
of, any material agreement, mortgage, indenture, deed of trust or other
instrument to which and Loan Party may be subject, including, without
limitation, the agreements set forth on Exhibit A attached hereto (including,
without limitation, the Indenture (as defined in the Credit Agreement)), or
result in the creation of any mortgage, lien, pledge or encumbrance in respect
of any property of Borrower (other than liens in your favor), (b) contravene
any judgment, decree, license, order or permit applicable to Borrower,  or (c) violate any provision of the
certificate of formation or limited liability company agreement of Borrower.

 

8.             Neither
the execution and delivery by Parent or any Subsidiary Guarantor of the Loan
Documents, nor the performance by Parent or any Subsidiary Guarantor of their
respective obligations thereunder, nor compliance by Parent or any Subsidiary
Guarantor with the terms and provisions thereof, will (a) contravene any
provision of law, statute, rule or regulation of (i) the State of New
York (or any

 

G-1

 

political subdivision thereof), (ii) the Delaware Revised Uniform
Limited Partnership Act, the Delaware General Corporation Law, or the Delaware
Limited Liability Company Act, as applicable, in the case of each Subsidiary
Guarantor formed under the laws of the State of Delaware, (iii) the
Maryland General Corporation Law, in the case of Parent, (iv) the
corporation, limited liability company, and limited partnership laws, as
applicable, of the State of formation of each other Subsidiary Guarantor, or (v) the
United States of America, in each case, to which Parent or any Subsidiary
Guarantor is subject, or conflict with, or result in any breach of, any
material agreement, mortgage, indenture, deed of trust or other instrument to
which any Loan Party may be subject, including, without limitation, the
agreements set forth on Exhibit A
attached hereto, or result in the creation of any mortgage, lien, pledge or
encumbrance in respect of any property of Parent or any Subsidiary Guarantor
(other than liens in your favor), or (b)  violate any provision of the
certificate of incorporation, bylaws, 
certificate of formation, or limited liability company agreement, as
applicable, of Parent or any Subsidiary Guarantor.

 

9.             No
consent, approval, waiver, license, or authorization or any other action by or
filing with any governmental authority is required under any [New York or
federal statute or regulation, the Delaware Revised Uniform Limited Partnership
Act, the Delaware General Corporation Law, the Delaware Limited Liability
Company Act, or the Maryland General Corporation Law] in connection with the
execution and delivery by Borrower, Parent, or any Subsidiary Guarantor of the
Transaction Documents, except for those already obtained or completed.

 

10.           The
Pledge Agreements create in favor of the Administrative Agent, for the benefit
of the Lenders, a valid lien and security interest, which attaches to the
Collateral.

 

11.           Upon
the filing of the Financing Statements in the Office of the Secretary of State
of               ,
the liens and security interests created by the Pledge Agreements shall
constitute perfected liens and security interests in the Collateral.

 

12.           None
of Borrower, Parent, or any Subsidiary Guarantor is an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

 

13.           Neither
the execution nor the delivery by Borrower, Parent, or any Subsidiary Guarantor
of the Loan Documents to which it is a party nor the performance of its
obligations thereunder, will contravene Regulation U of the Board of Governors
of the Federal Reserve System.

 

G-2

 

EXHIBIT H

 

BORROWING BASE REPORT

 

To:          Bank
of America, N.A., as Administrative Agent

 

Date:            ,            

 

	
  A.

  	
   

  	
  Appraised Value Amount of all
  Borrowing Base Properties (See calculation on Schedule
  I):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Mortgageability Amount (See
  calculation on Schedule II):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Lesser of
  Line A and Line B:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Consolidated Recourse
  Indebtedness:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Borrowing Base (Line C minus Line D):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Aggregate Commitments:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  Available Commitments (Lesser of Line E and Line F):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Total Outstandings:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  [Borrowing
  Availability][Borrowing Base Deficiency] (Line G minus
  Line H):

  	
   

  	
  $

  

 

This report (this “Report”) is submitted pursuant to that certain
Credit Agreement, dated as of November 1, 2010 (as amended, restated,
extended, supplemented, or otherwise modified in writing from time to time, the
“Agreement;” the terms defined
therein being used herein as therein defined), among Sunstone Hotel
Partnership, LLC, a Delaware limited liability company (“Borrower”),
Sunstone Hotel Investors, Inc., Maryland corporation (“Parent”), the Lenders from time to
time party thereto, and Bank of America, N.A., as Administrative Agent and L/C
Issuer.

 

The undersigned hereby certify, as
of the date first written above, that (a) the amounts and calculations
herein and in Schedule I and Schedule II accurately reflect
the Borrowing Base, Available Loan Amount, and Total Outstandings and
(b) no Default has occurred or is continuing.

 

 

[Signature Page Follows.]

 

H-1

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL PARTNERSHIP, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARENT:

  
	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL INVESTORS, INC., a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

H-2

 

SCHEDULE I

to Borrowing Base Report

 

Appraised Value Amount

 

	
  Borrowing Base

  Property

  	
   

  	
  Appraised Value

  	
   

  	
  Adjustment Factor *

  	
   

  	
  Appraised Value

  Amount

  	
   

  
	
  1.  

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
  $

  	
   

  	
   

  
	
  2.  

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
  $

  	
   

  	
   

  
	
  3.  

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  Total Appraised Value
  Amount

  	
   

  	
  $

  	
   

  	
   

  

 

*For all Borrowing Base Properties other than Royal
Palm, the Adjustment Amount shall equal 55%, and for Royal Palm, the Adjustment
Amount shall equal (a) 35% prior to the Extended Maturity Date and (b) 55%
thereafter.

 

H-3

 

SCHEDULE II

to Borrowing Base Report

 

Mortgageability Amount

 

A.            Adjusted NOI of the
Borrowing Base Properties

 

	
  Borrowing Base Property

  	
   

  	
  Adjusted NOI for the 12

  months ended*

  	
   

  
	
  1.

  	
   

  	
  $

  	
   

  	
   

  
	
  2.

  	
   

  	
  $

  	
   

  	
   

  
	
  3.

  	
   

  	
  $

  	
   

  	
   

  
	
  Total Adjusted NOI  

  	
   

  	
  $

  	
   

  	
   

  

 

* See calculation attached as Exhibit A.
No Borrowing Base Property shall have an Adjusted NOI of less than $0.00

 

	
  B.       Mortgageability
  Amount:

  	
   

  	
  $

  	
   

  	
   

  

 

H-4

 

EXHIBIT A

to Borrowing Base Report

 

Calculation of Adjusted
NOI

 

Borrowing Base Property Name:                               

 

	
  A.

  	
   

  	
  Gross Revenue(1):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Operating Expenses:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Management Fees (greater of
  (i) the actual management fees paid, and (ii) 3.00% of such gross
  revenues to the extent not already paid and deducted in Line B):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Franchise Fees (greater of
  (i) the actual franchise fees paid, and (ii) 4.00% of such gross
  revenues to the extent not already paid and deducted in Line B):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  FF&E Reserves (greater of
  (i) assumed reserves stipulated in the Management Agreement with respect
  to such Borrowing Base Property, and (ii) 4.00% of gross revenues):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Adjusted NOI for Borrowing Base
  Property (Line A minus Line B minus Line C minus Line D minus Line E):

  	
   

  	
  $

  	
   

  	
   

  

 

(1)  Including amounts
received as ground lease income for the Renaissance Orlando.

 

H-5

 

EXHIBIT I

 

FORM OF GUARANTY AND
INDEMNITY RECOURSE EXCEPTIONS

 

See attached.

 

I-1Exhibit
10.1

 

Ford Motor Company

 

FORD AUTHORIZED

 

CONVERTER POOL AGREEMENT

 

THIS
AGREEMENT is made this first day of Nov 1, 2010 (the “Effective Date”) between
Supreme Indiana Operations, Inc with its principal place of business at
2581 E. Kercher Road, Goshen, Indiana 46528 (“Manufacturer”) and Ford
Motor Company, a Delaware corporation with its principal place of business at
The American Road, Dearborn, Michigan 48126 (“Ford”) (the “Agreement”).

 

WHEREAS,
Ford is engaged in the business of manufacturing and marketing completed and
incomplete motor vehicles, including Ford trucks and Ford truck chassis (“Vehicles”)
and Ford sells such Vehicles to its authorized Ford Lincoln and Mercury dealers
(“Authorized Ford Dealers”); and

 

WHEREAS,
Manufacturer, as a final stage manufacturer, is engaged in the business of
manufacturing and marketing modified completed vehicles and in the installation
of special bodies and equipment on or in incomplete Vehicles, which
installations include improvements, modifications, additions and changes
(collectively, the “Modifications”) (all of which vehicles, as modified by
Manufacturer, are referred to herein as “End Products”); and

 

WHEREAS,
certain Authorized Ford Dealers desire to purchase the End Products and as
such, purchase the Vehicles from Ford and the Modifications from the
Manufacturer; and

 

WHEREAS,
the price and terms and conditions of purchase of the Modifications from the
Manufacturer are governed by agreement between the Manufacturer and the
Authorized Ford Dealer, and Ford has no liability, obligation or responsibility
with respect to the Modifications; and

 

WHEREAS,
the parties to this Agreement (the “Parties”) desire to provide for
Manufacturer to maintain Vehicles at Manufacturer’s location, at no charge to
Manufacturer, for no more than 90 days, so as to facilitate the business
operations of Ford, its Authorized Ford Dealers and Manufacturer, and so as to
accommodate the production schedules of Ford and Manufacturer to the extent
feasible, and Ford is willing to deliver such Vehicles on bailment to
Manufacturer and Manufacturer is willing to accept delivery of these Vehicles
from Ford, subject to the terms of this Agreement; and

 

1

 

WHEREAS,
if there is no purchaser for the End Product after 90 days from Commencement of
Bailment (as defined herein), Manufacturer shall pay Storage Charges (as
defined herein) to Ford as set forth herein; and

 

NOW,
THEREFORE, in consideration of the foregoing and the mutual promises hereinafter
contained, the Parties agree as follows:

 

1.     BAILMENT

 

Ford and Manufacturer agree that this Agreement
shall constitute a bailment of the Vehicles ordered by Manufacturer from Ford (“Bailment”).
Such Vehicles shall be held by Manufacturer as bailee of the Vehicles in
accordance with the terms and conditions of this Agreement.

 

2.     FINAL STAGE MANUFACTURER

 

Manufacturer, as a final stage manufacturer, shall
enter into a separate agreement with Authorized Ford Dealer for the price and
terms and conditions of the purchase by Authorized Ford Dealer for the
Modifications and Ford shall have no liability, obligation or responsibility
for such Modifications or the terms and conditions thereof.

 

3.     FORD AUTHORIZED CONVERTER
PROCEDURES MANUAL

 

Ford shall provide Manufacturer with a copy of its
Ford Authorized Converter Procedures Manual (the “Manual”), setting forth the
policies and procedures to be followed in the handling of Vehicles, including
Vehicle orders, inventory accounting for Vehicles, repair of transportation
damage and defective parts, special use chassis, and similar matters.
Manufacturer shall abide by the policies and procedures as are set forth in the
Manual. Ford reserves the right to change the Manual at any time.

 

4.     ORDERS

 

Manufacturer shall submit orders for Vehicles
electronically or by other method specified by Ford in the Manual. Ford shall
have no obligation to accept any such order or to deliver to Manufacturer on
Bailment, any specific model or number of Vehicles, but may deliver to
Manufacturer such number and type of Vehicles ordered by Manufacturer as Ford
deems appropriate. Manufacturer shall provide to Ford, at Ford’s request,
forecasts of Manufacturer’s requirements for Vehicles.

 

5.     RECEIPT AND INSPECTION
PROCEDURES

 

Manufacturer shall examine Vehicles upon delivery and, upon
satisfaction that the number of Vehicles received as shown on the documents is
accurate, accept delivery and sign the invoices, delivery receipts, damage
reports and other documents specified by Ford (“Acceptance of Delivery”). Ford
shall deliver the Vehicles to Manufacturer at the locations listed in Exhibit A
or at such other locations as may be approved by Ford, in writing from time to
time. Ford shall not be responsible for any delay in delivering the Vehicles to
Manufacturer.

 

2

 

6.     COMMENCEMENT QF BAILMENT

 

The Bailment begins upon Manufacturer’s Acceptance
of Delivery (“Commencement of the Bailment”). Such acceptance constitutes
acknowledgement that the Vehicle was received in the condition, quantity and
state described.

 

7.     STORAGE

 

(a) Upon Commencement of the Bailment,
Manufacturer shall maintain Vehicles at Manufacturer’s location, at no charge
to Manufacturer, for no more than 90 days. If there is no purchaser for the End
Product after 90 days from Commencement of the Bailment, storage charges will
begin to accrue on the Vehicle (“Storage Charge”). Beginning on the
ninety-first (91st) day until
such time that the Vehicle is re-billed to an Authorized Ford Dealer,
Manufacturer shall pay daily Storage Charges to Ford as set forth below:

 

	
  0 to 90 days:

  	
  No
  Charge

  
	
  91-180 days:

  	
  Prime
  Rate plus 2 points

  
	
  181-270 days:

  	
  Prime
  Rate plus 3 points

  
	
  271-360 days:

  	
  Prime
  Rate plus 5 points

  
	
  361 + days:

  	
  Prime
  Rate plus 8 points

  

 

Manufacturer’s Storage Charges shall appear in Ford Motor Credit
Company’s Dealer Finance system on the first day of the month and shall be
payable the same day (the 1st).  On a
monthly basis, Ford will provide Manufacturer with information regarding the
Storage Charges for each Vehicle.

 

i.             Manufacturer
shall pay a daily storage charge based on the Invoice Amount of each vehicle
beginning on the Storage Charge Start Date for such Vehicle, in an amount equal
to the Prime Rate plus (2 point, 3 points, 5 points or 8 points as set forth
above) as the “Storage Charge”. The term “Invoice Amount” shall mean that
amount reflected on the applicable Vehicle invoice that can be accessed by Ford
and Manufacturer via the Lason Vision system online at www.fleet.ford.com. The
term “Prime Rate” means the interest rate for “Bank prime loans” under the
column entitled “Week Ending” for the Friday preceding the last Monday of a
calendar month as reported in the Federal Reserve Statistical Release No. H.15
(519) issued by the Federal Reserve Board. 
In the event such Release is discontinued or modified to eliminate the
reporting of a 30-day bank prime loans rate, then Ford will substitute, in its
sole discretion, a comparable report or release of the bank prime loans rate
published by a comparable source.

 

ii.          The Storage Charge will be calculated on the basis
of 360-day year. For purposes of computing the Storage Charge on a Vehicle, the
Storage Charge shall change on the first day of each month following the Storage
Charge Start Date following any month in which there is a change in the Prime
Rate. The Storage Charge in effect on the first day of a month shall be deemed
to be in effect throughout such month.

 

3

 

(b) Vehicles shall be stored only at the
locations approved by Ford in Exhibit A hereto or at such other locations
as may be approved by Ford, in writing, from time to time. Unless otherwise
agreed, all Vehicles shall be kept at the approved location, within a fenced
and locked storage area, and shall be placed in an area within the storage area
separate from that used by Manufacturer to store any other property.
Manufacturer shall not move any Vehicles from the approved location to one not
approved by Ford without first obtaining the written authorization of Ford.
Ford shall have the right to enter onto Manufacturer’s premises, at reasonable
times and upon prior reasonable notice, to inspect the Vehicles and
Manufacturer’s records with respect thereto.

 

(c) Manufacturer, at its sole cost and expense,
shall ensure that Vehicles do not deteriorate from a “like new” condition in
appearance or quality during the period of storage. Vehicles in inventory over
30 days are to be inspected and maintained by Manufacturer in accordance with
the vehicle inspection procedure outlined in the Manual.

 

(d) Upon request by Ford, any or all of the
Vehicles shall be immediately returned to Ford as set forth in paragraph 9
herein.

 

8.     LOSS

 

Ford shall not be responsible for any delay in
delivering the Vehicles to Manufacturer. Manufacturer shall assume all risks of
loss with respect to the Vehicles, including all loss or damage that occurs
despite Manufacturer’s exercise of reasonable care from the time that
Manufacturer accepted the Vehicle and until the Bailment ends. Manufacturer is
liable for any and all loss or shortage resulting from its failure to examine
any shipment and for any damage and other loss resulting from its failure to
comply with any shipping, loading, packaging, storage or other instructions
issued by Ford.

 

9.     END OF BAILMENT

 

For each Vehicle, the Bailment shall end in one of the following ways (1) at
the time that the Vehicle is sold by Ford to an Authorized Ford Dealer
according to the procedures set forth in the Manual; or (2) upon
authorized return of the Vehicle(s) to Ford by Manufacturer. Upon the
occurrence of any of the following events set forth in (a) — (e) herein,
the Vehicle(s) must be returned to Ford by Manufacturer at Manufacturer’s
expense, to the place and in the manner requested by Ford; otherwise, if Ford
requests such return of the Vehicle(s), Ford shall bear the expense: (a) Manufacturer
becomes the subject of a bankruptcy petition filed in a court in any
jurisdiction, whether voluntary or involuntary; (b) a receiver or trustee
is appointed for all or a substantial portion of Manufacturer’s assets; (c) Manufacturer
makes an assignment for the benefit of its creditors; (d) Manufacturer
fails to perform any material covenant or obligation in this agreement; or (e) any
representation or warranty in this agreement by Manufacturer ceases to be true
and correct in all material respects.

 

10.  TITLE

 

Title
to the Vehicles, is, and will at all times remain, the sole and exclusive
property

 

4

 

of
Ford until sold by Ford to an Authorized Ford Dealer. Manufacturer has no
property rights or interest in any of the Vehicles and cannot grant any rights
or interest to a third party. Manufacturer has no right to transfer any Vehicle
or to use it except as directed by Ford in this Agreement. Manufacturer has no
right to retain possession of any Vehicle after receipt of a written demand, at
any time, by Ford for return of the Vehicle. Neither this Agreement nor the
Manufacturer’s obligations may be assigned either by Manufacturer’s own act or
by operation of law.

 

11.  UCC FILINGS

 

Manufacturer authorizes
Ford, at its option, to file UCC financing statement(s) evidencing this
Bailment and Ford’s ownership of the Vehicles. Manufacturer represents that it
is organized under the laws of the state of Delaware.

 

12.  NOTICE TO
MANUFACTURER’S CREDITORS

 

Within 10 business days after the Effective Date of
this Agreement, Manufacturer will (i) send each of its secured creditors and
lienholders written notification that it is holding the Vehicles for Ford at
Manufacturer’s facility, and (ii) provide to Ford a list of the creditors
and lienholders notified, together with a copy of the written notification sent
to secured creditors and lienholders. Manufacturer will certify to Ford that it
has notified all known secured creditors and lienholders.

 

13.  USE OF
VEHICLES

 

Subject to section 14 herein, Manufacturer shall not
use the Vehicles in any manner other than to make modifications to the Vehicles
after such the Vehicle is sold by Ford to an Authorized Ford Dealer.
Manufacturer agrees that in no case shall it make any addition or modification
to any Vehicle until it has been purchased by an Authorized Ford Dealer.

 

14.  SALE OF VEHICLE
TO AUTHORIZED FORD DEALER; MODIFICATIONS

 

(a) Manufacturer shall notify Ford
electronically or by other methods specified by Ford in the Manual when an
Authorized Ford Dealer desires to purchase a Vehicle. Following such
notification, Ford may sell such Vehicle to one of its Authorized Ford Dealers
at such price and on such terms as Ford shall determine in its sole and
exclusive discretion.

 

(b) Subject to section 14(e) below,
Manufacturer agrees that in no case, prior to the Vehicle being purchased by an
Authorized Ford Dealer from Ford, shall Manufacturer (i) make any
Modification to any Vehicle; (ii) install any body or equipment thereon;
or (iii) remove any Vehicle from the location approved by Ford.

 

(c) Manufacturer may transfer Vehicle(s) to
other Manufacturers approved by Ford if Ford has given consent.

 

5

 

(d) The price and terms and conditions of the
Modifications provided by Manufacturer to an Authorized Ford Dealer, and any
improvements, modifications or changes thereto, shall be governed by a separate
agreement between the Manufacturer and the Authorized Ford Dealer and Ford
shall have no liability, obligation, or responsibility with respect thereto to
any person, including without limitation, Manufacturer, Authorized Ford Dealer
or other third Party.

 

(e) Ford may, from time to time, allow
Manufacturer to make a Modification and/or install a body or equipment on
certain Demonstrators or other such Vehicles authorized by Ford prior to such
Vehicle being purchased by an Authorized Ford Dealer from Ford, provided that (i) Manufacturer
obtains the prior written consent of Ford in each case; (ii) such
Modifications and installations do not decrease the value of the Vehicle; (iii) such
Vehicles are not driven unless authorized by Ford; and (iv) Manufacturer
is entirely responsible for such Modification and installation made to the
modified Vehicles. A Demonstrator Vehicle is a vehicle (i) authorized by
Ford to be modified or upfit prior to being purchased by a Ford Dealer, and (ii) used
for demonstration purposes only. Demonstrator vehicles must be enrolled in and
meet the requirements of the Show Them The Value (“STTV”) Demonstrator Program
for eligible Ford Authorized Converter Pool Accounts. STTV Demonstration
Program details are available at www.sttvdemoprogram.com. The STTV Demonstrator
Program is limited to eligible Pool Accounts and may be terminated by Ford at
any time for any reason.

 

15.  DEMONSTRATOR VEHICLES

 

In addition to the terms and conditions for all bailed Vehicles set
forth in this Agreement, Manufacturer shall strictly adhere to the terms and
conditions set forth in this section 15 when using Demonstrator (Demo)
Vehicles:

 

(a) Authorized Manufacturers shall utilize
Demonstrator Vehicles only according to the terms and conditions set forth in
the annual Show Them The Value Demonstrator Program announcement and website at
www.sttvdemoprogram.com or according to other terms and conditions set forth by
Ford from time to time. Use of Demo Vehicles according to Ford’s terms and
conditions shall be considered the Allowable Use. Ford and Manufacturer agree
that Demo Vehicles are on bailment from Ford to the Manufacturer. Ford lends
the Demos to Manufacturer to be held and used by Manufacturer, only as a bailee
of the Vehicle, in accordance with this Agreement and the terms and conditions
of the respective STTV program. Demos shall not be removed from Manufacturer’s
control without Ford’s prior written approval, other than for the Allowable Use
purposes. Demos shall remain the property of Ford and Manufacturer shall bear
the risk of loss or damage that occurs to Demos except for loss or damage
arising from the sole negligence of Ford. The Demos shall at all times be
properly used and maintained by Manufacturer. Ford shall have the right to
enter onto Manufacturer’s premises at reasonable times to inspect or remove
Demos. Manufacturer shall ensure that Demos are operated at all times in a
safe, careful and lawful manner by legally qualified drivers who are employees
of Manufacturer and stand in relations to the Manufacturer as employee to
employer or are otherwise authorized by Manufacturer.

 

6

 

(b) With respect to taxes, fees, registration
and other legally required permits and obligations for Demos Manufacturer
shall:

 

i.                       obtain all
necessary authorizations, permits, waivers or exemptions that may be required
from a government agency to operate the Demos on public highways and assume
responsibility for ensuring that if necessary, the Demo has been properly
registered and titled, including any required inspections or testing, in
accordance with the laws of the jurisdiction where the Demo will be primarily
used.

ii.                    pay all occupational taxes
and governmental charges imposed (and all increases therein), including any
permits, special permits, licenses or taxes required by the business of
Manufacturer

iii.                 pay any tolls or similar usage fees resulting
from operation.

iv.                be responsible for any fines levied as a
result of moving, parking, toll, or similar vehicle violations.

v.                   pay any taxes
or fees currently in force (and all increases therein) or which hereafter may
be enacted and become due and payable with respect to the Manufacturer’s
possession and use of the Demo.

vi.                pay emissions tests.

 

(c) With
respect to maintenance, repairs, and use of Demos, Manufacturer shall:

 

i.                  make all major
repairs necessary to maintain the Vehicle in good working order and condition.
Title to all such repairs shall vest in Ford.

ii.                    repair or cause to be
repaired said vehicle(s) while in use by Manufacturer. All repairs and
servicing shall be done by qualified service personnel at authorized Ford,
Lincoln, or Mercury dealerships.

inspect
the Vehicle upon delivery and by acceptance thereof is deemed to find the
Vehicle in good working order and condition.

iv.                     maintain the Vehicle in good
working order and condition, properly serviced and greased, and comply in every
respect with the provisions of this agreement, and of the manufac-turer’s owner
manual.

v.                        reimburse Ford
for any repairs caused by abuse, misuse, negligence or intentional wrongful
acts of manufacturer.

vi.                     provide or cause to be
provided at its own expense, any repairs or service not completed at authorized
Ford, Lincoln, or Mercury dealerships.

vii.                  pay for all gasoline and for all washing,
parking, garage, highway road service, tolls and fines required or incurred in
connection with the operation of the Vehicle.

viii.               not use or operate or allow the Vehicle to be
operated in violation of any federal, state, local or provincial law, rule regulation
or ordinance including those pertaining to the age and licensing of drivers,
the disclosure of Ford’s interest in the Vehicle, or other requirements or
limitations.

ix.                       under no circumstances,
disconnect any odometer or other mileage recording device nor use or operated
the Vehicle in a manner subjecting it to depreciation above the normal
depreciation associated with general commercial use.

x.                          not use or
operate the Vehicle for any illegal purpose or by a person under the influence
of alcohol or narcotics.

 

7

 

xi.                       not use or operate the
vehicle in any manner or for any purpose that would cause any insurance
specified in this Agreement to be suspended, cancelled, held inapplicable or
increased in cost.

xii.                    not use or operate the demo
outside of the continental United States, without Ford’s express written
consent.

xiii.                 use, operate, and test the Vehicle only in
accordance with the terms and provisions of any such authorization, permit,
waiver or exemption, and expressly agrees, in addition to the indemnify obligations
of Manufacturer set forth in Section 19 of this Agreement, to indemnify
and hold harmless Ford from and against any and all damages, suits, actions,
claims, costs or expenses arising from, or connected with, any violation or
noncompliance with any of the terms and provisions of any such authorization,
permit, waiver or exemption by, or resulting from the action or inaction of,
Manufacturer or any of its agents or employees.

 

16.    PREDELIVERY

 

Manufacturer agrees to perform Pre-delivery
Inspection on the Vehicle portion of each End Product prior to delivery to the
Authorized Ford Dealer in strict accordance with the Body and Conversion
Companies Pre-delivery Inspection Application.

 

17.    COMPLIANCE WITH LAWS AND
REGULATIONS

 

In the interest of protecting the reputation of the products of
Manufacturer and Ford, and maintaining customer goodwill, Manufacturer agrees
to:

 

(a) employ components and workmanship of high
commercial quality in the manufacture of End Products and to assure that End
Products conform in all respects to applicable Federal and State laws, rules and
regulations; and,

 

(b) provide assistance to Ford in communicating
promptly, when necessary, with the first retail purchasers of End Products. To
that end, Manufacturer agrees to secure and maintain records of the names and
addresses of the first retail purchasers of End Products.

 

18.    LABELING

 

Manufacturer shall affix to all Vehicles such labels
as Ford supplies (if not already affixed) and maintain the labels in place.

 

19.    INDEMNIFICATION

 

Ford and Manufacturer recognize that the burden of
defending against product liability allegations, whether or not meritless or
frivolous, should be borne by the party whose alleged negligence, wrongdoing or
defective product is at issue, regardless of whether it is a party to the
particular litigation. The parties also recognize that, under existing law,
there are circumstances where a claimant may sue only one party even though the
defect, wrongdoing or negligence alleged is the principal responsibility of the
other party. The parties also recognize that this results in the

 

8

 

named
defendant bearing more than its fair share of the cost of the litigation. In
order to avoid possible controversy between the parties as to which shall
defend such litigation, or bear the cost of defending such litigation,
including the cost of settlements or verdicts, the parties agree as follows:

 

(a) Indemnification by Ford. With respect to
any Vehicle supplied by Ford to Manufacturer, Ford shall indemnify, hold
harmless and protect Manufacturer from any loss, damage or expense, including,
without limitation, settlements, judgments, expert fees and reasonable attorney’s
fees, resulting from or related to lawsuits, complaints or claims against
Manufacturer for property damage or personal injury where Manufacturer’s
liability, if any, arises solely because of a defect in manufacture, assembly,
materials or design for which Ford alone is responsible.

 

(b) Manufacturer,
and/or its product liability insurance carrier, shall cooperate fully in the
defense of the action as Ford, and/or its Product liability insurance carrier,
may reasonably require. Ford shall have the right to assume Manufacturer’s
defense at any time, provided that Ford acknowledges Manufacturer’s right to
indemnity under this provision.

 

(c) Indemnification by Manufacturer. With
respect to any Vehicle supplied by Ford to Manufacturer, Manufacturer or its
contractors, subcontractors, vendors, agents and/or employees, shall indemnify,
hold harmless and protect Ford from any loss, damage or expense, including,
without limitation, settlements, judgments, expert fees, and attorney’s fees,
resulting from or related to lawsuits, complaints or claims against Ford for
property damage or personal injury, where Ford’s liability, if any, arises
solely from modifications or additions made by Manufacturer or from processing
of Vehicles by Manufacturer. Liability on the part of Ford which arises, if at
all, because Ford knew or should have known that the processing, modification
or additions made by Manufacturer were negligent, improper or defective, or
that Ford expressly or impliedly approved the modifications or additions made
by Manufacturer, shall be deemed to be liability which arises “solely from
processing, modifications or additions made by Manufacturer” within the meaning
of this paragraph. However, Manufacturer shall not be obligated to indemnify
Ford if the modifications or additions were made or the processing was conducted
pursuant to express written instructions provided by Ford.

 

(d) Manufacturer’s Duty to Defend. Ford shall
notify Manufacturer of any lawsuit, complaint or claim that Ford has reason to
believe may be covered by this indemnity provision. If Ford’s alleged liability
arises solely from modifications or additions made by Manufacturer or
processing conducted by Manufacturer not pursuant to express written
instructions from Ford, and if Manufacturer’s investigation discloses no basis
for Ford’s liability other than the allegations in the lawsuit, complaint, or
claim, Manufacturer shall assume Ford’s defense upon Ford’s request. Ford
and/or its product liability carrier shall cooperate fully in the defense of
the action as Manufacturer, or its product liability carrier, may reasonably
require. Manufacturer shall have the right to assume Ford’s defense at any
time, provided that Manufacturer acknowledges Ford’s right to indemnity under
this provision.

 

9

 

(e) Cross-Claims or Third Party Complaints.
Neither party shall file cross-claims or third-party complaints against the
other without notifying the other in advance. Where practicable, the notice
should be given sufficiently in advance to allow thorough discussion of
alternatives to such filing.

 

(f) Contributions to Settlement. In the
appropriate case, the parties shall, where settlement is or may be warranted,
make a reasonable effort to agree upon the amount each party shall contribute
to settlement, based upon the nature of the plaintiffs allegations. For
example, if the case involves an allegation that a Manufacturer’s component is
defective, a reasonable allocation would require the Manufacturer to contribute
all or most of any settlement amount. If, however, the allegation concerns a
component supplied by Ford, a reasonable allocation would require Ford to
contribute all or most of any settlement amount. It is recognized that there
shall be cases of multiple allegations with respect to each party and that allocation
of responsibility shall be dependent on the circumstances of the case.

 

(g) Contributions to Adverse Judgment. If the
case, for any reason, does not settle, the parties shall, in advance of trial,
make a reasonable attempt to agree upon the extent to which each company shall
contribute to satisfy any adverse judgment or verdict that may be returned,
based upon the principles set forth in the preceding paragraph. Based on these
principles, the parties shall likewise attempt to agree upon the extent to which
each shall contribute to the cost of defending the litigation, including
attorney’s fees.

 

(h) Unilateral Settlement; Notifying Other
Party. In cases where both parties are named defendants, neither party shall
unilaterally enter into a settlement agreement without giving reasonable notice
to, and consulting in advance with, the other party.

 

20.    INSURANCE

 

At
its sole cost and expense, Manufacturer shall procure and maintain insurance
continuously throughout the term of this Agreement from such companies as are
acceptable to Ford and listed in the current “Best’s Insurance Guide” as
possessing a minimum policy holders rating of “A-” (Excellent) and a financial
category no lower than “VI” ($25,000,000 to $50,000,000 of adjusted
policyholders surplus). The following insurance shall cover Manufacturer
activities under this Agreement whether such activities are by itself or by any
Subcontractor or by anyone directly or indirectly employed by any of them, or
by anyone for whose acts any of them may be liable:

 

(a) Liability Insurance

 

·                       Workers’ Compensation
insurance for statutory limits or a State certificate of self insurance, and
employer’s liability insurance for not less than one million ($1,000,000) per
occurrence.

 

·                       Occurrence type commercial
general liability insurance, including products and completed operations, but
not limited to blanket contractual coverage, for bodily injury

 

10

 

including death, personal injury, and property damage with limits of
not less than ten million ($10,000,000) combined single limit per occurrence.

 

·                       Comprehensive Automobile
liability insurance covering all owned, non-owned and hired vehicles, with
limits of not less than five million ($5,000,000) combined single limit per
occurrence.

 

(b) With the exception of Workers’
Compensation, each insurance policy listed above, and any excess or umbrella
policy carried by Manufacturer with additional limits than those specified
above, must name Ford Motor Company (or the appropriate Company subsidiary or
affiliate) as an additional insured under the policy(s). All insurance policies
of the Manufacturer shall be endorsed to state that the policy will be primary,
and will not be excess to or contributory with, any self-insurance or insurance
policies carried by Ford. The insurance policy shall provide that the policy
may not be cancelled or materially altered without 30 days prior written notice
to Ford. Manufacturer shall furnish to Ford an acceptable certificate of
insurance evidencing the coverage required herein. The furnishing of acceptable
evidence of required coverage should not relieve Manufacturer from any
liability or obligation for which it is otherwise responsible to Ford.

 

(c) Manufacturer shall require that its
subcontractors procure and/or maintain insurance coverage at the limits
described above. Manufacturer shall indemnify and be fully responsible for any
cost to Ford resulting from said subcontractor’s failure to procure and/or
maintain said insurance.

 

21.   TAXES

 

Unless otherwise agreed by the parties, Ford shall
report, bear, and pay all applicable personal property taxes on Vehicles and
Manufacturer shall report, bear, and pay all applicable personal property taxes
on Modifications. In the event a tax jurisdiction issues a forced assessment
against one party for the full value of End Products, each party agrees to
indemnify the other for the assessment amount attributable to their respective
property.

 

22.   WARRANTIES

 

(a) No warranty obligation of Ford for any
Vehicle shall be more extensive than Ford’s warranty obligation for such
Vehicle under Ford’s warranty to retail purchasers and shall be expressly IN
LIEU OF ANY AND ALL OTHER EXPRESS OR IMPLIED WARRANTIES, GUARANTEES, CONDITIONS
OR REPRESENTATIONS, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, WITH THE REMEDY SET FORTH THEREIN AS THE
SOLE AND EXCLUSIVE REMEDY THEREUNDER.

 

(b) With each Vehicle delivered by Manufacturer
to Authorized Ford Dealers, or retail customers on an Authorized Ford Dealers’
behalf, Manufacturer shall deliver copies of any applicable Ford warranty and
an Owner’s Guide, owner registration card and such other consumer and operating
material as Ford generally provides with that model of Vehicle.

 

11

 

(c) The warranty obligations of Ford (and any
governmental certification made by Ford) shall cover only the Vehicles as
manufactured by Ford and provided to Manufacturer, and shall not extend to any
addition, modification or change of or to the Vehicle by Manufacturer as a
Final Stage Manufacturer. Ford’s warranty does not cover any failures of a Ford
component usually covered by the Ford warranty if such failure is caused by any
addition, modification, or change to the Vehicle once the Vehicle has left Ford’s
possession. In such event, the cost of repair and any related charges shall be
paid for by Manufacturer and shall in no event be covered by Ford’s warranty.

 

23.    TERMINATION

 

(a) This Agreement may be terminated by either
party, at any time, for any reason, with or without cause, by written notice to
the other party.

 

(b) Either party may
terminate this Agreement for cause, upon the occurrence of any of the following
events: (i) the other Party becomes the subject of a bankruptcy petition
filed in a court in any jurisdiction, whether voluntary or involuntary; (ii) a
receiver or trustee is appointed for all or a substantial portion of the other
Party’s assets; (iii) the other Party makes an assignment for the benefit
of its creditors; (iv) the other Party fails to perform any material covenant
or obligation in the Agreement; or (v) any representation or warranty in
the Agreement made by the other party ceases to be true and correct in all
material respects.

 

(c) Written Notice of termination shall be
delivered personally or by certified mail, return receipt requested to the
person and at the address provided herein for Notice. Termination shall be
effective at the end of the thirtieth (30) calendar day after the day of
receipt of such written Notice or at such later time as may be agreed to in
writing by the Parties.

 

(d) Upon termination of the Agreement by either
party, Manufacturer shall fully cooperate with Ford in returning to Ford all
Vehicles in its possession. Upon termination of this Agreement by Ford for the
reasons set forth in subsection (b) of this paragraph, all Vehicles in the
possession of Manufacturer must be returned to Ford by Manufacturer at
Manufacturer’s expense, to the place and in the manner requested by Ford, and
Ford shall have the right to cancel any and all shipments scheduled for
Manufacturer after Ford gives such Notice.

 

(e) Ford shall have no other obligations to
Manufacturer upon termination of this Agreement except those set forth in this Section 23.

 

24.    FINANCIAL INFORMATION

 

On a quarterly basis, or as otherwise requested by Ford, Manufacturer
will provide the most current Financial Reports: (a) for the Manufacturer;
and, (b) for any Related Company of Manufacturer involved in the converter
business or in financing the Manufacturer. 
Financial Reports include income statements, balance sheets, cash flow
statements and supporting data. Ford may use Financial Reports provided only to
assess Manufacturer’s ongoing ability to perform its obligations under this
Agreement and for no other purpose, unless Manufacturer

 

12

 

agrees
otherwise in writing. Ford agrees that it shall protect the disclosed Financial
Reports by using the same degree of care, but no less than a reasonable degree
of care, to prevent the dissemination to third parties or publication of the
Financial Reports as Ford uses to protect its own confidential information of a
like nature. Ford is permitted to disseminate the Financial Reports to its
employees and those employees of any of its subsidiaries, its parent company
and any of its parent company’s subsidiaries, provided such employees are made
fully aware of the obligation of confidentiality contained within this
Agreement. Manufacturer certifies that any information contained in the
Financial Reports shall be true, correct and complete and that the financial
information therein fairly presents the financial condition of Manufacturer in
accordance with generally accepted accounting principles. Manufacturer
acknowledges and intends that Ford shall rely, and shall have the right to
rely, on such information. For the purpose of this Agreement, a Related Company
is any parent company of Manufacturer and any subsidiary or affiliate in which
any of them owns or controls at least 25% of the voting stock, partnership
interest or other ownership interest. If requested by Ford, Manufacturer will
provide to Ford Letters of Credit and/or Personal Guarantees and/or Corporate
Guarantees. Such letters of Credit, Personal Guarantees, Corporate Guarantees
and Financial Statements will be collected from Manufacturer by Ford Motor
Credit Company on behalf of Ford.

 

25.    GENERAL TERMS

 

(a) This agreement shall bind Ford when signed
by a duly authorized representative of Manufacturer and when it bears the
signature of Ford’s Commercial Truck Director. No waiver or modification of any
term of this Agreement, or creation of additional terms, shall be valid or
binding upon Ford unless made in writing as set forth above. The failure by
either party to enforce any term of this Agreement at any future time shall not
be considered a waiver of any right or remedy available hereunder or by law.

 

(b) This Agreement does not constitute either
party the agent or legal representative of the other party for any purpose
whatsoever.

 

(c) This Agreement shall be effective as of the
Effective Date set forth herein and shall terminate and supersede any other
agreements concerning Vehicles between the parties and constitutes the entire
and complete agreement between the parties with respect to the subject matter
hereof and there are no other agreements between them, either oral or written,
respecting the subject matter hereof.

 

(d) This Agreement and all transactions
hereunder, including shall be governed by and construed in accordance with the
laws of the State of Michigan as if entirely performed therein.

 

(e) All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally or when telecopied (with confirmation of the transmission received
by the sender), one business day after being delivered to a nationally
recognized overnight courier with next day delivery specified or three business
days after mailing by certified or registered U.S. Mail, return receipt
requested, with first class postage prepaid, unless otherwise set forth in this
Agreement, to the Parties at the following addresses (or at such other address
for a Party as shall be specified by like notice) (“Notice”):

 

13

 

(i)if
to Ford, to:

 

Ford
Motor Company

One
American Road

Dearborn,
Michigan 48126

Attention:
Secretary’s Office

Facsimile
No.: (313) 248-7613

 

with
a copy to:

 

Ford
Motor Company

Director
Commercial Truck

6N233

16800
Executive Plaza Drive

Dearborn,
Michigan 48126

 

(ii) if
to Manufacturer, to:

Supreme
Indiana Operations

2581
E. Kercher Road

Goshen, IN
46528

 

(f) Manufacturer may not assign this Agreement
or delegate performance of its obligations hereunder without the prior written
consent of Ford.

 

(g) Notwithstanding anything in this Agreement
to the contrary, Ford shall have the right to amend, modify or change this
Agreement in case of legislation, government regulation or changes in
circumstances beyond the control of Ford that might affect materially the
relationship between Ford and Manufacturer. Further, Ford may, by notice to
Manufacturer, amend this Agreement as to matters that in Ford’s reasonable
judgment, do not adversely affect Manufacturer.

 

IN WITNESS WHEREOF, the parties have caused their
duly authorized representatives to execute this Agreement on the execution date
set forth below. The Effective Date of this Agreement shall be as defined
herein above.

 

The
parties have reviewed this document with legal counsel of their choice.

 

 

	
  Manufacturer:

  	
   

  	
  Ford:

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Jeffery D. Mowery

  	
   

  	
  By:

  	
  /s/

  
	
  Title:
  Vice President-Finance

  	
   

  	
  Title:
  Director Commercial Truck

  
	
  Execution
  Date:

  	
  November 1,
  2010

  	
   

  	
  Execution
  Date:

  	
  November 1,
  2010

  
							

 

14

 

Exhibit A

 

Ford Converter Pool Authorized Delivery Locations

 

22135 Alessandro Blvd.

Moreno Valley, CA 92553

 

2450 Progress Way

Woodburn, OR 97071

 

2581 East Kercher Road

Goshen, IN 46526

 

531 Hwy. 41 Bypass

Griffin, GA 30224

 

500 West Commerce Street

Cleburne, TX 76031

 

3050 Dee Street

Apopka, FL 32703

 

411 Jonestown Road

Jonestown, PA 17038

 

15

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