Morgans Hotel Group Co.
EX-10.38: THIRD MEZZANINE GUARANTY (NON-QUALIFIED MANDATORY PREPAYMENT)
<DOCUMENT>
<TYPE>EX-10.38
<SEQUENCE>14
<FILENAME>y51336exv10w38.htm
<DESCRIPTION>EX-10.38: THIRD MEZZANINE GUARANTY (NON-QUALIFIED MANDATORY PREPAYMENT)
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<TITLE>EX-10.38</TITLE>
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.38</B>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXECUTION COPY</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>THIRD MEZZANINE GUARANTY AGREEMENT</B><BR>
<U><B>(NON-QUALIFIED MANDATORY PREPAYMENT)</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>THIS THIRD MEZZANINE GUARANTY AGREEMENT (NON-QUALIFIED MANDATORY PREPAYMENT) </B>(this &#147;<B>Guaranty</B>&#148;)
is executed as of November&nbsp;6, 2007, by <B>MORGANS GROUP LLC</B>, a Delaware limited liability company,
having an address at 475 Tenth Avenue, New York, New York 10018, Attention: Marc Gordon, Chief
Investment Officer (&#147;<B>Morgans Guarantor</B>&#148;), and by <B>DLJ MB IV HRH, LLC</B>, a Delaware limited liability
company, having an address c/o DLJ Merchant Banking Partners, 11 Madison Avenue, New York, New York
10010, Attention: Ryan Sprott (&#147;<B>DLJ Guarantor</B>&#148;; and collectively with Morgans Guarantor, each,
individually, a &#147;<B>Guarantor</B>&#148;, and collectively, &#147;<B>Guarantors</B>&#148;), jointly and severally, for the
benefit of <B>COLUMN FINANCIAL, INC.</B>, a Delaware corporation, having an address at 11 Madison Avenue,
New York, New York 10010 (together with its successors and assigns, &#147;<B>Lender</B>&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RECITALS:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Pursuant to that certain Replacement Reduced Acquisition Loan Promissory Note and
Replacement Construction Loan Promissory Note, each dated of even date herewith and executed by
HRHH Hotel/Casino, LLC, HRHH Cafe, LLC, HRHH Development, LLC, HRHH IP, LLC, and HRHH Gaming, LLC
(collectively, the &#147;<B>Mortgage Borrowers</B>&#148;), and payable to the order of Column Financial, Inc., in
its capacity as mortgage lender (together with its successors and assigns, the &#147;<B>Mortgage Lender</B>&#148;),
in the original principal amount of One Billion Thirty Million and No/100 Dollars ($1,030,000,000)
(as the same may be further amended, restated, replaced, supplemented, or otherwise modified from
time to time, collectively, the &#147;<B>Mortgage Notes</B>&#148;), Mortgage Borrowers have become indebted, and may
from time to time be further indebted, to Mortgage Lender with respect to a loan (the &#147;<B>Mortgage
Loan</B>&#148;) made pursuant to that certain Amended and Restated Loan Agreement, dated as of the date
hereof, among Mortgage Borrowers and Mortgage Lender (as the same may be amended, restated,
replaced, supplemented, or otherwise modified from time to time, the &#147;<B>Mortgage Loan Agreement</B>&#148;),
which Mortgage Loan is secured by, among other things, (i)&nbsp;that certain Construction Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Financing Statement (Fixture Filing), dated
as of February&nbsp;2, 2007 (as amended by that certain Modification of Construction Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Financing Statement (Fixture Filing) and
Other Loan Documents dated as of the date hereof, and as the same may be further amended, restated,
replaced, supplemented or otherwise modified from time to time, the &#147;<B>Mortgage</B>&#148;), made by Mortgage
Borrowers for the benefit of Mortgage Lender, encumbering, among other properties, certain real
property and the improvements thereon located in the City of Las Vegas, County of Clark, State of
Nevada, as more particularly described in the Mortgage (the &#147;<B>Property</B>&#148;); (ii)&nbsp;that certain Guaranty
Agreement (Non-Qualified Mandatory Prepayment) dated as of February&nbsp;2, 2007 (as amended by that
certain Modification and Ratification of Guaranties dated as of the date hereof, and as the same
may be further amended, restated, replaced, supplemented, or otherwise modified from time to time,
the &#147;<B>Mortgage Non-Qualified Prepayment Guaranty</B>&#148;), made by Guarantors in favor of Mortgage Lender);
and (iii)&nbsp;further evidenced, secured or governed by other instruments and documents executed in
connection with the Mortgage Loan (together with the Mortgage
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notes, the Mortgage Loan Agreement, the Mortgage and the Mortgage Non-Qualified Prepayment
Guaranty, collectively, the &#147;<B>Mortgage Loan Documents</B>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Pursuant to that certain First Mezzanine Promissory Note, dated of even date herewith,
executed by HRHH Gaming Senior Mezz, LLC and HRHH JV Senior Mezz, LLC (collectively, the &#147;<B>First
Mezzanine Borrowers</B>&#148;), and payable to the order of Column Financial, Inc, in its capacity as first
mezzanine lender (together with its successors and assigns, &#147;<B>First Mezzanine Lender</B>&#148;), in the
original principal amount of Two Hundred Million and No/100 Dollars ($200,000,000), as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to time (the &#147;<B>First
Mezzanine Note</B>&#148;), First Mezzanine Borrowers have become indebted to First Mezzanine Lender with
respect to a loan (the &#147;<B>First Mezzanine Loan</B>&#148;) made pursuant to that certain First Mezzanine Loan
Agreement, dated as of the date hereof, among First Mezzanine Borrowers and First Mezzanine Lender
(as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to
time, the &#147;<B>First Mezzanine Loan Agreement</B>&#148;), which First Mezzanine Loan is secured by, among other
things, (i)&nbsp;that certain First Mezzanine Pledge and Security Agreement, dated as of the date
hereof, made by First Mezzanine Borrowers, as pledgors, in favor of First Mezzanine Lender, as
pledgee (as the same may be amended, restated, replaced, supplemented, or otherwise modified from
time to time, the &#147;<B>First Mezzanine Pledge Agreement</B>&#148;); (ii)&nbsp;that certain First Mezzanine Guaranty
Agreement (Non-Qualified Mandatory Prepayment), dated as of the date hereof, made by Guarantors in
favor of First Mezzanine Lender (as the same may be amended, restated, replaced, supplemented, or
otherwise modified from time to time, the &#147;<B>First Mezzanine Non-Qualified Prepayment Guaranty</B>&#148;); and
(iii)&nbsp;further evidenced, secured or governed by other instruments and documents executed in
connection with the First Mezzanine Loan (together with the First Mezzanine Note, the First
Mezzanine Loan Agreement, the First Mezzanine Pledge Agreement and the First Mezzanine Non-Qualifed
Prepayment Guaranty, collectively, the &#147;<B>First Mezzanine Loan Documents</B>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;Pursuant to that certain Second Mezzanine Promissory Note, dated of even date herewith,
executed by HRHH Gaming Junior Mezz, LLC and HRHH JV Junior Mezz, LLC (collectively, the &#147;<B>Second
Mezzanine Borrowers</B>&#148;), and payable to the order of Column Financial, Inc., in its capacity as
second mezzanine lender (together with its successors and assigns, the &#147;<B>Second Mezzanine Lender</B>&#148;),
in the original principal amount of One Hundred Million and No/100 Dollars ($100,000,000), as the
same may be amended, restated, replaced, supplemented or otherwise modified from time to time (the
&#147;<B>Second Mezzanine Note</B>&#148;), Second Mezzanine Borrowers have become indebted to Second Mezzanine
Lender with respect to a loan (the &#147;<B>Second Mezzanine Loan</B>&#148;) made pursuant to that certain Second
Mezzanine Loan Agreement, dated as of the date hereof, among Second Mezzanine Borrowers and Second
Mezzanine Lender (as the same may be amended, restated, replaced, supplemented, or otherwise
modified from time to time, the &#147;<B>Second Mezzanine Loan Agreement</B>&#148;), which Second Mezzanine Loan is
secured by, among other things, (i)&nbsp;that certain Second Mezzanine Pledge and Security Agreement,
dated as of the date hereof, made by Second Mezzanine Borrowers, as pledgors, in favor of Second
Mezzanine Lender, as pledgee (as the same may be amended, restated, replaced, supplemented, or
otherwise modified from time to time, the &#147;<B>Second Mezzanine Pledge Agreement</B>&#148;); (ii)&nbsp;that certain
Second Mezzanine Guaranty Agreement (Non-Qualified Mandatory Prepayment), dated as of the date
hereof, made by Guarantors in favor of Second Mezzanine Lender (as the same may be amended,
restated, replaced,
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">supplemented, or otherwise modified from time to time, the &#147;<B>Second Mezzanine Non-Qualified
Prepayment Guaranty</B>&#148;, and together with the Mortgage Non-Qualifed Prepayment Guaranty and the First
Mezzanine Non-Qualified Prepayment Guaranty, collectively, the <B>&#147;Other Guarantees&#148;</B>); and (iii)
further evidenced, secured or governed by other instruments and documents executed in connection
with the Second Mezzanine Loan (together with the Second Mezzanine Note, the Second Mezzanine Loan
Agreement, the Second Mezzanine Pledge Agreement and the Second Mezzanine Non-Qualified Prepayment
Guaranty, collectively, the &#147;<B>Second Mezzanine Loan Documents</B>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Pursuant to that certain Third Mezzanine Promissory Note, dated of even date herewith,
executed by HRHH Gaming Junior Mezz Two, LLC, a Delaware limited liability company and HRHH JV
Junior Mezz Two, LLC, a Delaware limited liability company (collectively, the &#147;<B>Borrowers</B>&#148;), and
payable to the order of Lender in the original principal amount of Sixty Five Million and No/100
Dollars ($65,000,000), as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time (the &#147;<B>Note</B>&#148;), Borrowers have become indebted to Lender with respect to a
loan (the &#147;<B>Loan</B>&#148;) made pursuant to that certain Third Mezzanine Loan Agreement, dated as of the
date hereof, among Borrowers and Lender (as the same may be amended, restated, replaced,
supplemented, or otherwise modified from time to time, the &#147;<B>Loan Agreement</B>&#148;), which Loan is secured
by, among other things, (i)&nbsp;that certain Third Mezzanine Pledge and Security Agreement, dated as of
the date hereof, made by Borrowers, as pledgors, in favor of Lender, as pledgee (as the same may be
amended, restated, replaced, supplemented, or otherwise modified from time to time, the &#147;<B>Pledge
Agreement</B>&#148;); and (ii)&nbsp;further evidenced, secured or governed by other instruments and documents
executed in connection with the Loan (together with the Note, the Loan Agreement and the Pledge
Agreement , collectively, the &#147;<B>Loan Documents</B>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;Lender is not willing to make the Loan, or otherwise extend credit, to Borrowers unless
each Guarantor unconditionally guarantees payment and performance to Lender of the Guaranteed
Obligation (as herein defined).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.&nbsp;Each Guarantor is the owner of a direct or indirect interest in each Borrower, and each
Guarantor will directly benefit from Lender&#146;s making the Loan to Borrowers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW, THEREFORE</B>, as an inducement to Lender to make the Loan to Borrowers, and to extend such
additional credit as Lender may from time to time extend under the Loan Documents, and for $10.00
and other good and valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 1</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NATURE AND SCOPE OF GUARANTY</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.1 </B><U><B>Guaranty of Obligation</B></U>. Each Guarantor hereby jointly and severally, irrevocably
and unconditionally guarantees to Lender and its successors and assigns the payment and performance
of the Guaranteed Obligation as and when the same shall be due and payable, whether by lapse of
time, by acceleration of maturity or otherwise. Each Guarantor hereby
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">jointly and severally, irrevocably and unconditionally covenants and agrees that it is liable
for the Guaranteed Obligation as a primary obligor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.2 </B><U><B>Definitions</B></U>. The following terms shall have the respective meanings set forth
below. All other capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Loan Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Guaranteed Obligation</B>&#148; means the obligation of Borrowers to pay, or cause Mortgage Borrowers
to pay, to Lender the Non-Qualified Mandatory Prepayment; <U>provided</U>, <U>however</U>, that
in no event shall the aggregate liability of Guarantors under this Guaranty and the Other
Guarantees exceed the Non-Qualified Mandatory Prepayment, which shall be applied to the Mortgage
Debt, the First Mezzanine Debt, the Second Mezzanine Debt and the Debt in accordance with the
provisions of Section&nbsp;2.4.3(b) of the Mortgage Loan Agreement and Section&nbsp;2.4.4(b) of the Loan
Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Other Guarantees</B>&#148; has the meaning ascribed to such term in the Recitals.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.3 </B><U><B>Nature of Guaranty</B></U>. This Guaranty is an irrevocable, absolute, joint and several,
continuing guaranty of payment and performance and not a guaranty of collection. This Guaranty may
not be revoked by any Guarantor and shall continue to be effective with respect to any Guaranteed
Obligation arising or created after any attempted revocation by any Guarantor and after (if such
Guarantor is a natural person) such Guarantor&#146;s death (in which event this Guaranty shall be
binding upon such Guarantor&#146;s estate and such Guarantor&#146;s legal representatives and heirs). The
fact that at any time or from time to time the Guaranteed Obligation may be increased or reduced
shall not release or discharge the obligation of any Guarantor to Lender with respect to the
Guaranteed Obligation. This Guaranty may be enforced by Lender and any subsequent holder of the
Note and shall not be discharged by the assignment or negotiation of all or part of the Note.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.4 </B><U><B>Guaranteed Obligation Not Reduced by Offset</B></U>. The Guaranteed Obligation and the
liabilities and obligations of Guarantors to Lender hereunder, shall not be reduced, discharged or
released because or by reason of any existing or future offset, claim or defense of any Borrower
(except for the defense of the payment of the Guaranteed Obligation), or any other party, against
Lender or against payment of the Guaranteed Obligation, whether such offset, claim or defense
arises in connection with the Guaranteed Obligation (or the transactions creating the Guaranteed
Obligation) or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.5 </B><U><B>Payment By Guarantors</B></U>. If all or any part of the Guaranteed Obligation shall not
be punctually paid when due, whether at demand, maturity, acceleration or otherwise, Guarantors
shall, immediately upon demand by Lender, and without presentment, protest, notice of protest,
notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of
the maturity, or any other notice whatsoever (except as otherwise provided herein), pay (and each
agrees jointly and severally to pay) in lawful money of the United States of America, the amount
due on the Guaranteed Obligation to Lender at Lender&#146;s address as set forth herein. Such demand(s)
may be made at any time coincident with or after the time for payment of all or part of the
Guaranteed Obligation, and may be made from time to time with
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">respect to the same or different items of Guaranteed Obligation. Such demand shall be deemed
made, given and received in accordance with the notice provisions hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.6 </B><U><B>No Duty To Pursue Others</B></U>. To the extent permitted by applicable law, it shall not
be necessary for Lender (and each Guarantor hereby waives any rights which such Guarantor may have
to require Lender), in order to enforce the obligations of any Guarantor hereunder, first to (a)
institute suit or exhaust its remedies against any Loan Party or others liable on the Loan or the
Guaranteed Obligation or any other person, (b)&nbsp;enforce Lender&#146;s rights against any collateral which
shall ever have been given to secure the Loan, (c)&nbsp;enforce Lender&#146;s rights against any other
guarantors of the Guaranteed Obligation, (d)&nbsp;join any Borrower or any others liable on the
Guaranteed Obligation in any action seeking to enforce this Guaranty, (e)&nbsp;exhaust any remedies
available to Lender against any collateral which shall ever have been given to secure the Loan, or
(f)&nbsp;resort to any other means of obtaining payment of the Guaranteed Obligation. Lender shall not
be required to mitigate damages or take any other action to reduce, collect or enforce the
Guaranteed Obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.7 </B><U><B>Waivers</B></U>. Each Guarantor agrees to the provisions of the Loan Documents, and, to
the extent permitted by applicable law, hereby waives notice of (a)&nbsp;any loans or advances made by
Lender to any Borrower, (b)&nbsp;acceptance of this Guaranty, (c)&nbsp;any amendment or extension of the
Note, the Loan Agreement or of any other Loan Documents, (d)&nbsp;the execution and delivery by any
Borrower and Lender of any other loan or credit agreement or of any Borrower&#146;s execution and
delivery of any promissory notes or other documents arising under the Loan Documents or in
connection with the Collateral, (e)&nbsp;the occurrence of any breach by any Borrower or an Event of
Default, (f)&nbsp;Lender&#146;s transfer or disposition of the Guaranteed Obligation, or any part thereof,
(g)&nbsp;sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for
the Guaranteed Obligation, (h)&nbsp;protest, proof of non-payment or default by any Loan Party, and (i)
any other action at any time taken or omitted by Lender, and, generally, all demands and notices of
every kind in connection with this Guaranty, the Loan Documents, any documents or agreements
evidencing, securing or relating to the Guaranteed Obligation and/or the obligations hereby
guaranteed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.8 </B><U><B>Payment of Expenses</B></U>. In the event that any Guarantor should breach or fail to
timely perform any provisions of this Guaranty, Guarantors jointly and severally agree to pay to
Lender and shall promptly upon written demand by Lender, pay Lender all reasonable costs and
expenses (including court costs and attorneys&#146; fees) incurred by Lender in the enforcement hereof
or the preservation of Lender&#146;s rights hereunder. Notwithstanding the foregoing, in the event that
(A)&nbsp;Lender employs counsel to enforce the provisions of this Guaranty and (B)&nbsp;Lender has sold or
transferred any interests in the Note, then Guarantor shall only be responsible for the attorney&#146;s
fees and expenses of the counsel of only one Lender. The covenant contained in this <U>Section
1.8</U> shall survive the payment and performance of the Guaranteed Obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.9 </B><U><B>Effect of Bankruptcy</B></U>. In the event that, pursuant to any insolvency, bankruptcy,
reorganization, receivership or other debtor relief law, or any judgment, order or decision
thereunder, Lender must rescind or restore any payment, or any part thereof, received by Lender in
satisfaction of the Guaranteed Obligation, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to any Guarantor by Lender shall be without effect, and this
Guaranty shall remain in full force and effect. It is the intention of each Borrower and each
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Guarantor that none of Guarantors&#146; obligations hereunder shall be discharged except by
Guarantors&#146; performance of such obligations and then only to the extent of such performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.10 </B><U><B>Waiver of Subrogation, Reimbursement and Contribution</B></U>. Notwithstanding anything
to the contrary contained in this Guaranty, as long as the Debt remains outstanding and to the
extent permitted by applicable law, each Guarantor hereby unconditionally and irrevocably waives,
releases and abrogates any and all rights such Guarantor may now or hereafter have under any
agreement, at law or in equity (including, without limitation, any law subrogating such Guarantor
to the rights of Lender), to assert any claim against or seek contribution, indemnification or any
other form of reimbursement from any Loan Party or any other party liable for payment of any or all
of the Guaranteed Obligation for any payment made by any Guarantor under or in connection with this
Guaranty or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.11 </B><U><B>Borrower</B></U>. The term &#147;Borrower&#148; as used herein shall include any new or successor
corporation, association, partnership (general or limited), limited liability company, joint
venture, trust or other individual or organization formed as a result of any merger,
reorganization, sale, transfer, devise, gift or bequest of any Borrower or any interest in any
Borrower.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 2</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING<BR>
GUARANTORS&#146; OBLIGATIONS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Guarantor hereby consents and agrees to each of the following, and agrees that such
Guarantor&#146;s obligations under this Guaranty shall not be released, diminished, impaired, reduced or
adversely affected by any of the following, and, to the extent permitted by applicable law, waives
any common law, equitable, statutory or other rights (including, without limitation, rights to
notice) which such Guarantor might otherwise have as a result of or in connection with any of the
following, even if any of the following is materially prejudicial to any Guarantor:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.1 </B><U><B>Modifications</B></U>. Any renewal, extension, increase, modification, alteration or
rearrangement of all or any part of the Guaranteed Obligation, the Note, the Pledge Agreement, the
Loan Agreement, the other Loan Documents, the Mortgage Loan Documents, the First Mezzanine Loan
Documents, the Second Mezzanine Loan Documents, or any other document, instrument, contract or
understanding between Borrowers (or any of them) and Lender, or between Mortgage Borrowers (or any
of them) and Mortgage Lender, or between First Mezzanine Borrowers (or any of them) and First
Mezzanine Lender, or between Second Mezzanine Borrowers (or any of them) and Second Mezzanine
Lender, or any other parties, pertaining to the Guaranteed Obligation or any failure of Lender,
First Mezzanine Lender or Second Mezzanine Lender to notify any Guarantor of any such action.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.2 </B><U><B>Adjustment</B></U>. Any adjustment, indulgence, forbearance or compromise that might be
granted or given by Lender to any Borrower, or by Mortgage Lender to any Mortgage Borrower, or by
First Mezzanine Lender to any First Mezzanine Borrower, or by Second Mezzanine Lender to any Second
Mezzanine Borrower, or any Guarantor or any other Person, as applicable.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.3 </B><U><B>Condition of Borrowers or Guarantors</B></U>. The insolvency, bankruptcy, arrangement,
adjustment, composition, liquidation, disability, dissolution or lack of power of any Loan Party,
any Guarantor or any other party at any time liable for the payment of all or part of the
Guaranteed Obligation; or any dissolution of any Loan Party or any Guarantor, or any sale, lease or
transfer of any or all of the assets of any Loan Party or any Guarantor, or any changes in the
shareholders, partners or members of any Loan Party or any Guarantor; or any reorganization of any
Loan Party or any Guarantor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.4 </B><U><B>Invalidity of Guaranteed Obligation</B></U>. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Obligation, or any document or agreement
executed in connection with the Guaranteed Obligation, for any reason whatsoever, including,
without limitation, the fact that (a)&nbsp;the Guaranteed Obligation, or any part thereof, exceeds the
amount permitted by law, (b)&nbsp;the act of creating the Guaranteed Obligation or any part thereof is
ultra vires, (c)&nbsp;the officers or representatives executing the Note, the Pledge Agreement, the Loan
Agreement, the other Loan Documents, the Mortgage Loan Documents, the First Mezzanine Loan
Documents, the Second Mezzanine Loan Documents or otherwise creating the Guaranteed Obligation
acted in excess of their authority, (d)&nbsp;the Guaranteed Obligation violates applicable usury laws,
(e)&nbsp;any Borrower has valid defenses (other than the payment of the Guaranteed Obligation), claims
or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligation
wholly or partially uncollectible from any Borrower, (f)&nbsp;the creation, performance or repayment of
the Guaranteed Obligation (or the execution, delivery and performance of any document or instrument
representing part of the Guaranteed Obligation or executed in connection with the Guaranteed
Obligation, or given to secure the repayment of the Guaranteed Obligation) is illegal,
uncollectible or unenforceable, or (g)&nbsp;the Note, the Pledge Agreement, the Loan Agreement, any of
the other Loan Documents, the Mortgage Loan Documents, the First Mezzanine Loan Documents or the
Second Mezzanine Loan Documents have been forged or otherwise are irregular or not genuine or
authentic, it being agreed that each Guarantor shall remain jointly and severally liable hereon
regardless of whether any Borrower, any other Guarantor or any other Person be found not liable on
the Guaranteed Obligation or any part thereof for any reason.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.5 </B><U><B>Release of Obligors</B></U>. Any full or partial release of the liability of any Loan
Party on the Guaranteed Obligation, or any part thereof, or of any co-guarantors, or any other
Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and
severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligation, or any
part thereof, it being recognized, acknowledged and agreed by each Guarantor that such Guarantor
may be required to pay the Guaranteed Obligation in full without assistance or support of any other
party, and such Guarantor has not been induced to enter into this Guaranty on the basis of a
contemplation, belief, understanding or agreement that any other Person (including any other
Guarantor) will be liable to pay or perform the Guaranteed Obligation, or that Lender will look to
any other Person (including any other Guarantor) to pay or perform the Guaranteed Obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.6 </B><U><B>Other Collateral</B></U>. The taking or accepting of any other security, collateral or
guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligation.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.7 </B><U><B>Release of Collateral</B></U>. Any release, surrender, exchange, subordination,
deterioration, waste, loss or impairment (including, without limitation, negligent, willful,
unreasonable or unjustifiable impairment) of any collateral, property or security at any time
existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed
Obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.8 </B><U><B>Care and Diligence</B></U>. The failure of Lender or any other party to exercise
diligence or reasonable care in the preservation, protection, enforcement, sale or other handling
or treatment of all or any part of such collateral, property or security, including, but not
limited to, any neglect, delay, omission, failure or refusal of Lender (a)&nbsp;to take or prosecute any
action for the collection of any of the Guaranteed Obligation or (b)&nbsp;to foreclose, or initiate any
action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any
security therefor, or (c)&nbsp;to take or prosecute any action in connection with any instrument or
agreement evidencing or securing all or any part of the Guaranteed Obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.9 </B><U><B>Unenforceability</B></U>. The fact that any collateral, security, security interest or
lien contemplated or intended to be given, created or granted as security for the repayment of the
Guaranteed Obligation, or any part thereof, shall not be properly perfected or created, or shall
prove to be unenforceable or subordinate to any other security interest or lien, it being
recognized and agreed by each Guarantor that such Guarantor is not entering into this Guaranty in
reliance on, or in contemplation of the benefits of, the validity, enforceability, collectibility
or value of any of the collateral for the Guaranteed Obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.10 </B><U><B>Offset</B></U>. The Note, the Guaranteed Obligation and the liabilities and obligations
of Guarantors to Lender hereunder shall not be reduced, discharged or released by reason of any
existing or future right of offset, claim or defense (except as may be expressly provided in the
Loan Agreement and except for the defense of payment of the Guaranteed Obligation) of any Borrower
against Lender or any other Person, or against payment of the Guaranteed Obligation, or of any
Mortgage Borrower against Mortgage Lender, or any other Person, or of any First Mezzanine Borrower
against First Mezzanine Lender, or any other Person, or of any Second Mezzanine Borrower against
Second Mezzanine Lender or any other Person, whether such right of offset, claim or defense arises
in connection with the Guaranteed Obligation (or the transactions creating the Guaranteed
Obligation) or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.11 </B><U><B>Merger</B></U>. The reorganization, merger or consolidation of any Borrower into or with
any Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.12 </B><U><B>Preference</B></U>. Any payment by any Borrower to Lender, or by any Mortgage Borrower
to Mortgage Lender, or by any First Mezzanine Borrower to First Mezzanine Lender, or by any Second
Mezzanine Borrower to Second Mezzanine Lender, as applicable, is held to constitute a preference
under bankruptcy laws, or for any reason Lender, Mortgage Lender, First Mezzanine Lender or Second
Mezzanine Lender is required to refund such payment or pay such amount to such Borrower, Mortgage
Borrower, First Mezzanine Borrower or Second Mezzanine Borrower or to someone else, as applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.13 </B><U><B>Other Actions Taken or Omitted</B></U>. Any other action taken or omitted to be taken
with respect to the Loan Documents, the Mortgage Loan Documents, the First Mezzanine Loan
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Documents, the Second Mezzanine Loan Documents, the Guaranteed Obligation, or the security and
collateral therefor, whether or not such action or omission prejudices any Guarantor or increases
the likelihood that any Guarantor will be required to pay the Guaranteed Obligation pursuant to the
terms hereof, it being the unambiguous and unequivocal intention of each Guarantor that such
Guarantor shall be obligated to pay the Guaranteed Obligation when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or
uncontemplated, and whether or not otherwise or particularly described herein, which obligation
shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed
Obligation.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 3</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>REPRESENTATIONS AND WARRANTIES</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To induce Lender to enter into the Loan Documents and extend credit to Borrowers, each
Guarantor represents and warrants to Lender as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.1 </B><U><B>Benefit</B></U>. Such Guarantor is an Affiliate of each Borrower, is the owner of a
direct or indirect interest in each Borrower, and has received, or will receive, direct or indirect
benefit from the making of this Guaranty with respect to the Guaranteed Obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.2 </B><U><B>Familiarity and Reliance</B></U>. Such Guarantor is familiar with, and has independently
reviewed books and records regarding, the financial condition of the Borrowers and is familiar with
the value of any and all collateral intended to be created as security for the payment of the Note
or Guaranteed Obligation; however, such Guarantor is not relying on such financial condition or the
collateral as an inducement to enter into this Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.3 </B><U><B>No Representation By Lender</B></U>. Neither Lender nor any other party has made any
representation, warranty or statement to such Guarantor in order to induce such Guarantor to
execute this Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.4 </B><U><B>Financial Representations, Warranties and Covenants</B></U>. Each Guarantor hereby makes
the representations, warranties and covenants set forth on <U>Exhibit&nbsp;A</U> attached hereto and
made a part hereof, which representations, warranties and covenants are intended to and shall form
a part of this Guaranty for all purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.5 </B><U><B>Legality</B></U>. The execution, delivery and performance by such Guarantor of this
Guaranty and the consummation of the transactions contemplated hereunder do not, and will not,
contravene or conflict with any law, statute or regulation whatsoever to which such Guarantor is
subject or constitute a material default (or an event which with notice or lapse of time or both
would constitute a default) under, or result in the material breach of, any indenture, mortgage,
deed of trust, charge, lien, or any contract, agreement or other instrument to which such Guarantor
is a party or which may be applicable to such Guarantor. This Guaranty is a legal and binding
obligation of such Guarantor and is enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to the enforcement of
creditors&#146; rights.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.6 </B><U><B>Survival</B></U>. All representations and warranties made by each Guarantor herein shall
survive the execution hereof.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 4</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>SUBORDINATION OF CERTAIN INDEBTEDNESS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.1 </B><U><B>Subordination of All Guarantor Claims</B></U>. As used herein, the term &#147;<B>Guarantor
Claims</B>&#148; shall mean all debts and liabilities of any Loan Party to any Guarantor, whether such debts
and liabilities now exist or are hereafter incurred or arise, or whether the obligations of such
Loan Party thereon be direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract,
open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or
liabilities may, at their inception, have been, or may hereafter be created, or the manner in which
they have been or may hereafter be acquired by any Guarantor. The Guarantor Claims shall include
without limitation all rights and claims of any Guarantor against any Loan Party (arising as a
result of subrogation or otherwise) as a result of any Guarantor&#146;s payment of all or a portion of
the Guaranteed Obligation. Upon the occurrence and during the continuance of an Event of Default,
no Guarantor shall receive or collect, directly or indirectly, from any Loan Party or any other
party any amount upon any Guarantor Claim.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.2 </B><U><B>Claims in Bankruptcy</B></U>. In the event of any receivership, bankruptcy,
reorganization, arrangement, debtor&#146;s relief, or other insolvency proceedings involving any
Guarantor as debtor, Lender shall have the right to prove its claim in any such proceeding so as to
establish its rights hereunder and receive directly from the receiver, trustee or other court
custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Each
Guarantor hereby assigns such dividends and payments to Lender. Should Lender receive, for
application against the Guaranteed Obligation, any such dividend or payment which is otherwise
payable to any Guarantor, and which, as between any Borrower and any Guarantor, shall constitute a
credit against the Guarantor Claims, then upon payment to Lender in full of the Guaranteed
Obligation, such Guarantor shall become subrogated to the rights of Lender to the extent that such
payments to Lender on the Guarantor Claims have contributed toward the liquidation of the
Guaranteed Obligation, and such subrogation shall be with respect to that proportion of the
Guaranteed Obligation which would have been unpaid if Lender had not received dividends or payments
upon the Guarantor Claims.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.3 </B><U><B>Payments Held in Trust</B></U>. Notwithstanding anything to the contrary in this
Guaranty, in the event that any Guarantor shall receive any funds, payments, claims or
distributions which are prohibited by this Guaranty, such Guarantor agrees to hold in trust for
Lender an amount equal to the amount of all funds, payments, claims or distributions so received,
and agrees that it shall have absolutely no dominion over the amount of such funds, payments,
claims or distributions so received except to pay such funds, payments, claims and/or distributions
promptly to Lender, and such Guarantor covenants promptly to pay the same to Lender.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.4 </B><U><B>Liens Subordinate</B></U>. Each Guarantor agrees that any liens, security interests,
judgment liens, charges or other encumbrances upon any Loan Party&#146;s assets securing payment
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of any Guarantor Claim shall be and remain inferior and subordinate to any liens, security
interests, judgment liens, charges or other encumbrances upon such Loan Party&#146;s assets securing
payment of the Guaranteed Obligation, regardless of whether such encumbrances in favor of such
Guarantor or Lender presently exist or are hereafter created or attach. Without the prior written
consent of Lender as long as the Debt is outstanding, no Guarantor shall (a)&nbsp;exercise or enforce
any creditor&#146;s right it may have against any Loan Party, or (b)&nbsp;foreclose, repossess, sequester or
otherwise take steps or institute any action or proceedings (judicial or otherwise, including,
without limitation, the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor&#146;s relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security
interests, collateral rights, judgments or other encumbrances on assets of any Loan Party held by
any Guarantor.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 5</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>MISCELLANEOUS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.1 </B><U><B>Waiver</B></U>. No failure to exercise, and no delay in exercising, on the part of
Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right.
The rights of Lender hereunder shall be in addition to all other rights provided by law. No
modification or waiver of any provision of this Guaranty, nor consent to departure therefrom, shall
be effective unless in writing and no such consent or waiver shall extend beyond the particular
case and purpose involved. No notice or demand given in any case shall constitute a waiver of the
right to take other action in the same, similar or other instances without such notice or demand.
Pursuant to Nevada Revised Statutes (&#147;<B>NRS</B>&#148;) Section&nbsp;40.495(2), each Guarantor hereby waives the
provisions of NRS Section&nbsp;40.430.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.2 </B><U><B>Notices</B></U>. Except as otherwise required by applicable law, all notices, consents,
approvals and requests required or permitted hereunder or under any other Loan Document (each, a
&#147;<B>Notice</B>&#148;) shall be given in writing and shall be effective for all purposes if (a)&nbsp;hand delivered,
(b)&nbsp;sent by reputable overnight courier, (c)&nbsp;sent by (i)&nbsp;certified or registered United States
mail, postage prepaid, return receipt requested or (ii)&nbsp;expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of attempted delivery, or (d)&nbsp;sent by
telecopier (with answer back acknowledged and followed by a hard copy via one of the other methods
described above), addressed as follows (or to such other address and Person as shall be designated
from time to time by any party hereto, as the case may be, in a Notice to the other parties hereto
in the manner provided for in this <U>Section&nbsp;5.2</U>):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Guarantor:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">DLJ MB IV HRH, LLC</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">c/o DLJ Merchant Banking Partners</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">11 Madison Avenue</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10010&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Ryan Sprott</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile&nbsp;No.: (212)&nbsp;743-1667</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">with a copy to:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Latham &#038; Watkins LLP</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">885 Third Avenue</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Suite&nbsp;1000</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10022</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Michelle Kelban, Esq.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile No.: (212)&nbsp;751-4864</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">with a copy to:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Latham &#038; Watkins LLP</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">633 West Fifth Street</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Suite&nbsp;4000</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Los Angeles, California 90071</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Paul Fuhrman, Esq.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile No.: (213)&nbsp;891-8763</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Guarantor:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Morgans Group LLC</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">475 Tenth Avenue</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10018</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention:&nbsp; Marc Gordon, Chief Investment Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile No.: (212)&nbsp;277-4270</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">with a copy to:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wachtell, Lipton, Rosen &#038; Katz</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">51 West 52nd Street</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">29th Floor</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10019</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Stephen Gellman, Esq.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile No.: (212)&nbsp;403-2000</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lender:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Column Financial, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">11 Madison Avenue</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10010</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Edmund Taylor</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile No.: (212)&nbsp;352-8106</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">with a copy to:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Column Financial, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">One Madison Avenue</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10019</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Legal and Compliance Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Casey McCutcheon, Esq.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile No.: (917)&nbsp;326-8433</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">with a copy to:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thelen Reid Brown Raysman &#038; Steiner, LLP</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">875 Third Avenue</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10022</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Jeffrey B. Steiner, Esq.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile No.: (212)&nbsp;603-2001</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hard Rock / Rand Peppas</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A Notice shall be deemed to have been given: in the case of hand delivery or delivery by a
reputable overnight courier, at the time of delivery; in the case of registered or certified mail,
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">when delivered or the first attempted delivery on a Business Day; in the case of expedited prepaid
delivery and telecopy, upon the first attempted delivery on a Business Day; or in the case of
telecopy, upon sender&#146;s receipt of a machine-generated confirmation of successful transmission on a
Business Day after advice by telephone to recipient that a telecopy Notice is forthcoming;
<U>provided</U>, that within three (3)&nbsp;Business Days thereafter, a hard copy of such Notice shall
have been delivered pursuant to the provisions of <U>clause (a)</U>, <U>(b)</U> or <U>(c)</U> of
this <U>Section&nbsp;5.2</U>. Any failure to deliver a Notice by reason of a change of address not
given in accordance with this <U>Section&nbsp;5.2</U>, or any refusal to accept a Notice, shall be
deemed to have been given when delivery was attempted. Any Notice required or permitted to be
given by any party hereunder or under any other Loan Document may be given by its respective
counsel. Additionally, any Notice required or permitted to be given by Lender hereunder or under
any other Loan Document may also be given by the Servicer.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.3 </B><U><B>Governing Law</B></U>. This Guaranty shall be governed in accordance with the terms and
provisions of Section&nbsp;10.3 of the Loan Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.4 </B><U><B>Invalid Provisions</B></U>. If any provision of this Guaranty is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term of this Guaranty,
such provision shall be fully severable and this Guaranty shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and
the remaining provisions of this Guaranty shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty,
unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic
understandings and intentions of the parties as expressed herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.5 </B><U><B>Amendments</B></U>. This Guaranty may be amended only by an instrument in writing
executed by the party or an authorized representative of the party against whom such amendment is
sought to be enforced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.6 </B><U><B>Parties Bound; Assignment</B></U>. This Guaranty shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and legal representatives;
provided, however, that no Guarantor may, without the prior written consent of Lender, assign any
of its rights, powers, duties or obligations hereunder except as may otherwise be permitted under
the Loan Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.7 </B><U><B>Fully Recourse</B></U><B>. </B>(a)&nbsp;The Guaranteed Obligation is a joint and several recourse
obligation of Guarantors and is not restricted by any limitation on personal liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Notwithstanding anything to the contrary in this Guaranty, in the Loan Agreement or in any
other Loan Document, no present or future Constituent Member other than (i)&nbsp;a Guarantor, and (ii)
with respect to the DLJ Guarantor, DLJ Merchant Banking Partners IV, L.P., MBP IV Plan Investors,
L.P., DLJMB HRH Co-Investments, L.P., DLJ Offshore Partners IV, L.P., and DLJ Merchant Banking
Partners IV (Pacific), L.P. (such limited partnerships, collectively, the &#147;<B>DLJMB Parties</B>&#148;) as
provided in the DLJMB Commitment Letter, nor any present or future shareholder, officer, director,
employee, trustee, beneficiary, advisor, member, partner, principal, participant or agent of or in
any Guarantor or of or in any Person that is or becomes a Constituent Member, other than Guarantors
and such DLJMB Parties, shall have any
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">personal liability, directly or indirectly, under or in connection with this Guaranty, or any
amendment or amendments hereto made at any time or times, heretofore or hereafter, and Lender on
behalf of itself and its successors and assigns, hereby waives any and all such personal liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.8 </B><U><B>Headings</B></U>. Section headings are for convenience of reference only and shall in no
way affect the interpretation of this Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.9 </B><U><B>Recitals</B></U>. The recital and introductory paragraphs hereof are a part hereof, form
a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents
referred to therein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.10 </B><U><B>Counterparts</B></U>. To facilitate execution, this Guaranty may be executed in as many
counterparts as may be convenient or required. It shall not be necessary that the signature of, or
on behalf of, each party, or that the signature of all Persons required to bind any party, appear
on each counterpart. All counterparts shall collectively constitute a single instrument. It shall
not be necessary in making proof of this Guaranty to produce or account for more than a single
counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.
Any signature page to any counterpart may be detached from such counterpart without impairing the
legal effect of the signatures thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.11 </B><U><B>Rights and Remedies</B></U>. If any Guarantor becomes liable for any indebtedness owing
by any Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such
liability shall not be in any manner impaired or affected hereby and the rights of Lender hereunder
shall be cumulative of any and all other rights that Lender may ever have against any such
Guarantor. To the extent permitted by applicable law, the exercise by Lender of any right or
remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.12 </B><U><B>Entirety</B></U>. <B>THIS GUARANTY EMBODIES THE FINAL AND ENTIRE AGREEMENT OF GUARANTORS
AND LENDER WITH RESPECT TO GUARANTORS&#146; GUARANTY OF THE GUARANTEED OBLIGATION AND SUPERSEDES ANY AND
ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTORS AND LENDER AS A
FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THIS GUARANTY, AND NO COURSE OF DEALING BETWEEN ANY
GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY. THERE
ARE NO ORAL AGREEMENTS BETWEEN ANY GUARANTOR AND LENDER.</B>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.13 </B><U><B>Waiver of Right To Trial By Jury</B></U>. <B>EACH GUARANTOR HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE LOAN AGREEMENT, THE PLEDGE AGREEMENT, OR THE
OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH GUARANTOR, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION 5.13 IN
ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH GUARANTOR.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.14 </B><U><B>Cooperation</B></U>. Each Guarantor acknowledges that Lender and its successors and
assigns may (a)&nbsp;sell this Guaranty, the Note and other Loan Documents to one or more investors as a
whole loan, (b)&nbsp;participate the Loan secured by this Guaranty to one or more investors, (c)&nbsp;deposit
this Guaranty, the Note and other Loan Documents with a trust, which trust may sell certificates to
investors evidencing an ownership interest in the trust assets, or (d)&nbsp;otherwise sell the Loan or
one or more interests therein to investors (the transactions referred to in <U>clauses (a)</U>
through <U>(d)</U> are hereinafter each referred to as &#147;<B>Secondary Market Transactions</B>&#148;). Each
Guarantor shall reasonably cooperate with Lender at Lender&#146;s cost and expense in effecting any such
Secondary Market Transaction and shall reasonably cooperate to implement all requirements imposed
by any Rating Agency involved in any Secondary Market Transaction. Each Guarantor shall provide
such information and documents relating to such Guarantor, Borrowers, Mortgage Borrowers, First
Mezzanine Borrowers, Second Mezzanine Borrowers, the Properties and any tenants of the Improvements
as Lender may reasonably request in connection with such Secondary Market Transaction. In
addition, each Guarantor shall make available to Lender all information concerning its business and
operations that Lender may reasonably request in connection with such Secondary Market Transaction.
Lender shall be permitted to share all such information with the investment banking firms, Rating
Agencies, accounting firms, law firms and other third party advisory firms involved with the Loan
and the Loan Documents or the applicable Secondary Market Transaction provided such parties are
held to customary confidentiality standards. It is understood that the information provided by any
Guarantor to Lender may ultimately be incorporated into the offering documents for the Secondary
Market Transaction and that various investors may also see some or all of the information. Lender
and all of the aforesaid third party advisors and professional firms shall be entitled to rely on
the information supplied by, or on behalf of, any Guarantor in the form as provided by such
Guarantor. Lender may publicize the existence of the Loan in connection with its marketing for a
Secondary Market Transaction, or otherwise as part of its business development. Notwithstanding
anything to the contrary contained in this Guaranty, in the event of a Secondary Market
Transaction, Guarantors shall be entitled to deal with and rely upon only one Servicer (having at
least ten (10)&nbsp;years experience servicing loans) for all owners of interest in the Loan in
connection with all matters relating to the Loan and shall not incur any costs greater than those
that would be incurred if the lead lender were the only Lender (including enforcement costs). Any
such transaction shall be at Lender&#146;s sole cost and expense, including,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">without limitation, the cost of any reports, certifications or opinions required of Guarantors
in connection with any such transaction. No such transaction shall result in a material increase
in the obligations or potential liability of Guarantors under this Guaranty and the Loan Documents
by reason of any requested covenant, representation, warranty, indemnity or certification or
otherwise. Without limitation on the foregoing, in no event shall Guarantors have liability (by
way of certification, indemnity or otherwise) for information or statements contained in third
party reports used in connection with the secondary marketing transaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.15 </B><U><B>Termination</B></U>. Subject to <U>Section&nbsp;5.16</U> hereof, this Guaranty shall
terminate upon the payment of the Debt in full.&nbsp; Alternatively, subject to <U>Section&nbsp;5.16</U>
hereof, this Guaranty shall terminate upon the earliest to occur of&nbsp;(i) Borrowers&#146; satisfaction of
the Qualification Conditions on or before the Construction Qualification Date,&nbsp;(ii) Borrowers&#146;
payment of the Non-Qualified Mandatory Prepayment,&nbsp;or (iii)&nbsp;Borrowers&#146; delivery of a Non-Qualified
Prepayment Letter of Credit&nbsp;(or&nbsp;a combination of the foregoing <U>clauses (ii)</U> and
<U>(iii)</U>). Upon&nbsp;any such termination of this Guaranty, Lender shall, at Borrowers&#146; reasonable
expense (including Lender&#146;s reasonable attorneys&#146; fees), promptly execute and deliver such
documents as may be reasonably requested by Borrowers or Guarantors to evidence release of this
Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.16 </B><U><B>Reinstatement in Certain Circumstances</B></U>. If at any time any payment of the
principal of or interest under the Note or any other amount payable by any Borrower under the Loan
Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Borrower or otherwise, Guarantors&#146; obligations hereunder with respect to such
payment shall be reinstated as though such payment has been due but not made at such time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.17 </B><U><B>Exculpation</B></U>. Notwithstanding anything to the contrary contained herein,
Guarantors agree that they will not have any claims or causes of action against any disclosed or
undisclosed officer, director, employee, trustee, shareholder, partner, or principal of Lender
arising out of or in connection with this Guaranty or the transactions contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.18 </B><U><B>Usage of Terms</B></U>. As used in this Guaranty, the phrase &#147;any Borrower&#148; shall mean
&#147;any one or more Borrowers, including all of the Borrowers&#148; and the phrase &#147;any Guarantor&#148; shall
mean &#147;any one or more Guarantors, including all of the Guarantors&#148;.
</DIV>

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</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EXECUTED as of the day and year first above written.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><U><B>GUARANTORS</B></U><B>:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>MORGANS GROUP LLC</B>,<BR>
a Delaware limited liability company</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Morgans Hotel Group Co.,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">a Delaware corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">as Managing Member</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ RICHARD SZYMANSKI
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Name: Richard Szymanski
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: Chief Financial Officer
and Secretary</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>DLJ MB IV HRH, LLC</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">a Delaware limited liability company</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ KENNETH J. LOHSEN
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Name: Kenneth J. Lohsen
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: Authorized Signatory</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Exhibit&nbsp;A</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>FINANCIAL REPRESENTATIONS, WARRANTIES AND COVENANTS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;</B><U><B>Guarantor&#146;s Financial Condition</B></U><B>. </B>(a)&nbsp;As of the date hereof after giving effect to
this Guaranty and, in the case of the DLJ Guarantor, the equity and other commitments of the DLJMB
Parties insofar as they relate to the DLJ Guarantor, and throughout the term of the Loan, such
Guarantor is and will be solvent and has and will have (i)&nbsp;assets which, fairly valued, exceed its
obligations, liabilities (including contingent liabilities as determined in accordance with GAAP)
and debts, and (ii)&nbsp;property and assets sufficient to satisfy and repay its obligations and
liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;At all times throughout the term of this Guaranty, the Guarantors shall maintain (i)
Guarantors Net Worth in excess of $400,000,000.00 in the aggregate, and (ii)&nbsp;a minimum amount of
Guarantors Effective Liquidity in excess of $200,000,000.00 in the aggregate. Within one-hundred
twenty (120)&nbsp;days following the end of each calendar year, and, upon Lender&#146;s written request,
within sixty (60)&nbsp;days following the end of any calendar quarter, each Guarantor shall deliver or
cause to be delivered to Lender a complete copy of such Guarantor&#146;s and, in the case of the DLJ
Guarantor, the DLJMB Parties&#146; annual, and, if requested, quarterly financial statements audited by
a &#147;Big Four&#148; accounting firm, BDO Seidman LLP, or other independent certified public accountant
reasonably acceptable to Lender prepared in accordance with GAAP, including in each case statements
of profit and loss and a balance sheet for such Guarantor and the DLJMB Parties, as the case may
be, together with a certificate of each Guarantor (which certificate in the case of the Morgans
Guarantor shall pertain only to the Morgans Guarantor, and in the case of the DLJ Guarantor shall
pertain only to the DLJ Guarantor and the DLJMB Parties) (i)&nbsp;setting forth in reasonable detail
such Guarantor&#146;s and each DLJMB Parties&#146; Net Worth as of the end of the prior calendar year or
quarter, as the case may be, based thereon, and then Effective Liquidity, and (ii)&nbsp;certifying that
such financial statements are true, correct, accurate and complete in all material respects and
fairly present the financial condition and results of the operations of such Guarantor, and, in the
case of the DLJ Guarantor, the DLJMB Parties, <U>provided</U>, <U>however</U>, that in the event
the DLJ Guarantor, any DLJMB Party or the Morgans Guarantor is not otherwise required to, and does
not, cause to be prepared such audited financial statements in the ordinary course of its business,
it may deliver the unaudited statements which are delivered to its investors or otherwise prepared
in the ordinary course of its business, accompanied by such certification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Such Guarantors shall not, and the DLJ Guarantor shall not cause or permit and further
represents and covenants that the DLJMB Parties shall not, at any time while a default in the
payment of the Guaranteed Obligations has occurred and is continuing beyond any applicable grace
period or following any notice thereof, (i)&nbsp;enter into or effectuate any transaction with any
Affiliate of such Guarantors or any of the DLJMB Parties, as the case may be, which would reduce
such Guarantors&#146; or DLJMB Party&#146;s then Net Worth or Effective Liquidity, or (ii)&nbsp;sell, pledge,
mortgage or otherwise Transfer to any other Person (including any of its Affiliates) any assets or
any interest therein, other than (in the case of either <U>clauses (i)</U> or <U>(ii)</U> of this
<U>Section&nbsp;1(c)</U>) (x)&nbsp;if in the ordinary course of business, consistent with past practice and
for reasonably equivalent value, or (y)&nbsp;for reasonably equivalent value.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;As used in this <U>Section&nbsp;1</U> and <U>Section&nbsp;4</U> below, the following terms shall
have the following meanings:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Distributable Cash</B>&#148; means, with respect to any Person, and subject to the following
proviso, the amount of all capital surplus, retained earnings or net profits of such Person
held in the form of cash or cash equivalents (including cash reserves established from
undistributed net profits from any prior fiscal period), then freely and lawfully
distributable to the holders of all equity interests of such Person as dividends or
distributions or in redemption of such equity interests in accordance with all laws and
operative agreements, documents or instruments governing the formation and capitalization of
such Person, the receipt of which by the holders of such equity interests, if so paid, will
not give rise to any liability of the recipient to return or to repay such amounts to such
Person, and the payment or distribution of which by such Person to such equity holders (i)
will not violate any term or condition of any agreement or instrument to which such Person
is subject or by which its properties or assets is bound, and (ii)&nbsp;has been consented to or
approved by all other Persons not controlled by the Morgans Guarantor whose consent to or
approval of such payment or distribution is required under any of such operative, governing
or other agreements, documents or instruments; <U>provided</U> that Lender is given, from
time to time, such information as it may reasonably request (including income statements and
balance sheets of any such Person that satisfy the requirements for financial statements set
forth in <U>Section&nbsp;1(c)</U> above, together with a certificate of the chief financial
officer of the Morgans Guarantor confirming that, to the best of his or her knowledge, the
foregoing calculations and financial statements are accurate in all material respects)
confirming the foregoing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Effective Liquidity</B>&#148; means, with respect to any Person, as of a given date, the sum of
(i)&nbsp;all unrestricted cash and cash equivalents held by such Person and, in the case of the
Morgans Guarantor, the Distributable Cash of its direct or indirect wholly-owned
subsidiaries, the membership or other equity interests which are not pledged to or otherwise
encumbered by any lien, charge or other encumbrance in favor of any Person other than the
Morgans Guarantor or Lender; (ii)&nbsp;the aggregate amount of available borrowing of such Person
under credit facilities and other lines of credit; and (iii)&nbsp;except as provided in the
following sentence, the aggregate maximum amount, if any, of all committed and undrawn or
uncalled capital available to such Person (as to any Person its &#147;<B>Available Capital</B>&#148;) under
the terms of any partnership, limited liability, statutory business trust, or similar
agreement of such Person from any Constituent Member (other than (x)&nbsp;any Constituent Member
of another Constituent Member that is publicly traded, and (y)&nbsp;in the case of the DLJ
Guarantor, any limited partner of DLJMB HRH Co-Investments, L.P., a DLJMB Party
(&#147;<B>Co-Investments LP</B>&#148;)), <U>less</U>, (iv)&nbsp;the aggregate amount of any accrued but unpaid
liabilities or obligations of such Person under the facilities or agreements described in
the preceding <U>clauses (ii)</U> and <U>(iii)</U>, other than (for purposes of this
<U>clause (iv)</U>) the principal amount of Indebtedness under any such facilities. In
addition, and notwithstanding anything herein to the contrary, the Available Capital of
Co-Investments LP for purposes of determining its Effective Liquidity shall equal, as of a
given date, either (A)&nbsp;Co-Investments LP&#146;s Available Capital, or (B), if
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">greater, and subject to the following proviso, an aggregate amount not exceeding one
hundred fifty (150%) percent of the aggregate Available Capital of the other DLJMB Parties,
<U>provided</U> that Lender is given, from time to time, such information as it may
reasonably request (including an opinion of counsel to Co-Investments LP in respect of the
following <U>clause (y)</U>) to confirm that the limited partners of Co-Investments LP (x)
are financially capable of funding such amount, and (y)&nbsp;are and remain obligated to make
capital contributions to Co-Investments LP in such aggregate amounts in order to cause the
DLJ Guarantor or the DLJMB Parties to pay and perform the Guaranteed Obligations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Guarantors Effective Liquidity</B>&#148; means, with respect to the Guarantors, as of a given
date, the sum of the Effective Liquidity of (i)&nbsp;the DLJ Guarantor and, without duplication,
each of the DLJMB Parties, and (ii)&nbsp;the Morgans Guarantor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Guarantors Net Worth</B>&#148; means, with respect to the Guarantors, as of a given date, the
sum of (i)&nbsp;the Net Assets of the Morgans Guarantor, and (ii)&nbsp;the Net Worth of (x)&nbsp;the DLJ
Guarantor and (y), without duplication, each of the DLJMB Parties, including for purposes of
this computation, and subject to the following proviso, the Net Worth of any limited partner
of Co-Investments LP that shall have entered into an equity commitment letter satisfactory
to Lender, for the express benefit of Lender, pursuant to which such limited partner of
Co-Investments LP agrees to, and recognizes the rights of Lender in place and instead of the
general partner or manager of Co-Investments LP to require such limited partner of
Co-Investments LP to, make contributions to Co-Investments LP directly to Lender, in an
aggregate amount not exceeding one hundred fifty (150%) percent of the aggregate Net Worth
of the DLJMB Parties other than Co-Investments LP, <U>provided</U> that Lender is given,
from time to time, such information as it may reasonably request (including an opinion of
counsel to Co-Investments LP in respect of the following <U>clause (B)</U>) to confirm (A)
the Net Worth of the limited partners of Co-Investments LP, and (B)&nbsp;that they are and remain
obligated to make capital contributions to Co-Investments LP in such aggregate amounts in
order to cause the DLJ Guarantor or the DLJMB Parties to pay and perform the Guaranteed
Obligations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Net Assets</B>&#148; means, with respect to the Morgans Guarantor only, as of a given date, an
amount equal to the aggregate fair market value of the Morgans Guarantor&#146;s assets and
properties (i)&nbsp;as reasonably determined by Lender in good faith applying such customary and
reasonable market factors as Lender shall then apply to similar assets and properties, or
(ii)&nbsp;at the election of the Morgans Guarantor, as determined by appraisals prepared by an
independent MAI real estate &#147;state certified general appraiser&#148; (as defined under
regulations or guidelines issued pursuant the Financial Institutions Reform Recovery
Enforcement Act of 1989, 12 U.S.C. 1811 et. Seq., as amended) selected by the Morgans
Guarantor and approved by Lender (which approval shall not be unreasonably withheld,
delayed, or conditioned) at the Morgans Guarantor&#146;s sole cost and expense and not more than
ninety (90)&nbsp;days prior to such date, <U>minus</U> the amount of all Indebtedness of the
Morgans Guarantor and its consolidated subsidiaries as of such date, but in no event shall
such amount be less than zero.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Net Worth&#148; </B>shall mean, with respect to any Person as of a given date, (i)&nbsp;such
Person&#146;s total assets as of such date, <U>less</U> (ii)&nbsp;such Person&#146;s total liabilities as
of such date, in each case, as they would be reflected in a balance sheet prepared in
accordance with GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Financial and Other Information; Dividends and Distributions</U>. Each Guarantor with
respect to (i)&nbsp;itself, severally and not jointly, and (ii)&nbsp;in the case of the DLJ Guarantor, the
DLJMB Parties, represents, warrants and covenants to Lender during the term of the Loan that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;all financial data and other financial information that, as of any applicable date, has
been delivered to Lender with respect to such Guarantor, and in the case of the DLJ Guarantor, the
DLJMB Parties (i)&nbsp;is true, complete and correct in all material respects as of the dates of such
reports, (ii)&nbsp;accurately represent, in all material respects, the financial condition of such
Guarantor and the DLJMB Parties as of the date of such reports, and (iii)&nbsp;has been prepared in
accordance with GAAP throughout the periods covered, except as disclosed therein; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;except for the payment of employee salaries and benefits and other administrative expenses
and dividends or other distributions in the ordinary course of business consistent with past
practice, or with Lender&#146;s prior written consent exercised in its sole discretion, it shall not
sell, pledge, mortgage or otherwise transfer any of its material assets, or any interest therein,
on terms materially less favorable than would be obtained in an arms-length transaction for fair
consideration, or, with respect to any such transactions between or among the DLJMB Parties and any
of their respective affiliates, on terms materially less favorable to such DLJMB Parties than would
be obtained in comparable transactions with Persons who are not affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Confidentiality; Cooperation</U>. Lender agrees to treat all financial statements and
other financial information of any Guarantor and the DLJMB Parties that are not publicly available,
confidentially, <U>provided</U> that, each Guarantor recognizes that Lender shall, and hereby
authorizes Lender to, include such financial information or extracts therefrom in any Disclosure
Documents or similar disclosure with respect to any syndication of the Loan, so long as in each
case the affected Guarantor shall have the right, prior to their dissemination, to review and
approve any such Disclosure Documents or similar documents (such approval not to be unreasonably
withheld, delayed or conditioned) and the recipients of any such Disclosure Documents are subject
to customary obligations to preserve the confidentiality of such information, to the extent
applicable to such syndication. In connection therewith and with respect to all such financial
information, each Guarantor shall cooperate with and indemnify and hold harmless Lender to the same
extent provided in Section&nbsp;9.3 of the Loan Agreement as if it were a party thereto and each
reference to &#147;Borrowers&#148; therein were instead a reference to such Guarantor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Substitute Guarantors</U>. If at any time, subject to all of the terms and conditions
of the Loan Agreement and all of the other Loan Documents, &nbsp;a Guarantor shall seek to be released
from its obligations under this Guaranty and substitute any replacement guarantor for the
Guaranteed Obligations following any Transfer of an interest (direct or indirect) in HR Holdings,
any Guarantor Transfer or otherwise (any such replacement guarantor permitted under the Loan
Documents or otherwise consented to by Lender, being referred to herein as a &#147;<B>Substitute
Guarantor</B>&#148;), then, so long as (a)&nbsp;the aggregate Net Worth (determined, in the case of
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Guarantors, as provided in the definition of &#147;Guarantors Net Worth&#148; above) of all Persons
providing this Guaranty, including any Substitute Guarantor, shall equal $400,000,000.00 or more,
and the aggregate Effective Liquidity (determined, in the case of Guarantors, as provided in the
definitions of &#147;Effective Liquidity&#148; and &#147;Guarantors Effective Liquidity&#148; above) of all such
Persons shall equal $200,000,000.00 or more, and (b)&nbsp;at least one of the Persons providing this
Guaranty is a Qualified Real Estate Guarantor, (i)&nbsp;the requirements of the first sentence of
<U>Section&nbsp;1(b)</U> above shall be modified such that, as to&nbsp;each Person providing this Guaranty
pursuant to the Loan Agreement, including any Substitute Guarantor, at all times that such Guaranty
shall be required to be outstanding in accordance with the Loan Agreement, (x)&nbsp;such Person&#146;s Net
Worth (or in the event that the Morgans Guarantor shall remain a guarantor hereunder at such time,
as to the Morgans Guarantor only, its Net Assets, and in the event that the DLJ Guarantor shall
remain a guarantor hereunder at such time, the Net Worth of the DLJ Guarantor and the DLJMB Parties
calculated in accordance with <U>clause (ii)</U> of the definition of &#147;Guarantors Net Worth&#148;
above) shall equal $200,000,000.00 or more (or in the event that the Morgans Guarantor or any
transferee, including an Affiliate of such transferee of the Morgan Guarantor&#146;s interests in HR
Holdings (collectively, a &#147;<B>Morgans Transferee</B>&#148;) shall remain or become a guarantor of the Loan at
such time, as to the Morgans Guarantor and any Morgans Transferee only, the product of
$400,000,000.00 and such Person&#146;s then percentage interest (directly or indirectly) in all profits
and losses of HR Holdings), and (y)&nbsp;such Person&#146;s Effective Liquidity shall equal $100,000,000.00
or more (or in the event that the Morgans Guarantor or any Morgans Transferee shall remain or
become a guarantor of the Loan at such time, as to the Morgans Guarantor and any Morgan Transferee
only, the product of $200,000,000.00 and such Person&#146;s then percentage interest (directly or
indirectly) in all profits and losses of HR Holdings), and (ii)&nbsp;the provisions of this <U>Exhibit
A</U> with respect to financial reporting, financial condition, transactions, dividends and
distributions, confidentiality and cooperation shall apply to all such Persons.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Conflicts</U>. Nothing in this <U>Exhibit&nbsp;A</U> shall be read in any manner or
construed or deemed to alter, modify, amend or waive any term or condition of any Loan Document,
except to the extent this <U>Exhibit&nbsp;A</U> is expressly incorporated by reference therein,
including by <U>Section&nbsp;3.4</U> of this Guaranty. In the event of any conflicts between the terms
and conditions hereof and the terms and conditions of any other Loan Document, the terms and
conditions of the other Loan Documents shall control and be binding in all respects.
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